1
EXHIBIT 10.2
- --------------------------------------------------------------------------------
FIFTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
- --------------------------------------------------------------------------------
2
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINED TERMS AND RULES OF CONSTRUCTION................................................................2
Section 1.1. Definitions.................................................................................2
ARTICLE 2. ORGANIZATIONAL MATTERS................................................................................18
Section 2.1. Organization...............................................................................18
Section 2.2. Name.......................................................................................18
Section 2.3. Resident Agent; Principal Office...........................................................19
Section 2.4. Power of Attorney..........................................................................19
Section 2.5. Term.......................................................................................20
Section 2.6. Number of Partners.........................................................................20
ARTICLE 3. PURPOSE...............................................................................................20
Section 3.1. Purpose and Business.......................................................................20
Section 3.2. Powers.....................................................................................21
Section 3.3. Partnership Only for Purposes Specified....................................................21
Section 3.4. Representations and Warranties by the Parties..............................................22
Section 3.5. Certain ERISA Matters......................................................................24
ARTICLE 4. CAPITAL CONTRIBUTIONS.................................................................................24
Section 4.1. Capital Contributions of the Partners......................................................24
Section 4.2. Loans......................................................................................24
Section 4.3. Additional Funding and Capital Contributions...............................................24
Section 4.4. No Preemptive Rights.......................................................................25
Section 4.5. Other Contribution Provisions..............................................................25
ARTICLE 5. DISTRIBUTIONS.........................................................................................26
Section 5.1. Requirement and Characterization of Distributions..........................................26
Section 5.2. Distributions in Kind......................................................................26
Section 5.3. Distributions Upon Liquidation.............................................................27
Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests......................27
ARTICLE 6. ALLOCATIONS...........................................................................................27
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss................................27
Section 6.2. General Allocations........................................................................27
Section 6.3. Additional Allocation Provisions...........................................................29
Section 6.4. Tax Allocations............................................................................31
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS.................................................................32
Section 7.1. Management.................................................................................32
i
3
Section 7.2. Certificate of Limited Partnership.........................................................35
Section 7.3. Restrictions on General Partner's Authority................................................36
Section 7.4. Reimbursement of the General Partner.......................................................38
Section 7.5. Outside Activities of the General Partner..................................................39
Section 7.6. Employee Benefit Plans.....................................................................39
Section 7.7. Indemnification............................................................................39
Section 7.8. Liability of the General Partner...........................................................41
Section 7.9. Other Matters Concerning the General Partner...............................................42
Section 7.10. Title to Partnership Assets................................................................43
Section 7.11. Reliance by Third Parties..................................................................43
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................................44
Section 8.1. Limitation of Liability....................................................................44
Section 8.2. Management of Business.....................................................................44
Section 8.3. Outside Activities of Limited Partners.....................................................44
Section 8.4. Return of Capital..........................................................................45
Section 8.5. Rights of Limited Partners Relating to the Partnership.....................................45
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................................46
Section 9.1. Records and Accounting.....................................................................46
Section 9.2. Fiscal Year................................................................................46
Section 9.3. Reports....................................................................................46
Section 9.4. Nondisclosure of Certain Information.......................................................46
ARTICLE 10. TAX MATTERS..........................................................................................47
Section 10.1. Preparation of Tax Returns.................................................................47
Section 10.2. Tax Elections..............................................................................47
Section 10.3. Tax Matters Partner........................................................................47
Section 10.4. Organizational Expenses....................................................................48
Section 10.5. Withholding................................................................................49
ARTICLE 11. TRANSFERS AND WITHDRAWALS............................................................................49
Section 11.1. Transfer...................................................................................49
Section 11.2. Transfer of General Partner's and Common Limited Partner's Partnership Interest............50
Section 11.3. Preferred Limited Partners' Rights to Transfer.............................................50
Section 11.4. Substituted Limited Partners...............................................................52
Section 11.5. Assignees..................................................................................53
Section 11.6. General Provisions.........................................................................53
ARTICLE 12. ADMISSION OF PARTNERS................................................................................55
Section 12.1. Admission of Successor General Partner.....................................................55
Section 12.2. Admission of Additional Limited Partners...................................................55
Section 12.3. Amendment of Agreement and Certificate of Limited Partnership..............................56
ii
4
ARTICLE 13. DISSOLUTION AND LIQUIDATION..........................................................................56
Section 13.1. Dissolution................................................................................56
