EXHIBIT 10.1
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAGUIRE PROPERTIES, L.P.
TABLE OF CONTENTS
PAGE
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ARTICLE 1. DEFINED TERMS.................................................................... 1
Section 1.1 Definitions...................................................... 1
Section 1.2 Rules of Construction............................................ 15
ARTICLE 2. ORGANIZATIONAL MATTERS........................................................... 15
Section 2.1 Organization..................................................... 15
Section 2.2 Name............................................................. 15
Section 2.3 Registered Office and Agent; Principal Office.................... 15
Section 2.4 Power of Attorney................................................ 16
Section 2.5 Term............................................................. 17
ARTICLE 3. PURPOSE.......................................................................... 17
Section 3.1 Purpose and Business............................................. 17
Section 3.2 Powers........................................................... 17
Section 3.3 Partnership Only for Purposes Specified.......................... 18
Section 3.4 Representations and Warranties by the Parties.................... 18
Section 3.5 Certain ERISA Matters............................................ 20
ARTICLE 4. CAPITAL CONTRIBUTIONS............................................................ 20
Section 4.1 Capital Contributions of the Partners............................ 20
Section 4.2 Loans by Third Parties........................................... 21
Section 4.3 Additional Funding and Capital Contributions..................... 21
Section 4.4 Other Contribution Provisions.................................... 23
Section 4.5 No Preemptive Rights............................................. 23
ARTICLE 5. DISTRIBUTIONS.................................................................... 24
Section 5.1 Requirement and Characterization of Distributions................ 24
Section 5.2 Distributions in Kind............................................ 24
Section 5.3 Distributions Upon Liquidation................................... 24
Section 5.4 Distributions to Reflect Issuance of Additional Partnership
Interests................................................... 24
ARTICLE 6. ALLOCATIONS...................................................................... 25
Section 6.1 Timing and Amount of Allocations of Net Income and Net
Loss............................................................ 25
Section 6.2 General Allocations.............................................. 25
Section 6.3 Additional Allocation Provisions................................. 26
Section 6.4 Tax Allocations.................................................. 28
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS............................................ 29
Section 7.1 Management....................................................... 29
Section 7.2 Certificate of Limited Partnership............................... 33
Section 7.3 Restrictions on General Partner's Authority...................... 33
Section 7.4 Reimbursement of the General Partner............................. 34
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Section 7.5 Outside Activities of the General Partner........................ 36
Section 7.6 Contracts with Affiliates........................................ 37
Section 7.7 Indemnification.................................................. 37
Section 7.8 Liability of the General Partner................................. 39
Section 7.9 Other Matters Concerning the General Partner..................... 40
Section 7.10 Title to Partnership Assets...................................... 41
Section 7.11 Reliance by Third Parties........................................ 41
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS....................................... 42
Section 8.1 Limitation of Liability.......................................... 42
Section 8.2 Management of Business........................................... 42
Section 8.3 Outside Activities of Limited Partners........................... 42
Section 8.4 Return of Capital................................................ 42
Section 8.5 Rights of Limited Partners Relating to the Partnership........... 43
Section 8.6 Redemption Rights................................................ 43
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS........................................... 46
Section 9.1 Records and Accounting........................................... 46
Section 9.2 Fiscal Year...................................................... 47
Section 9.3 Reports.......................................................... 47
Section 9.4 Nondisclosure of Certain Information............................. 47
ARTICLE 10. TAX MATTERS..................................................................... 47
Section 10.1 Preparation of Tax Returns....................................... 47
Section 10.2 Tax Elections.................................................... 48
Section 10.3 Tax Matters Partner.............................................. 48
Section 10.4 Organizational Expenses.......................................... 49
Section 10.5 Withholding...................................................... 49
ARTICLE 11. TRANSFERS AND WITHDRAWALS....................................................... 50
Section 11.1 Transfer......................................................... 50
Section 11.2 Transfer of General Partner's Partnership Interest............... 50
Section 11.3 Limited Partners' Rights to Transfer............................. 51
Section 11.4 Substituted Limited Partners..................................... 53
Section 11.5 Assignees........................................................ 53
Section 11.6 General Provisions............................................... 54
ARTICLE 12. ADMISSION OF PARTNERS........................................................... 56
Section 12.1 Admission of Successor General Partner........................... 56
Section 12.2 Admission of Additional Limited Partners......................... 56
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership................................................. 57
ARTICLE 13. DISSOLUTION AND LIQUIDATION..................................................... 57
Section 13.1 Dissolution...................................................... 57
Section 13.2 Winding Up....................................................... 58
Section 13.3 Capital Contribution Obligation.................................. 59
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Section 13.4 Compliance with Timing Requirements of Regulations............... 59
