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TENTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
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TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINED TERMS AND RULES OF CONSTRUCTION................................................................2
Section 1.1. Definitions.....................................................................................2
ARTICLE 2. ORGANIZATIONAL MATTERS................................................................................21
Section 2.1. Organization...................................................................................21
Section 2.2. Name...........................................................................................21
Section 2.3. Resident Agent; Principal Office...............................................................21
Section 2.4. Power of Attorney..............................................................................21
Section 2.5. Term...........................................................................................23
Section 2.6. Number of Partners.............................................................................23
ARTICLE 3. PURPOSE...............................................................................................23
Section 3.1. Purpose and Business...........................................................................23
Section 3.2. Powers.........................................................................................23
Section 3.3. Partnership Only for Purposes Specified........................................................24
Section 3.4. Representations and Warranties by the Parties..................................................24
Section 3.5. Certain ERISA Matters..........................................................................26
ARTICLE 4. CAPITAL CONTRIBUTIONS.................................................................................26
Section 4.1. Capital Contributions of the Partners..........................................................26
Section 4.2. Loans..........................................................................................26
Section 4.3. Additional Funding and Capital Contributions...................................................27
Section 4.4. No Preemptive Rights...........................................................................28
Section 4.5. Other Contribution Provisions..................................................................28
ARTICLE 5. DISTRIBUTIONS.........................................................................................28
Section 5.1. Requirement and Characterization of Distributions..............................................28
Section 5.2. Distributions in Kind..........................................................................29
Section 5.3. Distributions Upon Liquidation.................................................................29
Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests..........................29
ARTICLE 6. ALLOCATIONS...........................................................................................29
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss....................................29
Section 6.2. General Allocations............................................................................30
Section 6.3. Additional Allocation Provisions...............................................................31
Section 6.4. Tax Allocations................................................................................33
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS.................................................................34
Section 7.1. Management.....................................................................................34
Section 7.2. Certificate of Limited Partnership.............................................................38
Section 7.3. Restrictions on General Partner's Authority....................................................38
Section 7.4. Reimbursement of the General Partner...........................................................40
Section 7.5. Outside Activities of the General Partner......................................................41
Section 7.6. Employee Benefit Plans.........................................................................41
Section 7.7. Indemnification................................................................................41
Section 7.8. Liability of the General Partner...............................................................43
Section 7.9. Other Matters Concerning the General Partner...................................................44
Section 7.10. Title to Partnership Assets.................................................................45
Section 7.11. Reliance by Third Parties...................................................................45
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................................46
Section 8.1. Limitation of Liability........................................................................46
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Section 8.2. Management of Business.........................................................................46
Section 8.3. Outside Activities of Limited Partners.........................................................46
Section 8.4. Return of Capital..............................................................................46
Section 8.5. Rights of Limited Partners Relating to the Partnership.........................................47
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................................48
Section 9.1. Records and Accounting.........................................................................48
Section 9.2. Fiscal Year....................................................................................48
Section 9.3. Reports........................................................................................48
Section 9.4. Nondisclosure of Certain Information...........................................................48
ARTICLE 10. TAX MATTERS..........................................................................................49
Section 10.1. Preparation of Tax Returns..................................................................49
Section 10.2. Tax Elections...............................................................................49
Section 10.3. Tax Matters Partner.........................................................................49
Section 10.4. Organizational Expenses.....................................................................50
Section 10.5. Withholding.................................................................................50
ARTICLE 11. TRANSFERS AND WITHDRAWALS............................................................................51
Section 11.1. Transfer....................................................................................51
Section 11.2. Transfer of General Partner's and Common Limited Partner's Partnership Interest.............52
Section 11.3. Preferred Limited Partners' Rights to Transfer..............................................52
Section 11.4. Substituted Limited Partners................................................................54
Section 11.5. Assignees...................................................................................55
Section 11.6. General Provisions..........................................................................55
ARTICLE 12. ADMISSION OF PARTNERS................................................................................57
Section 12.1. Admission of Successor General Partner......................................................57
Section 12.2. Admission of Additional Limited Partners....................................................58
Section 12.3. Amendment of Agreement and Certificate of Limited Partnership...............................58
ARTICLE 13. DISSOLUTION AND LIQUIDATION..........................................................................59
Section 13.1. Dissolution.................................................................................59
Section 13.2. Winding Up..................................................................................59
Section 13.3. Compliance with Timing Requirements of Regulations..........................................61
Section 13.4. Deemed Distribution and Recontribution......................................................61
Section 13.5. Rights of Limited Partners..................................................................61
Section 13.6. Notice of Dissolution.......................................................................62
Section 13.7. Cancellation of Certificate of Limited Partnership..........................................62
Section 13.8. Reasonable Time for Winding-Up..............................................................62
Section 13.9. Waiver of Partition.........................................................................62
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS.........................................................62
Section 14.1. Amendments..................................................................................62
Section 14.2. Action by the Partners......................................................................63
ARTICLE 15. GENERAL PROVISIONS...................................................................................63
Section 15.1. Addresses and Notice........................................................................63
Section 15.2. Titles and Captions.........................................................................64
Section 15.3. Pronouns and Plurals........................................................................64
Section 15.4. Further Action..............................................................................64
Section 15.5. Binding Effect..............................................................................64
Section 15.6. Creditors...................................................................................64
Section 15.7. Waiver......................................................................................64
Section 15.8. Counterparts................................................................................64
Section 15.9. Applicable Law..............................................................................65
Section 15.10. Invalidity of Provisions....................................................................65
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Section 15.11. Entire Agreement............................................................................ 65
Section 15.12. No Rights as Stockholders................................................................... 65
ARTICLE 16. INTENTIONALLY OMITTED................................................................................ 65
ARTICLE 17. SERIES D PREFERRED UNITS............................................................................. 65
Section 17.1. Designation and Number...................................................................... 65
Section 17.2. Ranking..................................................................................... 65
Section 17.3. Distributions............................................................................... 66
Section 17.4. Liquidation Proceeds........................................................................ 67
Section 17.5. Series D Redemption......................................................................... 68
Section 17.6. Voting and Certain Management Rights........................................................ 69
Section 17.7. Transfer Restrictions....................................................................... 72
Section 17.8. Exchange Rights............................................................................. 72
Section 17.9. No Conversion Rights........................................................................ 76
Section 17.10. No Sinking Fund............................................................................. 76
ARTICLE 18. SERIES E PREFERRED UNITS............................................................................. 76
Section 18.1. Designation and Number...................................................................... 76
Section 18.2. Ranking..................................................................................... 76
Section 18.3. Distributions............................................................................... 77
Section 18.4. Liquidation Proceeds........................................................................ 79
Section 18.5. Series E Redemption......................................................................... 79
Section 18.6. Voting and Certain Management Rights........................................................ 80
Section 18.7. Transfer Restrictions....................................................................... 83
Section 18.8. Exchange Rights............................................................................. 83
Section 18.9. No Conversion Rights........................................................................ 87
Section 18.10. No Sinking Fund............................................................................. 87
ARTICLE 19. SERIES F PREFERRED UNITS............................................................................. 87
Section 19.1. Designation and Number...................................................................... 87
Section 19.2. Ranking..................................................................................... 88
Section 19.3. Distributions............................................................................... 88
Section 19.4. Liquidation Proceeds........................................................................ 90
Section 19.5. Series F Redemption......................................................................... 90
Section 19.6. Voting and Certain Management Rights........................................................ 91
Section 19.7. Transfer Restrictions....................................................................... 94
Section 19.8. Exchange Rights............................................................................. 94
Section 19.9. No Conversion Rights........................................................................ 99
Section 19.10. No Sinking Fund............................................................................. 99
ARTICLE 20. SERIES G PREFERRED UNITS............................................................................. 99
Section 20.1. Designation and Number...................................................................... 99
Section 20.2. Ranking..................................................................................... 99
Section 20.3. Distributions............................................................................... 99
Section 20.4. Liquidation Proceeds........................................................................101
Section 20.5. Series G Redemption.........................................................................102
Section 20.6. Voting and Certain Management Rights........................................................103
Section 20.7. Transfer Restrictions.......................................................................105
Section 20.8. Exchange Rights.............................................................................106
Section 20.9. No Conversion Rights........................................................................111
Section 20.10. No Sinking Fund.............................................................................111
ARTICLE 21. SERIES H PREFERRED UNITS.............................................................................111
Section 21.1. Designation and Number......................................................................111
Section 21.2. Ranking.....................................................................................111
Section 21.3. Distributions...............................................................................111
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Section 21.4. Liquidation Proceeds.......................................................................113
Section 21.5. Series H Redemption........................................................................114
Section 21.6. Voting and Certain Management Rights.......................................................115
Section 21.7. Transfer Restrictions......................................................................117
Section 21.8. Exchange Rights............................................................................118
Section 21.9. No Conversion Rights.......................................................................122
Section 21.10. No Sinking Fund............................................................................122
ARTICLE 22. SERIES I PREFERRED UNITS............................................................................122
Section 22.1. Designation and Number.....................................................................122
Section 22.2. Ranking....................................................................................122
Section 22.3. Distributions..............................................................................123
Section 22.4. Liquidation Proceeds.......................................................................124
Section 22.5. Series I Redemption........................................................................125
Section 22.6. Voting and Certain Management Rights.......................................................126
Section 22.7. Transfer Restrictions......................................................................128
Section 22.8. Exchange Rights............................................................................129
Section 22.9. No Conversion Rights.......................................................................133
Section 22.10. No Sinking Fund............................................................................133
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TENTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
THIS TENTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as
of December 6, 2001, is entered into by and among AMB Property Holding
Corporation, a Maryland corporation (the "Company"), as the General Partner, and
the Persons whose names are set forth on Exhibit A attached hereto, as the
Limited Partners (the "Existing Limited Partners"), together with any other
Persons who become Partners in the Partnership as provided herein.
WHEREAS, the General Partner and the Existing Limited Partners are
parties to that certain Ninth Amended and Restated Agreement of Limited
Partnership, dated March 21, 2001, as amended;
WHEREAS, on November 24, 1998, Belcrest Realty Corporation, a Delaware
corporation and Belair Real Estate Corporation, a Delaware corporation (each a
"Contributor" and, together the "Contributors") made an aggregate Capital
Contribution of $110,000,000, in cash, to the Partnership in exchange for which
the Contributors received an aggregate of 2,200,000 Series C Preferred Units in
the Partnership;
WHEREAS, on May 5, 1999, J.P. Morgan Mosaic Fund, LLC, a Delaware
limited liability company (the "Series D Contributor") made a Capital
Contribution of $79,766,850, in cash, to the Partnership in exchange for which
the Series D Contributor received 1,595,337 Series D Preferred Units in the
Partnership;
WHEREAS, on August 31, 1999, Fifth Third Equity Exchange Fund 1999, LLC,
a Delaware limited liability company (the "Series E Contributor") made a Capital
Contribution of $11,022,000, in cash, to the Partnership in exchange for which
the Series E Contributor received 220,440 Series E Preferred Units in the
Partnership;
WHEREAS, on March 22, 2000, Bailard, Biehl & Kaiser Technology Exchange
Fund, LLC, a Delaware limited liability company (the "Series F Contributor")
made a Capital Contribution of $19,871,950, in cash, to the Partnership in
exchange for which the Series F Contributor received 397,439 Series F Preferred
Units in the Partnership;
WHEREAS, on August 29, 2000, Bailard, Biehl & Kaiser Technology Exchange
Fund, LLC, a Delaware limited liability company (the "Series G Contributor")
made a Capital Contribution of $1,000,000, in cash, to the Partnership in
exchange for which the Series G Contributor received 20,000 Series G Preferred
Units in the Partnership;
WHEREAS, on September 1, 2000, J.P. Morgan Mosaic Fund IV, LLC, a
Delaware limited liability company (the "Series H Contributor") made a Capital
Contribution of $42,000,000, in cash, to the Partnership in exchange for which
the Series H Contributor received 840,000 Series H Preferred Units in the
Partnership;
WHEREAS, on March 21, 2001, J.P. Morgan Chase Mosaic Fund V, LLC, a
Delaware limited liability company (the "Series I Contributor") made a Capital
Contribution of $25,500,000, in cash, to the Partnership in exchange for which
the Series I Contributor received 510,000 Series I Preferred Units in the
Partnership;
WHEREAS, pursuant to Section 7.3D(ii), this Agreement may be amended by
the General Partner to reflect the termination of or reduction in Partnership
Units or the withdrawal of Partners; and
WHEREAS, on the date hereof, the Partnership has repurchased and
redeemed all of the outstanding Series C Preferred Units from the Series C
Limited Partners pursuant to the terms of a Preferred Unit Repurchase Agreement,
entered into by and among the Partnership, the General Partner and the Series C
Limited Partners;
WHEREAS, pursuant to the authority granted to the General Partner under
this Agreement, the General Partner desires to amend and restate this Agreement
to reflect the elimination of the Series C Preferred Units; and
WHEREAS, by virtue of the execution of this Agreement by the Company in
its capacity as General Partner of the Partnership, the General Partner hereby
consents to the amendment and restatement of the Ninth Amended and Restated
Agreement of Limited Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINED TERMS AND RULES OF CONSTRUCTION
Section 1.1. Definitions
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.
"Additional Funds" shall have the meaning set forth in Section 4.3.A.
"Additional Limited Partner" means a Person admitted to the Partnership
as a Limited Partner pursuant to Section 12.2 and who is shown as such on the
books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant fiscal year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts which such Partner is
obligated to restore pursuant to this Agreement or is deemed to
be obligated to restore
2
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the
penultimate sentence of each of Regulations Sections
1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is intended
to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
"Adjustment Date" shall have the meaning set forth in Section 4.3.D.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Agreed Value" means (i) in the case of any Contributed Property set
forth in Exhibit A and as of the time of its contribution to the Partnership,
the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of
any Contributed Property not set forth in Exhibit A and as of the time of its
contribution to the Partnership, the fair market value of such property or other
consideration as determined by the General Partner, reduced by any liabilities
either assumed by the Partnership upon such contribution or to which such
property is subject when contributed; and (iii) in the case of any property
distributed to a Partner by the Partnership, the fair market value of such
property as determined by the General Partner at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Tenth Amended and Restated Agreement of Limited
Partnership, as it may be amended, modified, supplemented or restated from time
to time.
"AMB" means AMB Property Corporation, a Maryland corporation, in its
capacity as the owner of 100% of the common stock of the General Partner and as
the sole general partner of the Operating Partnership.
"Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith; such opinion may be in the form of an
opinion by such independent third party that the value for such asset as set by
the General Partner is fair, from a financial point of view, to the Partnership.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may
be) for such period,
3
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period,
(c) the amount of any reduction in reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such amounts
are no longer necessary),
(d) the excess of the net proceeds from the sale, exchange,
disposition, or refinancing of Partnership property for such period over
the gain (or loss, as the case may be) recognized from any such sale,
exchange, disposition, or refinancing during such period, and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period;
(ii) less the sum of:
(a) all principal debt payments made during such period by the
Partnership,
(b) capital expenditures made by the Partnership during such
period,
(c) investments in any entity (including loans made thereto) to
the extent that such investments are not otherwise described in clauses
(ii)(a) or (b),
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period,
(e) any amount included in determining Net Income or Net Loss
for such period that was not received by the Partnership during such
period,
(f) the amount of any increase in reserves established during
such period which the General Partner determines are necessary or
appropriate in its sole and absolute discretion, and
(g) the amount of any working capital accounts and other cash or
similar balances which the General Partner determines to be necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"Board of Directors" means the Board of Directors of AMB.
"Business Day" means each day, other than a Saturday or a Sunday, which
is not a day on which banking institutions in Los Angeles, California or New
York, New York are authorized or required by law, regulation or executive order
to close.
4
"Capital Account" means, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to such Partner.
(ii) From each Partner's Capital Account there shall be subtracted the
amount of cash and the Gross Asset Value of any property distributed to such
Partner pursuant to any provision of this Agreement, such Partner's distributive
share of Net Losses and any items in the nature of expenses or losses which are
specially allocated pursuant to Section 6.3 hereof, and the amount of any
liabilities of such Partner assumed by the Partnership or which are secured by
any property contributed by such Partner to the Partnership.
(iii) In the event any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
interest.
(iv) In determining the amount of any liability for purposes of
subsections (i) and (ii) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.
(v) The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification; provided that,
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of this Agreement upon the dissolution of the
Partnership. The General Partner also shall (a) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q) and (b) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership by such Partner.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Secretary of State of Delaware, as
amended from time to time in accordance with the terms hereof and the Act.
5
"Charter" means the Company's Articles of Incorporation, as filed with
the Maryland Department of Assessments and Taxation on November 24, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time or any successor statute thereto, 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.
"Common Unit" means each Partnership Unit that is not entitled to any
preference with respect to any other Partnership Unit as to distribution or
voluntary or involuntary liquidation, dissolution or winding up of the
Partnership.
"Common Limited Partner" means any Person holding Common Units, and
named as a Common Limited Partner in Exhibit A attached hereto, as such Exhibit
may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a Common Limited
Partner in the Partnership.
"Consent" means the consent to, approval of, or vote on a proposed
action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a Majority in
Interest of the Limited Partners, other than the Preferred Limited Partners,
which Consent shall be obtained prior to the taking of any action for which it
is required by this Agreement and may be given or withheld by a Majority in
Interest of the Limited Partners, unless otherwise expressly provided herein, in
their sole and absolute discretion.
"Consent of the Partners" means the Consent of Partners, other than the
Preferred Limited Partners, holding Percentage Interests that in the aggregate
are equal to or greater than a majority of the aggregate Percentage Interests of
all Partners, other than the Preferred Limited Partners, which Consent shall be
obtained prior to the taking of any action for which it is required by this
Agreement and may be given or withheld by such Partners, in their sole and
absolute discretion.
"Constructively Own" means ownership under the constructive ownership
rules described in Exhibit C.
"Contributed Property" means each property or other asset, in such form
as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership (or, to the extent provided in applicable
regulations, deemed contributed by the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"Contributor" shall have the meaning given to such term in the recitals
hereto.
"Debt" means, as to any Person, as of any date of determination: (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
6
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
which, in accordance with generally accepted accounting principles, should be
capitalized.
"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, except that if
the Gross Asset Value of an asset differs from its adjusted basis for Federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Funding Debt" means the incurrence of any Debt by or on behalf of the
General Partner for the purpose of providing funds to the Partnership.
"Future Parity Preferred Capital" means, with respect to any series of
Parity Preferred Units issued to Future Parity Preferred Unitholders following
the date hereof, the product of (i) the number of Parity Preferred Units within
such series then held by Preferred Limited Partners (other than the General
Partner and the Operating Partnership) and (ii) the sum of the amount
contributed to the Partnership per such Parity Preferred Unit by Preferred
Limited Partners and the Preferred Distribution Shortfall with respect to each
such Parity Preferred Unit, if any.
"Future Parity Preferred Unitholders" shall have the meaning set forth
in Section 17.6.D.
"General Partner" means the Company or its successors as general partner
of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Partner
to the Partnership shall be the gross fair market value of such asset, as
determined by the contributing Partner and the General Partner (as set forth on
Exhibit A attached hereto, as such Exhibit may be amended from time to time);
provided, that if the contributing Partner is the General Partner
7
then, except with respect to the General Partner's initial Capital Contribution
which shall be determined as set forth on Exhibit A, or capital contributions of
cash, the determination of the fair market value of the contributed asset shall
be determined by (a) the price paid by the General Partner if the asset is
acquired by the General Partner contemporaneously with its contribution to the
Partnership or (b) by Appraisal if otherwise acquired by the General Partner.
(ii) Immediately prior to the times listed below, the Gross Asset Values
of all Partnership assets shall be adjusted to equal their respective gross fair
market values, as determined by the General Partner using such reasonable method
of valuation as it may adopt:
(a) the acquisition of an additional interest in the Partnership by
a new or existing Partner in exchange for more than a de minimis
Capital Contribution, if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(b) the distribution by the Partnership to a Partner of more than a
de minimis amount of Partnership property as consideration for
an interest in the Partnership if the General Partner reasonably
determines that such adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners in the
Partnership;
(c) the liquidation of the Partnership within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as the General Partner shall reasonably
determine necessary or advisable in order to comply with
Regulations Sections 1.704-1(b) and 1.704-2.
(iii) The Gross Asset Value of any Partnership asset distributed to a
Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the distributee and the General Partner; provided,
that if the distributee is the General Partner, or if the distributee and the
General Partner cannot agree on such a determination, by Appraisal.
(iv) The Gross Asset Values of Partnership assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to
the extent that the General Partner reasonably determines that an adjustment
pursuant to subparagraph (ii) is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
subparagraph (iv).
(v) If the Gross Asset Value of a Partnership asset has been determined
or adjusted pursuant to subparagraph (i), (ii) or (iv), such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a Partnership Unit.
8
"Immediate Family" means, with respect to any natural Person, such
natural Person's estate or heirs or current spouse or former spouse, parents,
parents-in-law, children, siblings and grandchildren and any trust or estate,
all of the beneficiaries of which consist of such Person or such Person's
spouse, former spouse, parents, parents-in-law, children, siblings or
grandchildren.
"Incapacity" or "Incapacitated" means: (i) as to any individual Partner,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating him or her incompetent to manage his or her Person or his or her
estate; (ii) as to any corporation which is a Partner, 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, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, 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, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner 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 is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred and twenty (120) days after the commencement
thereof, (g) the appointment without the Partner's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within ninety
(90) days of such appointment or (h) an appointment referred to in clause (g) is
not vacated within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person subject to a claim or demand or made
or threatened to be made a party to, or involved or threatened to be involved
in, an action, suit or proceeding by reason of his or her status as (a) the
General Partner or (b) a director, officer, employee or agent of the Partnership
or the General Partner and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time, in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
"Junior Stock" means shares of capital stock of AMB representing any
class or series of equity interest ranking, as to distributions and voluntary or
involuntary liquidation, dissolution or winding up of AMB, junior to the Series
D Preferred Shares, the Series E Preferred Shares, the Series F Preferred
Shares, the Series G Preferred Shares, the Series H Preferred Shares and the
Series I Preferred Shares.
9
"Junior Units" means Partnership Units representing any class or series
of Partnership Interest ranking, as to distributions and voluntary or
involuntary liquidation, dissolution or winding up of the Partnership, junior to
the Series D Preferred Units, the Series E Preferred Units, the Series F
Preferred Units, the Series G Preferred Units, the Series H Preferred Units and
the Series I Preferred Units.
"Limited Partner" means any Person named as a Limited Partner in Exhibit
A attached hereto, as such Exhibit may be amended from time to time, any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of a Limited
Partner representing a fractional part of the Partnership Interests of all
Limited Partners and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Limited Partnership Interest may be expressed as a number of
Partnership Units.
"Liquidating Events" shall have the meaning set forth in Section 13.1.
"Liquidator" shall have the meaning set forth in Section 13.2.A.
"Majority in Interest of the Limited Partners" means Limited Partners
(other than any Preferred Limited Partner) holding Percentage Interests that in
the aggregate are greater than fifty percent (50%) of the aggregate Percentage
Interests of all Limited Partners (other than any Preferred Limited Partner).
"Majority in Interest of Partners" means Partners (other than Preferred
Limited Partners) holding Percentage Interests that are greater than fifty
percent (50%) of the aggregate Percentage Interests of all Partners (other than
Preferred Limited Partners).
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, 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:
(i) Any income of the Partnership that is exempt from Federal income tax
and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be added to such
taxable income or loss;
(ii) 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
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this definition of Net Income or
Net Loss shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) or (iii) of the definition of Gross Asset
Value, the amount of such
10
adjustment shall be taken into account as gain or loss from the disposition of
such asset for purposes of computing Net Income or Net Loss;
(iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(v) 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;
(vi) To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(vii) Notwithstanding any other provision of this definition of Net
Income or Net Loss, any items which are specially allocated pursuant to Section
6.3 shall not be taken into account in computing Net Income or Net Loss. The
amounts of the items of Partnership income, gain, loss, or deduction available
to be specially allocated pursuant to Section 6.3 shall be determined by
applying rules analogous to those set forth in this definition of Net Income or
Net Loss.
Solely for purposes of allocating Net Income or Net Loss in any Fiscal
Year to the Holders of the Series D Preferred Units, the Series E Preferred
Units, the Series F Preferred Units, the Series G Preferred Units, the Series H
Preferred Units and the Series I Preferred Units pursuant to Sections 6.2.B.1(c)
and (e), and Section 6.2.B.2(b), items of Net Income and Net Loss, as the case
may be, shall not include Depreciation with respect to properties that are
"ceiling limited" in respect of Preferred Limited Partners. For purposes of the
preceding sentence, Partnership property shall be considered ceiling limited in
respect of a Preferred Limited Partner if Depreciation attributable to such
Partnership property which would otherwise be allocable to such Partner, without
regard to this paragraph, exceeded depreciation determined for federal income
tax purposes attributable to such Partnership property which would otherwise be
allocable to such Partner by more than 5%.
"Nonrecourse Deductions" shall have the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" shall have the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit B to this Agreement.
11
"Operating Partnership" means AMB Property, L.P., a Delaware limited
partnership.
"Parity Preferred Capital" means the sum of (i) the aggregate Series D
Preferred Capital for all Holders of Series D Preferred Units (other than the
General Partner and the Operating Partnership), (ii) the aggregate Series E
Preferred Capital for all Holders of Series E Preferred Units (other than the
General Partner and the Operating Partnership), (iii) the aggregate Series F
Preferred Capital for all Holders of Series F Preferred Units (other than the
General Partner and the Operating Partnership), (iv) the aggregate Series G
Preferred Capital for all Holders of Series G Preferred Units (other than the
General Partner and the Operating Partnership), (v) the aggregate Series H
Preferred Capital for all Holders of Series H Preferred Units (other than the
General Partner and the Operating Partnership), (vi) the aggregate Series I
Preferred Capital for all Holders of Series I Preferred Units (other than the
General Partner and the Operating Partnership) and (vii) the aggregate Future
Parity Preferred Capital for each series of Preferred Units issued following the
date hereof.
"Parity Preferred Stock" means any class or series of equity interest of
AMB now or hereafter authorized, issued or outstanding expressly designated by
AMB to rank on a parity with the Series D Preferred Shares, the Series E
Preferred Shares, the Series F Preferred Shares, the Series G Preferred Shares,
the Series H Preferred Shares and the Series I Preferred Shares with respect to
distributions and rights upon voluntary or involuntary liquidation, winding up
or dissolution of AMB.
"Parity Preferred Unit" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with the Series D
Preferred Units, the Series E Preferred Units, the Series F Preferred Units, the
Series G Preferred Units, the Series H Preferred Units and the Series I
Preferred Units with respect to distributions and rights upon voluntary or
involuntary liquidation, winding up or dissolution of the Partnership.
"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
12
"Partnership Interest" means an ownership interest in the Partnership of
either a Limited Partner or the General Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. There may be one or more
classes of Partnership Interests as provided in Section 4.3. A Partnership
Interest may be expressed as a number of Partnership Units. Unless otherwise
expressly provided for by the General Partner at the time of the original
issuance of any Partnership Interests, all Partnership Interests (whether of a
Limited Partner or a General Partner) shall be of the same class. The
Partnership Interests represented by the Common Units, the Series D Preferred
Units, the Series E Preferred Units, the Series F Preferred Units, the Series G
Preferred Units, the Series H Preferred Units and the Series I Preferred Units
are the only Partnership Interests and each such type of unit is a separate
class of Partnership Interest for all purposes of this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash with respect to Common
Units pursuant to Section 5.1 which record date shall be the same as the record
date established by AMB for a distribution to its stockholders of some or all of
its portion of such distribution.
"Partnership Unit" means, with respect to any class of Partnership
Interest, a fractional, undivided share of such class of Partnership Interest
issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership Units may
be evidenced by a certificate for units substantially in the form of Exhibit D-1
hereto or as the General Partner may determine with respect to any class of
Partnership Units issued from time to time under Sections 4.1 and 4.3.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in the Partnership as determined by dividing
the Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such Exhibit may be amended from time to time. If the
Partnership issues more than one class of Partnership Interest, the interest in
the Partnership among the classes of Partnership Interests shall be determined
as set forth in the amendment to the Partnership Agreement setting forth the
rights and privileges of such additional classes of Partnership Interest, if
any, as contemplated by Section 4.3.B.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"Plan Asset Regulation" means the regulations promulgated by the United
States Department of Labor in Title 29, Code of Federal Regulations, Part 2510,
Section 101-3, and any successor regulations thereto.
13
"Pledge" shall have the meaning set forth in Section 11.3.A.
"Preferred Distribution Shortfall" shall have the meaning given to such
term in Section 5.1 hereof.