Section 13.2. Winding Up.................................................................................57
Section 13.3. Compliance with Timing Requirements of Regulations.........................................58
Section 13.4. Deemed Distribution and Recontribution.....................................................59
Section 13.5. Rights of Limited Partners.................................................................59
Section 13.6. Notice of Dissolution......................................................................59
Section 13.7. Cancellation of Certificate of Limited Partnership.........................................60
Section 13.8. Reasonable Time for Winding-Up.............................................................60
Section 13.9. Waiver of Partition........................................................................60
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS.........................................................60
Section 14.1. Amendments.................................................................................60
Section 14.2. Action by the Partners.....................................................................60
ARTICLE 15. GENERAL PROVISIONS...................................................................................61
Section 15.1. Addresses and Notice.......................................................................61
Section 15.2. Titles and Captions........................................................................61
Section 15.3. Pronouns and Plurals.......................................................................62
Section 15.4. Further Action.............................................................................62
Section 15.5. Binding Effect.............................................................................62
Section 15.6. Creditors..................................................................................62
Section 15.7. Waiver.....................................................................................62
Section 15.8. Counterparts...............................................................................62
Section 15.9. Applicable Law.............................................................................62
Section 15.10. Invalidity of Provisions...................................................................63
Section 15.11. Entire Agreement...........................................................................63
Section 15.12. No Rights as Stockholders..................................................................63
ARTICLE 16. SERIES C PREFERRED UNITS.............................................................................63
Section 16.1. Designation and Number.....................................................................63
Section 16.2. Ranking....................................................................................63
Section 16.3. Distributions..............................................................................63
Section 16.4. Liquidation Proceeds.......................................................................65
Section 16.5. Series C Redemption........................................................................66
Section 16.6. Voting Rights..............................................................................67
Section 16.7. Transfer Restrictions......................................................................68
Section 16.8. Exchange Rights............................................................................69
Section 16.9. No Conversion Rights.......................................................................73
Section 16.10. No Sinking Fund............................................................................74
ARTICLE 17. SERIES D PREFERRED UNITS.............................................................................74
Section 17.1. Designation and Number.....................................................................74
Section 17.2. Ranking....................................................................................74
Section 17.3. Distributions..............................................................................74
iii
5
Section 17.4. Liquidation Proceeds.......................................................................76
Section 17.5. Series D Redemption........................................................................76
Section 17.6. Voting and Certain Management Rights.......................................................78
Section 17.7. Transfer Restrictions......................................................................80
Section 17.8. Exchange Rights............................................................................80
Section 17.9. No Conversion Rights.......................................................................85
Section 17.10. No Sinking Fund............................................................................85
ARTICLE 18. SERIES E PREFERRED UNITS.............................................................................85
Section 18.1. Designation and Number.....................................................................85
Section 18.2. Ranking....................................................................................85
Section 18.3. Distributions..............................................................................85
Section 18.4. Liquidation Proceeds.......................................................................87
Section 18.5. Series E Redemption........................................................................87
Section 18.6. Voting and Certain Management Rights.......................................................89
Section 18.7. Transfer Restrictions......................................................................91
Section 18.8. Exchange Rights............................................................................91
Section 18.9. No Conversion Rights.......................................................................96
Section 18.10. No Sinking Fund............................................................................96
iv
6
FIFTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
THIS FIFTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of
August 31, 1999, 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 Fourth Amended and Restated Agreement of Limited
Partnership, dated May 5, 1999, 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, pursuant to Section 4.3.B of the Partnership Agreement, the
General Partner may, in its sole and absolute discretion subject to Delaware
law, in connection with any Capital Contribution, issue additional Partnership
Interests in one or more classes, or one or more series of any 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;
WHEREAS, on the date hereof, Fifth Third Equity Exchange Fund 1999,
LLC, a Delaware limited liability company (the "Series E Contributor") has made
a Capital Contribution of $11,022,000, in cash, to the Partnership in exchange
for which the Series E Contributor is entitled to receive an aggregate of
220,440 Series E Preferred Units in the Partnership with the rights,
preferences, exchange and other rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and conditions as set
forth herein;
WHEREAS, pursuant to the authority granted to the General Partner
under the Partnership Agreement, the General Partner desires to amend and
restate the Partnership Agreement to reflect (i) the issuance of the Series E
Preferred Units, (ii) the admission of the
7
Series E Contributor as an Additional Limited Partner and a holder of a certain
number of Series E Preferred Units and (iii) certain other matters described
herein;
WHEREAS, the Series E Contributor desires to become a party to the
Partnership Agreement as a Limited Partner and to be bound by all terms,
conditions and other provisions of the Partnership Agreement; 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 Fourth 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 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.