Section 13.5 Deemed Distribution and Recontribution........................... 60
Section 13.6 Rights of Limited Partners....................................... 60
Section 13.7 Notice of Dissolution............................................ 60
Section 13.8 Cancellation of Certificate of Limited Partnership............... 60
Section 13.9 Reasonable Time for Winding-Up................................... 60
Section 13.10 Waiver of Partition.............................................. 61
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS.................................... 61
Section 14.1 Amendments....................................................... 61
Section 14.2 Action by the Partners........................................... 61
ARTICLE 15. GENERAL PROVISIONS.............................................................. 62
Section 15.1 Addresses and Notice............................................. 62
Section 15.2 Titles and Captions.............................................. 62
Section 15.3 Pronouns and Plurals............................................. 62
Section 15.4 Further Action................................................... 62
Section 15.5 Binding Effect................................................... 62
Section 15.6 Creditors........................................................ 63
Section 15.7 Waiver........................................................... 63
Section 15.8 Counterparts..................................................... 63
Section 15.9 Applicable Law................................................... 63
Section 15.10 Invalidity of Provisions......................................... 63
Section 15.11 Entire Agreement................................................. 63
Section 15.12 No Rights as Stockholders........................................ 63
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MAGUIRE PROPERTIES, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP,
dated as of June 27, 2003, is entered into by and among Maguire Properties,
Inc., 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, together with any other Persons who become Partners in the Partnership
as provided herein.
WHEREAS, the limited partnership was formed on June 26, 2002
and an original agreement of limited partnership was entered into between the
Company, as general partner, and Robert F. Maguire III, as limited partner;
WHEREAS, the Company proposes to effect a public offering of
its common stock and to contribute the net proceeds from the public offering to
the Partnership, to cause the Partnership to acquire direct and indirect
interests in certain office properties and other assets, and to cause the
Partnership to enter into certain financing transactions;
WHEREAS, the Partnership will issue Partnership Interests to
the Company and other persons in connection with the foregoing transactions;
WHEREAS, upon the completion of the foregoing transactions,
the Partnership shall return the original capital contributions made by the
Company and Mr. Maguire, and any ongoing interest in the Partnership of the
Company and Mr. Maguire shall be based on their respective contributions as
contemplated below;
WHEREAS, by virtue of their respective execution of this
Agreement the Company and Mr. Maguire hereby consent to the amendment and
restatement of the original agreement of limited partnership;
NOW, THEREFORE, BE IT RESOLVED, that for good and adequate
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
DEFINED TERMS
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 Maryland 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-l(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-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjustment Date" means, with respect to any Capital
Contribution, the close of business on the Business Day last preceding the date
of the Capital Contribution, provided, that if such Capital Contribution is
being made by the General Partner in respect of the proceeds from the issuance
of REIT Shares (or the issuance of the General Partner's securities exercisable
for, convertible into or exchangeable for REIT Shares), then the Adjustment Date
shall be as of the close of business on the Business Day last preceding the date
of the issuance of such securities.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person. Control of any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"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 liabilities 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 Amended and Restated Agreement of
Limited Partnership, as it may be amended, modified, supplemented or restated
from time to time.
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"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 property
or 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),
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 (excluding any sale or other
disposition of all or substantially all of the assets of the
Partnership or a related series of transactions that, taken
together, result in the sale or other disposition of all or
substantially all of the assets of the Partnership), 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,
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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.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to be closed.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(a) To each Partner's Capital Account there shall be
added such Partner's Capital Contributions, such Partner's share of Net Income
and any items in the nature of income or gain which are specially allocated
pursuant to Section 6.3, and the amount of any Partnership liabilities assumed
by such Partner or which are secured by any property distributed to such
Partner.
(b) 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, 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
(except to the extent already reflected in the amount of such Partner's Capital
Contribution).
(c) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement (which does not
result in a termination of the Partnership for federal income tax purposes), the
transferee shall succeed to the Capital Account of the transferor to the extent
it relates to the transferred interest.
(d) In determining the amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(e) 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-l(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
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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 (i) 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 (ii) 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 (net of any liabilities
assumed by the Partnership relating to such property and any liability to which
such property is subject).