"Preferred Limited Partner" means any Person holding a Preferred Unit,
and named as a Preferred Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended from time to time, or any Substitute Limited Partner or
Additional Limited Partner, in such Person's capacity as a Preferred Limited
Partner in the Partnership.
"Preferred Share" means a share of AMB preferred stock, par value $.01
per share, with such rights, priorities and preferences as shall be designated
by the Board of Directors in accordance with the REIT Charter.
"Preferred Unit" means a Partnership Unit representing a Limited
Partnership Interest, with such preferential rights and priorities as shall be
designated by the General Partner pursuant to Section 4.3.C hereof including,
without limitation, the Series D Preferred Units, the Series E Preferred Units,
the Series F Preferred Units, the Series G Preferred Units, the Series H
Preferred Units and the Series I Preferred Units.
"Priority Return" means with respect to (i) the Series D Preferred
Units, the Series D Priority Return, (ii) the Series E Preferred Units, the
Series E Priority Return, (iii) the Series F Preferred Units, the Series F
Priority Return, (iv) the Series G Preferred Units, the Series G Priority
Return, (v) the Series H Preferred Units, the Series H Priority Return and (vi)
the Series I Preferred Units, the Series I Priority Return.
"Properties" means such interests in real property and personal property
including without limitation, fee interests, interests in ground leases,
interests in joint ventures, interests in mortgages, and Debt instruments as the
Partnership may hold from time to time.
"PTP" shall have the meaning set forth in Section 17.8.
"Qualified REIT Subsidiary" means any Subsidiary of AMB that is a
"qualified REIT subsidiary" within the meaning of Section 856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as defined in Rule
501 promulgated under the Securities Act.
"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).
"Regulatory Allocations" shall have the meaning set forth in Section
6.3.A(viii).
"REIT" means a real estate investment trust under Sections 856 through
860 of the Code.
"REIT Charter" means the Articles of Incorporation of AMB as of November
24, 1997, as amended by the Articles Supplementary filed with the Maryland
Department of
14
Assessments and Taxation on July 23, 1998 designating the 8 1/2% Series A
Cumulative Redeemable Preferred Stock, the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on November 12, 1998 designating
the 8J% Series B Cumulative Redeemable Preferred Stock, the Articles
Supplementary filed with the Maryland Department of Assessments and Taxation on
November 24, 1998 designating the 8 3/4% Series C Cumulative Redeemable
Preferred Stock, the Articles Supplementary filed with the Maryland Department
of Assessments and Taxation on May 5, 1999 designating the 7.75% Series D
Cumulative Redeemable Preferred Stock, the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on August 31, 1999 designating
the 7.75% Series E Cumulative Redeemable Preferred Stock, the Articles
Supplementary filed with the Maryland Department of Assessments and Taxation on
March 23, 2000 designating the 7.95% Series F Cumulative Redeemable Preferred
Stock, the Articles Supplementary filed with the Maryland Department of
Assessments and Taxation on August 30, 2000 designating the 7.95% Series G
Cumulative Redeemable Preferred Stock, the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on September 1, 2000 designating
the 8.125% Series H Cumulative Redeemable Preferred Stock, the Articles
Supplementary filed with the Maryland Department of Assessments and Taxation on
March 21, 2001 designating the 8.00% Series I Cumulative Redeemable Preferred
Stock and the Articles Supplementary filed with the Maryland Department of
Assessments and Taxation on December 6, 2001 redesignating and reclassifying the
8 3/4% Series C Cumulative Redeemable Preferred Stock, and as further amended or
restated from time to time.
"REIT Requirements" shall have the meaning set forth in Section 5.1.
"REIT Share" means a share of common stock, par value $.01 per share, of
AMB.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
"Series B Preferred Units" means the 8 5/8% Series B Cumulative
Redeemable Partnership Units of the Operating Partnership.
"Series C Limited Partner" means any Person holding Series C Preferred
Units, which were repurchased and redeemed by the Partnership on December 5,
2001.
"Series C Preferred Units" means the Partnership's 8 3/4% Series C
Cumulative Redeemable Partnership Units, which were repurchased and redeemed by
the Partnership on December 5, 2001.
"Series D Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series D Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on May 5, 1999.
"Series D Limited Partner" means any Person holding Series D Preferred
Units and named as a Series D Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
15
"Series D Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series D Preferred Units then held by the
Series D Limited Partner (including the General Partner and the Operating
Partnership to the extent either of them holds Series C Preferred Units)
multiplied by (ii) the sum of $50 and any Preferred Distribution Shortfall per
Series D Preferred Unit.
"Series D Preferred Share" means a share of 7.75% Series D Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference $50
per share, of AMB.
"Series D Preferred Units" means the Partnership's 7.75% Series D
Cumulative Redeemable Membership Units.
"Series D Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 17.3.A hereof.
"Series D Priority Return" shall mean an amount equal to 7.75% per annum
on an amount equal to $50 per Series D Preferred Unit then outstanding
(equivalent to $3.875 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
May 5, 1999 to the extent not distributed for any given distribution period
pursuant to Sections 5.1 and 17.3 hereof. Notwithstanding the foregoing,
distributions on the Series D Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series D Preferred Units will accumulate as of
the Series D Preferred Unit Distribution Payment Date on which they first become
payable.
"Series D Redemption" shall have the meaning set forth in Section
17.5.A.
"Series E Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series E Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on August 31, 1999.
"Series E Limited Partner" means any Person holding Series E Preferred
Units and named as a Series E Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Series E Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series E Preferred Units then held by the
Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series E Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series E Preferred Unit.
"Series E Preferred Share" means a share of 7.75% Series E Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference
$50.00 per share, of AMB.
16
"Series E Preferred Units" means the Partnership's 7.75% Series E
Cumulative Redeemable Partnership Units.
"Series E Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 18.3.A hereof.
"Series E Priority Return" shall mean an amount equal to 7.75% per annum
on an amount equal to $50.00 per Series E Preferred Unit then outstanding
(equivalent to $3.875 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
August 31, 1999 to the extent not distributed for any given distribution period
pursuant to Sections 5.1 and 18.3 hereof. Notwithstanding the foregoing,
distributions on the Series E Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series E Preferred Units will accumulate as of
the Series E Preferred Unit Distribution Payment Date on which they first become
payable.
"Series E Redemption" shall have the meaning set forth in Section
18.5.A.
"Series F Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series F Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on March 23, 2000.
"Series F Limited Partner" means any Person holding Series F Preferred
Units and named as a Series F Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Series F Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series F Preferred Units then held by the
Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series F Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series F Preferred Unit.
"Series F Preferred Share" means a share of 7.95% Series F Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference
$50.00 per share, of AMB.
"Series F Preferred Units" means the Partnership's 7.95% Series F
Cumulative Redeemable Partnership Units.
"Series F Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 19.3.A hereof.
"Series F Priority Return" shall mean an amount equal to 7.95% per annum
on an amount equal to $50.00 per Series F Preferred Unit then outstanding
(equivalent to $3.975 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day
17
year of twelve 30-day months (or actual days for any month which is shorter than
a full monthly period), cumulative from March 22, 2000 to the extent not
distributed for any given distribution period pursuant to Sections 5.1 and 19.3
hereof. Notwithstanding the foregoing, distributions on the Series F Preferred
Units will accrue whether or not the terms and provisions of any agreement of
the Partnership at any time prohibit the current payment of distributions,
whether or not the Partnership has earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such
distributions are authorized. Accrued but unpaid distributions on the Series F
Preferred Units will accumulate as of the Series F Preferred Unit Distribution
Payment Date on which they first become payable.
"Series F Redemption" shall have the meaning set forth in Section
19.5.A.
"Series G Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series G Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on August 29, 2000.
"Series G Limited Partner" means any Person holding Series G Preferred
Units and named as a Series G Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Series G Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series G Preferred Units then held by the
Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series G Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series G Preferred Unit.
"Series G Preferred Share" means a share of 7.95% Series G Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference
$50.00 per share, of AMB.
"Series G Preferred Units" means the Partnership's 7.95% Series G
Cumulative Redeemable Partnership Units.
"Series G Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 20.3.A hereof.
"Series G Priority Return" shall mean an amount equal to 7.95% per annum
on an amount equal to $50.00 per Series G Preferred Unit then outstanding
(equivalent to $3.975 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
August 29, 2000 to the extent not distributed for any given distribution period
pursuant to Sections 5.1 and 20.3 hereof. Notwithstanding the foregoing,
distributions on the Series G Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series G Preferred Units will accumulate as of
the Series G Preferred Unit Distribution Payment Date on which they first become
payable.
18
"Series G Redemption" shall have the meaning set forth in Section
20.5.A.
"Series H Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series H Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on September 1, 2000.
"Series H Limited Partner" means any Person holding Series H Preferred
Units and named as a Series H Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Series H Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series H Preferred Units then held by the
Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series H Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series H Preferred Unit.
"Series H Preferred Share" means a share of 8.125% Series H Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference
$50.00 per share, of AMB.
"Series H Preferred Units" means the Partnership's 8.125% Series H
Cumulative Redeemable Partnership Units.
"Series H Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 21.3.A hereof.
"Series H Priority Return" shall mean an amount equal to 8.125% per
annum on an amount equal to $50.00 per Series H Preferred Unit then outstanding
(equivalent to $4.0625 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
September 1, 2000 to the extent not distributed for any given distribution
period pursuant to Sections 5.1 and 21.3 hereof. Notwithstanding the foregoing,
distributions on the Series H Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series H Preferred Units will accumulate as of
the Series H Preferred Unit Distribution Payment Date on which they first become
payable.
"Series H Redemption" shall have the meaning set forth in Section
21.5.A.
"Series I Articles Supplementary" means the Articles Supplementary of
AMB in connection with its Series I Preferred Shares, as filed with the Maryland
Department of Assessments and Taxation on March 21, 2001.
"Series I Limited Partner" means any Person holding Series I Preferred
Units and named as a Series I Limited Partner in Exhibit A attached hereto, as
such Exhibit may be
19
amended from time to time, or any Substitute Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Series I Preferred Capital" means a Capital Account balance equal to
the product of (i) the number of Series I Preferred Units then held by the
Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series I Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series I Preferred Unit.
"Series I Preferred Share" means a share of 8.00% Series I Cumulative
Redeemable Preferred Stock, par value $.01 per share, liquidation preference
$50.00 per share, of AMB.
"Series I Preferred Units" means the Partnership's 8.00% Series I
Cumulative Redeemable Partnership Units.
"Series I Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 22.3.A hereof.
"Series I Priority Return" shall mean an amount equal to 8.00% per annum
on an amount equal to $50.00 per Series I Preferred Unit then outstanding
(equivalent to $4.00 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
March 21, 2001 to the extent not distributed for any given distribution period
pursuant to Sections 5.1 and 22.3 hereof. Notwithstanding the foregoing,
distributions on the Series I Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series I Preferred Units will accumulate as of
the Series I Preferred Unit Distribution Payment Date on which they first become
payable.
"Series I Redemption" shall have the meaning set forth in Section
22.5.A.
"Specified Redemption Date" means the day of receipt by the General
Partner of a Notice of Redemption.
"Subsidiary" shall mean, with respect to any person, any corporation,
partnership, limited liability company, joint venture or other entity of which a
majority of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests, is owned, directly or indirectly, by such person.
"Subsidiary Partnership" means any partnership or limited liability
company that is a Subsidiary of the Partnership or the Operating Partnership.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Tax Items" shall have the meaning set forth in Section 6.4.A.
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"Tenant" means any tenant from which AMB derives rent either directly or
indirectly through partnerships, including the Partnership.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1. Organization
The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners 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.
Section 2.2. Name
The name of the Partnership is AMB Property II, L.P. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner, including the name of the General Partner or any Affiliate
thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or
letters shall be included in the Partnership's name where necessary for the
purposes of complying with the laws of any jurisdiction that so requires. The
General Partner in its sole and absolute discretion may change the name of the
Partnership at any time and from time to time and shall notify the Limited
Partners of such change in the next regular communication to the Limited
Partners.
Section 2.3. Resident Agent; Principal Office
The name and address of the resident agent of the Partnership in the
State of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The address of the principal office of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801 at such address. The principal office
of the Partnership is located at Pier 1, Bay 1, San Francisco, California 94111,
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 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:
(i) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices: (a) all certificates, documents and
other instruments (including, without limitation, this Agreement
and the Certificate and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
21
partnership in which the Limited Partners have limited
liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or
own property; (b) all instruments that the General Partner or
any Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement
in accordance with its terms; (c) all conveyances and other
instruments or documents that the General Partner or any
Liquidator deems appropriate or necessary to reflect the
dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner
pursuant to, or other events described in, Articles 11, 12 and
13 or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership Interests; and
(ii) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of
the General Partner or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent, approval, 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 discretion of the General Partner or any
Liquidator, to effectuate the terms or intent of 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
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 or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or any Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.
22
Section 2.5. Term
The term of the Partnership commenced on October 15, 1997 and shall
continue until October 15, 2096 unless it is dissolved sooner pursuant to the
provisions of Article 13 or as otherwise provided by law.
Section 2.6. Number of Partners
Without the consent of the General Partner which may be given or
withheld in its sole discretion, the Partnership shall not at any time have more
than one hundred (100) partners (including as partners those persons indirectly
owning an interest in the Partnership through a partnership, limited liability
company, S corporation or grantor trust (such entity, a "flow through entity"),
but only if substantially all of the value of such person's interest in the flow
through entity is attributable to the flow through entity's interest (direct or
indirect) in the Partnership).
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 conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit AMB, in
its capacity as the owner of 100% of the Common Stock of the General Partner and
as the sole General Partner of the Operating Partnership, at all times to be
classified as a REIT for Federal income tax purposes, unless AMB ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged, directly or indirectly, in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting AMB's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that AMB's current status as a
REIT inures to the benefit of all the Partners and not solely the General
Partner.
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, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire and develop real
property, and manage, lease, sell, transfer and dispose of real property;
provided, however, not withstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of AMB, in its sole and absolute discretion, (i) could adversely affect
the ability of AMB, in its capacity as the owner of 100% of the Common Stock of
the General Partner and as the sole general partner of the Operating
Partnership, to continue to qualify as a REIT, (ii) absent
23
the consent of the General Partner, which may be given or withheld in its sole
and absolute discretion, and except with respect to the distribution of
Available Cash to the Series D Limited Partners, the Series E Limited Partners,
the Series F Limited Partners, the Series G Limited Partners, the Series H
Limited Partners and the Series I Limited Partners in accordance with Sections
17.3, 18.3, 19.3, 20.3, 21.3 and 22.3, respectively, could subject AMB to any
taxes under Section 857 or Section 4981 of the Code, or (iii) could violate any
law or regulation of any governmental body or agency having jurisdiction over
AMB or its securities, unless any such action (or inaction) under the foregoing
clauses (i), (ii) or (iii) shall have been specifically consented to by AMB in
writing.
Section 3.3. Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes specified
in Section 3.1, and this Agreement shall not be deemed to create a partnership
among the Partners with respect to any activities whatsoever other than the
activities within the purposes of the Partnership as specified in Section 3.1.
Except as otherwise provided in this Agreement, no Partner shall have any
authority to act for, bind, commit or assume any obligation or responsibility on
behalf of the Partnership, its properties or any other Partner. No Partner, in
its capacity as a Partner under this Agreement, shall be responsible or liable
for any indebtedness or obligation of another Partner, nor shall the Partnership
be responsible or liable for any indebtedness or obligation of any Partner,
incurred either before or after the execution and delivery of this Agreement by
such Partner, except as to those responsibilities, liabilities, indebtedness or
obligations incurred pursuant to and as limited by the terms of this Agreement
and the Act.
Section 3.4. Representations and Warranties by the Parties
A. Each Partner that is an individual represents and warrants to each
other Partner that (i) such Partner has in the case of any Person other than an
individual, the power and authority, and in the case of an individual, the legal
capacity, to enter into this Agreement and perform such Partner's obligations
hereunder, (ii) the consummation of the transactions contemplated by this
Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any agreement by which such Partner or any of
such Partner's property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject, (iii) such Partner is neither a
"foreign person" within the meaning of Section 1445(f) of the Code nor a
"foreign partner" within the meaning of Section 1446(e) of the Code and (iv)
this Agreement has been duly executed and delivered by such Partner and is
binding upon, and enforceable against, such Partner in accordance with its
terms.
B. Each Partner that is not an individual represents and warrants to
each other Partner that (i) its execution and delivery of this Agreement and all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action, including without limitation, that of its
general partner(s), committee(s), trustee(s), beneficiaries, directors and/or
stockholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its certificate of limited partnership, partnership agreement, trust agreement,
limited liability company operating agreement, charter or by-laws, as the case
may be, any agreement by which such Partner or any of such Partner's properties
or any of its partners, beneficiaries, trustees or stockholders, as the
24
case may be, is or are bound, or any statute, regulation, order or other law to
which such Partner or any of its partners, trustees, beneficiaries or
stockholders, as the case may be, is or are subject, (iii) such Partner is
neither a "foreign person" within the meaning of Section 1445(f) of the Code nor
a "foreign partner" within the meaning of Section 1446(e) of the Code and (iv)
this Agreement has been duly executed and delivered by such Partner and is
binding upon, and enforceable against, such Partner in accordance with its
terms.
C. Each Partner represents, warrants and agrees that it has acquired and
continues to hold its interest in the Partnership for its own account for
investment only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, nor with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.
D. Each Partner further represents, warrants and agrees as follows:
(i) Except as provided in Exhibit E, at any time such Partner
actually or Constructively owns a 25% or greater capital interest or
profits interest in the Partnership, it does not and will not, without
the prior written consent of the General Partner, actually own or
Constructively Own (a) with respect to any Tenant that is a corporation,
any stock of such Tenant and (b) with respect to any Tenant that is not
a corporation, any interests in either the assets or net profits of such
Tenant.
(ii) Except as provided in Exhibit F, at any time such Partner
actually or Constructively owns a 25% or greater capital interest or
profits interest in the Partnership, it does not, and agrees that it
will not without the prior written consent of the General Partner,
actually own or Constructively Own, any stock in AMB, other than any
shares of capital stock of AMB that such Partner may acquire pursuant to
Sections 17.8, 18.8, 19.8, 20.8, 21.8 or 22.8, subject to the ownership
limitations set forth in the REIT Charter.
(iii) Upon request of the General Partner, it will disclose to
the General Partner the amount of shares of capital stock of AMB that it
actually owns or Constructively Owns.
(iv) It understands that if, for any reason, (a) the
representations, warranties or agreements set forth in Section 3.4.D(i)
or (ii) are violated or (b) the Partnership's actual or Constructive
Ownership of the REIT Shares or other shares of capital stock of AMB
violates the limitations set forth in the REIT Charter, then (x) some or
all of the Series D Redemption rights or rights to exchange Partnership
Interests for Series D Preferred Shares, some or all of the Series E
Redemption rights or rights to exchange Partnership Interests for Series
E Preferred Shares, some or all of the Series F Redemption rights or
rights to exchange Partnership Interests for Series F Preferred Shares,
some or all of the Series G Redemption rights or rights to exchange
Partnership Interests for Series G Preferred Shares, some or all of the
Series H Redemption rights or
25
rights to exchange Partnership Interests for Series H Preferred Shares
or some or all of the Series I Redemption rights or rights to exchange
Partnership Interests for Series I Preferred Shares of the Limited
Partners may become non-exercisable, and (y) some or all of such shares
owned by the Partners and/or some or all of the Partnership Interests
owned by the Limited Partners may be automatically transferred to a
trust for the benefit of a charitable beneficiary, as provided in the
REIT Charter and Exhibit I of this Agreement, respectively.
E. The representations and warranties contained in Sections 3.4.A,
3.4.B, 3.4.C and 3.4.D shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and winding up of the Partnership.
F. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
Section 3.5. Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to qualify as
a "real estate operating company" (as such term is defined in the Plan Asset
Regulation). The General Partner will use its reasonable best efforts to
structure the investments in, relationships with and conduct with respect to
Properties and any other assets of the Partnership so that the Partnership will
be a "real estate operating company" (as such term is defined in the Plan Asset
Regulation).
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions of the Partners
At the time of their respective execution of this Agreement, the
Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class and in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to accurately reflect exchanges, redemptions, Capital
Contributions, the issuance of additional Partnership Units or similar events
having an effect on a Partner's Percentage Interest. Except as required by law
or as otherwise provided in Sections 4.3 and 10.5, no Partner shall be required
or permitted to make any additional Capital Contributions or loans to the
Partnership.
Section 4.2. Loans
Subject to Section 4.3, the Partnership may incur Debt, or enter into
other similar credit, guarantee, financing or refinancing arrangements for any
purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person, including the General Partner, the
Operating Partnership and their affiliates, upon such terms as the
26
General Partner determines appropriate; provided, that the Partnership shall not
incur any Debt that is recourse to the General Partner, except to the extent
otherwise agreed to by the General Partner in its sole discretion.
Section 4.3. Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from time to time,
determine that the Partnership requires additional funds ("Additional Funds")
for the acquisition of additional Properties or for such other Partnership
purposes as the General Partner may determine. Additional Funds may be raised by
the Partnership, at the election of the General Partner, in any manner provided
in, and in accordance with, the terms of this Section 4.3. No Person shall have
any preemptive, preferential or similar right or rights to subscribe for or
acquire any Partnership Interest.
B. Issuance of Additional Partnership Interests. The General Partner may
raise all or any portion of the Additional Funds by accepting additional Capital
Contributions of cash. The General Partner may also accept additional Capital
Contributions of real property or other non-cash assets. In connection with any
such additional Capital Contributions (of cash or property), and subject to
Sections 17.6, 18.6, 19.6, 20.6, 21.6 and 22.6 hereof, the General Partner is
hereby authorized to cause the Partnership from time to time to issue to
Partners (including the General Partner) or other Persons (including, without
limitation, in connection with the contribution of property to the Partnership)
additional Partnership Units or other Partnership Interests in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers, and duties, including rights, powers, and duties senior to then existing
Limited Partnership Interests, all as shall be determined by the General Partner
in its sole and absolute discretion subject to Delaware law, and as set forth by
amendment to this Agreement, including without limitation: (i) the allocations
of items of Partnership income, gain, loss, deduction, and credit to such class
or series of Partnership Interests; (ii) the right of each such class or series
of Partnership Interests to share in Partnership distributions; (iii) the rights
of each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; and (iv) the right to vote. In the event that
the Partnership issues additional Partnership Interests pursuant to this Section
4.3.B, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Sections 5.4 and 6.2.C)
as it determines are necessary to reflect the issuance of such additional
Partnership Interests.
C. Percentage Interest Adjustments in the Case of Capital Contributions
for Partnership Units. Upon the acceptance of additional Capital Contributions
in exchange for Partnership Units, the Percentage Interest related thereto, and
the Percentage Interest of each other Partner, shall be equal to the amounts
agreed to by the Partnership and the contributors.
D. AMB agrees to comply with Section 4.3.D of the Third Amended and
Restated Agreement of Limited Partnership of the Operating Partnership, as
amended or waived from time to time.
27
Section 4.4. No Preemptive Rights
Except to the extent expressly granted by the Partnership pursuant to
another agreement, no Person shall have any preemptive, preferential or other
similar right with respect to (i) making additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
Section 4.5. Other Contribution Provisions
In the event that any Partner is admitted to the Partnership and is
given (or is treated as having received) a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be treated by the
Partnership and the affected Partner as if the Partnership had compensated such
Partner in cash, and the Partner had contributed such cash to the capital of the
Partnership. In addition, with the consent of the General Partner, in its sole
discretion, one or more Limited Partners may enter into contribution agreements
with the Partnership which have the effect of providing a guarantee of certain
obligations of the Partnership.
ARTICLE 5.
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute all, or
such portion as the General Partner may in its discretion determine, Available
Cash generated by the Partnership (i) first, to the extent that the amount of
cash distributed with respect to any Partnership Interests that are entitled to
any preference in distribution for any prior distribution period was less than
the required distribution for such outstanding Partnership Interests for such
prior distribution period, and to the extent such deficiency has not been
subsequently distributed pursuant to this Section 5.1 (a "Preferred Distribution
Shortfall"), in accordance with the rights of such class of Partnership
Interests (and within such class, pro rata in proportion to the respective
Percentage Interests on the applicable record date) and to the Partners who are
Partners on the applicable record date with respect to such distribution, (ii)
second, with respect to any Partnership Interests that are entitled to any
preference in distribution, in accordance with the rights of such class of
Partnership Interests (and within such class, pro rata in proportion to the
respective Percentage Interests on the applicable record date) and (iii) third,
with respect to Partnership Interests that are not entitled to any preference in
distribution, pro rata to each such class on a quarterly basis and in accordance
with the terms of such class to Partners who are Partners of such class on the
Partnership Record Date with respect to such distribution (and within each such
class, pro rata in proportion with the respective Percentage Interests on such
Partnership Record Date). Except as expressly provided for in Article 17 with
respect to the Series D Preferred Units, in Article 18 with respect to the
Series E Preferred Units, in Article 19 with respect to the Series F Preferred
Units, in Article 20 with respect to the Series G Preferred Units, in Article 21
with respect to the Series H Preferred Units, in Article 22 with respect to the
Series I Preferred Units and in an agreement, if any, entered into in connection
with the creation of a new class of Partnership Interests in accordance with
Article 4, no Partnership Interest shall be entitled to a distribution in
preference to any other Partnership Interest. The General Partner shall take
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with AMB's
28
qualification as a REIT, to cause the Partnership to distribute sufficient
amounts to enable AMB, in its capacity of general partner of the Operating
Partnership, and the sole stockholder of the General Partner, to pay stockholder
dividends that will, so long as AMB has determined to qualify as a REIT (a)
satisfy the requirements for qualifying as a REIT under the Code and Regulations
("REIT Requirements") and (b) except to the extent otherwise determined by the
General Partner, avoid any Federal income or excise tax liability of the AMB,
except to the extent that a distribution pursuant to clause (b) would prevent
the Partnership from making a distribution to the holders of Series D Preferred
Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred
Units or Series H Preferred Units in accordance with Sections 17.3, 18.3, 19.3,
20.3, 21.3 and 22.3, respectively.
Section 5.2. Distributions in Kind
No right is given to any Partner to demand and receive property other
than cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles
5, 6 and 10; provided, however, that, in such case, the General Partners shall
distribute only cash to the Series D Limited Partners, the Series E Limited
Partners, the Series F Limited Partners, the Series G Limited Partners, Series H
Limited Partners and Series I Limited Partners.
Section 5.3. Distributions Upon Liquidation
Proceeds from a Liquidating Event shall be distributed to the Partners
in accordance with Section 13.2.
Section 5.4. Distributions to Reflect Issuance of Additional Partnership
Interests
In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Section 4.3.B or 4.4, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests. In the absence of any agreement to the
contrary, an Additional Limited Partner shall be entitled to the distributions
set forth in Section 5.1 (without regard to this Section 5.4) with respect to
the quarter during which the closing of its contribution to the Partnership
occurs, multiplied by a fraction the numerator of which is the number of days
from and after the date of such closing through the end of the applicable
quarter, and the denominator of which is the total number of days in such
quarter.
ARTICLE 6.
ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss
Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each fiscal year of the Partnership as of the end of
each such year. Subject to the other provisions of this Article 6, an allocation
to a Holder of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
29
Section 6.2. General Allocations
A. In General. Except as otherwise provided in this Article 6, Net
Income and Net Loss allocable with respect to a class of Partnership Interests,
shall be allocated to each of the Holders holding such class of Partnership
Interests in accordance with their respective Percentage Interest of such class.
B. B.1. Net Income. Except as provided in Section 6.3, Net Income for
any Partnership Year shall be allocated in the following manner and order of
priority:
(a) First, 100% to the General Partner in an amount equal to the
remainder, if any, of the cumulative Net Losses allocated to the
General Partner pursuant to Section 6.2.B.2(d) for all prior
Partnership Years minus the cumulative Net Income allocated to
the General Partner pursuant to this Section 6.2.B.1(a) for all
prior Partnership Years;
(b) Second, 100% to each Holder of Partnership Interests in an
amount equal to the remainder, if any, of the cumulative Net
Losses allocated to each such Holder pursuant to Section
6.2.B.2(c) for all prior Partnership Years minus the cumulative
Net Income allocated to such Holder pursuant to this Section
6.2.B.1(b) for all prior Partnership Years;
(c) Third, 100% to the Holders of Preferred Units in an amount equal
to the remainder, if any, of the cumulative Net Losses allocated
to such Holders pursuant to Section 6.2.B.2(b) for all prior
Partnership Years minus the cumulative Net Income allocated to
such Holders pursuant to this Section 6.2.B.1(c) for all prior
Partnership Years;
(d) Fourth, 100% to the Holders of Common Units in an amount equal
to the remainder, if any, of the cumulative Net Losses allocated
to each such Holder pursuant to Section 6.2.B.2(a) for all prior
Partnership Years minus the cumulative Net Income allocated to
each Holder pursuant to this Section 6.2.B.1(d) for all prior
Partnership Years;
(e) Fifth, 100% to the Holders of Preferred Units, with respect to
each series of Preferred Units, in an amount equal to the excess
of (i) the cumulative Priority Return to the last day of the
current Partnership Year or to the date of redemption of such
Preferred Units, to the extent such Preferred Units are redeemed
during such year, over (ii) the cumulative Net Income allocated
to the Holders of such Preferred Units, pursuant to this Section
6.2.B.1(e) for all prior Partnership Years; and
(f) Sixth, 100% to the Holders of Common Units in accordance with
their respective Percentage Interests in the Common Units.