2
8
"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 Fifth 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,
(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),
3
9
(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.
"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
4
10
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.
"Charter" means the Company's Articles of Incorporation, as filed
with the Maryland Department of Assessments and Taxation on November 24, 1997.
5
11
"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
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such
6
12
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
7
13
be amended from time to time); provided, that if the contributing Partner is the
General Partner 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
8
14
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.
"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.
9
15
"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
C Preferred Shares, the Series D Preferred Shares and the Series E Preferred
Shares.
"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 C Preferred Units, the Series D Preferred Units and the Series E
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
10
16
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 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 C Preferred Units, the Series D
Preferred Units and the Series E 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%.
11
17
"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.
"Operating Partnership" means AMB Property, L.P., a Delaware limited
partnership.
"Parity Preferred Capital" means the sum of (i) the aggregate Series
C Preferred Capital for all Holders of Series C Preferred Units (other than the
General Partner and the Operating Partnership), (ii) the aggregate Series D
Preferred Capital for all Holders of Series D Preferred Units (other than the
General Partner and the Operating Partnership), (iii) the aggregate Series E
Preferred Capital for all Holders of Series E Preferred Units (other than the
General Partner and the Operating Partnership) and (iv) 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 C Preferred Shares, the
Series D Preferred Shares and the Series E 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 C
Preferred Units, the Series D Preferred Units and the Series E 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
12
18
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.
"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 C
Preferred Units, the Series D Preferred Units and the Series E 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.
13
19
"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.
"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 C Preferred Units, the Series D Preferred Units
and the Series E Preferred Units.
"Priority Return" means with respect to (i) the Series C Preferred
Units, the Series C Priority Return, (ii) the Series D Preferred Units, the
Series D Priority Return and (iii) the Series E Preferred Units, the Series E
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 16.7.
"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).
14
20
"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 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 8 3/8% 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 and 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, 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" shall have the meaning set forth in
Section 16.8.C.
"Series C Articles Supplementary" means the Articles Supplementary
of AMB in connection with its Series C Preferred Shares, as filed with the
Maryland Department of Assessments and Taxation on November 24, 1998.
"Series C Limited Partner" means any Person holding Series C
Preferred Units and named as a Series C 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 C Preferred Capital" means a Capital Account balance equal
to the product of (i) the number of Series C Preferred Units then held by the
Series C 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 C Preferred Unit.
"Series C Preferred Share" means a share of 8 3/4% Series C
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50 per share, of AMB.
"Series C Preferred Units" means the Partnership's 8 3/4% Series C
Cumulative Redeemable Partnership Units.
15
21
"Series C Preferred Unit Distribution Payment Date" shall have the
meaning set forth in Section 16.3.A hereof.
"Series C Priority Return" shall mean an amount equal to 8 3/4% per
annum on an amount equal to $50 per Series C Preferred Unit then outstanding
(equivalent to $4.375 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
November 24, 1998 to the extent not distributed for any given distribution
period pursuant to Sections 5.1 and 16.3 hereof. Notwithstanding the foregoing,
distributions on the Series C 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 C Preferred Units will accumulate as of
the Series C Preferred Unit Distribution Payment Date on which they first become
payable.
"Series C Redemption" shall have the meaning set forth in Section
16.5.A.
"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.
"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
16
22
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.
"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
17
23
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.
"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.
"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.
18
24
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 505 Montgomery Street, 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 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
19
25
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.
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
20
26
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 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 C Limited Partners, the Series D Limited Partners and the Series E
Limited Partners in accordance with Sections 16.3, 17.3 and 18.3, 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
21
27
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 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.
22
28
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 16.8, 17.8 or 18.8, 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 C Redemption rights or rights to exchange
Partnership Interests for Series C Preferred Shares, some or all of the
Series D Redemption rights or rights to exchange Partnership Interests
for Series D Preferred Shares or some or all of the Series E Redemption
rights or rights to exchange Partnership Interests for Series E
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.
23
29
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 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
24
30
property), and subject to Sections 16.6, 17.6 and 18.6 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.
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.
25
31
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 16 with respect to the Series C Preferred Units, in Article 17 with
respect to the Series D Preferred Units, in Article 18 with respect to the
Series E 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 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 C Preferred Units, Series D Preferred Units or Series E
Preferred Units in accordance with Sections 16.3, 17.3 and 18.3, 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 C Limited Partners, the Series D Limited
Partners and the Series E Limited Partners.
26
32
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.