"Cash Amount" means, with respect to any Partnership Units
subject to a Redemption, an amount of cash equal to the Deemed Partnership
Interest Value attributable to such Partnership Units.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Maryland State Department
of Assessments and Taxation on June 26, 2002, as amended from time to time in
accordance with the terms and the Act.
"Charter" means the Articles of Incorporation of the General
Partner filed with the Maryland State Department of Assessments and Taxation on
June 26, 2002, as amended or restated from time to time.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto. 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.
"Consent" means the consent to, approval of, or vote on a
proposed action by a Partner given in accordance with Article 14.
"Consent of the Limited Partners" means the Consent of a
Majority in Interest of the 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
holding Percentage Interests that in the aggregate are equal to or greater than
fifty percent (50%) of the aggregate Percentage Interests of all 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 withhold by such Partners, in
their sole and absolute discretion
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"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 to the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"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, guarantees 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 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.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interests of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interests" means, as of any
date with respect to any class or series of Partnership Interests, (i) the total
number of Partnership Units of the General Partner in such class or series of
Partnership Interests (as provided for in Sections 4.1 and 4.3.B) issued and
outstanding as of the close of business on such date multiplied by the Fair
Market Value determined as of such date of a share of capital stock of the
General Partner which corresponds to such class or series of Partnership
Interests, as adjusted (x) pursuant to Section 7.5 (in the event the General
Partner acquires material assets, other than on behalf of the Partnership) and
(y) for stock dividends and distributions, stock splits and subdivisions,
reverse stock splits and combinations, distribution of warrants or options and
distributions of evidences of indebtedness or assets not received by the General
Partner pursuant to a pro rata distribution by the Partnership; (ii) divided by
the Percentage Interest of the General Partner in such class or series of
Partnership Interests on such date; provided, that if no outstanding shares of
capital stock of the General Partner correspond to a class of series of
Partnership Interests, the Deemed Value of the Partnership Interests with
respect to such class or series shall be equal to an amount reasonably
determined by the General Partner.
"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
6
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.
"Effective Date" means the date of closing of the initial
public offering of REIT Shares upon which date contributions set forth on
Exhibit A shall become effective.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Fair Market Value" means, with respect to any share of
capital stock of the General Partner, the average of the daily market price for
the ten (10) consecutive trading days immediately preceding the date with
respect to which "Fair Market Value" must be determined hereunder or, if such
date is not a Business Day, the immediately preceding Business Day. The market
price for each such trading day shall be: (i) if such shares are listed or
admitted to trading on any securities exchange or the Nasdaq National Market,
the closing price, regular way, on such day, or if no such sale takes place on
such day, the average of the closing bid and asked prices on such day, (ii) if
such shares are not listed or admitted to trading on any securities exchange or
the Nasdaq National Market, the last reported sale price on such day or, if no
sale takes place on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated by the General
Partner, or (iii) if such shares are not listed or admitted to trading on any
securities exchange or the Nasdaq National Market and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten (10) days prior to the date
in question) for which prices have been so reported; provided that, if there are
no bid and asked prices reported during the ten (10) days prior to the date in
question, the Fair Market Value of such shares shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market Value of such
rights shall be determined by the General Partner acting in good faith on the
basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate; and provided, further that, in connection with
determining the Deemed Value of the Partnership Interests for purposes of
determining the number of additional Partnership Units issuable upon a Capital
Contribution funded by an underwritten public offering of shares of capital
stock of the General Partner, the Fair Market Value of such shares shall be the
public offering price per share of such class of capital stock sold.
Notwithstanding the foregoing, the General Partner in its reasonable discretion
may use a different "Fair Market Value" for purposes of making the
determinations under subparagraph (b) of the definition of "Gross Asset Value"
and Section 4.3.C in connection with the contribution of Property to the
Partnership by a third party, provided such value shall be based upon the value
per REIT Share (or per Partnership Unit) agreed upon by the General Partner and
such third party for purposes of such contribution.
"General Partner" means the Company or its successor as
general partner of the Partnership.
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"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:
(a) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset, as determined by the contributing Partner and the General Partner
(as set forth on Exhibit A attached hereto, as such Exhibit may be amended from
time to time); provided, that if the contributing Partner is the General Partner
then, except with respect to the General Partner's initial Capital Contribution
which shall be determined as set forth on Exhibit A, the determination of the
fair market value of the contributed asset shall be determined (i) by the price
paid by the General Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership, (ii) by Appraisal,
if otherwise acquired by the General Partner, (iii) by the amount of cash if the
asset is cash, and (iv) as reasonably determined by the General Partner if the
asset is REIT Shares or other shares of capital stock of the Company.