To the extent the allocations of Net Income set forth above in any
paragraph of this Section 6.2.B.1 are not sufficient to entirely satisfy the
allocation set forth in such paragraph, such allocation shall be made in
proportion to the total amount that would have been allocated pursuant to such
paragraph without regard to such shortfall.
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B.2. Net Losses. Except as provided in Section 6.3, Net Losses for any
Partnership Year shall be allocated in the following manner and order of
priority:
(a) First, 100% to the Holders of Common Units in accordance with
their respective Percentage Interests in the Common Units (to
the extent consistent with this Section 6.2.B.2(a)) until the
Adjusted Capital Account (ignoring for this purpose any amounts
a Holder is obligated to contribute to the capital of the
Partnership or is deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2) and ignoring the
Holder's Series D Preferred Capital, Series E Preferred Capital,
Series F Preferred Capital, Series G Preferred Capital, Series H
Preferred Capital and Series I Preferred Capital) of each such
Holder is zero;
(b) Second, 100% to the Holders of Preferred Units, pro rata to each
such Holder's Adjusted Capital Account (ignoring for this
purpose any amounts a Holder is obligated to contribute to the
capital of the Partnership or is deemed obligated to contribute
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)(2)), until
the Adjusted Capital Account (as so modified) of each such
Holder is zero;
(c) Third, 100% to the Holders of Partnership Interests to the
extent of, and in proportion to, the positive balance (if any) in their Adjusted
Capital Accounts; and
(d) Fourth, 100% to the General Partner.
C. Allocations to Reflect Issuance of Additional Partnership Interests.
In the event that the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to Section 4.3 or
4.4, the General Partner shall make such revisions to this Section 6.2 or to
Section 12.2.B as it determines are necessary to reflect the terms of the
issuance of such additional Partnership Interests, including making preferential
allocations to certain classes of Partnership Interests, subject to the terms of
the Series D Preferred Units, the Series E Preferred Units, the Series F
Preferred Units, the Series G Preferred Units, the Series H Preferred Units and
the Series I Preferred Units.
Section 6.3. Additional Allocation Provisions
Notwithstanding the foregoing provisions of this Article 6:
A. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding the provisions of
Section 6.2, or any other provision of this Article 6, if there is a net
decrease in Partnership Minimum Gain during any fiscal year, each Holder
shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to
such Holder's share of the net decrease in Partnership Minimum Gain, as
determined under Regulations Section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Holder pursuant thereto. The
items to be allocated shall be determined in accordance
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with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3.A(i) is intended to qualify as a "minimum gain chargeback" within
the meaning of Regulation Section 1.704-2(f) which shall be controlling
in the event of a conflict between such Regulation and this Section
6.3.A(i).
(ii) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4), and notwithstanding the
provisions of Section 6.2, or any other provision of this Article 6
(except Section 6.3.A(i)), if there is a net decrease in Partner Minimum
Gain attributable to a Partner Nonrecourse Debt during any fiscal year,
each Holder who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Holder's share of the net decrease in Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Holder pursuant
thereto. The items to be so allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section
6.3.A(ii) is intended to qualify as a "chargeback of partner nonrecourse
debt minimum gain" within the meaning of Regulation Section 1.704-2(i)
which shall be controlling in the event of a conflict between such
Regulation and this Section 6.3.A(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions.
Any Nonrecourse Deductions for any fiscal year shall be specially
allocated to the Holders in accordance with their respective Percentage
Interest in Common Units. Any Partner Nonrecourse Deductions for any
fiscal year shall be specially allocated to the Holder(s) who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable, in
accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iv) Qualified Income Offset. If any Holder unexpectedly
receives an adjustment, allocation or distribution described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Partnership income and gain shall be allocated, in accordance with
Regulations Section 1.704-1(b)(2)(ii)(d), to the Holder in an amount and
manner sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account Deficit of the Holder as
quickly as possible provided that an allocation pursuant to this Section
6.3.A(iv) shall be made if and only to the extent that such Holder would
have an Adjusted Capital Account Deficit after all other allocations
provided in this Article 6 have been tentatively made as if this Section
6.3.A(iv) were not in the Agreement. It is intended that this Section
6.3.A(iv) qualify and be construed as a "qualified income offset" within
the meaning of Regulations 1.704-1(b)(2)(ii)(d), which shall be
controlling in the event of a conflict between such Regulations and this
Section 6.3.A(iv).
(v) Gross Income Allocation. In the event any Holder has a
deficit Capital Account at the end of any fiscal year which is in excess
of the sum of (a) the amount (if any) such Holder is obligated to
restore to the Partnership and (b) the amount such Holder is deemed to
be obligated to restore pursuant to Regulations Section 1.704-
32
1(b)(2)(ii)(c) or the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially
allocated items of Partnership income and gain in the amount of such
excess as quickly as possible; provided, that an allocation pursuant to
this Section 6.3.A(v) shall be made if and only to the extent that such
Holder would have a deficit Capital Account in excess of such sum after
all other allocations provided in this Article 6 have been tentatively
made as if this Section 6.3.A(v) and Section 6.3.A(iv) were not in the
Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent any
allocation of Net Loss would cause or increase an Adjusted Capital
Account Deficit as to any Holder, such allocation of Net Loss shall be
reallocated among the other Holders in accordance with their respective
Percentage Interests in Common Units, subject to the limitations of this
Section 6.3.A(vi).
(vii) Section 754 Adjustment. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Holder in complete
liquidation of his interest in the Partnership, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Holders in accordance with their interests in
the Partnership in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in
Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the
"Regulatory Allocations") are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections
1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1
and 6.2, the Regulatory Allocations shall be taken into account in
allocating other items of income, gain, loss and deduction among the
Holders so that, to the extent possible, the net amount of such
allocations of other items and the Regulatory Allocations to each Holder
shall be equal to the net amount that would have been allocated to each
such Holder if the Regulatory Allocations had not occurred.
B. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be such Holder's Percentage Interest in Common Units.
Section 6.4. Tax Allocations
A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes each item of income, gain, loss and deduction (collectively,
"Tax Items") shall be allocated among the Holders in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Sections 6.2 and 6.3.
33
B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A, Tax Items with respect to Partnership property that is
contributed to the Partnership by a Partner shall be shared among the Holders
for income tax purposes pursuant to Regulations promulgated under Section 704(c)
of the Code, so as to take into account the variation, if any, between the basis
of the property to the Partnership and its initial Gross Asset Value. With
respect to Partnership property that is initially contributed to the Partnership
upon its formation pursuant to Section 4.1, such variation between basis and
initial Gross Asset Value shall be taken into account under the "traditional
method" as described in Regulations Section 1.704-3(b). With respect to
properties subsequently contributed to the Partnership, the Partnership shall
account for such variation under any method approved under Section 704(c) of the
Code and the applicable regulations as chosen by the General Partner. In the
event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (ii) of the definition of Gross Asset Value (provided in Article
1), subsequent allocations of Tax Items with respect to such asset shall take
account of the variation, if any, between the adjusted basis of such asset and
its Gross Asset Value in the same manner as under Section 704(c) of the Code and
the applicable regulations consistent with the requirements of Regulations
Section 1.704-1(b)(2)(iv)(g) using any method approved under 704(c) of the Code
and the applicable regulations as chosen by the General Partner.
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
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership; provided, however, that the General
Partner may be removed by the Majority in Interest of the Limited Partners, with
or without cause, such removal effective upon the delivery of written notice
thereof by the Limited Partners to the General Partner. In addition to the
powers now or hereafter granted a general partner of a limited partnership under
the Act and other applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to the
other provisions hereof including Section 7.3, shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2 and
to effectuate the purposes set forth in Section 3.1, including, without
limitation:
(i) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit
AMB, in its capacity as the sole general partner of the
Operating Partnership and as sole stockholder of the General
Partner (for so long as AMB has determined to qualify as a
REIT), to avoid the payment of any Federal income tax
(including, for this purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions to its stockholders
sufficient to permit AMB to maintain REIT status), the
assumption or guarantee of, or other contracting for,
34
indebtedness and other liabilities, the issuance of evidences of
indebtedness (including the securing of same by mortgage, deed
of trust or other lien or encumbrance on all or any of the
Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership;
(ii) 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;
(iii) subject to the provisions of Section 7.3.D, the acquisition,
disposition, mortgage, pledge, encumbrance, hypothecation or
exchange of any assets of the Partnership or the merger or other
combination of the Partnership with or into another entity;
(iv) the mortgage, pledge, encumbrance or hypothecation of all or any
assets of the Partnership, and 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 or the operations of the General
Partner or the Partnership, the lending of funds to other
Persons (including, without limitation, the General Partner (if
necessary to permit the financing or capitalization of a
subsidiary of the General Partner or the Partnership) and any
Subsidiaries of the Partnership) and the repayment of
obligations of the Partnership, any of its Subsidiaries and any
other Person in which it has an equity investment;
(v) the negotiation, execution, and performance of any contracts,
leases, 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;
(vi) the distribution of Partnership cash or other Partnership assets
in accordance with this Agreement;
(vii) the selection and dismissal of employees of the Partnership
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer"), and
agents, outside attorneys, accountants, consultants and
contractors of the Partnership, the determination of their
compensation and other terms of employment or hiring, including
waivers of conflicts of interest and the payment of their
expenses and compensation out of the Partnership's assets;
(viii) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
(ix) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation,
35
the acquisition of interests in, and the contributions of
property to any Subsidiary and any other Person in which it has
an equity investment from time to time); provided that as long
as AMB, in its capacity as the sole stockholder of the General
Partner and as the sole general partner of the Operating
Partnership, has determined to continue to qualify as a REIT,
the Partnership may not engage in any such formation,
acquisition or contribution that would cause AMB to fail to
qualify as a REIT;
(x) the control of any matters affecting the rights and obligations
of the Partnership, including the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Person
(including, without limitation, contributing or loaning
Partnership funds to, incurring indebtedness on behalf of, or
guarantying the obligations of any such Persons);
(xii) subject to the other provisions in this Agreement, the
determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt; provided that, such methods are
otherwise consistent with requirements of this Agreement;
(xiii) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvements owned by the Partnership or any Subsidiary of the
Partnership or any Person in which the Partnership has made a
direct or indirect equity investment;
(xiv) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(xv) the collection and receipt of revenues and income of the
Partnership;
(xvi) 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;
(xvii) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with
any Subsidiary of the Partnership or any other Person in which
the Partnership has a direct or indirect interest, or jointly
with any such Subsidiary or other Person;
(xviii) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which
the Partnership does not have an interest, pursuant to
contractual or other arrangements with such Person;
36
(xix) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or other
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; and
(xx) the making of loans by the Partnership to its Partners, for any
purpose, provided that such loans be upon arm's-length terms.
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 provisions of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to obtain and maintain (i) casualty, liability and other
insurance (including, without limitation, earthquake insurance) on the
properties of the Partnership and (ii) liability insurance for the Indemnities
hereunder.
D. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital and other
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the General Partner
may, but other than as set forth in the following sentence and as expressly set
forth in the agreements listed on Exhibit H hereto, shall be under no obligation
to, take into account the tax consequences to any Partner (including the General
Partner) of any action taken by the General Partner. The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.
F. Except as otherwise provided herein, to the extent the duties of the
General Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that Partnership funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its individual
funds for payment to third parties or to undertake any individual liability or
obligation on behalf of the Partnership.
37
Section 7.2. Certificate of Limited Partnership
To the extent that such action is determined by the General Partner to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and to maintain the Partnership's qualification to do business as a foreign
limited partnership in each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(iv), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware, and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Section 7.3. Restrictions on General Partner's Authority
A. The General Partner may not take any action in contravention of this
Agreement, including, without limitation:
(i) take any action that would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(ii) possess Partnership property, or assign any rights in specific
Partnership property, for other than a Partnership purpose
except as otherwise provided in this Agreement;
(iii) admit a Person as a Partner, except as otherwise provided in
this Agreement;
(iv) perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other
liability except as provided herein or under the Act; or
(v) perform any act that would subject the Partnership to regulation
as an "investment company" as such term is defined under the
Investment Company Act of 1940, as amended.
B. The General Partner shall not, without the prior Consent of the
Partners (in addition to any Consent of the Limited Partners required by any
other provision hereof), undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction which would have the effect of
such transactions:
(i) except as provided in Section 7.3.D below, amend, modify or
terminate this Agreement other than to reflect the admission,
substitution, termination or withdrawal of partners pursuant to
Article 12;
38
(ii) make a general assignment for the benefit of creditors or
appoint or acquiesce in the appointment of a custodian, receiver
or trustee for all or any part of the assets of the Partnership;
(iii) institute any proceeding for bankruptcy on behalf of the
Partnership;
(iv) confess a judgment against the Partnership; or
(v) enter into a merger (including a triangular merger),
consolidation or other combination of the Partnership with or
into another entity.
C. Except in the case of a Liquidating Event pursuant to Section 13.1
(other than Section 13.1.F), the General Partner shall not, without the prior
Consent of the Limited Partners, undertake, on behalf of the Partnership, any
actions or enter into any transaction which would have the effect of a
dissolution of the Partnership, including a sale, exchange, transfer or other
disposition of all or substantially all of the Partnership's assets in a single
transaction or a series of related transactions.
D. Notwithstanding Sections 7.3.B and 7.3.C, but subject to Section
7.3.E, the General Partner shall have the power, without the Consent of the
Partners, to amend this Agreement as may be required to facilitate or implement
any of the following purposes:
(i) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(ii) to reflect the issuance of additional Partnership Interests
pursuant to Section 4.3.B, or the admission, substitution,
termination, reduction in Partnership Units or withdrawal of
Partners in accordance with this Agreement (which may be
effected through the replacement of Exhibit A with an amended
Exhibit A);
(iii) to set forth or amend the designations, rights, powers, duties,
and preferences of the holders of any additional Partnership
Interests issued pursuant to Article 4;
(iv) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity in, correct or supplement any
provision, or make other changes with respect to matters arising
under, this Agreement that will not be inconsistent with law or
with the provisions of this Agreement;
(v) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
Federal, state of local agency or contained in Federal, state or
local law.
(vi) to reflect such changes as are reasonably necessary for AMB, in
its capacity as the sole stockholder of the General Partner and
as the sole general partner of the Operating Partnership, to
maintain its status as a
39
REIT, including changes which may be necessitated due to a
change in applicable law (or an authoritative interpretation
thereof) or a ruling of the IRS; and
(vii) to modify, as set forth in the definition of "Capital Account,"
the manner in which Capital Accounts are computed.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.D is taken.
E. Notwithstanding Sections 7.3.B, 7.3.C and 7.3.D, this Agreement shall
not be amended, and no action may be taken by the General Partner, including in
either case through merger or sale of assets of the Partnership or otherwise,
without the Consent of each Common Limited Partner or Preferred Limited Partner
adversely affected if such amendment or action would (i) convert a Limited
Partner's interest in the Partnership into a general partner's interest (except
as the result of the General Partner acquiring such interest), (ii) modify the
limited liability of a Limited Partner, (iii) alter rights of the Partner to
receive distributions pursuant to Article 5 or Section 13.2.A(4) or Articles 17,
18, 19 or 20 or the allocations specified in Article 6 (except as permitted
pursuant to Sections 4.3 and 7.3.D), (iv) alter the Series D Redemption or
exchange rights as set forth in Sections 17.5 and 17.8, respectively, the Series
E Redemption or exchange rights as set forth in Sections 18.5 and 18.8,
respectively, the Series F Redemption or exchange rights as set forth in
Sections 19.5 and 19.8, respectively, the Series G Redemption or exchange rights
as set forth in Sections 20.5 and 20.8, respectively, the Series H Redemption or
exchange rights as set forth in Sections 21.5 and 21.8, respectively, or the
Series I Redemption or exchange rights as set forth in Sections 22.5 and 22.8,
respectively, or (v) amend this Section 7.3.E. Further, no amendment may alter
the restrictions on the General Partner's authority set forth elsewhere in this
Section 7.3 without the Consent specified in such section.
F. The General Partner shall not undertake to dispose of any Partnership
Property specified in the agreements listed in Exhibit G in a taxable sale or
taxable exchange prior to the dates specified in such agreements without the
prior consent of each Limited Partner which contributed all or any portion of an
interest in such Property to the Partnership, as set forth in such agreements.
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 the General Partner may determine in its sole and absolute
discretion, for all expenses it incurs relating to the ownership of interests in
and operation of, or for the benefit of, the Partnership. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
C. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.4 constitute gross income of the General Partner (as
opposed to the repayment of
40
advances made by the General Partner on behalf of the Partnership), such amounts
shall constitute guaranteed payments within the meaning of Section 707(c) of the
Code, shall be treated consistently therewith by the Partnership and all
Partners, and shall not be treated as distributions for purposes of computing
the Partners' Capital Accounts.
Section 7.5. Outside Activities of the General Partner
Without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly, enter into or conduct any business, other than in
connection with the ownership, acquisition and disposition of Partnership
Interests as a General Partner and the management of the business of the
Partnership and such activities as are incidental to the same and activities
incidental to the ownership of interests permitted by the next succeeding
sentence. Without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly, participate in or otherwise acquire any interest in
any real or personal property, except its General Partner Interest, its interest
in any Subsidiary Partnership(s) (held directly or indirectly through a
Qualified REIT Subsidiary) that the General Partner holds in order to maintain
such Subsidiary Partnership's status as a partnership, and such bank accounts,
similar instruments or other short-term investments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the REIT
Charter. The General Partner's General Partner Interest in the Partnership, and
interests in such short-term liquid investments, bank accounts or similar
instruments as the General Partner deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter are interests
which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.
Section 7.6. Employee Benefit Plans
The General Partner, in its sole and absolute discretion and without the
approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans funded by the Partnership for the benefit of
employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries.
Section 7.7. Indemnification
A. The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several, expenses
(including legal fees and expenses), judgments, fines, settlements, and other
amounts arising from any and all claims, demands, actions, suits or proceedings,
civil, criminal, administrative or investigative, that relate to the operations
of the Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in bad faith or
was the result of active and deliberate dishonesty; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or (iii)
in the case of any criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. Without limitation, the foregoing
indemnity shall extend to any liability of any Indemnitee, pursuant to a loan
guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary
of the Partnership (including, without limitation, any
41
indebtedness which the Partnership or any Subsidiary of 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 7.7 in favor of any
Indemnitee having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
or upon a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, 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 7.7.
B. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A has been met and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. The indemnification provided by this Section 7.7 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity.
D. The Partnership may purchase and maintain insurance, on behalf of the
Indemnitees and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by any such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
42
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, 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 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee 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.
I. If and to the extent any reimbursements to the General Partner
pursuant to this Section 7.7 constitute gross income of the General Partner (as
opposed to the repayment of advances made by the General Partner on behalf of
the Partnership) such amounts shall constitute guaranteed payments within the
meaning of Section 707(c) of the Code, shall be treated consistently therewith
by the Partnership and all Partners, and shall not be treated as distributions
for purposes of computing the Partners' Capital Accounts.
J. Any indemnification hereunder is subject to, and limited by, the
provisions of Section 17-108 of the Act.
K. In the event the Partnership is made a party to any litigation or
otherwise incurs any loss or expense as a result of or in connection with any
Partner's personal obligations or liabilities unrelated to Partnership business,
such Partner shall indemnify and reimburse the Partnership for all such loss and
expense incurred, including legal fees, and the Partnership Interest of such
Partner may be charged therefor. The liability of a Partner under this Section
7.7.K shall not be limited to such Partner's Partnership Interest, but shall be
enforceable against such Partner personally.
Section 7.8. Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this Agreement,
none of the General Partner and any of its officers, directors, agents and
employees shall be liable or accountable in damages or otherwise to the
Partnership, any Partners or any Assignees, or their successors or assigns, for
losses sustained, liabilities incurred or benefits not derived as a result of
errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General Partner
is acting for the benefit of the Partnership, the Limited Partners and the
General Partner's stockholders collectively, that the General Partner is under
no obligation to give priority to the separate interests of the Limited Partners
or the General Partner's stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions and
that the General Partner shall not be liable to the Partnership or to any
Limited Partner for monetary
43
damages for losses sustained, liabilities incurred, or benefits not derived by
Limited Partners in connection with such decisions; provided, that the General
Partner has acted in good faith.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A, the General Partner may exercise any of the powers granted to it
by this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith.
D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of the General Partner and any of its officers,
directors, agents and employees to the Partnership and the Limited Partners
under this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
Section 7.9. 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 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 and other consultants and
advisers selected by it, and any act taken or omitted to be taken in reliance
upon the opinion of such Persons as to matters which such General Partner
reasonably believes to be within such Person's professional or expert competence
shall be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
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 a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order to protect the ability of
AMB, in its capacity as the sole stockholder of the General Partner and as the
sole general partner of the Operating Partnership, for so long as AMB has
determined to qualify as a REIT, to (i) continue to qualify as a REIT or (ii)
except with respect to the distribution of Available Cash to the Series D
Limited Partners, the Series E Limited Partners, the Series F Limited Partners,
the Series G Limited Partners, the Series H Limited Partners and the Series I
Limited Partners in accordance in accordance with Sections 17.3, 18.3, 19.3,
20.3, 21.3 and 22.3, respectively, avoid AMB incurring any taxes under Section
857 or Section 4981
44
of the Code, is expressly authorized under this Agreement and is deemed approved
by all of the Limited Partners.
E. So long as the General Partner holds any interest in the Partnership
(as either a General Partner or Limited Partner), the General Partner shall have
"management rights" (as such term is defined in the Plan Asset Regulation) with
respect to the Partnership and its Properties to the extent necessary to qualify
AMB as a "venture capital operating company" (as such term is defined in the
Plan Asset Regulation).
Section 7.10. 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 Partners, individually or collectively, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets may be held in the name of the Partnership, the
General Partner or one or more nominees, as the General Partner may determine,
including Affiliates of the General Partner. The General Partner hereby declares
and warrants that any Partnership assets for which legal title is held in the
name of the General Partner or any nominee or Affiliate of the General Partner
shall be deemed held by the General Partner or such nominee or Affiliate for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 7.11. 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 to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.
45
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1. Limitation of Liability
The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement or under the Act.
Section 8.2. Management of Business
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, general partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operations, 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. Notwithstanding the foregoing, the General
Partner may be removed by the Limited Partners, pursuant to and in accordance
with Section 7.1. Upon the removal of the General Partner, the Common Limited
Partners shall select a successor General Partner, who shall upon the acceptance
of such selection be admitted as a successor General Partner pursuant to Section
12.1 hereof. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, general partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
Section 8.3. Outside Activities of Limited Partners
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, Partnership or a Subsidiary, any Limited
Partner and any officer, director, employee, agent, trustee, Affiliate or
stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such other Person shall have no obligation pursuant to this Agreement to
offer any interest in any such business ventures to the Partnership, any Limited
Partner or any such other Person, even if such opportunity is of a character
which, if presented to the Partnership, any Limited Partner or such other
Person, could be taken by such other Person.
Section 8.4. Return of Capital
Except pursuant to the Series D Redemption and exchange rights set forth
in Sections 17.5 and 17.8, the Series E Redemption and exchange rights set forth
in Sections 18.5 and 18.8, the Series F Redemption and exchange rights set forth
in Sections 19.5 and 19.8, the Series G Redemption and exchange rights set forth
in Sections 20.5 and 20.8, the Series H
46
Redemption and exchange rights set forth in Sections 21.5 and 21.8 and the
Series I Redemption and exchange rights set forth in Sections 22.5 and 22.8 no
Limited Partner shall be entitled to the withdrawal or return of his or her
Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
as expressly set forth herein with respect to the rights, priorities and
preferences of the Preferred Limited Partners holding any series of Preferred
Units, no Limited Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital Contributions, or as
otherwise expressly provided in this Agreement, as to profits, losses,
distributions or credits.
Section 8.5. Rights of Limited Partners Relating to the Partnership
A. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5.B, each Limited Partner shall have the
right, for a purpose reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon written demand with a statement of the
purpose of such demand and at the Partnership's expense:
(i) to obtain a copy of the most recent annual and quarterly reports
filed with the Securities and Exchange Commission by AMB
pursuant to the Exchange Act, and each communication sent to the
stockholders of AMB;
(ii) to obtain a copy of the Partnership's Federal, state and local
income tax returns for each Partnership Year;
(iii) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers
of attorney pursuant to which this Agreement, the Certificate
and all amendments thereto have been executed; and
(v) to obtain true and full information regarding the amount of cash
and a description and statement of any other property or
services contributed by each Partner and which each Partner has
agreed to contribute in the future, and the date on which each
became a Partner.
B. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner believes to be in the
nature of trade secrets or other information the disclosure of which the General
Partner in good faith believes is not in the best interests of the Partnership
or (ii) the Partnership or the General Partner is required by law or by
agreements with unaffiliated third parties to keep confidential.
47
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 appropriate books and records with respect to the
Partnership's business, including without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided,
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2. Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. Reports
A. (1) As soon as practicable, but in no event later than the earlier to
occur of (a) 105 days after the close of each Partnership Year and (b) five (5)
business days following the date on which Company files its annual report in
respect of a fiscal year on Form 10-K, or such other applicable form ("Form
10-K"), with the Securities and Exchange Commission (the "Commission"), a
complete copy of AMB's audited financial statements for such fiscal year
including a balance sheet, income statement and cash flow statement for such
fiscal year prepared and audited by an independent nationally recognized firm of
certified public accountants in accordance with GAAP and (2) not later than
fifteen (15) days after the date documents are delivered in clause (A)(1) above,
the consolidating balance sheet, cash flow statement and income statement of the
Operating Partnership for such fiscal year, prepared by AMB; and
B. (1) As soon as practicable, but in no event later than five (5)
business days following the date on which AMB files its quarterly report in
respect of a fiscal quarter on Form 10-Q, or such other applicable form ("Form
10-Q"), with the Commission, a complete copy of AMB's unaudited quarterly
financial statements for such fiscal quarter including a balance sheet, income
statement and cash flow statement for such fiscal quarter prepared in accordance
with GAAP and (2) not later than fifteen (15) days after the date documents are
delivered in clause (B)(1) above, the consolidating balance sheet, cash flow
statement and income statement of the Operating Partnership for such fiscal
quarter, prepared and certified by AMB.
Section 9.4. Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the General
Partner may keep confidential from the Limited Partners any information that the
General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner
48
in good faith believes is not in the best interests of the Partnership or which
the Partnership is required by law or by agreements with unaffiliated third
parties to keep confidential.
ARTICLE 10.
TAX MATTERS
Section 10.1. Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for Federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for Federal and state income tax reporting purposes. Each Limited Partner shall
promptly provide the General Partner with such information relating to any
Contributed Property contributed by such Limited Partner to the Partnership.
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, including the election under Section 754 of the Code. The
General Partner shall have the right to seek to revoke any such election
(including without limitation, any election under Section 754 of the Code) upon
the General Partner's determination in its sole and absolute discretion that
such revocation is 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 6223(c) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of each of the
Limited Partners and Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners and Assignees.
B. The tax matters partner is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (a) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement
agreement on behalf of such Partner or (b) who is a "notice
partner" (as defined in Section 6231 of the Code) or a member of
a "notice group" (as defined in Section 6223(b)(2) of the Code);
49
(ii) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for
readjustment with the Tax Court or the United States Claims
Court, or the filing of a complaint for refund with the District
Court of the United States for the district in which the
Partnership's principal place of business is located;
(iii) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the IRS
at any time and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition or complaint)
for judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the period for
assessing any tax which is attributable to any item required to
be taken into account by a Partner for tax purposes, or an item
affected by such item; and
(vi) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review
proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm 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.
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 hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Limited Partner any amount of
Federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this
50
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions and the holding of a security
interest in such Limited Partner's Partnership Interest). Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus two percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e., 15
days after demand) until such amount is paid in full. Each Limited Partner shall
take such actions as the Partnership or the General Partner shall request in
order to perfect or enforce the security interest created hereunder.
ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
A. The term "transfer," when used in this Article 11 with respect to a
Partnership Interest, shall be deemed to refer to a transaction by which the
General Partner purports to assign its General Partner Interest to another
Person or by which a Limited Partner purports to assign its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift (outright or
in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other
disposition by law or otherwise. Except to the extent otherwise specified, the
term "transfer" when used in this Article 11 does not include any exchange for
Series D Preferred Shares pursuant to Section 17.8, any exchange for Series E
Preferred Shares pursuant to Section 18.8, any exchange for Series F Preferred
Shares pursuant to Section 19.8, any exchange for Series G Preferred Shares
pursuant to Section 20.8, any exchange for Series H Preferred Shares pursuant to
Section 21.8, or any exchange for Series I Preferred Shares pursuant to Section
22.8. No part of the interest of a Limited Partner shall be subject to the
claims of any creditor, any spouse for alimony or support, or to legal process,
and may not be voluntarily or involuntarily alienated or encumbered, except as
may be specifically provided for in this Agreement.
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B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void ab initio unless
otherwise consented by the General Partner in its sole and absolute discretion.
Section 11.2. Transfer of General Partner's and Common Limited Partner's
Partnership Interest
A. The General Partner shall not withdraw from the Partnership and shall
not transfer all or any portion of its interest in the Partnership (whether by
sale, statutory merger, consolidation, liquidation or otherwise). Any attempted
transfer of the General Partner Interest shall be void ab initio. To the extent
the prior sentence does not have the effect of preventing any such proposed
transfer, the transfer shall cause the dissolution of the Partnership.
B. Except as otherwise provided in this Section 11.2.B, no Common
Limited Partner shall withdraw from or transfer all or any portion of its
interest in the Partnership (whether by sale, statutory merger, consolidation,
liquidation or otherwise). Any attempted transfer of a Common Limited Partner
Interest contrary to this Section 11.2.B shall be void ab initio. To the extent
the prior sentence does not have the effect of preventing any such proposed
transfer, the transfer shall cause the dissolution of the Partnership.
C. Notwithstanding Section 11.2.B, any Common Limited Partner other than
the Operating Partnership shall be permitted to transfer, with the consent of
the General Partner (which consent may be given or withheld in the General
Partner's sole and absolute discretion), all or any portion of its Partnership
Interest to the Operating Partnership.
Section 11.3. Preferred Limited Partners' Rights to Transfer
A. Any Preferred Limited Partner may, at any time without the consent of
the General Partner, (i) transfer all or any portion of its Partnership Interest
to the General Partner, (ii) transfer all or any portion of its Partnership
Interest to an Affiliate controlled thereby or to an Immediate Family member,
subject to the provisions of Section 11.6, (iii) transfer all or any portion of
its Partnership Interest to a trust for the benefit of a charitable beneficiary
or to a charitable foundation, subject to the provisions of Section 11.6 and
(iv) subject to the provisions of Section 11.6, (a) pledge (a "Pledge") all or
any portion of its Partnership Interest to a lending institution, which is not
an Affiliate of such Preferred Limited Partner, as collateral or security for a
bona fide loan or other extension of credit, or (b) transfer such pledged
Partnership Interest to such lending institution in connection with the exercise
of remedies under such loan or extension of credit. In addition, each Preferred
Limited Partner or Assignee (resulting from a transfer made pursuant to clauses
(i)-(iv) of the preceding sentence) shall have the right to transfer all or any
portion of its Partnership Interest, subject to the provisions of Section 11.6,
provided that any transfer of a Partnership Interest shall be made only to
Qualified Transferees.
It is a condition to any transfer otherwise permitted hereunder that the
transferee assumes by operation of law or express agreement all of the
obligations of the transferor Preferred Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein
52
all obligations and liabilities of the transferor Partner are assumed by a
successor corporation by operation of law) shall relieve the transferor Partner
of its obligations under this Agreement without the approval of the General
Partner, in its reasonable discretion. Notwithstanding the foregoing, any
transferee of any transferred Partnership Interest shall be subject to any and
all ownership limitations contained in the REIT Charter, which may limit or
restrict such transferee's ability to exercise its Series D Redemption rights or
the exchange rights set forth in Sections 17.5 or 17.8, respectively, its Series
E Redemption rights or the exchange rights set forth in Sections 18.5 or 18.8,
respectively, its Series F Redemption rights or the exchange rights set forth in
Sections 19.5 or 19.8, respectively, its Series G Redemption rights or the
exchange rights set forth in Sections 20.5 or 20.8, respectively, its Series H
Redemption rights or the exchange rights set forth in Sections 21.5 or 21.8,
respectively, or its Series I Redemption rights or the exchange rights set forth
in Sections 22.5 or 22.8, respectively, and to the representations set forth in
Section 3.4.D. Any transferee, whether or not admitted as a Substituted Limited
Partner, shall take subject to the obligations of the transferor hereunder.
Unless admitted as a Substituted Limited Partner, no transferee, whether by a
voluntary transfer, by operation of law or otherwise, shall have any rights
hereunder, other than the rights of an Assignee as provided in Section 11.5.
B. If a Preferred Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator, or receiver
of such Limited Partner's estate shall have all the rights of a Preferred
Limited Partner, but not more rights than those enjoyed by other Preferred
Limited Partners, for the purpose of settling or managing the estate, and such
power as the Incapacitated Preferred Limited Partner possessed to transfer all
or any part of his or its interest in the Partnership. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate the
Partnership.
C. The General Partner may prohibit any transfer otherwise permitted
under this Section 11.3 by a Preferred Limited Partner of his or her Partnership
Units if, in the opinion of legal counsel to the Partnership, such transfer
would require the filing of a registration statement under the Securities Act by
the Partnership or would otherwise violate any Federal or state securities laws
or regulations applicable to the Partnership or the Partnership Unit.
D. No transfer by a Preferred Limited Partner of his or her Partnership
Units (including any Series D Redemption or exchange rights set forth in
Sections 17.5 and 17.8, respectively, any Series E Redemption or exchange rights
set forth in Sections 18.5 and 18.8, respectively, any Series F Redemption or
exchange rights set forth in Sections 19.5 and 19.8, respectively, any Series G
Redemption or exchange rights set forth in Sections 20.5 and 20.8, respectively,
any Series H Redemption or exchange rights set forth in Sections 21.5 and 21.8,
respectively, any Series I Redemption or exchange rights set forth in Sections
22.5 and 22.8, respectively, or any other acquisition of Common Units, Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units, Series H Preferred Units or Series I Preferred Units by the
General Partner, AMB or the Partnership) may be made to any person if (i) in the
opinion of legal counsel for the Partnership, it could result in the Partnership
being treated as an association taxable as a corporation or (ii) absent the
consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, such transfer could be treated as effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code.
53
E. No transfer of any Preferred Partnership Units may be made to a
lender to the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, without the consent of the General
Partner, in its sole and absolute discretion; provided, that as a condition to
such consent, the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem or exchange for the specified
amount of Series D Preferred Shares, Series E Preferred Shares, Series F
Preferred Shares, Series G Preferred Shares, Series H Preferred Shares and/or
Series I Preferred Shares (as the case may be) any Partnership Units in which a
security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
F. No Preferred Limited Partner may withdraw from the Partnership except
as a result of transfer, Series D Redemption, Series E Redemption, Series F
Redemption, Series G Redemption, Series H Redemption, Series I Redemption or
exchange of all of its Partnership Units pursuant hereto.
Section 11.4. Substituted Limited Partners
A. Any Preferred Limited Partner shall have the right to substitute a
transferee permitted by this Agreement as a Limited Partner in his or her place.
The General Partner shall have the right to consent to the admission of a
permitted transferee of the interest of any other Limited Partner, as a
Substituted Limited Partner, pursuant to this Section 11.4, which consent may be
given or withheld by the General Partner in its sole and absolute discretion.
The General Partner's failure or refusal to permit a transferee of any such
interests to become a Substituted Limited Partner shall not give rise to any
cause of action against the Partnership or any Partner.
B. 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. The admission of any transferee as a Substituted Limited Partner
shall be subject to the transferee executing and delivering to the Partnership
an acceptance of all of the terms and conditions of this Agreement (including,
without limitation, the provisions of Section 2.4 and such other documents or
instruments as may be required to effect the admission, each in form and
substance satisfactory to the General Partner) and the acknowledgment by such
transferee that each of the representations and warranties set forth in Section
3.4 are true and correct with respect to such transferee as of the date of the
transfer of the Partnership Interest to such transferee and will continue to be
true to the extent required by such representations and warranties.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
54
Section 11.5. Assignees
If the General Partner, with respect to a transferee requiring the
General Partner's consent, does not consent, in its sole and absolute
discretion, to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, the right of exchange for Series
D Preferred Shares set forth in Section 17.8, the right of exchange for Series E
Preferred Shares set forth in Section 18.8, the right of exchange for Series F
Preferred Shares set forth in Section 19.8, the right of exchange for Series G
Preferred Shares set forth in Section 20.8, the right of exchange for Series H
Preferred Shares set forth in Section 21.8, and the right of exchange for Series
I Preferred Shares set forth in Section 22.8, but shall not be deemed to be a
holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to effect a Consent with respect to such Partnership Units
on any matter presented to the Limited Partners for approval (such Consent
remaining with the transferor Limited Partner). In the event any such transferee
desires to make a further assignment of any such Partnership Units, such
transferee shall be subject to all the provisions of this Article 11 to the same
extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units. Notwithstanding anything contained in this
Agreement to the contrary, as a condition to becoming an Assignee, any
prospective Assignee must first execute and deliver to the Partnership an
acknowledgment that each of the representations and warranties set forth in
Section 3.4 hereof are true and correct with respect to such prospective
Assignee as of the date of the prospective assignment of the Partnership
Interest to such prospective Assignee and will continue to be true to the extent
required by such representations or warranties.
Section 11.6. General Provisions
A. No Limited Partner may withdraw from the Partnership other than as a
result of (i) a transfer of all of such Limited Partner's Partnership Units as
permitted in accordance with this Article 11 and the transferee(s) of such Units
being admitted to the Partnership as a Substituted Limited Partner(s), (ii)
pursuant to the Series D Redemption or exchange of all of such Limited Partner's
Series D Preferred Units pursuant to Section 17.8, (iii) pursuant to the Series
E Redemption or exchange of all of such Limited Partner's Series E Preferred
Units pursuant to Section 18.8, (iv) pursuant to the Series F Redemption or
exchange of all such Limited Partner's Series F Preferred Units pursuant to
Section 19.8, (v) pursuant to the Series G Redemption or exchange of all such
Limited Partner's Series G Preferred Units pursuant to Section 20.8, (vi)
pursuant to the Series H Redemption or exchange of all such Limited Partner's
Series H Preferred Units pursuant to Section 21.8, or (vii) pursuant to the
Series I Redemption or exchange of all such Limited Partner's Series I Preferred
Units pursuant to Section 22.8; provided further that in connection with any
such redemption or exchange, the applicable Limited Partner thereafter owns no
Partnership Interest.
B. Any Limited Partner who shall transfer all of such Limited Partner's
Partnership Units in a transfer permitted pursuant to this Article 11 where such
transferee was admitted as a Substituted Limited Partner or pursuant to the
exercise of its rights of Series D
55
Redemption or exchange of all of such Limited Partner's Series D Preferred Units
pursuant to Section 17.8, pursuant to the exercise of its rights of Series E
Redemption or exchange of all of such Limited Partner's Series E Preferred Units
pursuant to Section 18.8, pursuant to the exercise of its rights of Series F
Redemption or exchange of all of such Limited Partner's Series F Preferred Units
pursuant to Section 19.8, pursuant to the exercise of its rights of Series G
Redemption or exchange of all of such Limited Partner's Series G Preferred Units
pursuant to Section 20.8, pursuant to the exercise of its rights of Series H
Redemption or exchange of all of such Limited Partner's Series H Preferred Units
pursuant to Section 21.8, or pursuant to the exercise of its rights of Series I
Redemption or exchange of all of such Limited Partner's Series I Preferred Units
pursuant to Section 22.8, shall cease to be a Limited Partner; provided the
Limited Partner owns no other Partnership Interest.
C. Transfers pursuant to this Article 11 may only be made effective on
the last day of the month set forth on the written instrument of transfer,
unless the General Partner otherwise agrees.
D. If any Partnership Interest is transferred, assigned or redeemed
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article 11 or transferred or redeemed pursuant to
Sections 17.5, 18.5, 19.5, 20.5, 21.5 or 22.5, on any day other than the first
day of a Partnership Year, then Net Income, Net Losses, each item thereof and
all other items attributable to such Partnership Interest for such fiscal year
shall be divided and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the fiscal year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method. Except as otherwise required by Section 706(d) of the Code or as
otherwise specified in this Agreement or as otherwise determined by the General
Partner (to the extent consistent with Section 706(d) of the Code), solely for
purposes of making such allocations, each of such items for the calendar month
in which the transfer, assignment or redemption occurs shall be allocated among
all the Partners and Assignees in a manner determined by the General Partner in
its sole discretion.
E. In addition to any other restrictions on transfer herein contained,
including without limitation the provisions of this Article 11 and Section 2.6,
in no event may any transfer or assignment of a Partnership Interest by any
Partner (including by way of a Series D Redemption or exchange for Series D
Preferred Shares, a Series E Redemption or exchange for Series E Preferred
Shares, a Series F Redemption or exchange for Series F Preferred Shares, a
Series G Redemption or exchange for Series G Preferred Shares, a Series H
Redemption or exchange for Series H Preferred Shares, a Series I Redemption or
exchange for Series I Preferred Shares or any other acquisition of Common Units,
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units, Series H Preferred Units or Series I Preferred Units
by the Partnership, AMB or the General Partner) be made (i) to any person or
entity who lacks the legal right, power or capacity to own a Partnership
Interest; (ii) in violation of applicable law; (iii) except with the consent of
the General Partner, which may be given or withheld in its sole and absolute
discretion, of any component portion of a Partnership Interest, such as the
Capital Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, if in the opinion of legal counsel to the Partnership such transfer
would cause a termination of the Partnership for Federal or state income tax
purposes; (v) if in the opinion of counsel to the Partnership such transfer
would cause
56
the Partnership to cease to be classified as a partnership for Federal or state
income tax purposes; (vi) if such transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title I of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); (vii) if such transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if such
transfer requires the registration of such Partnership Interest or requires the
registration of the exchange of such Partnership Interests for any capital stock
pursuant to any applicable Federal or state securities laws; (ix) except with
the consent of the General Partner, which may be given or withheld in its sole
and absolute discretion, if such transfer is effectuated through an "established
securities market" or a "secondary market" (or the substantial equivalent
thereof) within the meaning of Section 7704 of the Code or such transfer causes
the Partnership to become a "Publicly Traded Partnership," as such term is
defined in Sections 469(k)(2) or 7704(b) of the Code; (x) if such transfer
subjects the Partnership to be regulated under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or the Employee Retirement Income
Security Act of 1974, each as amended; (xi) if the transferee or assignee of
such Partnership Interest is unable to make the representations set forth in
Section 3.4.D or such transfer could otherwise adversely affect the ability of
AMB, in its capacity as the sole stockholder of General Partner and the sole
general partner of the Operating Partnership, to remain qualified as a REIT; or
(xii) if, except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, such transfer would subject AMB to
any additional taxes under Section 857 or Section 4981 of the Code.
F. The General Partner shall monitor the transfers of interests in the
Partnership (including any acquisition of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H
Preferred Units or Series I Preferred Units by the Partnership, AMB or the
General Partner) to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether such transfers of interests would result in the Partnership being unable
to qualify for at least one of the "safe harbors" set forth in Regulations
Section 1.7704-1 (or such other applicable guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors"). The
General Partner shall have authority (but shall not be required to) to take any
steps it determines are necessary or appropriate in its sole and absolute
discretion to prevent any trading of interests which could cause the Partnership
to become a "publicly traded partnership," or any recognition by the Partnership
of such transfers, or to insure that at least one of the Safe Harbors is met.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
upon such transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be
57
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission. In the case of such admission on any day other than the first day of
a Partnership Year, all items attributable to the General Partner Interest for
such Partnership Year shall be allocated between the transferring General
Partner and such successor as provided in Article 11.
Section 12.2. Admission of Additional Limited Partners
A. A Person who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner in order to effect
such Person's admission as an Additional Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no
Person shall be admitted as an Additional Limited Partner without the consent of
the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner, the documents set forth in this Section 12.2.A and the consent of the
General Partner to such admission. If any Additional Limited Partner is admitted
to the Partnership on any day other than the first day of a Partnership Year,
then Net Income, Net Losses, each item thereof and all other items allocable
among Partners and Assignees for such Partnership Year shall be allocated among
such Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such items for the calendar month
in which an admission of an Additional Limited Partner occurs shall be allocated
among all the Partners and Assignees, including such Additional Limited Partner,
in a manner determined by the General Partner in its sole discretion.
Section 12.3. 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 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.
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ARTICLE 13.
DISSOLUTION AND LIQUIDATION
Section 13.1. Dissolution
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner (selected
as described in Section 13.1.B below) shall continue the business of the
Partnership. The Partnership shall dissolve, and its affairs shall be wound up,
upon the first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5;
B. an event of withdrawal of the General Partner, as defined in the Act,
unless, within ninety (90) days after the withdrawal, all of the remaining
Common Limited Partners agree in writing, in their sole and absolute discretion,
to continue the business of the Partnership and to the appointment, effective as
of the date of withdrawal, of a substitute General Partner;
C. prior to October 15, 2096, an election to dissolve the Partnership
made by the General Partner with the consent of Limited Partners who hold ninety
percent (90%) of the outstanding Units held by Limited Partners;
D. subject to the provisions of Section 7.3.C, an election to dissolve
the Partnership made by the General Partner in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act;
F. the sale or disposition of all or substantially all of the assets and
properties of the Partnership;
G. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
Federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to or at the time of the entry of such order or judgment a Majority
in Interest of the Limited Partners remaining consent in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such order or judgment, of a substitute General Partner.
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, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner (or, in the event there is no remaining General Partner,
59
any Person elected by a Majority in Interest of the Limited Partners (the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and assets and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the General Partner,
include shares of stock of the General Partner) shall be applied and distributed
in the following order:
(i) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(ii) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner;
(iii) Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners; and
(iv) The balance, if any, to the Partners in accordance with their
Capital Account balances determined after giving effect to all
contributions and distributions for all periods, and after
taking into account all Capital Account adjustments for the
Partnership taxable year during which the liquidation occurs
(other than those made as a result of the liquidating
distribution set forth in this Section 13.2.A(iv)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A 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 those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A, undivided interests in such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
such distributions in kind shall be made only if, in the good faith judgment of
the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. The Partnership shall be terminated when any notes received in
connection with any such sale or disposition referenced in Section 13.1.E above,
or in connection with the liquidation of the Partnership have been paid and all
of the cash or property available for application and distribution under this
Agreement have been applied and distributed in accordance with this Agreement.
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Section 13.3. Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article 13 to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in his or her Capital Account (after giving
effect to all contributions, distributions and allocations for the taxable
years, including the year during which such liquidation occurs), such Partner
shall have no obligation to make any contribution to the capital of the
Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever, except to the extent otherwise agreed to by such Partner and the
General Partner. In the discretion of the Liquidator or the General Partner, a
pro rata portion of the distributions that would otherwise be made to the
General Partner and Limited Partners pursuant to this Article 13 may be:
A. distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating Partnership assets,
collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the Liquidator or the General
Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or
B. withheld to establish any reserves deemed necessary or appropriate
for any contingent or unforeseen liabilities or obligations of the Partnership;
and to reflect the unrealized portion of any installment obligations owed to the
Partnership; provided that, such withheld amounts shall be distributed to the
General Partner and Limited Partners as soon as practicable.
Section 13.4. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the event the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Partnership
property in kind to the General Partner and Limited Partners, who shall be
deemed to have assumed and taken such property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be deemed
to have recontributed the Partnership property in kind to the Partnership, which
shall be deemed to have assumed and taken such property subject to all such
liabilities.
Section 13.5. Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of his Capital
Contribution and shall have no right or power to demand or receive property from
the General Partner. Except as expressly set forth herein with respect to the
rights, priorities and preferences of the Preferred Limited Partners
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holding any series of Preferred Units, no Limited Partner shall have priority
over any other Limited Partner as to the return of his Capital Contributions,
distributions or allocations.
Section 13.6. Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of Section 13.1, result in a dissolution of the Partnership,
the General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners and to all other parties with whom the
Partnership regularly conducts business (as determined in the discretion of the
General Partner) and shall publish notice thereof in a newspaper of general
circulation in each place in which the Partnership regularly conducts business
(as determined in the discretion of the General Partner).
Section 13.7. Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2, the Partnership shall be terminated and
the Certificate and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware shall be canceled
and such other actions as may be necessary to terminate the Partnership shall be
taken.
Section 13.8. Reasonable Time for Winding-Up
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, in order to minimize any losses otherwise attendant
upon such winding-up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.
Section 13.9. Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
ARTICLE 14.
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS
Section 14.1. Amendments
A. The actions requiring consent or approval of the Partners or of the
Limited Partners pursuant to this Agreement, including Sections 7.3, 17.6, 18.6,
19.6, 20.6, 21.6 and 22.6, or otherwise pursuant to applicable law, are subject
to the procedures in this Article 14.
B. Amendments to this Agreement requiring the consent or approval of
Limited Partners may be proposed by the General Partner or by Limited Partners
holding twenty-five percent (25%) or more of the Partnership Interests held by
Limited Partners entitled to consent to or approve such matter. Following such
proposal, the General Partner shall submit any proposed amendment to the
Partners or to the Limited Partners entitled to consent to or approve such
amendment, as applicable. The General Partner shall seek the written consent or
approval of the Partners or the Limited Partners entitled to consent to or
approve the proposed amendment or shall call a meeting to vote thereon and to
transact any other business that it may
62
deem appropriate. For purposes of obtaining a written consent, the General
Partner may require a response within a reasonable specified time, but not less
than fifteen (15) days, and failure to respond in such time period shall
constitute a consent which is consistent with the General Partner's
recommendation (if so recommended); provided that, an action shall become
effective at such time as requisite consents are received even if prior to such
specified time.
Section 14.2. Action by the Partners
A. Meetings of the Partners may be called by the General Partner and
shall be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held by the Limited Partners that are entitled to vote on the matters
proposed to be voted on at such meeting. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven days nor more than thirty (30) days prior to the
date of such meeting. Partners may vote in person or by proxy at such meeting.
Whenever the vote of the Percentage Interests of the Partners, or the Consent of
the Partners or Consent of the Limited Partners is permitted or required under
this Agreement, such vote or Consent may be given at a meeting of Partners or
may be given in accordance with the procedure prescribed in Section 14.1.
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 so taken is signed by the Percentage Interests as is expressly required
by this Agreement for the action in question. Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of the Percentage Interests of the Partners (expressly required by
this Agreement). Such consent shall be filed with the General Partner. An action
so taken shall be deemed to have been taken at a meeting held on the effective
date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for
him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it.
D. Each meeting of Partners shall be conducted by the General Partner or
such other Person as the General Partner may appoint pursuant to such rules for
the conduct of the meeting as the General Partner or such other Person deems
appropriate.
E. Except as otherwise expressly provided, on matters on which Limited
Partners are entitled to vote, each Limited Partner shall have a vote equal to
the number of Partnership Units held.
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
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made when delivered in person or when sent by certified first class United
States mail, nationally recognized overnight delivery service or facsimile
transmission to the Partner or Assignee at the address set forth in Exhibit A or
such other address as the Partners 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 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 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 or delay 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 any 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 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.
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Section 15.9. Applicable Law
This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.
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 (together with the agreements listed on Exhibit H hereto
as to rights and obligations in respect of the Units held by the Limited
Partners who are parties thereto, or their permitted transferees) 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.
Section 15.12. No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring
upon the holders of Partnership Units any rights whatsoever as stockholders of
the General Partner, including without limitation any right to receive dividends
or other distributions made to stockholders of the General Partner or to vote or
to consent or to receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter.
ARTICLE 16.
INTENTIONALLY OMITTED
ARTICLE 17.
SERIES D PREFERRED UNITS
Section 17.1. Designation and Number
A series of Partnership Units in the Partnership designated as the 7.75%
Series D Cumulative Redeemable Preferred Units (the "Series D Preferred Units")
is hereby established. The number of Series D Preferred Units shall be
1,595,337.
Section 17.2. Ranking
The Series D Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i) senior to the Common Units and to all Partnership
Units the terms of which provide that such Partnership Units shall rank junior
to the Series D Preferred Units; (ii) on a parity with all other Parity
Preferred Units; and (iii) junior to all Partnership Units which rank senior to
the Series D Preferred Units.
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Section 17.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 18.3A, 19.3A, 20.3A, 21.3A and 22.3A hereof), holders of Series D
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series D
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 25th day of March, June, September and December of
each year and (B) in the event of (i) an exchange of Series D Preferred Units
into Series D Preferred Shares, or (ii) a redemption of Series D Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series D
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series D Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series D Preferred Units will be
made to the holders of record of the Series D Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series D
Preferred Unit Distribution Payment Date (the "Series D Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series I Preferred Units, Series H Preferred Units,
the Series G Preferred Units, the Series F Preferred Units, the Series E
Preferred Units and the Series D Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series D Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series D Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series D Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or
66
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for such payment on the Series D Preferred Units
and all classes and series of outstanding Parity Preferred Units for all
distribution periods. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the exchange of Junior Units or Parity
Preferred Units into Partnership Interests of the Partnership ranking junior to
the Series D Preferred Units as to distributions and upon voluntary and
involuntary liquidation, dissolution or winding up of the Partnership, or (c)
distributions necessary to enable the Operating Partnership to redeem
partnership interests corresponding to Series D Preferred Shares and any Parity
Preferred Stock with respect to distributions or Junior Stock to be purchased by
AMB pursuant to the REIT Charter to preserve AMB's status as a REIT; provided
that such redemption shall be upon the same terms as the corresponding stock
purchase pursuant to the REIT Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series D
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series D Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
D Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series D Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series D Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or any other holder of Partnership Interests in
the Partnership, in each case ranking junior to or on parity with the Series D
Preferred Units may be made, without preserving the priority of distributions
described in Sections 17.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series D Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
Section 17.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series D Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the
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place or places where, the amounts distributable in such circumstances shall be
payable, shall be given by the General Partner pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series D
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
Section 17.5. Series D Redemption
A. Series D Redemption. The Series D Preferred Units may not be redeemed
prior to May 5, 2004. On or after such date, the Partnership shall have the
right to redeem the Series D Preferred Units, in whole or in part, at any time
or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series D Redemption"), equal
to the Capital Account balance of the holder of Series D Preferred Units (the
"Series D Redemption Price"); provided, however, that no redemption pursuant to
this Section 17.5 will be permitted if the Series D Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series D Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series D Preferred
Units are to be redeemed, the Series D Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series D Redemption. (i) The Series D Redemption Price
of the Series D Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter)), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series D Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series D Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
C. Procedures for Series D Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series D Preferred Units at
their respective addresses as they appear on the records of the
68
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series D Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Series D Redemption Price, (c) the aggregate number
of Series D Preferred Units to be redeemed and if fewer than all of the
outstanding Series D Preferred Units are to be redeemed, the number of Series D
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series D Preferred Units that the total number of Series D Preferred
Units held by such holder represents) of the aggregate number of Series D
Preferred Units to be redeemed, (d) the place or places where such Series D
Preferred Units are to be surrendered for payment of the Series D Redemption
Price, (e) that distributions on the Series D Preferred Units to be redeemed
will cease to accumulate on such redemption date and (f) that payment of the
Series D Redemption Price will be made upon presentation and surrender of such
Series D Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series D Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series D Preferred Units being
redeemed funds sufficient to pay the applicable Series D Redemption Price and
will give irrevocable instructions and authority to pay such Series D Redemption
Price to the holders of the Series D Preferred Units upon surrender of the
Series D Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series D Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series D Preferred Units is not a Business Day, then
payment of the Series D Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series D Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series D Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series D Redemption Price.
Section 17.6. Voting and Certain Management Rights
A. General. Holders of the Series D Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
B. Certain Voting Rights. So long as any Series D Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series D Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series D
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or
69
evidencing the right to purchase any such Partnership Interests, (ii) authorize
or create, or increase the authorized or issued amount of any Parity Preferred
Units or reclassify any Partnership Interest of the Partnership into any such
Partnership Interest or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests but only to the extent such Parity Preferred Units are issued to an
affiliate of the Partnership, other than AMB or the Operating Partnership to the
extent the issuance of such interests was to allow AMB or the Operating
Partnership to issue corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership (other than AMB to the extent
AMB issues corresponding preferred stock to persons who are not affiliates of
the Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 17 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series D
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series D Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series D Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series D Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series D Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.