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
27
33
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.
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 C Preferred Capital, Series D Preferred
Capital and Series E 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
28
34
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 C Preferred Units, the Series D Preferred Units and the
Series E 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
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
29
35
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
1.704-1(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).
30
36
(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.
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
31
37
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, 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;
32
38
(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, 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;
33
39
(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;
(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
34
40
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.
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
35
41
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;
36
42
(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.
37
43
(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 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 16, 17 or 18 or the allocations specified in Article 6 (except as
permitted pursuant to Sections 4.3 and 7.3.D), (iv) alter the Series C
Redemption or exchange rights as set forth in Sections 16.5 and 16.8,
respectively, the Series D Redemption or exchange rights as set forth in
Sections 17.5 and 17.8, respectively or the Series E Redemption or exchange
rights as set forth in Sections 18.5 and 18.8, 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.
38
44
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 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
39
45
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 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.
40
46
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in
part under this Section 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
41
47
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 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
42
48
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 C Limited Partners,
the Series D Limited Partners and the Series E Limited Partners in accordance
with Sections 16.3, 17.3 and 18.3, respectively, avoid AMB incurring any taxes
under Section 857 or Section 4981 of the Code, is expressly authorized under
this Agreement and is deemed approved by all of the Limited Partners.
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
43
49
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.
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.
44
50
Section 8.4. Return of Capital
Except pursuant to the Series C Redemption and exchange rights set
forth in Sections 16.5 and 16.8, the Series D Redemption and exchange rights set
forth in Sections 17.5 and 17.8 and the Series E Redemption and exchange rights
set forth in Sections 18.5 and 18.8, 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.
45
51
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
46
52
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 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
47
53
settlement agreement on behalf of such Partner or (b) who is a
"notice partner" (as defined in Section 6231 of the Code) or a
member of a "notice group" (as defined in Section 6223(b)(2)
of the Code);
(ii) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be
taken into account by a Partner for tax purposes (a "final
adjustment") is mailed to the tax matters partner, to seek
judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court or the
United States Claims Court, or the filing of a complaint for
refund with the District Court of the United States for the
district in which the Partnership's principal place of
business is located;
(iii) to intervene in any action brought by any other Partner for
judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the
IRS at any time and, if any part of such request is not
allowed by the IRS, to file an appropriate pleading (petition
or complaint) for judicial review with respect to such
request;
(v) to enter into an agreement with the IRS to extend the period
for assessing any tax which is attributable to any item
required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(vi) to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial
review 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.
48
54
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 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 C Preferred Shares pursuant to Section 16.8, any exchange for Series D
Preferred Shares pursuant to Section
49
55
17.8 or any exchange for Series E Preferred Shares pursuant to Section 18.8. 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.
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
50
56
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 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 C Redemption rights or the exchange
rights set forth in Sections 16.5 or 16.8, respectively, its Series D Redemption
rights or the exchange rights set forth in Sections 17.5 or 17.8, respectively,
or its Series E Redemption rights or the exchange rights set forth in Sections
18.5 or 18.8, 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 C Redemption or exchange rights set
forth in Sections 16.5 and 16.8, respectively, 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,
or any other acquisition of Common Units, Series C Preferred Units, Series D
Preferred Units or Series E 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
51
57
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
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 C Preferred Shares, Series D Preferred Shares and/or Series E
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 C Redemption, Series D Redemption, Series
E 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.
52
58
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
C Preferred Shares set forth in Section 16.8, the right of exchange for Series D
Preferred Shares set forth in Section 17.8, and the right of exchange for Series
E Preferred Shares set forth in Section 18.8, 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 C Redemption or exchange of all of such Limited
Partner's Series C Preferred Units pursuant to Section 16.8, (iii) pursuant to
the Series D Redemption or exchange of all of such Limited Partner's Series D
Preferred Units pursuant to Section 17.8 or (iv) pursuant to the Series E
Redemption or exchange of all of such Limited Partner's Series E Preferred Units
pursuant to Section 18.8.
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 C Redemption or exchange of all of such
Limited Partner's Series C Preferred Units pursuant to Section 16.8, pursuant to
the exercise of its rights of Series D Redemption or exchange of all of such
Limited Partner's Series D Preferred Units pursuant to Section 17.8 or 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, shall cease
to be a Limited Partner.