(b) 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, provided, however, that for such purpose, the net value of all of
the Partnership assets, in the aggregate, shall be equal to the Deemed Value of
the Partnership Interests of all classes of Partnership Interests then
outstanding, regardless of the method of valuation adopted by the General
Partner, immediately prior to the times listed below:
(i) 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;
(ii) 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;
(iii) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(iv) at such other times as the General Partner shall
reasonably determine necessary or advisable in order
to comply with Regulations Sections 1.704-l(b) and
1.704-2.
(c) 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, or if the distributee and the General Partner cannot agree on such a
determination, by Appraisal.
8
(d) 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-l(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (d) to the extent that the General Partner reasonably determines
that an adjustment pursuant to subparagraph (b) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset has
been determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a
Partnership Unit.
"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 (whether natural, adopted or by marriage),
siblings and grandchildren and any trust or estate, all of the beneficiaries of
which consist of such Person or such Person's spouse, or 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 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 90 days of such appointment,
or (h) an appointment referred to in clause (g) is not vacated within 90 days
after the expiration of any such stay.
9
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of his or her status as (A) the General Partner or (B) a director or
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 (whether
before or after the event giving rise to potential liability), in its sole and
absolute discretion.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"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,
or any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.
"Limited Partner 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 Partner Interest may be expressed as a
number of Partnership Units.
"Liquidating Event" 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 Limited Partner fifty percent (50%) or more of whose
equity is owned, directly or indirectly, by the General Partner) holding in the
aggregate Percentage Interests that are greater than fifty percent (50%) of the
aggregate Percentage Interests of all Limited Partners (other than any Limited
Partner fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the General Partner).
"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)(l) shall be included in taxable
income or loss), with the following adjustments:
(a) 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;
(b) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-l(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;
10
(c) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (b) or subparagraph (c) 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;
(d) 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;
(e) 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;
(f) 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-l(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
(g) 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.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or other shares of capital stock of the General Partner,
excluding in each case, grants under any Stock Plan, or (ii) any Debt issued by
the General Partner that provides any of the rights described in clause (i).
"Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(b)(l), 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-l(a)(2).
"Notice of Redemption" means the Notice of Redemption
substantially in the form of Exhibit B to this Agreement.
"Option Agreement Effective Date" means the date the
Partnership acquires an Option Interest pursuant to the respective Option
Agreement in exchange for Partnership Units.
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"Option Agreements" means those certain option agreements by
and between the Partnership and Affiliates of Robert F. Maguire III, whereby
such entities granted the Partnership an option to acquire the Option Interests.
"Option Interests" means those certain properties or interests
in entities which own certain real property.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set
forth in Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"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 or series 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
or series.
"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 pursuant to Section
5.1 which record date shall be the same as the record date established by the
General Partner 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
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and 4.3. The ownership of Partnership Units may be evidenced by a certificate
for units substantially in the form of Exhibit D hereto or as the General
Partner may determine with respect to any class of Partnership Units issued from
time to time under Section 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
or series of Partnership Interests, its interest in such class or series as
determined by dividing the Partnership Units of such class or series 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 or
series of Partnership Interests, the interest in the Partnership among the
classes or series 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 or series of Partnership Interest, if any,
as contemplated by Section 4.3.C.
"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.
"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.
"Qualified REIT Subsidiary" means any Subsidiary of the
General Partner that is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as such
term is defined in Rule 501 promulgated under the Securities Act.
"Redemption" shall have the meaning set forth in Section
8.6.A.
"Regulations" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Regulatory Allocations" shall have the meaning set forth in
Section 6.3.A(viii).
"REIT" means a real estate investment trust under Section
856 of the Code.
"REIT Requirements" shall have the meaning set forth in
Section 5.1.
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"REIT Share" means a share of common stock of the General
Partner.
"REIT Shares Amount" means, as of any date, an aggregate
number of REIT Shares equal to the number of Tendered Units, as adjusted (x)
pursuant to Section 7.5 (in the event the General Partner acquires material
assets, other than on behalf of the Partnership) and (y) for stock dividends and
distributions, stock splits and subdivisions, reverse stock splits and
combinations, distributions of rights, warrants or options, and distributions of
evidences of indebtedness or assets relating to assets not received by the
General Partner pursuant to a pro rata distribution by the Partnership.
"ROFO Agreement Effective Date" means the date the Partnership
acquires the ROFO Interest pursuant to the ROFO Agreement in exchange for
Partnership Units.