C. So long as any Series D Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series D Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 17.8; provided however, no
such vote shall be required so long as the Series D Preferred Units (or any
interests substituted therefore pursuant to Section 17.6.B) remain outstanding
and are exchangeable for Series D Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series D Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series D Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 25th day of
each March, June, September and December, or, if not a business day, the next
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succeeding business day, beginning with the quarterly period ending June 25,
1999) (whether or not consecutive), the holders of 51% of either (i) such Series
D Preferred Units, in the event that the holders of the Series E Preferred Units
are not entitled to exercise management rights pursuant to Section 18.6.D, the
holders of the Series F Preferred Units are not entitled to exercise management
rights pursuant to Section 19.6D, the holders of the Series G Preferred Units
are not entitled to exercise management rights pursuant to Section 20.6D, the
holders of the Series H Preferred Units are not entitled to exercise management
rights pursuant to Section 21.6D, the holders of the Series I Preferred Units
are not entitled to exercise management rights pursuant to Section 22.6D and
that no Future Parity Preferred Unitholders (as defined below) are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units, Series H Preferred Units and Series I Preferred Units are
entitled to exercise pursuant to this Section 17.6.D, Section 18.6.D, Section
19.6D, Section 20.6D, Section 21.6D and Section 22.6D, respectively, or (ii) the
Parity Preferred Capital, in the event that holders of the Series E Preferred
Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred
Units or Series I Preferred Units are entitled to exercise management rights
pursuant to Section 18.6.D, Section 19.6D, Section 20.6D, Section 21.6D or
Section 22.6D, respectively, or Future Parity Preferred Unitholders are entitled
to exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units, Series H Preferred Units and Series I Preferred Units are
entitled to exercise pursuant to this Section 17.6.D, Section 18.6.D, Section
19.6D, Section 20.6D, Section 21.6D and Section 22.6D, respectively, shall be
entitled to assume rights to manage the Partnership and perform actions related
thereto for the sole purpose of enforcing the Partnership's rights and remedies
as against obligees of the Partnership or other Persons from whom the
Partnership may be entitled to receive cash or other assets, until all
distributions accumulated on the Series D Preferred Units for all past quarterly
periods and the distribution for the then-current quarterly period shall have
been fully-paid or declared and a sum sufficient for the payment thereof
irrevocably set aside in trust for payment in full; provided, however, that no
such holder or holders of Series D Preferred Units may at any time take any
action (or fail to take any action) if the consequence of such action (or
inaction) would be (i) to cause AMB to fail to qualify as a REIT for federal or
applicable state income tax purposes or (ii) to cause the Partnership or the
Operating Partnership to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the Partnership, the
Operating Partnership, the General Partner, or AMB to be considered an
"investment company" as defined in, or otherwise be subject to regulation under,
the Investment Company Act of 1940, as amended; and provided, further, that
solely for purposes of exercising the management rights set forth in this
Section 17.6.D, each holder of Series D Preferred Units shall be deemed an
Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series D Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
17.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series D Preferred Units acknowledge and agree that the General Partner and the
Partnership shall be entitled to provide similar management rights to holders of
Parity Preferred Units that are issued by the Partnership following the date
hereof ("Future Parity Preferred Unitholders").
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Section 17.7. Transfer Restrictions
The Series D Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series D Preferred Units, or other action by the holder or holders
of such Units, is permitted, without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series D Preferred Units, Series H Preferred Units and Series I
Preferred Units within the meaning of Treasury Regulation Section
1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series D Preferred
Units, Series H Preferred Units and Series I Preferred Units within the meaning
of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury
Regulation Section 1.7704-1(h)(3)(ii)) and (b) the General Partner cannot rely
on Treasury Regulation Section 1.7704-1(h). In addition, no transfer may be made
to any person if such transfer would cause the exchange of the Series D
Preferred Units for Series D Preferred Shares, as provided herein, to be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws.
Section 17.8. Exchange Rights
A. Right to Exchange. (i) Series D Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after May 5, 2009, at the option of 51% of the holders of all outstanding
Series D Preferred Units, for authorized but previously unissued Series D
Preferred Shares at an exchange rate of one Series D Preferred Share from AMB
for one Series D Preferred Unit, subject to adjustment as described below (the
"Series D Exchange Price"); provided that the Series D Preferred Units will
become exchangeable at any time, in whole but not in part unless expressly
otherwise provided herein, at the option of 51% of the holders of all
outstanding Series D Preferred Units for Series D Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series D
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series D Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series D Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series D Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a "publicly
traded partnership" within the meaning of Code Section 7704 (a "PTP") and (B) an
opinion rendered by independent counsel familiar with such matters addressed to
a holder or holders of Series D Preferred Units, that the Partnership is or
likely is, or upon the occurrence of a defined event in the immediate future
will be or likely will be, a PTP. In addition, the Series D Preferred Units may
be exchanged for Series D Preferred Shares, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series D Preferred Units after May 5, 2002 and prior to May 5, 2009
if such holders of a Series D Preferred Units shall deliver to the General
Partner either (i) a private letter ruling addressed to such holder of Series D
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute,
72
the enactment of temporary or final Treasury Regulations or the publication of a
Revenue Ruling or any other IRS release, in either case to the effect that an
exchange of the Series D Preferred Units at such earlier time would not cause
the Series D Preferred Units to be considered "stock and securities" within the
meaning of Section 351(e) of the Code for purposes of determining whether the
holder of such Series D Preferred Units is an "investment company" under Section
721(b) of the Code if an exchange is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in Section
17.8.A(i), if a Series D Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series D Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series D Preferred Units for cash in an amount equal to the original Capital
Contribution per Series D Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series D Preferred Units, the number
of Series D Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series D Preferred Units that the total number of Series D Preferred
Units held by such holder represents) of the aggregate number of Series D
Preferred Units being redeemed.
(iii) In the event an exchange of all Series D Preferred Units pursuant
to Section 17.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series D Articles Supplementary,
each holder of Series D Preferred Units shall be entitled to exchange, pursuant
to the provisions of Section 17.8.B, a number of Series D Preferred Units which
would comply with the provisions on the ownership limitation of AMB set forth in
such Section 7 of Article Third of the Series D Articles Supplementary, with
respect to such holder, and any Series D Preferred Units not so exchanged (the
"Series D Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the original Capital Contribution per Series D Excess Unit, plus
any accrued and unpaid distributions thereon to the date of redemption subject
to any restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series D Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series D Excess Units under this Section 17.8.A(iii), the "Ownership
Limit" set forth in the Series D Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series D Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series D Preferred Units exceptions to the Ownership Limit set forth in the
Series D Articles Supplementary sufficient to allow such Holders to exchange all
of their Series D Preferred Units for Series D Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and
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applicable state law. Notwithstanding any provision of this Agreement to the
contrary, no Series D Limited Partner shall be entitled to effect an exchange of
Series D Preferred Units for Series D Preferred Shares to the extent that
ownership or right to acquire such shares would cause the Partner or any other
Person or, in the opinion of counsel selected by AMB, may cause the Partner or
any other Person, to violate the restrictions on ownership and transfer of
Series D Preferred Shares set forth in the REIT Charter. To the extent any such
attempted exchange for Series D Preferred Shares would be in violation of the
previous sentence, it shall be void ab initio and such Series D Limited Partner
shall not acquire any rights or economic interest in the Series D Preferred
Shares otherwise issuable upon such exchange.
(iv) The redemption of Series D Preferred Units described in Section
17.8.A(ii) and (iii) shall be subject to the provisions of Section 17.5.B(i) and
Section 17.5.C(ii); provided, however, that the term "Series D Redemption Price"
in such Sections 17.5.B(i) and 17.5.C(ii) shall be read to mean the original
Capital Contribution per Series D Preferred Unit being redeemed as set forth on
Exhibit A plus all accrued and unpaid distributions to the redemption date.
B. Procedure for Exchange of Series D Preferred Units and/or Series D
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series D Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series D Preferred Units
(or by the Series D Contributor in the case of an exchange pursuant to the last
sentence of Section 17.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series D Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series D Preferred Units for cash pursuant to Section 17.8.A(ii)
or redeem Series D Excess Units pursuant to Section 17.8.A(iii), by delivering
to each holder of record of Series D Preferred Units, within ten (10) Business
Days following receipt of the Series D Exchange Notice, (a) if the General
Partner elects to cause the Partnership to acquire any of the Series D Preferred
Units then outstanding, (1) certificates representing the Series D Preferred
Shares being issued in exchange for the Series D Preferred Units of such holder
being exchanged and (2) a written notice (a "Series D Redemption Notice")
stating (A) the redemption date, which may be the date of such Series D
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series D Exchange Notice, (B) the redemption price,
(C) the place or places where the Series D Preferred Units are to be surrendered
and (D) that distributions on the Series D Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series D Preferred Units then outstanding in
exchange for cash, a Series D Redemption Notice. Series D Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series D Preferred Units shall deliver any canceled certificates representing
Series D Preferred Units which have been exchanged or redeemed to the office of
General Partner (which currently is located at Pier 1, Bay 1, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series D Preferred Units to be exchanged for Series D Preferred
Shares pursuant to this Section 17.8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, AMB may require the holders
of Series D Preferred Units to make such
74
representations as may be reasonably necessary for the General Partner to
establish that the issuance of Series D Preferred Shares pursuant to the
exchange shall not be required to be registered under the Securities Act or any
state securities laws. Any Series D Preferred Shares issued pursuant to this
Section 17.8 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.
The certificates representing the Series D Preferred Shares issued upon
exchange of the Series D Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF
THE CORPORATION HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
OF THE SHARES REPRESENTED HEREBY, OR OTHER
EVIDENCE SATISFACTORY TO THE CORPORATION, THAT
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
STATE SECURITIES LAWS AND THE RULES AND
REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series D Preferred Units for Series
D Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series D Preferred Units tendered for exchange shall
(i) accrue on the Series D Preferred Shares into which such Series D Preferred
Units are exchanged, and (ii) continue to accrue on such Series D Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series D Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series D
Preferred Unit that was validly exchanged for Series D Preferred Shares pursuant
to this Section (other than the General Partner holding such Series D Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series D Preferred Shares for which such Series
D Preferred Unit was exchanged or redeemed. Further for purposes of the
foregoing, in the event of an exchange of Series D Preferred Units for Series D
Preferred Shares, if the accrued and unpaid distributions per Series D Preferred
Unit is not the same for each Series D Preferred Unit, the accrued and unpaid
distributions per Series D Preferred Unit for each such Series D Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series D Preferred Unit on any such unit.
(iii) Fractional Series D Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market
75
value of the Series D Preferred Shares on the day prior to the exchange date as
determined in good faith by the board of directors of the General Partner.
C. Adjustment of Series D Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series D Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series D Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Series D Preferred Shares or fraction thereof into which one Series D Preferred
Unit was exchangeable immediately prior to such transaction. AMB may not become
a party to any such transaction unless the terms thereof are consistent with the
foregoing. AMB and the Operating Partnership further agree that, notwithstanding
any transaction to which either may be a party (including, without limitation,
any merger, consolidation, statutory share exchange, tender offer for all or
substantially all of such entity's capital stock or partnership interests or
sale of all or substantially all of such entity's assets), immediately following
any such transaction, the issuer or issuers of any shares of capital stock and
other securities into which the Series D Preferred Units shall be exchangeable
pursuant to this Section 17.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which the Series B Preferred Units are
then exchangeable (or, if the Series B Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding).
Section 17.9. No Conversion Rights
The Series D Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 17.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series D Preferred Units.
ARTICLE 18.
SERIES E PREFERRED UNITS
Section 18.1. Designation and Number
A series of Partnership Units in the Partnership designated as the 7.75%
Series E Cumulative Redeemable Preferred Units (the "Series E Preferred Units")
is hereby established. The number of Series E Preferred Units shall be 220,440.
Section 18.2. Ranking
The Series E Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i)
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senior to the Common Units and to all Partnership Units the terms of which
provide that such Partnership Units shall rank junior to the Series E Preferred
Units; (ii) on a parity with the Series D Preferred Units and all other Parity
Preferred Units; and (iii) junior to all Partnership Units which rank senior to
the Series E Preferred Units.
Section 18.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 17.3A, 19.3A, 20.3A, 21.3A and 22.3A hereof), holders of Series E
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series E
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series E Preferred Units
into Series E Preferred Shares, or (ii) a redemption of Series E Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series E
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series E Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series E Preferred Units will be
made to the holders of record of the Series E Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series E
Preferred Unit Distribution Payment Date (the "Series E Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series I Preferred Units, Series H Preferred Units,
the Series G Preferred Units, the Series F Preferred Units, the Series E
Preferred Units and the Series D Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series E Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series E Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series E Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or
77
otherwise acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such Junior Units or
Parity Preferred Units) by the Partnership (except by conversion into or
exchange for other Junior Units or Parity Preferred Units, as the case may be)
unless, in each case, full cumulative distributions have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for such payment on the Series E Preferred Units
and all classes and series of outstanding Parity Preferred Units for all
distribution periods. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the exchange of Junior Units or Parity
Preferred Units into Partnership Interests of the Partnership ranking junior to
the Series E Preferred Units as to distributions and upon voluntary and
involuntary liquidation, dissolution or winding up of the Partnership, or (c)
distributions necessary to enable the Operating Partnership to redeem
partnership interests corresponding to Series E Preferred Shares and any Parity
Preferred Stock with respect to distributions or Junior Stock to be purchased by
AMB pursuant to the REIT Charter to preserve AMB's status as a REIT; provided
that such redemption shall be upon the same terms as the corresponding stock
purchase pursuant to the REIT Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series E
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series E Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
E Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series E Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series E Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
E Preferred Units may be made, without preserving the priority of distributions
described in Sections 18.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series E Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
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Section 18.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series E Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series E
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
Section 18.5. Series E Redemption
A. Series E Redemption. The Series E Preferred Units may not be redeemed
prior to August 31, 2004. On or after such date, the Partnership shall have the
right to redeem the Series E Preferred Units, in whole or in part, at any time
or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series E Redemption"), equal
to the Capital Account balance of the holder of Series E Preferred Units (the
"Series E Redemption Price"); provided, however, that no redemption pursuant to
this Section 18.5 will be permitted if the Series E Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series E Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series E Preferred
Units are to be redeemed, the Series E Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series E Redemption. (i) The Series E Redemption Price
of the Series E Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series E Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series E
79
Preferred Units for all quarterly distribution periods terminating on or prior
to the date of redemption.
C. Procedures for Series E Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series E Preferred Units at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series E Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (a) the redemption
date, (b) the Series E Redemption Price, (c) the aggregate number of Series E
Preferred Units to be redeemed and if fewer than all of the outstanding Series E
Preferred Units are to be redeemed, the number of Series E Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro rata
share (based on the percentage of the aggregate number of outstanding Series E
Preferred Units that the total number of Series E Preferred Units held by such
holder represents) of the aggregate number of Series E Preferred Units to be
redeemed, (d) the place or places where such Series E Preferred Units are to be
surrendered for payment of the Series E Redemption Price, (e) that distributions
on the Series E Preferred Units to be redeemed will cease to accumulate on such
redemption date and (f) that payment of the Series E Redemption Price will be
made upon presentation and surrender of such Series E Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series E Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series E Preferred Units being
redeemed funds sufficient to pay the applicable Series E Redemption Price and
will give irrevocable instructions and authority to pay such Series E Redemption
Price to the holders of the Series E Preferred Units upon surrender of the
Series E Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series E Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series E Preferred Units is not a Business Day, then
payment of the Series E Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series E Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series E Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series E Redemption Price.
Section 18.6. Voting and Certain Management Rights
A. General. Holders of the Series E Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
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B. Certain Voting Rights. So long as any Series E Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series E Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series E
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only to the
extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 18 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series E
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series E Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series E Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series E Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series E Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.
C. So long as any Series E Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series E Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 18.8; provided however, no
such vote shall be required so long as the Series E Preferred Units (or any
interests substituted therefore pursuant to Section 18.6.B) remain outstanding
and are exchangeable for
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Series E Preferred Shares or stock in another entity having substantially the
same terms and rights as the Series E Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series E Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 15th day of
each January, April, July and October, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending October 15,
1999) (whether or not consecutive), the holders of 51% of either (i) such Series
E Preferred Units, in the event that the holders of the Series D Preferred
Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred
Units and Series I Preferred Units are not entitled to exercise management
rights pursuant to Section 17.6.D, Section 19.6.D, Section 20.6.D, Section
21.6.D and Section 22.6.D, respectively, and that no Future Parity Preferred
Unitholders are entitled to exercise management rights similar to those to which
the holders of Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units, Series G Preferred Units, Series H Preferred Units and Series I
Preferred Units are entitled to exercise pursuant to Section 17.6.D, this
Section 18.6.D, Section 19.6.D, Section 20.6.D, Section 21.6.D and Section
22.6.D, respectively, or (ii) the Parity Preferred Capital, in the event that
holders of Series D Preferred Units, Series F Preferred Units, Series G
Preferred Units, Series H Preferred Units or Series I Preferred Units are
entitled to exercise management rights pursuant to Section 17.6.D, Section
19.6.D, Section 20.6.D, Section 21.6.D or Section 22.6.D, respectively, or
Future Parity Preferred Unitholders are entitled to exercise management rights
similar to those to which the holders of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H
Preferred Units, and Series I Preferred Units are entitled to exercise pursuant
to Section 17.6.D, Section 18.6.D, Section 19.6.D, Section 20.6.D, Section
21.6.D and Section 22.6.D, respectively, shall be entitled to assume rights to
manage the Partnership and perform actions related thereto for the sole purpose
of enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
E Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series E Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 18.6.D, each holder of Series E Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series E Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
18.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series E Preferred Units acknowledge and agree that the General Partner and the
Partnership has provided
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similar management rights to the holders of the Series D Preferred Units and
shall be entitled to provide similar management rights to Future Parity
Preferred Unitholders.
Section 18.7. Transfer Restrictions
The Series E Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series E Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series E Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series E Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series E Preferred Units for Series E Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.
Section 18.8. Exchange Rights
A. Right to Exchange. (i) Series E Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after August 31, 2009, at the option of 51% of the holders of all
outstanding Series E Preferred Units, for authorized but previously unissued
Series E Preferred Shares at an exchange rate of one Series E Preferred Share
from AMB for one Series E Preferred Unit, subject to adjustment as described
below (the "Series E Exchange Price"); provided that the Series E Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series E Preferred Units for Series E Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series E
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series E Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series E Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series E Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series E Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP. In addition, the Series E
Preferred Units may be exchanged for Series E Preferred Shares, in whole but not
in part unless expressly otherwise provided herein, at the option of 51% of the
holders of all outstanding Series E Preferred Units after August 31, 2002 and
prior to August 31, 2009 if such holders of a Series E Preferred Units shall
deliver to the General Partner either (i) a private letter ruling addressed to
such holder of Series E Preferred
83
Units or (ii) an opinion of independent counsel reasonably acceptable to the
General Partner based on a change in statute, the enactment of temporary or
final Treasury Regulations or the publication of a Revenue Ruling or any other
IRS release, in either case to the effect that an exchange of the Series E
Preferred Units at such earlier time would not cause the Series E Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
E Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in Section
18.8.A(i), if a Series E Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series E Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series E Preferred Units for cash in an amount equal to the original Capital
Contribution per Series E Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series E Preferred Units, the number
of Series E Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series E Preferred Units that the total number of Series E Preferred
Units held by such holder represents) of the aggregate number of Series E
Preferred Units being redeemed.
(iii) In the event an exchange of all Series E Preferred Units pursuant
to Section 18.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series E Articles Supplementary,
each holder of Series E Preferred Units shall be entitled to exchange, pursuant
to the provisions of Section 18.8.B, a number of Series E Preferred Units which
would comply with the provisions on the ownership limitation of AMB set forth in
such Section 7 of Article Third of the Series E Articles Supplementary, with
respect to such holder, and any Series E Preferred Units not so exchanged (the
"Series E Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the original Capital Contribution per Series E Excess Unit, plus
any accrued and unpaid distributions thereon to the date of redemption subject
to any restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series E Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series E Excess Units under this Section 18.8.A(iii), the "Ownership
Limit" set forth in the Series E Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series E Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series E Preferred Units exceptions to the Ownership Limit set forth in the
Series E Articles Supplementary sufficient to allow such Holders to exchange all
of their Series E Preferred Units for Series E Preferred Shares; provided such
holders furnish to
84
AMB representations acceptable to AMB in its sole and absolute discretion which
assure AMB that such exceptions will not jeopardize AMB's tax status as a REIT
for purposes of federal and applicable state law. Notwithstanding any provision
of this Agreement to the contrary, no Series E Limited Partner shall be entitled
to effect an exchange of Series E Preferred Units for Series E Preferred Shares
to the extent that ownership or right to acquire such shares would cause the
Partner or any other Person or, in the opinion of counsel selected by AMB, may
cause the Partner or any other Person, to violate the restrictions on ownership
and transfer of Series E Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series E Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series E
Limited Partner shall not acquire any rights or economic interest in the Series
E Preferred Shares otherwise issuable upon such exchange.
(iv) The redemption of Series E Preferred Units described in Section
18.8.A(ii) and (iii) shall be subject to the provisions of Section 18.5.B(i) and
Section 18.5.C(ii); provided, however, that the term "Series E Redemption Price"
in such Sections 18.5.B(i) and 18.5.C(ii) shall be read to mean the original
Capital Contribution per Series E Preferred Unit being redeemed as set forth on
Exhibit A plus all accrued and unpaid distributions to the redemption date.
B. Procedure for Exchange of Series E Preferred Units and/or Series E
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series E Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series E Preferred Units
(or by the Series E Contributor in the case of an exchange pursuant to the last
sentence of Section 18.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series E Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series E Preferred Units for cash pursuant to Section 18.8.A(ii)
or redeem Series E Excess Units pursuant to Section 18.8.A(iii), by delivering
to each holder of record of Series E Preferred Units, within ten (10) Business
Days following receipt of the Series E Exchange Notice, (a) if the General
Partner elects to cause the Partnership to acquire any of the Series E Preferred
Units then outstanding, (1) certificates representing the Series E Preferred
Shares being issued in exchange for the Series E Preferred Units of such holder
being exchanged and (2) a written notice (a "Series E Redemption Notice")
stating (A) the redemption date, which may be the date of such Series E
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series E Exchange Notice, (B) the redemption price,
(C) the place or places where the Series E Preferred Units are to be surrendered
and (D) that distributions on the Series E Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series E Preferred Units then outstanding in
exchange for cash, a Series E Redemption Notice. Series E Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series E Preferred Units shall deliver any canceled certificates representing
Series E Preferred Units which have been exchanged or redeemed to the office of
the General Partner (which currently is located at Pier 1, Bay 1, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series E Preferred Units to be exchanged for Series E Preferred
Shares pursuant to this Section 18.8 shall
85
be so exchanged in a single transaction at one time. As a condition to exchange,
AMB may require the holders of Series E Preferred Units to make such
representations as may be reasonably necessary for the General Partner to
establish that the issuance of Series E Preferred Shares pursuant to the
exchange shall not be required to be registered under the Securities Act or any
state securities laws. Any Series E Preferred Shares issued pursuant to this
Section 18.8 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.
The certificates representing the Series E Preferred Shares issued upon
exchange of the Series E Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS
OF SECTION 5 OF THE ACT AND STATE SECURITIES LAWS AND THE RULES AND
REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series E Preferred Units for Series
E Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series E Preferred Units tendered for exchange shall
(i) accrue on the Series E Preferred Shares into which such Series E Preferred
Units are exchanged, and (ii) continue to accrue on such Series E Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series E Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series E
Preferred Unit that was validly exchanged for Series E Preferred Shares pursuant
to this Section (other than the General Partner holding such Series E Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series E Preferred Shares for which such Series
E Preferred Unit was exchanged or redeemed. Further, for purposes of the
foregoing, in the event of an exchange of Series E Preferred Units for Series E
Preferred Shares, if the accrued and unpaid distributions per Series E Preferred
Unit is not the same for each Series E Preferred Unit, the accrued and unpaid
distributions per Series E Preferred Unit for each such Series E Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series E Preferred Unit on any such unit.
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(iii) Fractional Series E Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series E Preferred Shares on the day
prior to the exchange date as determined in good faith by the board of directors
of the General Partner.
C. Adjustment of Series E Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series E Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series E Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Series E Preferred Shares or fraction thereof into which one Series E Preferred
Unit was exchangeable immediately prior to such transaction. AMB may not become
a party to any such transaction unless the terms thereof are consistent with the
foregoing. AMB and the Operating Partnership further agree that, notwithstanding
any transaction to which either may be a party (including, without limitation,
any merger, consolidation, statutory share exchange, tender offer for all or
substantially all of such entity's capital stock or partnership interests or
sale of all or substantially all of such entity's assets), immediately following
any such transaction, the issuer or issuers of any shares of capital stock and
other securities into which the Series E Preferred Units shall be exchangeable
pursuant to this Section 18.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which (i) the Series B Preferred Units
are then exchangeable (or, if the Series B Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
and (ii) the Series D Preferred Units are then exchangeable (or, if the Series D
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding).
Section 18.9. No Conversion Rights
The Series E Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 18.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series E Preferred Units.
ARTICLE 19.
SERIES F PREFERRED UNITS
Section 19.1. Designation and Number
A series of Partnership Units in the Partnership designated as the 7.95%
Series F Cumulative Redeemable Preferred Units (the "Series F Preferred Units")
is hereby established. The number of Series F Preferred Units shall be 397,439.
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Section 19.2. Ranking
The Series F Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i) senior to the Common Units and to all Partnership
Units the terms of which provide that such Partnership Units shall rank junior
to the Series F Preferred Units; (ii) on a parity with the Series D Preferred
Units, the Series E Preferred Units and all other Parity Preferred Units; and
(iii) junior to all Partnership Units which rank senior to the Series F
Preferred Units.
Section 19.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 17.3A, 18.3A, 20.3A, 21.3A and 22.3A hereof), holders of Series F
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series F
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series F Preferred Units
into Series F Preferred Shares, or (ii) a redemption of Series F Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series F
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series F Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series F Preferred Units will be
made to the holders of record of the Series F Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series F
Preferred Unit Distribution Payment Date (the "Series F Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series I Preferred Units, Series H Preferred Units,
the Series G Preferred Units, the Series F Preferred Units, the Series E
Preferred Units and the Series D Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series F Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series F Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
88
C. Priority as to Distributions. (i) So long as any Series F Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series F Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series F
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series F Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series F
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series F Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
F Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series F Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series F Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
F Preferred Units may be made, without preserving the priority of distributions
described in Sections 19.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series F Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
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Section 19.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series F Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series F
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
Section 19.5. Series F Redemption
A. Series F Redemption. The Series F Preferred Units may not be redeemed
prior to March 22, 2005. On or after such date, the Partnership shall have the
right to redeem the Series F Preferred Units, in whole or in part, at any time
or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series F Redemption"), equal
to the Capital Account balance of the holder of Series F Preferred Units (the
"Series F Redemption Price"); provided, however, that no redemption pursuant to
this Section 19.5 will be permitted if the Series F Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series F Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series F Preferred
Units are to be redeemed, the Series F Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series F Redemption. (i) The Series F Redemption Price
of the Series F Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series F Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series F
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Preferred Units for all quarterly distribution periods terminating on or
prior to the date of redemption.
C. Procedures for Series F Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series F Preferred Units at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series F Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (a) the redemption
date, (b) the Series F Redemption Price, (c) the aggregate number of Series F
Preferred Units to be redeemed and if fewer than all of the outstanding Series F
Preferred Units are to be redeemed, the number of Series F Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro rata
share (based on the percentage of the aggregate number of outstanding Series F
Preferred Units that the total number of Series F Preferred Units held by such
holder represents) of the aggregate number of Series F Preferred Units to be
redeemed, (d) the place or places where such Series F Preferred Units are to be
surrendered for payment of the Series F Redemption Price, (e) that distributions
on the Series F Preferred Units to be redeemed will cease to accumulate on such
redemption date and (f) that payment of the Series F Redemption Price will be
made upon presentation and surrender of such Series F Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series F Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series F Preferred Units being
redeemed funds sufficient to pay the applicable Series F Redemption Price and
will give irrevocable instructions and authority to pay such Series F Redemption
Price to the holders of the Series F Preferred Units upon surrender of the
Series F Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series F Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series F Preferred Units is not a Business Day, then
payment of the Series F Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series F Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series F Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series F Redemption Price.
Section 19.6. Voting and Certain Management Rights
A. General. Holders of the Series F Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
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B. Certain Voting Rights. So long as any Series F Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series F Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series F
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only to the
extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 19 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series F
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series F Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series F Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series F Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series F Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.