53
59
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 16.5, 17.5 or 18.5, 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 C Redemption or exchange
for Series C Preferred Shares, a Series D Redemption or exchange for Series D
Preferred Shares, a Series E Redemption or exchange for Series E Preferred
Shares or any other acquisition of Common Units, Series C Preferred Units,
Series D Preferred Units or Series E 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 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
54
60
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 C Preferred Units, Series D
Preferred Units or Series E 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 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,
55
61
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.
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
56
62
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, 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
57
63
(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.
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:
58
64
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 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).
59
65
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, 16.6,
17.6 and 18.6, 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 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
60
66
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 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
61
67
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.
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.
62
68
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.
SERIES C PREFERRED UNITS
Section 16.1. Designation and Number
A series of Partnership Units in the Partnership designated as the
8 3/4% Series C Cumulative Redeemable Preferred Units (the "Series C Preferred
Units") is hereby established. The number of Series C Preferred Units shall be
2,200,000.
Section 16.2. Ranking
The Series C 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 C 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 C Preferred Units.
Section 16.3. Distributions
A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Section 5.1, 17.3A and 18.3A hereof), holders of Series C 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 C Priority Return.
63
69
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 C Preferred Units into Series C Preferred
Shares, or (ii) a redemption of Series C Preferred Units, on the exchange date
or redemption date, as applicable (each a "Series C 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 C 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 C Preferred Units will be made to the holders of
record of the Series C Preferred Units on the relevant record dates, which will
be fifteen (15) days prior to the relevant Series C Preferred Unit Distribution
Payment Date (the "Series C Preferred Unit Partnership Record Date").
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series C 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 C 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 C
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 C 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 C
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 C 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.
64
70
(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 C
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series C 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
C 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 C 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 C 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
C Preferred Units may be made, without preserving the priority of distributions
described in Sections 16.3.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 C 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 16.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series C
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 C
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
65
71
the Partnership's property or business shall be considered a liquidation,
dissolution or winding up of the Partnership.
Section 16.5. Series C Redemption
A. Series C Redemption. The Series C Preferred Units may not be
redeemed prior to November 24, 2003. On or after such date, the Partnership
shall have the right to redeem the Series C 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 C
Redemption"), equal to the Capital Account balance of the holder of Series C
Preferred Units (the "Series C Redemption Price"); provided, however, that no
redemption pursuant to this Section 16.5 will be permitted if the Series C
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series C Priority Return to the redemption date
to the extent not previously distributed. If fewer than all of the outstanding
Series C Preferred Units are to be redeemed, the Series C Preferred Units to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).
B. Limitation on Redemption. (i) The Series C Redemption Price of
the Series C 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 Operating
Partnership and the General Partner, and which in turn will be contributed by
the Operating Partnership and the General Partner 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 C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
C. Procedures for 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 C 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 C 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 C Redemption Price, (c) the aggregate number of Series C
Preferred Units to be redeemed and if fewer than all of the outstanding Series C
Preferred Units are to be redeemed, the number of Series C 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 C
Preferred Units that the total number of Series C
66
72
Preferred Units held by such holder represents) of the aggregate number of
Series C Preferred Units to be redeemed, (d) the place or places where such
Series C Preferred Units are to be surrendered for payment of the Series C
Redemption Price, (e) that distributions on the Series C Preferred Units to be
redeemed will cease to accumulate on such redemption date and (f) that payment
of the Series C Redemption Price will be made upon presentation and surrender of
such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series C 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 C Preferred Units being
redeemed funds sufficient to pay the applicable Series C Redemption Price and
will give irrevocable instructions and authority to pay such Series C Redemption
Price to the holders of the Series C Preferred Units upon surrender of the
Series C 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 C Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series C Preferred Units is not a Business Day, then
payment of the Series C 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 C Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series C 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 C Redemption Price.
Section 16.6. Voting Rights
A. General. Holders of the Series C 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 C Preferred Units
remains outstanding, the Partnership shall not, without the affirmative vote of
the holders of at least two-thirds of the Series C 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 C
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
67
73
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 16 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 C 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 C 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 C Preferred Units for
other interests in such entity having substantially the same terms and rights as
the Series C 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 C
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 C Preferred Units remain outstanding, the
Operating Partnership shall not, without the affirmative vote of the holders of
at least two-thirds of the Series C 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 16.8; provided
however, no such vote shall be required so long as the Series C Preferred Units
(or any interests substituted therefore pursuant to Section 16.6.B) remain
outstanding and are exchangeable for Series C Preferred Shares or stock in
another entity having substantially the same terms and rights as the Series C
Preferred Shares.