"ROFO Agreement" means that certain Right of First Offer
Agreements by and between the Partnership and Affiliates of Robert F. Maguire
III, whereby such entities granted the Partnership the right to acquire the ROFO
Interests.
"ROFO Interests" means those certain properties or interests
in entities which own certain real property described in the ROFO Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder and any successor statute thereto.
"Securities Exchange Act" means the Securities Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder and any successor statute thereto.
"Specified Redemption Date" means the day of receipt by the
General Partner of a Notice of Redemption.
"Stock Plan" means any stock incentive, stock option, stock
ownership or employee benefits plan of the General Partner.
"Subsidiary" means, 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.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Surviving Partnership" shall have the meaning set forth in
Section 11.2.B(2).
"Tax Items" shall have the meaning set forth in Section 6.4.A.
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"Tenant" means any tenant from which the General Partner
derives rent either directly or indirectly through partnerships, including the
Partnership.
"Tendered Units" shall have the meaning set forth in Section
8.6.A.
"Tendering Partner" shall have the meaning set forth in
Section 8.6.A.
"Termination Transaction" shall have the meaning set forth in
Section 11.2.B.
Section 1.2 Rules of Construction
Unless otherwise indicated, all referenced herein to "REIT,"
"REIT Requirements." "REIT Shares" and "REIT Shares Amount" with respect to the
General Partner shall apply only with reference to the Company.
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 Maguire Properties, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent: Principal Office
The name and address of the registered office and registered
agent of the Partnership in the State of Maryland are James J. Hanks, Jr., care
of Venable, Baetjer and Howard, LLP, 1800 Mercantile Bank & Trust Bldg., 2
Hopkins Plaza, Baltimore, MD 21202. The address of the principal office of the
Partnership in the State of Maryland is c/o Venable, Baetjer and Howard, LLP at
such address. The principal office of the Partnership is located at 555 West
Fifth Street, Suite 5000, Los Angeles, California 90013, 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 Maryland as the General Partner deems advisable.
15
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:
(1) 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 Maryland 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 or 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
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator,
16
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 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 June 26, 2002 and
shall continue until December 31, 2102 unless it is dissolved sooner pursuant to
the provisions of Article 13 or as otherwise provided by law.
ARTICLE 3.
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT for federal income tax
purposes, unless the General Partner 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
business described in the foregoing clause (i) or to own interests in any entity
engaged, directly or indirectly, in any such business and (iii) to do anything
necessary or incidental to the foregoing. In connection with the foregoing, and
without limiting the General Partner's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that the General Partner'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, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, notwithstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, (ii) could subject the General Partner 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 the General Partner or its
securities, unless any such action (or inaction) under (i), (ii) or (iii) shall
have been specifically consented to by the General Partner in writing.
17
Section 3.3 Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, nor
shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties
A. Each Partner that is an individual represents and warrants to
each other Partner that (i) such Partner has 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 a "United States person" within the meaning of
Section 7701(a)(30) of the Code, and (iv) this Agreement 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 bylaws, 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 a
"United States person" within the meaning of Section 7701(a)(30) of the Code and
(iv) this Agreement 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
18
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. Each Partner
represents, warrants and agrees that such Partner is an "accredited investor"
(as such term is defined in Rule 501(a) of Regulation D under the Securities
Act).
D. Each Partner acknowledges that (i) the Partnership Units (and
any REIT Shares that might be exchanged therefor) have not been registered under
the Securities Act and may not be transferred unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available (it being understood that the Partnership has no intention of so
registering the Partnership Units), (ii) a restrictive legend in the form set
froth in Exhibit D shall be placed on the certificates representing the
Partnership Units, and (iii) a notation shall be made in the appropriate records
of the Partnership indicating that the Partnership Units are subject to
restrictions on transfer.
E. Each Partner further represents, warrants, covenants and
agrees as follows:
(1) 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.
(2) 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 the General Partner, other than any REIT Shares
or other shares of capital stock of the General Partner such Partner may acquire
(a) as a result of an exchange of Tendered Units pursuant to Section 8.6 or (b)
upon the exercise of options granted or delivery of REIT Shares pursuant to any
Stock Plan, in each case subject to the ownership limitations set forth in the
General Partner's Charter.
(3) Upon request of the General Partner, it will disclose
to the General Partner the amount of REIT Shares or other shares of capital
stock of the General Partner that it actually owns or Constructively Owns.