C. So long as any Series F Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series F Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 19.8; provided however, no
such vote shall be required so long as the Series F Preferred Units (or any
interests substituted therefore pursuant to Section 19.6.B) remain outstanding
and are exchangeable for
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Series F Preferred Shares or stock in another entity having substantially the
same terms and rights as the Series F Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series F Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 15th day of
each January, April, July and October, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending April 15,
2000) (whether or not consecutive), the holders of 51% of either (i) such Series
F Preferred Units, in the event that the holders of the Series D Preferred
Units, Series E Preferred Units, Series G Preferred Units, Series H Preferred
Units and Series I Preferred Units are not entitled to exercise management
rights pursuant to Section 17.6D, Section 18.6.D, Section 20.6.D, Section 21.6.D
and Section 22.6.D, respectively, and that no Future Parity Preferred
Unitholders are entitled to exercise management rights similar to those to which
the holders of Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units, Series G Preferred Units, Series H Preferred Units and Series I
Preferred Units are entitled to exercise pursuant to Section 17.6D, Section
18.6.D, this Section 19.6.D, Section 20.6.D, Section 21.6.D and Section 22.6.D,
respectively, or (ii) the Parity Preferred Capital, in the event that holders of
Series D Preferred Units, Series E Preferred Units, Series G Preferred Units,
Series H Preferred Units and Series I Preferred Units are entitled to exercise
management rights pursuant to Section 17.6D, Section 18.6.D, Section 20.6.D,
Section 21.6.D or Section 22.6.D, respectively, or Future Parity Preferred
Unitholders are entitled to exercise management rights similar to those to which
the holders of Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units, Series G Preferred Units, Series H Preferred Units and Series I
Preferred Units are entitled to exercise pursuant to Section 17.6D, Section
18.6.D, this Section 19.6.D, Section 20.6.D, Section 21.6.D, and Section 22.6.D,
respectively, shall be entitled to assume rights to manage the Partnership and
perform actions related thereto for the sole purpose of enforcing the
Partnership's rights and remedies as against obligees of the Partnership or
other Persons from whom the Partnership may be entitled to receive cash or other
assets, until all distributions accumulated on the Series F Preferred Units for
all past quarterly periods and the distribution for the then-current quarterly
period shall have been fully-paid or declared and a sum sufficient for the
payment thereof irrevocably set aside in trust for payment in full; provided,
however, that no such holder or holders of Series F Preferred Units may at any
time take any action (or fail to take any action) if the consequence of such
action (or inaction) would be (i) to cause AMB to fail to qualify as a REIT for
federal or applicable state income tax purposes or (ii) to cause the Partnership
or the Operating Partnership to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the Partnership, the
Operating Partnership, the General Partner, or AMB to be considered an
"investment company" as defined in, or otherwise be subject to regulation under,
the Investment Company Act of 1940, as amended; and provided, further, that
solely for purposes of exercising the management rights set forth in this
Section 19.6.D, each holder of Series F Preferred Units shall be deemed an
Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series F Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
19.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series F Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units and the Series
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E Preferred Units and shall be entitled to provide similar management rights to
Future Parity Preferred Unitholders.
Section 19.7. Transfer Restrictions
The Series F Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series F Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series F Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series F Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series F Preferred Units for Series F Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.
Section 19.8. Exchange Rights
A. Right to Exchange. (i) Series F Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after March 22, 2010, at the option of 51% of the holders of all
outstanding Series F Preferred Units, for authorized but previously unissued
Series F Preferred Shares at an exchange rate of one Series F Preferred Share
from AMB for one Series F Preferred Unit, subject to adjustment as described
below (the "Series F Exchange Price"); provided that the Series F Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series F Preferred Units for Series F Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series F
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series F Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series F Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series F Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series F Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.
In addition, the Series F Preferred Units may be exchanged for Series F
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series F
Preferred Units after March 22, 2003 and prior to
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March 22, 2010 if such holders of a Series F Preferred Units shall deliver to
the General Partner either (i) a private letter ruling addressed to such holder
of Series F Preferred Units or (ii) an opinion of independent counsel reasonably
acceptable to the General Partner based on a change in statute, the enactment of
temporary or final Treasury Regulations or the publication of a Revenue Ruling
or any other IRS release, in either case to the effect that an exchange of the
Series F Preferred Units at such earlier time would not cause the Series F
Preferred Units to be considered "stock and securities" within the meaning of
Section 351(e) of the Code for purposes of determining whether the holder of
such Series F Preferred Units is an "investment company" under Section 721(b) of
the Code if an exchange is permitted at such earlier date.
In addition, Series F Preferred Units will become exchangeable in whole
but not in part unless expressly otherwise provided herein, at the option of 51%
of the holders of all outstanding Series F Preferred Units for Series F
Preferred Shares at an exchange rate of one Series F Preferred Share from AMB
for one Series F Preferred Unit if, (i) at any time such holders conclude based
on results or projected results that there exists (in the reasonable judgment of
such holders) an imminent and substantial risk that such holders' interest in
the Partnership represents or will represent more than 19.0% of the total
profits of or capital interests in the Partnership for a taxable year, (ii) such
holders deliver to the General Partner an opinion of independent counsel,
reasonably acceptable to the General Partner to the effect that there is a
substantial risk that their interest in the Partnership does not or will not
satisfy the 19.0% limit and (iii) the General Partner agrees with the
conclusions referred to in clauses (i) and (ii) of this sentence, such agreement
not to be unreasonably withheld.
Furthermore, Series F Preferred Units will become exchangeable in whole
but not in part unless expressly otherwise provided herein, at the option of 51%
of the holders of all outstanding Series F Preferred Units for Series F
Preferred Shares at an exchange rate of one Series F Preferred Share from AMB
for one Series F Preferred Unit if (i) the Series F Preferred Units are held by
a REIT and (ii) excluding the effect of any loans and advances, from time to
time, from the Partnership to the Operating Partnership or any other affiliate
or related entity not exceeding 15% of the Partnership's total assets, for
purposes of the 5% test of Section 856(c)(4)(B) of the Code, either (A) the
Partnership is advised by independent counsel that, based on the assets and
income of the Partnership for a taxable year after 1998, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code; or (B) the holder of the Series F Preferred Units shall
deliver to the General Partner an opinion of independent counsel reasonably
acceptable to the General Partner to the effect that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code and that such failure would create a meaningful risk that
the holder of the Series F Preferred Units would fail to maintain its
qualification as a real estate investment trust.
(ii) Notwithstanding anything to the contrary set forth in Section
19.8.A(i), if a Series F Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series F Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series F Preferred Units for cash in an amount equal to the original Capital
Contribution per Series F Preferred Unit and all accrued and unpaid
distributions thereon to the
95
date of redemption. If the General Partner elects to redeem fewer than all of
the outstanding Series F Preferred Units, the number of Series F Preferred Units
held by each holder to be redeemed shall equal such holder's pro rata share
(based on the percentage of the aggregate number of outstanding Series F
Preferred Units that the total number of Series F Preferred Units held by such
holder represents) of the aggregate number of Series F Preferred Units being
redeemed.
(iii) In the event an exchange of all Series F Preferred Units pursuant
to Section 19.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series F Articles Supplementary,
each holder of Series F Preferred Units shall be entitled to exchange, pursuant
to the provisions of Section 19.8.B, a number of Series F Preferred Units which
would comply with the provisions on the ownership limitation of AMB set forth in
such Section 7 of Article Third of the Series F Articles Supplementary, with
respect to such holder, and any Series F Preferred Units not so exchanged (the
"Series F Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the original Capital Contribution per Series F Excess Unit, plus
any accrued and unpaid distributions thereon to the date of redemption subject
to any restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series F Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series F Excess Units under this Section 19.8.A(iii), the "Ownership
Limit" set forth in the Series F Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series F Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series F Preferred Units exceptions to the Ownership Limit set forth in the
Series F Articles Supplementary sufficient to allow such Holders to exchange all
of their Series F Preferred Units for Series F Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series F
Limited Partner shall be entitled to effect an exchange of Series F Preferred
Units for Series F Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series F Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series F Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series F Limited Partner shall not acquire any
rights or economic interest in the Series F Preferred Shares otherwise issuable
upon such exchange.
(iv) The redemption of Series F Preferred Units described in Section
19.8.A(ii) and (iii) shall be subject to the provisions of Section 19.5.B(i) and
Section 19.5.C(ii); provided, however, that the term "Series F Redemption Price"
in such Sections 19.5.B(i) and 19.5.C(ii)
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shall be read to mean the original Capital Contribution per Series F Preferred
Unit being redeemed as set forth on Exhibit A plus all accrued and unpaid
distributions to the redemption date.
B. Procedure for Exchange of Series F Preferred Units and/or Series F
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series F Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series F Preferred Units
(or by the Series F Contributor in the case of an exchange pursuant to the last
sentence of Section 19.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series F Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series F Preferred Units for cash pursuant to Section 19.8.A(ii)
or redeem Series F Excess Units pursuant to Section 19.8.A(iii), by delivering
to each holder of record of Series F Preferred Units, within ten (10) Business
Days following receipt of the Series F Exchange Notice, (a) if the General
Partner elects to cause the Partnership to acquire any of the Series F Preferred
Units then outstanding, (1) certificates representing the Series F Preferred
Shares being issued in exchange for the Series F Preferred Units of such holder
being exchanged and (2) a written notice (a "Series F Redemption Notice")
stating (A) the redemption date, which may be the date of such Series F
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series F Exchange Notice, (B) the redemption price,
(C) the place or places where the Series F Preferred Units are to be surrendered
and (D) that distributions on the Series F Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series F Preferred Units then outstanding in
exchange for cash, a Series F Redemption Notice. Series F Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series F Preferred Units shall deliver any canceled certificates representing
Series F Preferred Units which have been exchanged or redeemed to the office of
the General Partner (which currently is located at Pier 1, Bay 1, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series F Preferred Units to be exchanged for Series F Preferred
Shares pursuant to this Section 19.8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, AMB may require the holders
of Series F Preferred Units to make such representations as may be reasonably
necessary for the General Partner to establish that the issuance of Series F
Preferred Shares pursuant to the exchange shall not be required to be registered
under the Securities Act or any state securities laws. Any Series F Preferred
Shares issued pursuant to this Section 19.8 shall be delivered as shares which
are duly authorized, validly issued, fully paid and nonassessable, free of any
pledge, lien, encumbrance or restriction other than those provided in the REIT
Charter, the Bylaws of AMB, the Securities Act and relevant state securities or
blue sky laws.
The certificates representing the Series F Preferred Shares issued upon
exchange of the Series F Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED,
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HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE CORPORATION
HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO THE
CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
ACT AND STATE SECURITIES LAWS AND THE RULES AND REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series F Preferred Units for Series
F Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series F Preferred Units tendered for exchange shall
(i) accrue on the Series F Preferred Shares into which such Series F Preferred
Units are exchanged, and (ii) continue to accrue on such Series F Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series F Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series F
Preferred Unit that was validly exchanged for Series F Preferred Shares pursuant
to this Section (other than the General Partner holding such Series F Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series F Preferred Shares for which such Series
F Preferred Unit was exchanged or redeemed. Further, for purposes of the
foregoing, in the event of an exchange of Series F Preferred Units for Series F
Preferred Shares, if the accrued and unpaid distributions per Series F Preferred
Unit is not the same for each Series F Preferred Unit, the accrued and unpaid
distributions per Series F Preferred Unit for each such Series F Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series F Preferred Unit on any such unit.
(iii) Fractional Series F Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series F Preferred Shares on the day
prior to the exchange date as determined in good faith by the board of directors
of the General Partner.
C. Adjustment of Series F Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series F Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series F Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Series F Preferred Shares or fraction thereof into which one Series F Preferred
Unit was exchangeable immediately prior to such transaction. AMB may not become
a party to any such transaction unless the terms thereof are consistent with the
foregoing. AMB
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and the Operating Partnership further agree that, notwithstanding any
transaction to which either may be a party (including, without limitation, any
merger, consolidation, statutory share exchange, tender offer for all or
substantially all of such entity's capital stock or partnership interests or
sale of all or substantially all of such entity's assets), immediately following
any such transaction, the issuer or issuers of any shares of capital stock and
other securities into which the Series F Preferred Units shall be exchangeable
pursuant to this Section 19.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which (i) the Series B Preferred Units
are then exchangeable (or, if the Series B Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
(ii) the Series D Preferred Units are then exchangeable (or, if the Series D
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding) and (iii) the Series E Preferred Units
are then exchangeable (or, if the Series E Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding).
Section 19.9. No Conversion Rights
The Series F Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 19.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series F Preferred Units.
ARTICLE 20.
SERIES G PREFERRED UNITS
Section 20.1. Designation and Number
A series of Partnership Units in the Partnership designated as the 7.95%
Series G Cumulative Redeemable Preferred Units (the "Series G Preferred Units")
is hereby established. The number of Series G Preferred Units shall be 20,000.
Section 20.2. Ranking
The Series G Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i) senior to the Common Units and to all Partnership
Units the terms of which provide that such Partnership Units shall rank junior
to the Series G Preferred Units; (ii) on a parity with the Series D Preferred
Units, the Series E Preferred Units, the Series F Preferred Units and all other
Parity Preferred Units; and (iii) junior to all Partnership Units which rank
senior to the Series G Preferred Units.
Section 20.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 17.3A,
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18.3A, 19.3A, 21.3A and 22.3A hereof), holders of Series G Preferred Units will
be entitled to receive, when, as and if declared by the Partnership acting
through the General Partner, out of Available Cash, cumulative preferential cash
distributions in an amount equal to the Series G Priority Return. Such
distributions will be payable (A) quarterly (such quarterly periods for purposes
of payment and accrual will be the quarterly periods ending on the dates
specified in this sentence and not calendar year quarters) in arrears, on the
15th day of January, April, July and October of each year and (B) in the event
of (i) an exchange of Series G Preferred Units into Series G Preferred Shares,
or (ii) a redemption of Series G Preferred Units, on the exchange date or
redemption date, as applicable (each a "Series G Preferred Unit Distribution
Payment Date"), commencing on the first of such payment dates to occur following
their original date of issuance. If any date on which distributions are to be
made on the Series G Preferred Units is not a Business Day, then payment of the
distribution to be made on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Distributions on the Series G Preferred Units will be made to the holders of
record of the Series G Preferred Units on the relevant record dates, which will
be fifteen (15) days prior to the relevant Series G Preferred Unit Distribution
Payment Date (the "Series G Preferred Unit Partnership Record Date"). For
purposes of clarifying the relative distribution priority rights among the
Series I Preferred Units, Series H Preferred Units, the Series G Preferred
Units, the Series F Preferred Units, the Series E Preferred Units and the Series
D Preferred Units, the payment of distributions with respect to a series of such
Preferred Units prior to the payment of distributions with respect to another
such series of Preferred Units, solely as a result of the distribution payment
dates with respect to a series of Preferred Units occurring on a different date
from another series of Preferred Units, shall not be deemed to create a priority
in favor of one series of Preferred Units over any other series of Preferred
Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series G Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series G Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series G Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series G Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series G
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Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series G Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series G
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series G Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
G Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series G Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series G Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
G Preferred Units may be made, without preserving the priority of distributions
described in Sections 20.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series G Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
Section 20.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series G Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.
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C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series G
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
Section 20.5. Series G Redemption
A. Series G Redemption. The Series G Preferred Units may not be redeemed
prior to September 1, 2005. On or after such date, the Partnership shall have
the right to redeem the Series G Preferred Units, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series G Redemption"), equal
to the Capital Account balance of the holder of Series G Preferred Units (the
"Series G Redemption Price"); provided, however, that no redemption pursuant to
this Section 20.5 will be permitted if the Series G Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series G Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series G Preferred
Units are to be redeemed, the Series G Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series G Redemption. (i) The Series G Redemption Price
of the Series G Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series G Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series G Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
C. Procedures for Series G Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series G Preferred Units at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series G Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each
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such notice shall state: (a) the redemption date, (b) the Series G Redemption
Price, (c) the aggregate number of Series G Preferred Units to be redeemed and
if fewer than all of the outstanding Series G Preferred Units are to be
redeemed, the number of Series G Preferred Units to be redeemed held by such
holder, which number shall equal such holder's pro rata share (based on the
percentage of the aggregate number of outstanding Series G Preferred Units that
the total number of Series G Preferred Units held by such holder represents) of
the aggregate number of Series G Preferred Units to be redeemed, (d) the place
or places where such Series G Preferred Units are to be surrendered for payment
of the Series G Redemption Price, (e) that distributions on the Series G
Preferred Units to be redeemed will cease to accumulate on such redemption date
and (f) that payment of the Series G Redemption Price will be made upon
presentation and surrender of such Series G Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series G Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series G Preferred Units being
redeemed funds sufficient to pay the applicable Series G Redemption Price and
will give irrevocable instructions and authority to pay such Series G Redemption
Price to the holders of the Series G Preferred Units upon surrender of the
Series G Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series G Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series G Preferred Units is not a Business Day, then
payment of the Series G Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series G Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series G Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series G Redemption Price.
Section 20.6. Voting and Certain Management Rights
A. General. Holders of the Series G Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
B. Certain Voting Rights. So long as any Series G Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series G Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series G
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or
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issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests but only to the extent such Parity
Preferred Units are issued to an affiliate of the Partnership, other than AMB or
the Operating Partnership to the extent the issuance of such interests was to
allow AMB or the Operating Partnership to issue corresponding preferred stock or
preferred interests to persons who are not affiliates of the Partnership (other
than AMB to the extent AMB issues corresponding preferred stock to persons who
are not affiliates of the Partnership or the Operating Partnership) or (iii)
either consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or amend, alter
or repeal the provisions of the Partnership Agreement (including, without
limitation, this Article 20 and Section 11.2), whether by merger, consolidation
or otherwise, in each case in a manner that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series G Preferred Units or the holders thereof; provided, however, that
with respect to the occurrence of any event set forth in (iii) above, so long as
(a) the Partnership is the surviving entity and the Series G Preferred Units
remain outstanding with the terms thereof unchanged, or (b) the resulting,
surviving or transferee entity is a partnership, limited liability company or
other pass-through entity organized under the laws of any state and substitutes
the Series G Preferred Units for other interests in such entity having
substantially the same terms and rights as the Series G Preferred Units,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series G Preferred Units; and provided
further, that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests
represented by Junior Units or Parity Preferred Units that are not issued to an
affiliate of the Partnership, other than the General Partner or the Operating
Partnership to the extent the issuance of such interests was to allow the
General Partner or the Operating Partnership to issue corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership (other than AMB to the extent AMB issues corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership or the Operating Partnership), shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
C. So long as any Series G Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series G Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 20.8; provided however, no
such vote shall be required so long as the Series G Preferred Units (or any
interests substituted therefore pursuant to Section 20.6.B) remain outstanding
and are exchangeable for Series G Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series G Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series G Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 15th day of
each January, April, July and October, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending October 15,
2000) (whether or not consecutive), the holders of 51% of either (i) such Series
G Preferred Units, in the event that the holders of the Series D Preferred
Units, Series E Preferred Units, Series F Preferred Units, Series
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H Preferred Units and Series I Preferred Units are not entitled to exercise
management rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D,
Section 21.6.D and Section 22.6.D, respectively, and that no Future Parity
Preferred Unitholders are entitled to exercise management rights similar to
those to which the holders of Series D Preferred Units, Series E Preferred
Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred
Units and Series I Preferred Units, are entitled to exercise pursuant to Section
17.6D, Section 18.6.D, Section 19.6.D, Section 20.6.D, Section 21.6.D and
Section 22.6.D, respectively, or (ii) the Parity Preferred Capital, in the event
that holders of Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units, Series H Preferred Units and Series I Preferred Units are
entitled to exercise management rights pursuant to Section 17.6D, Section
18.6.D, Section 19.6.D, Series 21.6.D and Section 22.6.D, respectively, or
Future Parity Preferred Unitholders are entitled to exercise management rights
similar to those to which the holders of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units, Series H
Preferred Units and Series I Preferred Units are entitled to exercise pursuant
to Section 17.6D, Section 18.6.D, Section 19.6.D, this Section 20.6.D, Section
21.6.D, and Section 22.6.D, respectively, shall be entitled to assume rights to
manage the Partnership and perform actions related thereto for the sole purpose
of enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
G Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series G Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 20.6.D, each holder of Series G Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series G Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
20.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series G Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units, the Series E Preferred Units and the Series F Preferred Units
and shall be entitled to provide similar management rights to Future Parity
Preferred Unitholders.
Section 20.7. Transfer Restrictions
The Series G Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series G Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series F Preferred Units and Series G Preferred Units within the
meaning of Treasury Regulation
105
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series F Preferred
Units and Series G Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)) and (b) the General Partner cannot rely on Treasury
Regulation Section 1.7704-1(h). In addition, no transfer may be made to any
person if such transfer would cause the exchange of the Series G Preferred Units
for Series G Preferred Shares, as provided herein, to be required to be
registered under the Securities Act of 1933, as amended, or any state securities
laws.
Section 20.8. Exchange Rights
A. Right to Exchange. (i) Series G Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after August 29, 2010, at the option of 51% of the holders of all
outstanding Series G Preferred Units, for authorized but previously unissued
Series G Preferred Shares at an exchange rate of one Series G Preferred Share
from AMB for one Series G Preferred Unit, subject to adjustment as described
below (the "Series G Exchange Price"); provided that the Series G Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series G Preferred Units for Series G Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series G
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series G Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series G Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series G Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series G Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.
In addition, the Series G Preferred Units may be exchanged for Series G
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series G
Preferred Units after August 29, 2003 and prior to August 29, 2010 if such
holders of a Series G Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series G
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute, the enactment of temporary
or final Treasury Regulations or the publication of a Revenue Ruling or any
other IRS release, in either case to the effect that an exchange of the Series G
Preferred Units at such earlier time would not cause the Series G Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
G Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.
106
In addition, Series G Preferred Units will become exchangeable in whole
but not in part unless expressly otherwise provided herein, at the option of 51%
of the holders of all outstanding Series G Preferred Units for Series G
Preferred Shares at an exchange rate of one Series G Preferred Share from AMB
for one Series G Preferred Unit if, (i) at any time such holders conclude based
on results or projected results that there exists (in the reasonable judgment of
such holders) an imminent and substantial risk that such holders' interest in
the Partnership represents or will represent more than 19.0% of the total
profits of or capital interests in the Partnership for a taxable year, (ii) such
holders deliver to the General Partner an opinion of independent counsel,
reasonably acceptable to the General Partner to the effect that there is a
substantial risk that their interest in the Partnership does not or will not
satisfy the 19.0% limit and (iii) the General Partner agrees with the
conclusions referred to in clauses (i) and (ii) of this sentence, such agreement
not to be unreasonably withheld.
Furthermore, Series G Preferred Units will become exchangeable in whole
but not in part unless expressly otherwise provided herein, at the option of 51%
of the holders of all outstanding Series G Preferred Units for Series G
Preferred Shares at an exchange rate of one Series G Preferred Share from AMB
for one Series G Preferred Unit if (i) the Series G Preferred Units are held by
a REIT and (ii) excluding the effect of any loans and advances, from time to
time, from the Partnership to the Operating Partnership or any other affiliate
or related entity not exceeding 15% of the Partnership's total assets, for
purposes of the 5% test of Section 856(c)(4)(B) of the Code, either (A) the
Partnership is advised by independent counsel that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code; or (B) the holder of the Series G Preferred Units shall
deliver to the General Partner an opinion of independent counsel reasonably
acceptable to the General Partner to the effect that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code and that such failure would create a meaningful risk that
the holder of the Series G Preferred Units would fail to maintain its
qualification as a real estate investment trust.
(ii) Notwithstanding anything to the contrary set forth in Section
20.8.A(i), if a Series G Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series G Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series G Preferred Units for cash in an amount equal to the original Capital
Contribution per Series G Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series G Preferred Units, the number
of Series G Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series G Preferred Units that the total number of Series G Preferred
Units held by such holder represents) of the aggregate number of Series G
Preferred Units being redeemed.
(iii) In the event an exchange of all Series G Preferred Units pursuant
to Section 20.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series G Articles Supplementary,
each holder of Series G Preferred
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Units shall be entitled to exchange, pursuant to the provisions of Section
20.8.B, a number of Series G Preferred Units which would comply with the
provisions on the ownership limitation of AMB set forth in such Section 7 of
Article Third of the Series G Articles Supplementary, with respect to such
holder, and any Series G Preferred Units not so exchanged (the "Series G Excess
Units") shall be redeemed by the Partnership for cash in an amount equal to the
original Capital Contribution per Series G Excess Unit, plus any accrued and
unpaid distributions thereon to the date of redemption subject to any
restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series G Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series G Excess Units under this Section 20.8.A(iii), the "Ownership
Limit" set forth in the Series G Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series G Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series G Preferred Units exceptions to the Ownership Limit set forth in the
Series G Articles Supplementary sufficient to allow such Holders to exchange all
of their Series G Preferred Units for Series G Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series G
Limited Partner shall be entitled to effect an exchange of Series G Preferred
Units for Series G Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series G Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series G Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series G Limited Partner shall not acquire any
rights or economic interest in the Series G Preferred Shares otherwise issuable
upon such exchange.
(iv) The redemption of Series G Preferred Units described in Section
20.8.A(ii) and (iii) shall be subject to the provisions of Section 20.5.B(i) and
Section 20.5.C(ii); provided, however, that the term "Series G Redemption Price"
in such Sections 20.5.B(i) and 20.5.C(ii) shall be read to mean the original
Capital Contribution per Series G Preferred Unit being redeemed as set forth on
Exhibit A plus all accrued and unpaid distributions to the redemption date.
B. Procedure for Exchange of Series G Preferred Units and/or Series G
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series G Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series G Preferred Units
(or by the Series G Contributor in the case
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of an exchange pursuant to the last sentence of Section 20.8.A.(i) hereof) by
(a) fax and (b) by certified mail postage prepaid. AMB may effect any exchange
of Series G Preferred Units, or the General Partner may exercise its option to
cause the Partnership to redeem any portion of the Series G Preferred Units for
cash pursuant to Section 20.8.A(ii) or redeem Series G Excess Units pursuant to
Section 20.8.A(iii), by delivering to each holder of record of Series G
Preferred Units, within ten (10) Business Days following receipt of the Series G
Exchange Notice, (a) if the General Partner elects to cause the Partnership to
acquire any of the Series G Preferred Units then outstanding, (1) certificates
representing the Series G Preferred Shares being issued in exchange for the
Series G Preferred Units of such holder being exchanged and (2) a written notice
(a "Series G Redemption Notice") stating (A) the redemption date, which may be
the date of such Series G Redemption Notice or any other date which is not later
than sixty (60) days following the receipt of the Series G Exchange Notice, (B)
the redemption price, (C) the place or places where the Series G Preferred Units
are to be surrendered and (D) that distributions on the Series G Preferred Units
will cease to accrue on such redemption date, or (b) if the General Partner
elects to cause the Partnership to redeem all of the Series G Preferred Units
then outstanding in exchange for cash, a Series G Redemption Notice. Series G
Preferred Units which are redeemed shall be deemed canceled (and any
corresponding Partnership Interest represented thereby deemed terminated) on the
redemption date. Holders of Series G Preferred Units shall deliver any canceled
certificates representing Series G Preferred Units which have been exchanged or
redeemed to the office of the General Partner (which currently is located at
Pier 1, Bay 1, San Francisco, California 94111) within ten (10) Business Days of
the exchange or redemption with respect thereto. Notwithstanding anything to the
contrary contained herein, any and all Series G Preferred Units to be exchanged
for Series G Preferred Shares pursuant to this Section 20.8 shall be so
exchanged in a single transaction at one time. As a condition to exchange, AMB
may require the holders of Series G Preferred Units to make such representations
as may be reasonably necessary for the General Partner to establish that the
issuance of Series G Preferred Shares pursuant to the exchange shall not be
required to be registered under the Securities Act or any state securities laws.
Any Series G Preferred Shares issued pursuant to this Section 20.8 shall be
delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of any pledge, lien, encumbrance or restriction other than
those provided in the REIT Charter, the Bylaws of AMB, the Securities Act and
relevant state securities or blue sky laws.
The certificates representing the Series G Preferred Shares issued upon
exchange of the Series G Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER
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DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
STATE SECURITIES LAWS AND THE RULES AND REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series G Preferred Units for Series
G Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series G Preferred Units tendered for exchange shall
(i) accrue on the Series G Preferred Shares into which such Series G Preferred
Units are exchanged, and (ii) continue to accrue on such Series G Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series G Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series G
Preferred Unit that was validly exchanged for Series G Preferred Shares pursuant
to this Section (other than the General Partner holding such Series G Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series G Preferred Shares for which such Series
G Preferred Unit was exchanged or redeemed. Further, for purposes of the
foregoing, in the event of an exchange of Series G Preferred Units for Series G
Preferred Shares, if the accrued and unpaid distributions per Series G Preferred
Unit is not the same for each Series G Preferred Unit, the accrued and unpaid
distributions per Series G Preferred Unit for each such Series G Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series G Preferred Unit on any such unit.
(iii) Fractional Series G Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series G Preferred Shares on the day
prior to the exchange date as determined in good faith by the board of directors
of the General Partner.
C. Adjustment of Series G Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series G Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series G Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Series G Preferred Shares or fraction thereof into which one Series G Preferred
Unit was exchangeable immediately prior to such transaction. AMB may not become
a party to any such transaction unless the terms thereof are consistent with the
foregoing. AMB and the Operating Partnership further agree that, notwithstanding
any transaction to which either may be a party (including, without limitation,
any merger, consolidation, statutory share exchange, tender offer for all or
substantially all of such entity's capital stock or partnership interests or
sale of all or substantially all of such entity's assets), immediately following
any such transaction, the issuer or issuers of any shares of capital stock and
other securities into which the Series G Preferred Units shall be exchangeable
pursuant to this Section 20.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which (i) the Series B Preferred Units
are then exchangeable (or, if the Series B Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
(ii) the Series D Preferred Units are then exchangeable (or, if the Series D
Preferred Units have previously been
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redeemed in full, would have been then exchangeable if then still outstanding),
(iii) the Series E Preferred Units are then exchangeable (or, if the Series E
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding) and (iv) the Series F Preferred Units
are then exchangeable (or, if the Series F Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding).