Section 16.7. Transfer Restrictions
The Series C Preferred Units shall be subject to the provisions of
Article 11 hereof. No transfer of Series C 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
68
74
more than four partners holding all outstanding Series C Preferred Units within
the meaning of Treasury Regulation Section 1.7704-1(h)(3)(i); 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 C Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(3)(i) and (b) the General Partner is relying on a provision
other than Treasury Regulation Section 1.7704-1(h) to avoid classification of
Operating Partnership as a "publicly traded partnership" within the meaning of
Code Section 7704 (a "PTP"). In addition, no transfer may be made to any person
if such transfer would cause the exchange of the Series C Preferred Units for
Series C 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 16.8. Exchange Rights
A. Right to Exchange.
(i) Series C Preferred Units will be exchangeable in whole but not
in part unless expressly otherwise provided herein at anytime on or after
November 24, 2008, at the option of 51% of the holders of all outstanding Series
C Preferred Units, for authorized but previously unissued Series C Preferred
Shares at an exchange rate of one Series C Preferred Share from AMB for one
Series C Preferred Unit, subject to adjustment as described below (the "Series C
Exchange Price"), provided that the Series C 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 C
Preferred Units for Series C Preferred Shares if (y) at any time full
distributions shall not have been timely made on any Series C Preferred Unit
with respect to six (6) prior quarterly distribution periods, whether or not
consecutive, provided, however, that a distribution in respect of Series C
Preferred Units shall be considered timely made if made within two (2) Business
Days after the applicable 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 C 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 C 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 C Preferred Units may be exchanged for
Series C 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 C
Preferred Units after November 24, 2001 and prior to November 24, 2008 if such
holders of a Series C Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series C
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series C Preferred Units at such earlier time would not
cause the Series C 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 C Preferred Units is an "investment company"
under section 721(b) of the Code if an exchange is permitted at such earlier
date. Furthermore, the Series C Preferred Units, if Series C Contributors
holding 51% of all outstanding Series C Preferred Units determine, may be
exchanged in whole
69
75
but not in part (regardless of whether held by Series C Contributors) for Series
C Preferred Shares (but only if the exchange in whole may be accomplished
consistently with the ownership limitations set forth under the Series C
Articles Supplementary (as defined herein), taking into account exceptions
thereto) if at any time, excluding the effect of the Loan (as defined below) for
purposes of the 5% test of Section 856(c)(4)(B) of the Code, (i) the Partnership
reasonably determines that the assets and income of the Partnership for a
taxable year after 1998 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 (ii) any holder of Series C
Preferred Units shall deliver to the Partnership and the Company an opinion of
independent counsel reasonably acceptable to the Company to the effect 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 and that such failure would create a
meaningful risk that a holder of the Series C Preferred Units would fail to
maintain qualification as a real estate investment trust. For purposes of this
Section 16.8.A(i), the term "Loan" means the loan made on November 24, 1998 by
the Partnership to the Operating Partnership in the aggregate principal amount
of $107,102,375.00.
(ii) Notwithstanding anything to the contrary set forth in Section
16.8.A(i), if a Series C 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 C Exchange Notice,
elect to cause the Partnership to redeem all or a portion of the outstanding
Series C Preferred Units for cash in an amount equal to the original Capital
Contribution per Series C 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 C Preferred Units, the number
of Series C 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 C Preferred Units that the total number of Series C Preferred
Units held by such holder represents) of the aggregate number of Series C
Preferred Units being redeemed.
(iii) In the event an exchange of all Series C Preferred Units
pursuant to Section 16.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Articles Supplementary to
the REIT Charter with respect to Series C Preferred Shares (the "Series C
Articles Supplementary"), each holder of Series C Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 16.8.B, a number of
Series C 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 C
Articles Supplementary, with respect to such holder, and any Series C Preferred
Units not so exchanged (the "Series C Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
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 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
70
76
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 Excess Units under this Section 16.8.A(iii), the "Ownership Limit" set
forth in the Series C 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 Excess Units, and to the extent consistent with the REIT
Charter, AMB agrees that it will grant to the holders of the Series C Preferred
Units exceptions to the Ownership Limit set forth in the Series C Articles
Supplementary sufficient to allow such Holders to exchange all of their Series C
Preferred Units for Series C 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 C Limited Partner shall be entitled
to effect an exchange of Series C Preferred Units for Series C 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 C Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series C Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series C
Limited Partner shall not acquire any rights or economic interest in the Series
C Preferred Shares otherwise issuable upon such exchange.
(iv) The redemption of Series C Preferred Units described in Section
16.8.A(ii) and (iii) shall be subject to the provisions of Section 16.5.B(i) and
Section 16.5.C(ii); provided, however, that the term "Redemption Price" in such
Sections 16.5.B(i) and 16.5.C(ii) shall be read to mean the original Capital
Contribution per Series C Preferred Unit being redeemed as set forth on Exhibit
A plus all accrued and unpaid distributions to the redemption date.
B. Procedure for Exchange and/or Redemption of Series C Preferred
Units.
(i) Any exchange shall be exercised pursuant to a notice of exchange
(the "Series C Exchange Notice") delivered to AMB and the General Partner by the
Partners representing at least 51% of the outstanding Series C Preferred Units
(or by Contributors in the case of an exchange pursuant to the last sentence of
Section 16.8.A.(i) hereof) by (a) fax and (b) by certified mail postage prepaid.
AMB may effect any exchange of Series C Preferred Units, or the General Partner
may exercise its option to cause the Partnership to redeem any portion of the
Series C Preferred Units for cash pursuant to Section 16.8.A(ii) or redeem
Excess Units pursuant to Section 16.8.A(iii), by delivering to each holder of
record of Series C Preferred Units, within ten (10) Business Days following
receipt of the Series C Exchange Notice, (a) if the General Partner elects to
cause the Partnership to acquire any of the Series C Preferred Units then
outstanding, (1) certificates representing the Series C Preferred Shares being
issued in exchange for the Series C Preferred Units of such holder being
exchanged and (2) a written notice (a "Series C Redemption Notice") stating (A)
the redemption date, which may be the date of such Series C Redemption Notice or
any other date which is not later than sixty (60) days following the receipt
71
77
of the Series C Exchange Notice, (B) the redemption price, (C) the place or
places where the Series C Preferred Units are to be surrendered and (D) that
distributions on the Series C 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 C Preferred Units then outstanding in exchange for
cash, a Series C Redemption Notice. Series C Preferred Units shall be deemed
canceled (and any corresponding Partnership Interest represented thereby deemed
terminated) simultaneously with the delivery of shares of Series C Preferred
Shares (with respect to Series C Preferred Units exchanged) or simultaneously
with the redemption date (with respect to Series C Preferred Units redeemed).
Holders of Series C Preferred Units shall deliver any canceled certificates
representing Series C Preferred Units which have been exchanged or redeemed to
the office of General Partner (which currently is located at 505 Montgomery
Street, 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 C Preferred Units to be exchanged
for Series C Preferred Stock pursuant to this Section 16.8 shall be so exchanged
in a single transaction at one time. As a condition to exchange, AMB may require
the holders of Series C Preferred Units to make such representations as may be
reasonably necessary for the General Partner to establish that the issuance of
Series C Preferred Shares pursuant to the exchange shall not be required to be
registered under the Securities Act or any state securities laws. Any Series C
Preferred Shares issued pursuant to this Section 16.8 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 C Preferred Shares issued
upon exchange of the Series C 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 C Preferred Units for
Series C Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series C Preferred Units tendered
for exchange shall (i) accrue on the Series C Preferred Shares into which such
Series C Preferred Units are exchanged, and (ii) continue to accrue on
72
78
such Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such REIT Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series C Preferred Unit that was validly exchanged for
Series C Preferred Shares pursuant to this Section (other than the General
Partner holding such Series C 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
C Preferred Shares for which such Series C Preferred Unit was exchanged or
redeemed. Further for purposes of the foregoing, in the event of an exchange of
Series C Preferred Units for Series C Preferred Shares, if the accrued and
unpaid distributions per Series C Preferred Unit is not the same for each Series
C Preferred Unit, the accrued and unpaid distributions per Series C Preferred
Unit for each such Series C Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series C Preferred Unit on any such
unit.
(iii) Fractional Series C 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 C 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 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 C 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 C 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 C
Preferred Shares or fraction thereof into which one Series C 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 C Preferred Units shall be exchangeable
pursuant to this Section 16.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which the 8N% Series B Cumulative
Redeemable Partnership Units of the Operating Partnership (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 16.9. No Conversion Rights
The Series C Preferred Units shall not be convertible into any other
class or series of interest in the Partnership.
73
79
Section 16.10. No Sinking Fund
No sinking fund shall be established for the retirement or
redemption of Series C Preferred Units.
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 the Series C
Preferred Units and all other Parity Preferred Units; and (iii) junior to all
Partnership Units which rank senior to the Series D Preferred Units.
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, 16.3.A and 18.3 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
74
80
will be fifteen (15) days prior to the relevant Series D Preferred Unit
Distribution Payment Date (the "Series D Preferred Unit Partnership Record
Date").