Section 20.9. No Conversion Rights
The Series G Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 20.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series G Preferred Units.
ARTICLE 21.
SERIES H PREFERRED UNITS
Section 21.1. Designation and Number
A series of Partnership Units in the Partnership designated as the
8.125% Series H Cumulative Redeemable Preferred Units (the "Series H Preferred
Units") is hereby established. The number of Series H Preferred Units shall be
840,000.
Section 21.2. Ranking
The Series H Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i) senior to the Common Units and to all Partnership
Units the terms of which provide that such Partnership Units shall rank junior
to the Series H Preferred Units; (ii) on a parity with the Series D Preferred
Units, the Series E Preferred Units, the Series F Preferred Units, the Series G
Preferred Units, and all other Parity Preferred Units; and (iii) junior to all
Partnership Units which rank senior to the Series H Preferred Units.
Section 21.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 17.3A, 18.3A, 19.3A, 20.3A and 22.3A hereof), holders of Series H
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series H
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 25th day of March, June, September and December of
each year and (B) in the event of (i) an exchange of Series H Preferred Units
into Series H Preferred Shares, or (ii) a redemption of Series H Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series H
Preferred Unit
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Distribution Payment Date"), commencing on the first of such payment dates to
occur following their original date of issuance. If any date on which
distributions are to be made on the Series H Preferred Units is not a Business
Day, then payment of the distribution to be made on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series H Preferred Units will be
made to the holders of record of the Series H Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series H
Preferred Unit Distribution Payment Date (the "Series H Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series I Preferred Units, Series H Preferred Units,
the Series G Preferred Units, the Series F Preferred Units, the Series E
Preferred Units and the Series D Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series H Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series H Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series H Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series H Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series H
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series H Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.
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(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series H
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series H Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
H Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series H Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series H Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
H Preferred Units may be made, without preserving the priority of distributions
described in Sections 21.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series H Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
Section 21.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series H Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series H
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
113
Section 21.5. Series H Redemption
A. Series H Redemption. The Series H Preferred Units may not be redeemed
prior to September 1, 2005. On or after such date, the Partnership shall have
the right to redeem the Series H Preferred Units, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series H Redemption"), equal
to the Capital Account balance of the holder of Series H Preferred Units (the
"Series H Redemption Price"); provided, however, that no redemption pursuant to
this Section 21.5 will be permitted if the Series H Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series H Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series H Preferred
Units are to be redeemed, the Series H Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series H Redemption. (i) The Series H Redemption Price
of the Series H Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series H Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series H Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
C. Procedures for Series H Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series H Preferred Units at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series H Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (a) the redemption
date, (b) the Series H Redemption Price, (c) the aggregate number of Series H
Preferred Units to be redeemed and if fewer than all of the outstanding Series H
Preferred Units are to be redeemed, the number of Series H Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro rata
share (based on the percentage of the aggregate number of outstanding Series H
Preferred Units that the total number of Series H Preferred Units held by such
holder represents) of the aggregate number of Series H Preferred Units to be
redeemed, (d) the place or places where such Series H Preferred Units are to be
surrendered for payment of the Series H Redemption Price, (e) that distributions
on the Series H Preferred Units to be redeemed will cease to accumulate on such
114
redemption date and (f) that payment of the Series H Redemption Price will be
made upon presentation and surrender of such Series H Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series H Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series H Preferred Units being
redeemed funds sufficient to pay the applicable Series H Redemption Price and
will give irrevocable instructions and authority to pay such Series H Redemption
Price to the holders of the Series H Preferred Units upon surrender of the
Series H Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series H Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series H Preferred Units is not a Business Day, then
payment of the Series H Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series H Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series H Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series H Redemption Price.
Section 21.6. Voting and Certain Management Rights
A. General. Holders of the Series H Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
B. Certain Voting Rights. So long as any Series H Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series H Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series H
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests, (ii) authorize or create, or increase
the authorized or issued amount of any Parity Preferred Units or reclassify any
Partnership Interest of the Partnership into any such Partnership Interest or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests but only to the
extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without
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limitation, this Article 21 and Section 11.2), whether by merger, consolidation
or otherwise, in each case in a manner that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series H Preferred Units or the holders thereof; provided, however, that
with respect to the occurrence of any event set forth in (iii) above, so long as
(a) the Partnership is the surviving entity and the Series H Preferred Units
remain outstanding with the terms thereof unchanged, or (b) the resulting,
surviving or transferee entity is a partnership, limited liability company or
other pass-through entity organized under the laws of any state and substitutes
the Series H Preferred Units for other interests in such entity having
substantially the same terms and rights as the Series H Preferred Units,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series H Preferred Units; and provided
further, that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests
represented by Junior Units or Parity Preferred Units that are not issued to an
affiliate of the Partnership, other than the General Partner or the Operating
Partnership to the extent the issuance of such interests was to allow the
General Partner or the Operating Partnership to issue corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership (other than AMB to the extent AMB issues corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership or the Operating Partnership), shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
C. So long as any Series H Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series H Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 21.8; provided however, no
such vote shall be required so long as the Series H Preferred Units (or any
interests substituted therefore pursuant to Section 21.6.B) remain outstanding
and are exchangeable for Series H Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series H Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series H Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 25th day of
each March, June, September and December, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending September
25, 2000) (whether or not consecutive), the holders of 51% of either (i) such
Series H Preferred Units, in the event that the holders of the Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series I Preferred Units are not entitled to exercise
management rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D,
Section 20.6.D and Section 22.6D, respectively, and that no Future Parity
Preferred Unitholders are entitled to exercise management rights similar to
those to which the holders of Series D Preferred Units, Series E Preferred
Units, Series F Preferred Units, Series G Preferred Units, Series H Preferred
Units and Series I Preferred Units are entitled to exercise pursuant to Section
17.6D, Section 18.6.D, Section 19.6.D, Section 20.6.D, this Section 21.6.D, and
Section 22.6.D, respectively, or (ii) the Parity Preferred Capital, in the event
that holders of Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units or Series G Preferred Units are entitled to exercise
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management rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D or
Section 20.6.D, respectively, or Future Parity Preferred Unitholders are
entitled to exercise management rights similar to those to which the holders of
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units and Series H Preferred Units are entitled to exercise
pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D, this Section 20.6.D,
this Section 21.6.D, or Section 22.6.D, respectively, shall be entitled to
assume rights to manage the Partnership and perform actions related thereto for
the sole purpose of enforcing the Partnership's rights and remedies as against
obligees of the Partnership or other Persons from whom the Partnership may be
entitled to receive cash or other assets, until all distributions accumulated on
the Series H Preferred Units for all past quarterly periods and the distribution
for the then-current quarterly period shall have been fully-paid or declared and
a sum sufficient for the payment thereof irrevocably set aside in trust for
payment in full; provided, however, that no such holder or holders of Series H
Preferred Units may at any time take any action (or fail to take any action) if
the consequence of such action (or inaction) would be (i) to cause AMB to fail
to qualify as a REIT for federal or applicable state income tax purposes or (ii)
to cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 21.6.D, each holder of Series H Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series H Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
21.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series H Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units, the Series E Preferred Units, the Series F Preferred Units
and the Series G Preferred Units and shall be entitled to provide similar
management rights to Future Parity Preferred Unitholders.
Section 21.7. Transfer Restrictions
The Series H Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series H Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series D Preferred Units, Series H Preferred Units and Series I
Preferred Units within the meaning of Treasury Regulation Section
1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series D Preferred
Units, Series H Preferred Units and Series I Preferred Units within the meaning
of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury
Regulation Section 1.7704-1(h)(3)(ii)) and (b) the General Partner cannot rely
on Treasury Regulation Section 1.7704-1(h). In addition, no transfer may be made
to any person if such transfer would cause the exchange of the Series H
Preferred Units for Series
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H Preferred Shares, as provided herein, to be required to be registered under
the Securities Act of 1933, as amended, or any state securities laws.
Section 21.8. Exchange Rights
A. Right to Exchange. (i) Series H Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after September 1, 2010, at the option of 51% of the holders of all
outstanding Series H Preferred Units, for authorized but previously unissued
Series H Preferred Shares at an exchange rate of one Series H Preferred Share
from AMB for one Series H Preferred Unit, subject to adjustment as described
below (the "Series H Exchange Price"); provided that the Series H Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series H Preferred Units for Series H Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series H
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series H Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series H Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series H Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series H Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.
In addition, the Series H Preferred Units may be exchanged for Series H
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series H
Preferred Units after September 1, 2003 and prior to September 1, 2010 if such
holders of a Series H Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series H
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute, the enactment of temporary
or final Treasury Regulations or the publication of a Revenue Ruling or any
other IRS release, in either case to the effect that an exchange of the Series H
Preferred Units at such earlier time would not cause the Series H Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
H Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in Section
21.8.A(i), if a Series H Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series H Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series H Preferred Units for cash in an amount equal to the original Capital
Contribution per Series H Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series H Preferred Units, the number
of Series H Preferred Units held by each holder to be
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redeemed shall equal such holder's pro rata share (based on the percentage of
the aggregate number of outstanding Series H Preferred Units that the total
number of Series H Preferred Units held by such holder represents) of the
aggregate number of Series H Preferred Units being redeemed.
(iii) In the event an exchange of all Series H Preferred Units pursuant
to Section 21.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series H Articles Supplementary,
each holder of Series H Preferred Units shall be entitled to exchange, pursuant
to the provisions of Section 21.8.B, a number of Series H Preferred Units which
would comply with the provisions on the ownership limitation of AMB set forth in
such Section 7 of Article Third of the Series H Articles Supplementary, with
respect to such holder, and any Series H Preferred Units not so exchanged (the
"Series H Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the original Capital Contribution per Series H Excess Unit, plus
any accrued and unpaid distributions thereon to the date of redemption subject
to any restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series H Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series H Excess Units under this Section 21.8.A(iii), the "Ownership
Limit" set forth in the Series H Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series H Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series H Preferred Units exceptions to the Ownership Limit set forth in the
Series H Articles Supplementary sufficient to allow such Holders to exchange all
of their Series H Preferred Units for Series H Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series H
Limited Partner shall be entitled to effect an exchange of Series H Preferred
Units for Series H Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series H Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series H Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series H Limited Partner shall not acquire any
rights or economic interest in the Series H Preferred Shares otherwise issuable
upon such exchange.
(iv) The redemption of Series H Preferred Units described in Section
20.8.A(ii) and (iii) shall be subject to the provisions of Section 21.5.B(i) and
Section 21.5.C(ii); provided, however, that the term "Series H Redemption Price"
in such Sections 21.5.B(i) and 21.5.C(ii) shall be read to mean the original
Capital Contribution per Series H Preferred Unit
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being redeemed as set forth on Exhibit A plus all accrued and unpaid
distributions to the redemption date.
B. Procedure for Exchange of Series H Preferred Units and/or Series H
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series H Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series H Preferred Units
(or by the Series H Contributor in the case of an exchange pursuant to the last
sentence of Section 21.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series H Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series H Preferred Units for cash pursuant to Section 21.8.A(ii)
or redeem Series H Excess Units pursuant to Section 21.8.A(iii), by delivering
to each holder of record of Series H Preferred Units, within ten (10) Business
Days following receipt of the Series H Exchange Notice, (a) if the General
Partner elects to cause the Partnership to acquire any of the Series H Preferred
Units then outstanding, (1) certificates representing the Series H Preferred
Shares being issued in exchange for the Series H Preferred Units of such holder
being exchanged and (2) a written notice (a "Series H Redemption Notice")
stating (A) the redemption date, which may be the date of such Series H
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series H Exchange Notice, (B) the redemption price,
(C) the place or places where the Series H Preferred Units are to be surrendered
and (D) that distributions on the Series H Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series H Preferred Units then outstanding in
exchange for cash, a Series H Redemption Notice. Series H Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series H Preferred Units shall deliver any canceled certificates representing
Series H Preferred Units which have been exchanged or redeemed to the office of
the General Partner (which currently is located at Pier 1, Bay 1, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series H Preferred Units to be exchanged for Series H Preferred
Shares pursuant to this Section 21.8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, AMB may require the holders
of Series H Preferred Units to make such representations as may be reasonably
necessary for the General Partner to establish that the issuance of Series H
Preferred Shares pursuant to the exchange shall not be required to be registered
under the Securities Act or any state securities laws. Any Series H Preferred
Shares issued pursuant to this Section 21.8 shall be delivered as shares which
are duly authorized, validly issued, fully paid and nonassessable, free of any
pledge, lien, encumbrance or restriction other than those provided in the REIT
Charter, the Bylaws of AMB, the Securities Act and relevant state securities or
blue sky laws.
The certificates representing the Series H Preferred Shares issued upon
exchange of the Series H Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
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(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF
THE CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER
EVIDENCE SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM
THE PROVISIONS OF SECTION 5 OF THE ACT AND STATE SECURITIES LAWS AND THE
RULES AND REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series H Preferred Units for Series
H Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series H Preferred Units tendered for exchange shall
(i) accrue on the Series H Preferred Shares into which such Series H Preferred
Units are exchanged, and (ii) continue to accrue on such Series H Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series H Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series H
Preferred Unit that was validly exchanged for Series H Preferred Shares pursuant
to this Section (other than the General Partner holding such Series H Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series H Preferred Shares for which such Series
H Preferred Unit was exchanged or redeemed. Further, for purposes of the
foregoing, in the event of an exchange of Series H Preferred Units for Series H
Preferred Shares, if the accrued and unpaid distributions per Series H Preferred
Unit is not the same for each Series H Preferred Unit, the accrued and unpaid
distributions per Series H Preferred Unit for each such Series H Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series H Preferred Unit on any such unit.
(iii) Fractional Series H Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series H Preferred Shares on the day
prior to the exchange date as determined in good faith by the board of directors
of the General Partner.
C. Adjustment of Series H Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series H Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series H Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable (including cash or any combination
thereof) upon the consummation of such transaction by a holder of that number of
Series H Preferred Shares or fraction thereof into which one Series H Preferred
Unit was exchangeable immediately prior to such transaction. AMB may not become
a party to any such transaction unless the terms thereof are consistent with the
foregoing. AMB and the Operating Partnership further agree that, notwithstanding
any transaction to which either
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may be a party (including, without limitation, any merger, consolidation,
statutory share exchange, tender offer for all or substantially all of such
entity's capital stock or partnership interests or sale of all or substantially
all of such entity's assets), immediately following any such transaction, the
issuer or issuers of any shares of capital stock and other securities into which
the Series H Preferred Units shall be exchangeable pursuant to this Section 21.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which (i) the Series B Preferred Units are then exchangeable
(or, if the Series B Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (ii) the Series D
Preferred Units are then exchangeable (or, if the Series D Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding), (iii) the Series E Preferred Units are then exchangeable
(or, if the Series E Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (iv) the Series F
Preferred Units are then exchangeable (or, if the Series F Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding), (v) the Series G Preferred Units are then exchangeable (or,
if the Series G Preferred Units have previously been redeemed in full, would
have been then exchangeable if then still outstanding) and (vi) the Series I
Preferred Units are then exchangeable (or, if the Series I Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding).
Section 21.9. No Conversion Rights
The Series H Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 21.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series H Preferred Units.
ARTICLE 22.
SERIES I PREFERRED UNITS
Section 22.1. Designation and Number
A series of Partnership Units in the Partnership designated as the 8.00%
Series I Cumulative Redeemable Preferred Units (the "Series I Preferred Units")
is hereby established. The number of Series I Preferred Units shall be 510,000.
Section 22.2. Ranking
The Series I Preferred Units shall, with respect to distribution rights
and rights upon voluntary or involuntary liquidation, winding up or dissolution
of the Partnership, rank (i) senior to the Common Units and to all Partnership
Units the terms of which provide that such Partnership Units shall rank junior
to the Series I Preferred Units; (ii) on a parity with the Series D Preferred
Units, the Series E Preferred Units, the Series F Preferred Units, the Series G
Preferred Units, the Series H Preferred Units and all other Parity Preferred
Units; and (iii) junior to all Partnership Units which rank senior to the Series
I Preferred Units.
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Section 22.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 17.3A, 18.3A, 19.3A, 20.3A and 21.3A hereof), holders of Series I
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series I
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 25th day of March, June, September and December of
each year and (B) in the event of (i) an exchange of Series I Preferred Units
into Series I Preferred Shares, or (ii) a redemption of Series I Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series I
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series I Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series I Preferred Units will be
made to the holders of record of the Series I Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series I
Preferred Unit Distribution Payment Date (the "Series I Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series I Preferred Units, the Series H Preferred
Units, the Series G Preferred Units, the Series F Preferred Units, the Series E
Preferred Units and the Series D Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series I Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series I Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series I Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or
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contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for such payment on the Series I Preferred Units
and all classes and series of outstanding Parity Preferred Units for all
distribution periods. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the exchange of Junior Units or Parity
Preferred Units into Partnership Interests of the Partnership ranking junior to
the Series I Preferred Units as to distributions and upon voluntary and
involuntary liquidation, dissolution or winding up of the Partnership, or (c)
distributions necessary to enable the Operating Partnership to redeem
partnership interests corresponding to Series I Preferred Shares and any Parity
Preferred Stock with respect to distributions or Junior Stock to be purchased by
AMB pursuant to the REIT Charter to preserve AMB's status as a REIT; provided
that such redemption shall be upon the same terms as the corresponding stock
purchase pursuant to the REIT Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series I
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series I Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
I Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series I Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series I Preferred Units which may be in
arrears.
(iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
I Preferred Units may be made, without preserving the priority of distributions
described in Sections 22.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.
D. No Further Rights. Holders of Series I Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
Section 22.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership, distributions on the Series I Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the
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place or places where, the amounts distributable in such circumstances shall be
payable, shall be given by the General Partner pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series I
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None of a
consolidation or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership's property or business
shall be considered a liquidation, dissolution or winding up of the Partnership.
Section 22.5. Series I Redemption
A. Series I Redemption. The Series I Preferred Units may not be redeemed
prior to March 21, 2006. On or after such date, the Partnership shall have the
right to redeem the Series I Preferred Units, in whole or in part, at any time
or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series I Redemption"), equal
to the Capital Account balance of the holder of Series I Preferred Units (the
"Series I Redemption Price"); provided, however, that no redemption pursuant to
this Section 21.5 will be permitted if the Series I Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series I Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series I Preferred
Units are to be redeemed, the Series I Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Series I Redemption. (i) The Series I Redemption Price
of the Series I Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB, which will be contributed by AMB to the General Partner
or the Operating Partnership and which in turn will be contributed by the
General Partner or the Operating Partnership to the Partnership as an additional
capital contribution, or out of the sale of limited partner interests in the
Partnership or the Operating Partnership and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding
Series I Preferred Units unless all accumulated and unpaid distributions have
been paid on all Series I Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
C. Procedures for Series I Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series I Preferred Units at
their respective addresses as they appear on the records of the
125
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series I Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Series I Redemption Price, (c) the aggregate number
of Series I Preferred Units to be redeemed and if fewer than all of the
outstanding Series I Preferred Units are to be redeemed, the number of Series I
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series I Preferred Units that the total number of Series I Preferred
Units held by such holder represents) of the aggregate number of Series I
Preferred Units to be redeemed, (d) the place or places where such Series I
Preferred Units are to be surrendered for payment of the Series I Redemption
Price, (e) that distributions on the Series I Preferred Units to be redeemed
will cease to accumulate on such redemption date and (f) that payment of the
Series I Redemption Price will be made upon presentation and surrender of such
Series I Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series I Preferred Units (which notice will be irrevocable) then, by 12:00 noon,
New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series I Preferred Units being
redeemed funds sufficient to pay the applicable Series I Redemption Price and
will give irrevocable instructions and authority to pay such Series I Redemption
Price to the holders of the Series I Preferred Units upon surrender of the
Series I Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series I Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series I Preferred Units is not a Business Day, then
payment of the Series I Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series I Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series I Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series I Redemption Price.
Section 22.6. Voting and Certain Management Rights
A. General. Holders of the Series I Preferred Units will not have any
voting rights or right to consent to any matter requiring the consent or
approval of the Limited Partners, except as set forth below and in Section
7.3.E.
B. Certain Voting Rights. So long as any Series I Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series I Preferred Units outstanding
at the time (i) authorize or create, or increase the authorized or issued amount
of, any class or series of Partnership Interests ranking prior to the Series I
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interest, or create, authorize or
issue any obligations or security convertible into or
126
evidencing the right to purchase any such Partnership Interests, (ii) authorize
or create, or increase the authorized or issued amount of any Parity Preferred
Units or reclassify any Partnership Interest of the Partnership into any such
Partnership Interest or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests but only to the extent such Parity Preferred Units are issued to an
affiliate of the Partnership, other than AMB or the Operating Partnership to the
extent the issuance of such interests was to allow AMB or the Operating
Partnership to issue corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership (other than AMB to the extent
AMB issues corresponding preferred stock to persons who are not affiliates of
the Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 22 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series I
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series I Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series I Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series I Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series I Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.
C. So long as any Series I Preferred Units remain outstanding, the
General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series I Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 22.8; provided however, no
such vote shall be required so long as the Series I Preferred Units (or any
interests substituted therefore pursuant to Section 22.6.B) remain outstanding
and are exchangeable for Series I Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series I Preferred Shares.
D. Notwithstanding anything to the contrary contained in this Agreement,
including, without limitation, the provisions of Article 7 regarding the
management rights and responsibilities of the General Partner, whenever
distributions on any Series I Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 25th day of
March, June, September and December, or, if not a business day, the next
succeeding
127
business day, beginning with the quarterly period ending March 25, 2001)
(whether or not consecutive), the holders of 51% of either (i) such Series I
Preferred Units, in the event that the holders of the Series D Preferred Units,
Series E Preferred Units, Series F Preferred Units, Series G Preferred Units and
Series H Preferred Units are not entitled to exercise management rights pursuant
to Section 17.6D, Section 18.6.D, Section 19.6.D, Section 20.6.D and Section
21.6.D, respectively, and that no Future Parity Preferred Unitholders are
entitled to exercise management rights similar to those to which the holders of
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units, Series H Preferred Units and Series I Preferred Units
are entitled to exercise pursuant to Section 17.6D, Section 18.6.D, Section
19.6.D, Section 20.6.D, Section 21.6.D and this Section 22.6.D, respectively, or
(ii) the Parity Preferred Capital, in the event that holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units or Series H Preferred Units are entitled to exercise management
rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D, Section 20.6.D
or Section 21.6.D, respectively, or Future Parity Preferred Unitholders are
entitled to exercise management rights similar to those to which the holders of
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units, Series H Preferred Units and Series I Preferred Units
are entitled to exercise pursuant to Section 17.6D, Section 18.6.D, Section
19.6.D, Section 20.6.D, Section 21.6.D and this Section 22.6.D, respectively,
shall be entitled to assume rights to manage the Partnership and perform actions
related thereto for the sole purpose of enforcing the Partnership's rights and
remedies as against obligees of the Partnership or other Persons from whom the
Partnership may be entitled to receive cash or other assets, until all
distributions accumulated on the Series I Preferred Units for all past quarterly
periods and the distribution for the then-current quarterly period shall have
been fully-paid or declared and a sum sufficient for the payment thereof
irrevocably set aside in trust for payment in full; provided, however, that no
such holder or holders of Series I Preferred Units may at any time take any
action (or fail to take any action) if the consequence of such action (or
inaction) would be (i) to cause AMB to fail to qualify as a REIT for federal or
applicable state income tax purposes or (ii) to cause the Partnership or the
Operating Partnership to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the Partnership, the
Operating Partnership, the General Partner, or AMB to be considered an
"investment company" as defined in, or otherwise be subject to regulation under,
the Investment Company Act of 1940, as amended; and provided, further, that
solely for purposes of exercising the management rights set forth in this
Section 22.6.D, each holder of Series I Preferred Units shall be deemed an
Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series I Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
22.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series I Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units, the Series E Preferred Units, the Series F Preferred Units,
Series G Preferred Units and Series H Preferred Units and shall be entitled to
provide similar management rights to Future Parity Preferred Unitholders.
Section 22.7. Transfer Restrictions
The Series I Preferred Units shall be subject to the provisions of
Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series I Preferred Units, or
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other action by the holder or holders of such Units, is permitted without the
consent of the General Partner which consent may be given or withheld in its
sole and absolute discretion, if such transfer or other action would result in
more than four partners holding all outstanding Series D Preferred Units, Series
H Preferred Units and Series I Preferred Units within the meaning of Treasury
Regulation Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation
Section 1.7704-1(h)(3)(ii)); provided, however, that the General Partner's
consent may not be unreasonably withheld if (a) such transfer or other action
would not result in more than ten partners holding all outstanding Series D
Preferred Units, Series H Preferred Units and Series I Preferred Units within
the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to
Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the General Partner
cannot rely on Treasury Regulation Section 1.7704-1(h). In addition, no transfer
may be made to any person if such transfer would cause the exchange of the
Series I Preferred Units for Series I Preferred Shares, as provided herein, to
be required to be registered under the Securities Act of 1933, as amended, or
any state securities laws.
Section 22.8. Exchange Rights
A. Right to Exchange. (i) Series I Preferred Units will be exchangeable
in whole but not in part unless expressly otherwise provided herein at anytime
on or after March 21, 2011, at the option of 51% of the holders of all
outstanding Series I Preferred Units, for authorized but previously unissued
Series I Preferred Shares at an exchange rate of one Series I Preferred Share
from AMB for one Series I Preferred Unit, subject to adjustment as described
below (the "Series I Exchange Price"); provided that the Series I Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series I Preferred Units for Series I Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series I
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series I Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series I Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series I Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series I Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.
In addition, the Series I Preferred Units may be exchanged for Series I
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series I
Preferred Units after March 21, 2004 and prior to March 21, 2011 if such holders
of a Series I Preferred Units shall deliver to the General Partner either (i) a
private letter ruling addressed to such holder of Series I Preferred Units or
(ii) an opinion of independent counsel reasonably acceptable to the General
Partner based on a change in statute, the enactment of temporary or final
Treasury Regulations or the publication of a Revenue Ruling or any other IRS
release, in either case to the effect that an exchange of the Series I Preferred
Units at such earlier time would not cause the Series I Preferred Units to be
considered "stock
129
and securities" within the meaning of Section 351(e) of the Code for purposes of
determining whether the holder of such Series I Preferred Units is an
"investment company" under Section 721(b) of the Code if an exchange is
permitted at such earlier date.
(ii) Notwithstanding anything to the contrary set forth in Section
22.8.A(i), if a Series I Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its option,
within ten (10) Business Days after receipt of the Series I Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series I Preferred Units for cash in an amount equal to the original Capital
Contribution per Series I Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series I Preferred Units, the number
of Series I Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series I Preferred Units that the total number of Series I Preferred
Units held by such holder represents) of the aggregate number of Series I
Preferred Units being redeemed.
(iii) In the event an exchange of all Series I Preferred Units pursuant
to Section 22.8.A would violate the provisions on ownership limitation of AMB
set forth in Section 7 of Article Third of the Series I Articles Supplementary,
each holder of Series I Preferred Units shall be entitled to exchange, pursuant
to the provisions of Section 22.8.B, a number of Series I Preferred Units which
would comply with the provisions on the ownership limitation of AMB set forth in
such Section 7 of Article Third of the Series I Articles Supplementary, with
respect to such holder, and any Series I Preferred Units not so exchanged (the
"Series I Excess Units") shall be redeemed by the Partnership for cash in an
amount equal to the original Capital Contribution per Series I Excess Unit, plus
any accrued and unpaid distributions thereon to the date of redemption subject
to any restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series I Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series I Excess Units under this Section 22.8.A(iii), the "Ownership
Limit" set forth in the Series I Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series I Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series I Preferred Units exceptions to the Ownership Limit set forth in the
Series I Articles Supplementary sufficient to allow such Holders to exchange all
of their Series I Preferred Units for Series I Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series I
Limited Partner shall be entitled to effect an exchange of Series I Preferred
Units for Series I Preferred Shares to the extent that ownership or right to
acquire such shares would cause the
130
Partner or any other Person or, in the opinion of counsel selected by AMB, may
cause the Partner or any other Person, to violate the restrictions on ownership
and transfer of Series I Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series I Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series I
Limited Partner shall not acquire any rights or economic interest in the Series
I Preferred Shares otherwise issuable upon such exchange.
(iv) The redemption of Series I Preferred Units described in Section
22.8.A(ii) and (iii) shall be subject to the provisions of Section 22.5.B(i) and
Section 22.5.C(ii); provided, however, that the term "Series I Redemption Price"
in such Sections 22.5.B(i) and 22.5.C(ii) shall be read to mean the original
Capital Contribution per Series I Preferred Unit being redeemed as set forth on
Exhibit A plus all accrued and unpaid distributions to the redemption date.