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 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
75
81
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 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).
76
82
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 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
77
83
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 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,
78
84
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
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 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 and Series E Preferred Units are entitled to exercise pursuant
to this Section 17.6.D and Section 18.6.D, respectively, or (ii) the Parity
Preferred Capital, in the event that holders of the Series E Preferred Units are
entitled to exercise management rights pursuant to Section 18.6.D or Future
Parity Preferred Unitholders are entitled to exercise management rights similar
to those to which the holders of Series D Preferred Units and Series E Preferred
Units are entitled to exercise pursuant to this Section 17.6.D and Section
18.6.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
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
79
85
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").
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 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 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
80
86
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 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, 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
81
87
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 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
82
88
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 shall be deemed
canceled (and any corresponding Partnership Interest represented thereby deemed
terminated) simultaneously with the delivery of shares of Series D Preferred
Shares (with respect to Series D Preferred Units exchanged) or simultaneously
with the redemption date (with respect to Series D Preferred Units redeemed).
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 505 Montgomery
Street, 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 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.
83
89
(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 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 both (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 C Preferred Units are then exchangeable (or, if the Series C
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding).
84
90
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) 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 C
Preferred Units, 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, 16.3.A and 17.3A 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
85
91
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 E Preferred Units, the Series D Preferred Units
and the Series C 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 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
86
92
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.
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
87
93
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 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.
88
94
(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.
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
89
95
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 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
are not entitled to exercise management rights pursuant to Section 17.6.D 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 and
Series E Preferred Units are entitled to exercise pursuant to Section 17.6.D and
this Section 18.6.D, respectively, or (ii) the Parity Preferred Capital, in the
event that holders of Series D Preferred Units are entitled to exercise
management rights pursuant to Section 17.6.D or Future Parity Preferred
Unitholders are entitled to exercise management rights similar to those to which
the holders of Series D Preferred Units and Series E Preferred Units are
entitled to exercise pursuant to Section 17.6.D and this Section 18.6.D,
respectively, shall be entitled to assume rights to
90
96
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 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
91
97
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 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.
92
98
(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 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.
93
99
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 shall
be deemed canceled (and any corresponding Partnership Interest represented
thereby deemed terminated) simultaneously with the delivery of shares of Series
E Preferred Shares (with respect to Series E Preferred Units exchanged) or
simultaneously with the redemption date (with respect to Series E Preferred
Units redeemed). 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 505
Montgomery Street, 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 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,
94
100
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.
(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
95
101
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), (ii) the Series C Preferred Units are then
exchangeable (or, if the Series C Preferred Units have previously been redeemed
in full, would have been then exchangeable if then still outstanding) and (iii)
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.
(Signature Pages Follow)
96
102
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:
-------------------------------------------------
Michael A. Coke
Senior 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:
-------------------------------------------------
Michael A. Coke
Senior Vice President and Chief Financial Officer
GENERAL PARTNER OF COMMON LIMITED PARTNER:
AMB PROPERTY CORPORATION,
a Maryland corporation
By:
-------------------------------------------------
Michael A. Coke
Senior Vice President and Chief Financial Officer
S-1
103
SERIES E LIMITED PARTNER:
FIFTH THIRD EQUITY EXCHANGE FUND 1999, LLC
a Delaware limited liability company
By: Fifth Third Securities, Inc., as manager of
Fifth Third Equity Exchange Fund 1999, LLC
By:
-------------------------------------------------
Name:
Title:
S-2
104
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
I. COMMON UNITS
Agreed Value of
Contribution Cash 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
105
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%)
-------------- --------------------------------- -------------- --------------
TOTAL SERIES C PREFERRED UNITS $110,000,000 -- $110,000,000 2,200,000 100.0000%
============== ================================= ============== ==============
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%
============== ============== ================= ============== ==============
A-2
106
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 E] 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 E] 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
107
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
108
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 ______________,
199_ (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: , 199_.
--------------------
AMB PROPERTY HOLDING CORPORATION
General Partner of AMB
Property II, L.P.
ATTEST:
By: By:
-------------------------------- -----------------------------
D-2
109
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
None
E-1
110
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
111
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
112
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
113
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 C 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 subsection (b)(ii), the
Purported Record Transferee, unless the Purported Record Transferee
would have acquired or owned Partnership Units for another Person
who
I-1
114
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.
(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
I-2
115
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, 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
I-3
116
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 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.
I-4
117
(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 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
I-5
118
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