B. Procedure for Exchange of Series I Preferred Units and/or Series I
Redemption.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series I Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series I Preferred Units
(or by the Series I Contributor in the case of an exchange pursuant to the last
sentence of Section 22.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series I Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series I Preferred Units for cash pursuant to Section 22.8.A(ii)
or redeem Series I Excess Units pursuant to Section 22.8.A(iii), by delivering
to each holder of record of Series I Preferred Units, within ten (10) Business
Days following receipt of the Series I Exchange Notice, (a) if the General
Partner elects to cause the Partnership to acquire any of the Series I Preferred
Units then outstanding, (1) certificates representing the Series I Preferred
Shares being issued in exchange for the Series I Preferred Units of such holder
being exchanged and (2) a written notice (a "Series I Redemption Notice")
stating (A) the redemption date, which may be the date of such Series I
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series I Exchange Notice, (B) the redemption price,
(C) the place or places where the Series I Preferred Units are to be surrendered
and (D) that distributions on the Series I Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series I Preferred Units then outstanding in
exchange for cash, a Series I Redemption Notice. Series I Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series I Preferred Units shall deliver any canceled certificates representing
Series I Preferred Units which have been exchanged or redeemed to the office of
the General Partner (which currently is located at Pier 1, Bay 1, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series I Preferred Units to be exchanged for Series I Preferred
Shares pursuant to this Section 22.8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, AMB may require the holders
of Series I Preferred Units to make such representations as may be reasonably
necessary for the General Partner to establish that the issuance of Series I
Preferred Shares pursuant to the exchange shall not be required to be registered
under the Securities Act or any state securities laws. Any Series I Preferred
Shares issued pursuant to this Section 22.8 shall be
131
delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of any pledge, lien, encumbrance or restriction other than
those provided in the REIT Charter, the Bylaws of AMB, the Securities Act and
relevant state securities or blue sky laws.
The certificates representing the Series I Preferred Shares issued upon
exchange of the Series I Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS
OF SECTION 5 OF THE ACT AND STATE SECURITIES LAWS AND THE RULES AND
REGULATIONS THEREUNDER.
(ii) In the event of an exchange of Series I Preferred Units for Series
I Preferred Shares, an amount equal to the accrued and unpaid distributions to
the date of exchange on any Series I Preferred Units tendered for exchange shall
(i) accrue on the Series I Preferred Shares into which such Series I Preferred
Units are exchanged, and (ii) continue to accrue on such Series I Preferred
Units, which shall remain outstanding following such exchange, with the General
Partner as the holder of such Series I Preferred Units. Notwithstanding anything
to the contrary set forth herein, in no event shall a Holder of a Series I
Preferred Unit that was validly exchanged for Series I Preferred Shares pursuant
to this Section (other than the General Partner holding such Series I Preferred
Unit following any such exchange), receive a distribution out of Available Cash
of the Partnership, if such Holder, after exchange, is entitled to receive a
distribution with respect to the Series I Preferred Shares for which such Series
I Preferred Unit was exchanged or redeemed. Further, for purposes of the
foregoing, in the event of an exchange of Series I Preferred Units for Series I
Preferred Shares, if the accrued and unpaid distributions per Series I Preferred
Unit is not the same for each Series I Preferred Unit, the accrued and unpaid
distributions per Series I Preferred Unit for each such Series I Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series I Preferred Unit on any such unit.
(iii) Fractional Series I Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment
based upon the fair market value of the Series I Preferred Shares on the day
prior to the exchange date as determined in good faith by the board of directors
of the General Partner.
C. Adjustment of Series I Exchange Price. In case AMB shall be a party
to any transaction (including, without limitation, a merger, consolidation,
statutory share exchange,
132
tender offer for all or substantially all of AMB's capital stock or sale of all
or substantially all of AMB's assets), in each case as a result of which the
Series I Preferred Shares will be converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), each Series I Preferred Unit will thereafter be
exchangeable into the kind and amount of shares of capital stock and other
securities and property receivable (including cash or any combination thereof)
upon the consummation of such transaction by a holder of that number of Series I
Preferred Shares or fraction thereof into which one Series I Preferred Unit was
exchangeable immediately prior to such transaction. AMB may not become a party
to any such transaction unless the terms thereof are consistent with the
foregoing. AMB and the Operating Partnership further agree that, notwithstanding
any transaction to which either may be a party (including, without limitation,
any merger, consolidation, statutory share exchange, tender offer for all or
substantially all of such entity's capital stock or partnership interests or
sale of all or substantially all of such entity's assets), immediately following
any such transaction, the issuer or issuers of any shares of capital stock and
other securities into which the Series I Preferred Units shall be exchangeable
pursuant to this Section 22.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which (i) the Series B Preferred Units
are then exchangeable (or, if the Series B Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
(ii) the Series D Preferred Units are then exchangeable (or, if the Series D
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding), (iii) the Series E Preferred Units are
then exchangeable (or, if the Series E Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
(iv) the Series F Preferred Units are then exchangeable (or, if the Series F
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding), (v) the Series G Preferred Units are
then exchangeable (or, if the Series G Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding)
and (vi) the Series H Preferred Units are then exchangeable (or, if the Series H
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding).
Section 22.9. No Conversion Rights
The Series I Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
Section 22.10. No Sinking Fund
No sinking fund shall be established for the retirement or redemption of
Series I Preferred Units.
(Signature Pages Follow)
133
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
GENERAL PARTNER:
AMB PROPERTY HOLDING CORPORATION,
a Maryland corporation
By: /s/ Michael A. Coke
--------------------------------
Michael A. Coke
Executive Vice President and
Chief Financial Officer
COMMON LIMITED PARTNER:
AMB PROPERTY, L.P.,
a Delaware limited partnership
By: AMB Property Corporation,
its general partner
By: /s/ Michael A. Coke
--------------------------------
Michael A. Coke
Executive Vice President and
Chief Financial Officer
GENERAL PARTNER OF COMMON LIMITED
PARTNER:
AMB PROPERTY CORPORATION,
a Maryland corporation
By: /s/ Michael A. Coke
--------------------------------
Michael A. Coke
Executive Vice President and
Chief Financial Officer
S-1
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
I. COMMON UNITS
Agreed Value
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- -------------------------- ------------ ------------- -------------- ------------- ------------- -----------
GENERAL PARTNER:
AMB Property Holding
Corporation 11/26/97 -- $3,626,023 $3,626,023 172,668 .99725%
LIMITED PARTNERS:
AMB Property, L.P. 11/26/97 -- $358,976,301 $358,976,301 17,094,110 98.72782%
06/30/98 -- $1,161,489 $1,161,489 47,602 .27493%
------------ ------------ ------------ ------------ ---------
TOTAL COMMON UNITS -- $363,763,813 $363,763,813 17,314,380 100.0000%
------------ ------------ ------------ ------------ ---------
A-1
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
II. SERIES C PREFERRED UNITS
Agreed Value Series C
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- -------------------------------- ------------- -------------- --------------- ------------------- -------------- --------------
LIMITED PARTNER:
Belcrest Realty Corporation 11/24/98 $24,000,000 -- $24,000,000 480,000 21.81818%
Belair Real Estate Corporation 11/24/98 $86,000,000 -- $86,000,000 1,720,000 78.18182%
Belcrest Realty Corporation 2/23/99 -- -- -- 381,000 17.31818%
Belair Real Estate Corporation 2/23/99 -- -- -- (381,000) (17.31818%)
Belcrest Realty Corporation 4/29/99 -- -- -- 239,000 10.86364%
Belair Real Estate Corporation 4/29/99 -- -- -- (239,000) (10.86364%)
Argosy Realty Corporation 7/9/99 -- -- -- 32,506 1.47755%
Belmar Realty Corporation 7/9/99 -- -- -- 32,506 1.47755%
Belport Realty Corporation 7/9/99 -- -- -- 32,506 1.47755%
Belrieve Realty Corporation 7/9/99 -- -- -- 32,506 1.47755%
Belair Real Estate Corporation 7/9/99 -- -- -- (130,024) (5.91018%)
Belcrest Realty Corporation 7/28/99 -- -- -- 300,000 13.63636%
Belair Real Estate Corporation 7/28/99 -- -- -- (300,000) (13.63636%)
Belmar Realty Corporation 3/17/00 -- -- -- (32,506) (1.47755%)
Belcrest Realty Corporation 3/17/00 -- -- -- (250,000) (11.36364%)
Belair Real Estate Corporation 3/17/00 -- -- -- 282,506 12.84118%
Belair Real Estate Corporation 12/19/00 -- -- -- 32,506 1.47755%
----------- --------------- ------------ --------- ------------
Altavera Realty Corporation, 12/19/00 -- -- -- (32,506) (1.47755%)
formerly known as Belrieve
Realty Corporation
=========== =============== ============ ========= ============
Belport Realty Corporation 3/14/01 -- -- -- (32,506) (1.47755%)
=========== =============== ============ ========= ============
Belair Real Estate Corporation 3/14/01 -- -- -- 32,506 1.47755%
=========== =============== ============ ========= ============
Argosy Realty Corporation 12/5/01 -- -- -- (32,506) (1.47755%)
=========== =============== ============ ========= ============
Belair Real Estate Corporation 12/5/01 -- -- -- (1,017,494) (46.24972%)
=========== =============== ============ ========= ============
Belcrest Realty Corporation 12/5/01 -- -- -- (1,150,000) (52.27272%)
=========== =============== ============ ========= ============
TOTAL SERIES C PREFERRED
UNITS $110,000,000 -- $110,000,000 0 000.0000%
=========== =============== ============ ========= ============
III. SERIES D PREFERRED UNITS
Agreed Value Series D
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------- -------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
J.P. Morgan Mosaic Fund, LLC 5/5/99 $79,766,850 -- $79,766,850 1,595,337 100.0000%
----------- -------------- ------------- ----------- ----------
TOTAL SERIES D PREFERRED
UNITS $79,766,850 -- $79,766,850 1,595,337 100.0000%
=========== ============== ============= ========== ==========
IV. SERIES E PREFERRED UNITS
Agreed Value Series E
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------- -------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
Fifth Third Equity Exchange 8/31/99 $11,022,000 -- $11,022,000 220,440 100.0000%
Fund 1999, LLC
----------- -------------- ------------- ----------- ----------
TOTAL SERIES E PREFERRED
UNITS $11,022,000 -- $11,022,000 220,440 100.0000%
=========== ============== ============= ========== ==========
V. SERIES F PREFERRED UNITS
Agreed Value Series F
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------- -------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
3/22/00 $19,871,950 -- $19,871,950 397,439 100.0000%
Bailard, Biehl & Kaiser
Technology Exchange Fund, LLC
----------- -------------- ------------- ----------- ----------
TOTAL SERIES F PREFERRED
UNITS $19,871,950 -- $19,871,950 397,439 100.0000%
=========== ============== ============= ========== ==========
A-2
VI. SERIES G PREFERRED UNITS
Agreed Value Series G
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------ ------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
Bailard, Biehl & Kaiser 8/29/00 $1,000,000 -- $1,000,000 20,000 100.0000%
Technology Exchange Fund, LLC
----------- -------------- ------------- ----------- ----------
TOTAL SERIES G PREFERRED
UNITS $1,000,000 -- $1,000,000 20,000 100.0000%
========== ============== ============= =========== ==========
VII. SERIES H PREFERRED UNITS
Agreed Value Series H
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------ ------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
J.P. Morgan Mosaic Fund IV, LLC 9/1/00 $42,000,000 -- $42,000,000 840,000 100.0000%
----------- -------------- ------------- ----------- ----------
TOTAL SERIES G PREFERRED
UNITS $42,000,000 -- $42,000,000 840,000 100.0000%
=========== ============== ============= =========== ==========
VIII. SERIES I PREFERRED UNITS
Agreed Value Series I
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------ ------------- -------------- ------------- ----------- ----------
LIMITED PARTNER:
J.P. Morgan Chase Mosaic Fund 3/21/01 $25,500,000 -- $25,500,000 510,000 100.0000%
V, LLC
------------ -------------- ------------ --------- ---------
TOTAL SERIES I PREFERRED
UNITS $25,500,000 -- $25,500,000 510,000 100.0000%
============ ============== ============ ========= =========
------------ -------------- ------------ --------- ---------
TOTAL ALL SERIES OF PREFERRED
UNITS $289,160,800 -- $289,160,800 3,185,777 100.0000%
============ ============== ============ ========= =========
A-3
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) exchanges ____________ Limited
Partnership Units in AMB Property II, L.P. in accordance with the terms of the
Limited Partnership Agreement of AMB Property II, L.P. dated as of
_________________, as amended, and the rights of Series G Redemption referred to
therein, (ii) surrenders such Limited Partnership Units and all right, title and
interest therein and (iii) directs that the cash (or, if applicable, Preferred
Stock) deliverable upon Series H Redemption or exchange be delivered to the
address specified below, and if applicable, that such Preferred Stock be
registered or placed in the name(s) and at the address(es) specified below.
Dated: ________________________
Name of Limited Partner:
---------------------------------
(Signature of Limited Partner)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
---------------------------------
Issue Shares in the name of:
Please insert social security or identifying number:
Address (if different than above):
B-1
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:
a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or constructively, by
or for a partnership, limited liability company or estate is considered as owned
proportionately by its partners, members or beneficiaries;
c. an Ownership Interest that is owned, actually or constructively, by
or for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);
d. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;
e. an Ownership Interest that is owned, actually or constructively, by
or for a partner or member which actually or constructively owns a 25% or
greater capital interest or profits interest in a partnership or limited
liability company, or by or for a beneficiary of an estate or trust, shall be
considered as owned by the partnership, limited liability company, estate, or
trust (or, in the case of a grantor trust, the grantors);
f. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such corporation
shall be considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under
paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g) and (iv) for purposes of the above described rules, an S corporation shall
be treated as a partnership and any stockholder of the S corporation shall be
treated as a partner of such partnership except that this rule shall not apply
for purposes of determining whether stock in the S corporation is constructively
owned by any person.
i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.
C-1
EXHIBIT D-1
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
AMB PROPERTY II, L.P.
No. _______________ ____________ UNITS
AMB Property Holding Corporation as the General Partner of AMB Property
II, L.P., a Delaware limited partnership (the "Operating Partnership"), hereby
certifies that is a Limited Partner of the Operating Partnership whose
Partnership Interests therein, as set forth in the Agreement of Limited
Partnership of AMB Property II, L.P., dated as of ______________, 2000 (as it
may be amended, modified or supplemented from time to time in accordance with
its terms, (the "Partnership Agreement"), under which the Operating Partnership
is existing and as filed in the office of the Delaware [State Department of
Assessments and Taxation] (copies of which are on file at the Operating
Partnership's principal office at______________________________________________,
represent units of limited partnership interest in the Operating Partnership
(the "Partnership Units").
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A COPY OF
WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED
IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE
THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.
DATED:____________________________, 2001.
AMB PROPERTY HOLDING CORPORATION
General Partner of AMB
Property II, L.P.
ATTEST:
By:_________________________ By:___________________________
D-2
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
None
E-1
EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY 25% LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
None
F-1
EXHIBIT G
SCHEDULE OF CERTAIN AGREEMENTS RELATING TO
PROPERTIES WITH RESTRICTIONS ON DISPOSITION
PURSUANT TO SECTION 7.3.F
1. APLP II Contribution Agreement dated as of May 21, 1998, by and between
Hayes Realty Company, an Illinois general partnership and AMB Property
II, L.P., a Delaware limited partnership.
G-1
EXHIBIT H
SCHEDULE OF CERTAIN AGREEMENTS CONTAINING
LIMITATIONS ON GENERAL PARTNERS GENERAL AUTHORITY
1. APLP II Contribution Agreement dated as of May 21, 1998, by and between
Hayes Realty Company, an Illinois general partnership and AMB Property
II, L.P., a Delaware limited partnership.
H-1
EXHIBIT I
RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT
(a) Definitions. for the purposes of this Exhibit I, the following terms
shall have the following meanings:
"Charitable Beneficiary" shall mean one or more beneficiaries
of a Trust, as determined pursuant to subsection (c)(vi), each of
which shall be an organization described in Sections 170(b)(1)(A),
170(c)(2) and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Constructive Ownership" shall mean ownership of Partnership
Units by a Person who is or would be treated as an owner of such
Partnership Units either actually or constructively through the
application of Section 318 of the Code, as modified by Section
856(d)(5) of the Code. The terms "Constructive Owner,"
"Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Exempted Person" shall mean any Person exempted from time to
time by the General Partner in its sole and absolute discretion. The
Operating Partnership shall be considered an Exempted Person.
"Market Price" shall mean the market price of the Partnership
Units on the relevant date as determined in good faith by the
General Partner; provided, however, if AMB has outstanding shares of
capital stock which correspond to such Partnership Units (i.e., the
Series D Preferred Shares), the Market Price of each such
Partnership Unit shall be equal to the Value of a share of such
capital stock, subject to adjustment if the right to exchange such
Partnership Units for such stock is other than one to one.
"Ownership Limit" shall mean 24.9% of the capital or profits
interests of the Partnership.
"Person" shall mean an individual, corporation, partnership,
limited liability company, estate, trust (including a trust
qualified under Section 401(a) or 501(c)(17) of the Code), a portion
of a trust permanently set aside for or to be used exclusively for
the purposes described in Section 642(c) of the Code, association,
private foundation within the meaning of Section 509(a) of the Code,
joint stock company or other entity.
"Purported Beneficial Transferee" shall mean, with respect to
any purported Transfer (or other event) which results in a transfer
to a Trust, as provided in
I-1
subsection (b)(ii), the Purported Record Transferee, unless the
Purported Record Transferee would have acquired or owned Partnership
Units for another Person who is the beneficial transferee or owner
of such Partnership Units, in which case the Purported Beneficial
Transferee shall be such Person.
"Purported Record Transferee" shall mean, with respect to any
purported Transfer (or other event) which results in a transfer to a
Trust, as provided in subsection (b)(ii), the holder of the
Partnership Units as set forth or to be set forth in Exhibit A to
the Partnership Agreement, and any Assignee of such Partnership
Units, if such Transfer or ownership had been valid under subsection
(b)(i).
"Restriction Termination Date" shall mean the first day after
the date hereof on which the General Partner determines, in its sole
and absolute discretion, that compliance with subsection (b)(i) is
no longer necessary or advisable.
"Transfer" shall mean any sale, transfer, gift, assignment,
devise or other disposition of Partnership Units, (including (i) the
granting of any option or entering into any agreement for the sale,
transfer or other disposition of Partnership Units or (ii) the sale,
transfer, assignment or other disposition of any securities (or
rights convertible into or exchangeable for Partnership Units)),
whether voluntary or involuntary, whether such transfer has occurred
of record or beneficially or Constructively (including but not
limited to transfers of interests in other entities which results in
changes in Constructive Ownership of Partnership Units), and whether
such transfer has occurred by operation of law or otherwise.
"Trust" shall mean each of the trusts provided for in
subsection (c).
"Trustee" shall mean any Person unaffiliated with the
Partnership, or a Purported Beneficial Transferee, or a Purported
Record Transferee, that is appointed by the Partnership to serve as
trustee of a Trust.
Capitalized terms used and not defined herein shall have the meanings ascribed
to them in the Third Amended and Restated Agreement of Limited Partnership of
AMB Property II, L.P. (the "Partnership Agreement"), as such agreement may be
amended from time to time. All references to "Section" refer to the Partnership
Agreement.
(b) Restriction on Ownership and Transfers.
(i) Prior to the Restriction Termination Date, no Person, other than
an Exempted Person, shall at any time Constructively Own Partnership Units in
excess of the Ownership Limit if the representations contained in Section 3.4.D
are not at such time true and correct.
I-2
(ii) If, prior to the Restriction Termination Date, any Transfer or
other event occurs that, if effective, would result in any Person Constructively
Owning Partnership Units in violation of subsection (b)(i), (1) then that number
of Partnership Units that otherwise would cause such Person to violate
subsection (b)(i) (rounded up to the nearest whole Partnership Unit) shall be
automatically transferred (provided such Transfer is not in violation of the
restrictions on transfer set forth in the Partnership Agreement, except to the
extent the General Partner waives such restrictions) to a Trust for the benefit
of a Charitable Beneficiary, as described in subsection (c), effective as of the
close of business on the business day prior to the date of such Transfer or
other event, and such Purported Beneficial Transferee shall thereafter have no
rights in such Partnership Units or (2) if, for any reason, the transfer to the
Trust described in clause (1) of this sentence is not automatically effective as
provided therein to prevent any Person from Constructively Owning Partnership
Units in violation of subsection (b)(i), then the Transfer of that number of
Partnership Units that otherwise would cause any Person to violate subsection
(b)(i) shall be void ab initio, and the Purported Beneficial Transferee shall
have no rights in such Partnership Units.
(c) Transfers of Partnership Units in Trust.
(i) Upon any purported Transfer or other event described in
subsection (b)(ii), such Partnership Units shall be deemed to have been
transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that results in a
transfer to the Trust pursuant to subsection (b)(ii). The Trustee shall be
appointed by the Partnership and shall be a Person unaffiliated with the
Partnership, any Purported Beneficial Transferee, or any Purported Record
Transferee. Each Charitable Beneficiary shall be designated by the Partnership
as provided in subsection (c)(vi).
(ii) Partnership Units held by the Trustee shall be issued and
outstanding Partnership Units of the Partnership. The Purported Beneficial
Transferee or Purported Record Transferee shall have no rights in the
Partnership Units held by the Trustee. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of any
Partnership Units held in trust by the Trustee, shall have no rights to
distributions or allocations with respect to Partnership Units held in the Trust
and shall not possess any rights to vote or other rights attributable to the
Partnership Units held in the Trust.
(iii) The Trustee shall have all voting rights and rights to
distributions and allocations with respect to Partnership Units held in the
Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any distribution paid prior to the discovery by the
Partnership that Partnership Units have been transferred to the Trustee shall be
paid to the Trustee upon demand, and any distribution with respect to such
Partnership Units shall be paid when due to the Trustee. Any distributions so
paid over to the Trustee shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial Transferee
shall have no voting rights with respect to the Partnership Units held in the
Trust and, subject to Delaware law,
I-3
effective as of the date the Partnership Units has been transferred to the
Trustee, the Trustee shall have the authority (at the Trustee's sole discretion)
(i) to rescind as void any vote cast by a Purported Record Transferee with
respect to such Partnership Units prior to the discovery by the Partnership that
the Partnership Units has been transferred to the Trustee and (ii) to recast
such vote in accordance with the desires of the Trustee acting for the benefit
of the Charitable Beneficiary; provided, however, that if the Partnership has
already taken irreversible action, then the Trustee shall not have the authority
to rescind and recast such vote. Notwithstanding any other provision of this
Exhibit I to the contrary, until the Partnership has received notification that
the Partnership Units have been transferred into a Trust, the Partnership shall
be entitled to rely on its Partnership Unit transfer and other unitholder
records for purposes of preparing Exhibit A to the Partnership Agreement, lists
of unitholders entitled to vote at meetings, and otherwise conducting votes of
Partners.
(iv) Within 20 days of receiving notice from the Partnership that
Partnership Units have been transferred to the Trust, the Trustee of the Trust
shall, in accordance with the terms of (and subject to the limitations contained
in) the Partnership Agreement, sell the Partnership Units held in the Trust to a
Person, designated by the Trustee, whose ownership of the Partnership Units will
not violate the ownership limitations set forth in subsection (b)(i). Upon such
sale, the interest of the Charitable Beneficiary in the Partnership Units sold
shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Purported Record Transferee and to the Charitable Beneficiary as provided in
this subsection (c)(iv). The Purported Record Transferee shall receive the
lesser of (1) the price paid by the Purported Record Transferee for the
Partnership Units in the transaction that resulted in such transfer to the Trust
(or, if the event which resulted in the transfer to the Trust did not involve a
purchase of such Partnership Units at Market Price, the Market Price of such
Partnership Units on the day of the event which resulted in the transfer of such
Partnership Units to the Trust) and (2) the price per Partnership Unit received
by the Trustee (net of any commissions and other expenses of sale) from the sale
or other disposition of the Partnership Units held in the Trust. Any net sales
proceeds in excess of the amount payable to the Purported Record Transferee
shall be immediately paid to the Charitable Beneficiary together with any
distributions thereon. If, prior to the discovery by the Partnership that
Partnership Units have been transferred to the Trustee, such Partnership Units
are sold by a Purported Record Transferee then (i) such Partnership Units shall
be deemed to have been sold on behalf of the Trust and (ii) to the extent that
the Purported Record Transferee received an amount for such Partnership Units
that exceeds the amount that such Purported Record Transferee was entitled to
receive pursuant to this subsection (c)(iv), such excess shall be paid to the
Trustee upon demand. The expenses described in item (2) above shall include any
expenses of administering the Trust, any transfer of Partnership Units thereto
or disposition of Partnership Units thereby, which shall be allocated equitably
among the Partnership Units which are transferred to the Trust.
(v) Partnership Units transferred to the Trustee shall be deemed to
have been offered for sale to the Partnership, or its designee, at a price per
Partnership Unit equal to the lesser of (i) the price paid by the Purported
Record Transferee for the Partnership Units in the transaction that resulted in
such transfer to the Trust (or, if the event which resulted in the transfer to
the Trust did not involve a purchase of such Partnership Units at Market Price,
the Market Price of such
I-4
Partnership Units on the day of the event which resulted in the transfer of such
Partnership Units to the Trust) and (ii) the Market Price on the date the
Partnership, or its designee, accepts such offer. The Partnership shall have the
right to accept such offer until the Trustee has sold the Partnership Units held
in the Trust pursuant to subsection (c)(iv). Upon such a sale to the
Partnership, the interest of the Charitable Beneficiary in the Partnership Units
sold shall terminate and the Trustee shall distribute the net proceeds of the
sale to the Purported Record Transferee and any distributions held by the
Trustee with respect to such Partnership Units shall thereupon be paid to the
Charitable Beneficiary.
(vi) By written notice to the Trustee, the Partnership shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the Partnership Units held in the Trust
would not violate the restrictions set forth in subsection (b)(i) in the hands
of such Charitable Beneficiary.
(d) Remedies For Breach. If the General Partner shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of subsection (b) or that a Person intends to acquire, has attempted
to acquire or may acquire beneficial ownership (determined without reference to
any rules of attribution) or Constructive Ownership of any Partnership Units of
the Partnership in violation of subsection (b), the General Partner shall take
such action as it deems advisable to refuse to give effect or to prevent such
Transfer, including, but not limited to, causing the Partnership to redeem
Partnership Units, refusing to give effect to such Transfer on the books of the
Partnership or instituting proceedings to enjoin such Transfer; provided,
however, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership) in violation of subsection (b)(i), shall
automatically result in the transfer to a Trust as described in subsection
(b)(ii).
(e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire or own Partnership Units in violation of subsection (b), or any
Person who is a Purported Beneficial Transferee such that an automatic transfer
to a Trust results under subsection (b)(ii), shall immediately give written
notice to the Partnership of such event and shall provide to the Partnership
such other information as the Partnership may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on such Person's
compliance with subsection (b)(i).
(f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Constructive Owner of
Partnership Units and each Person who is holding Partnership Units for a
beneficial owner or Constructive Owner shall provide to the Partnership such
information that the Partnership may request, in good faith, in order to
determine the Partnership's status as a partnership (as opposed to a
corporation) or AMB's status as a REIT for federal income tax purposes.
(g) Remedies Not Limited. Nothing contained in this Exhibit I shall
limit the authority of the General Partner to take such other action as it deems
necessary or advisable to protect the Partnership and the interests of its
Partners by preservation of the Partnership's status as a
I-5
partnership (as opposed to a corporation) or AMB's status as a REIT for federal
income tax purposes.
(h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Exhibit I, including any definition contained in
subsection (a), the General Partner shall have the power to determine the
application of the provisions of this Exhibit I with respect to any situation
based on the facts known to it. In the event that a provision of this Exhibit I
requires an action by the General Partner and Exhibit I fails to provide
specific guidance with respect to such action, the General Partner shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Exhibit I. Absent a decision to the contrary by
the General Partner (which the General Partner may make in its sole and absolute
discretion), if a Person would have (but for the remedies set forth in
subsection (b)) acquired Constructive Ownership of Partnership Units in
violation of subsection (b)(i), such remedies (as applicable) shall apply first
to the Partnership Units which, but for such remedies, would have been actually
owned by such Person, and second to Partnership Units which, but for such
remedies, would have been Constructively Owned (but not actually owned) by such
Person, pro rata among the Persons who actually own such Partnership Units based
upon the relative number of the Partnership Units held by each such Person.
I-6