(4) It understands that if, for any reason, (a) the
representations, warranties or agreements set forth in E(1) or (2) above
are violated, or (b) the Partnership's actual or Constructive Ownership of REIT
Shares or other shares of capital stock of the General Partner violates the
limitations set forth in the Charter, then (x) some or all of the Redemption
rights of the Partners may become non-exercisable, and (y) some or all of the
REIT Shares owned by the Partners may be automatically transferred to a trust
for the benefit of a charitable beneficiary, as provided in the Charter.
19
(5) Without the consent of the General Partner, which may
be given or withheld in its sole discretion, no Partner shall take any action
that would cause the Partnership at any time to have more than 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).
F. The representations and warranties contained in Sections 3.4
shall survive the execution and delivery of this Agreement by each Partner and
the dissolution and wind up of the Partnership.
G. Each Partner hereby acknowledges that no representations as to
potential profit, cash flows, funds from operations or yield, if any, in respect
of the Partnership or the General Partner have been made by any Partner or any
employee or representative or Affiliate of any Partner, and that projections and
any other information, including, without limitation, financial and descriptive
information and documentation, which may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.
Section 3.5 Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner may 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 or series 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 reflect accurately 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, as otherwise provided in Sections 4.3, 4.4 and 10.5, or as
otherwise agreed to by a Partner and the Partnership, no Partner shall be
required or permitted to make any additional Capital Contributions or loans to
the Partnership. Unless otherwise specified by the General Partner at the time
of the creation of any class of Partnership Interests, the corresponding class
or series of capital stock for any Partnership Units issued shall be REIT
Shares.
20
Section 4.2 Loans by Third Parties
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 that is not the General
Partner 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, except as set forth in this
Section 4.3.
B. Issuance of Additional Partnership Interests. The General
Partner, in its sole and absolute discretion, may raise all or any portion of
the Additional Funds by accepting additional Capital Contributions. In
connection therewith, 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 Partner Interests,
all as shall be determined by the General Partner in its sole and absolute
discretion subject to Maryland law, 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,
including, without limitation, the Limited Partner approval rights set forth in
Section 11.2.A; provided, that no such additional Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
(1) the additional Partnership Interests are issued in connection with the
grant, award, or issuance of shares of the General Partner pursuant to Section
4.3.C below, which shares have designations, preferences, and other rights
(except voting rights) such that the economic interests attributable to such
shares are substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the General Partner in
accordance with this Section 4.3.B, and (2) the General Partner shall make a
Capital Contribution to the Partnership in an amount equal to the net proceeds
raised in connection with such issuance, or (b) the additional Partnership
Interests are issued to all Partners holding Partnership Interests in the same
class in proportion to their respective Percentage Interests in such class. 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 Section 5.4,
Section 6.2.C,
21
and Section 8.6) as it determines are necessary to reflect the issuance of such
additional Partnership Interests.
C. Issuance of REIT Shares or Other Securities by the General
Partner.
The General Partner shall not issue any additional REIT Shares
(other than REIT Shares issued pursuant to Section 8.6 or pursuant to a dividend
or distribution (including any stock split) of REIT Shares to all of its
stockholders), other shares of capital stock of the General Partner or New
Securities unless (i) the General Partner shall cause the Partnership to issue
to the General Partner, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests thereof are
substantially similar to those of the REIT Shares, other shares of capital stock
of the General Partner or New Securities issued by the General Partner and (ii)
the General Partner shall make a Capital Contribution of the net proceeds from
the issuance of such additional REIT Shares, other shares of capital stock or
New Securities, as the case may be, and from the exercise of the rights
contained in such additional New Securities, as the case may be. Without
limiting the foregoing, the General Partner is expressly authorized to issue
REIT Shares, other shares of capital stock of the General Partner or New
Securities for no tangible value or for less than fair market value, and the
General Partner is expressly authorized to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance of Partnership Interests is
in the interests of the Partnership; and (y) the General Partner contributes all
proceeds, if any, from such issuance and exercise to the Partnership.
In connection with the General Partner's initial public
offering of REIT Shares, any other issuance of REIT Shares, other capital stock
of the General Partner or New Securities, the General Partner shall contribute
to the Partnership, any net proceeds raised in connection with such issuance;
provided, that if the net proceeds actually received by the General Partner are
less than the gross proceeds of such issuance as a result of any underwriter's
discount or other expenses paid or incurred in connection with such issuance,
then the General Partner shall be deemed to have made a Capital Contribution to
the Partnership in the amount equal to the sum of the net proceeds of such
issuance plus the amount of such underwriter's discount and other expenses paid
by the General Partner (which discount and expense shall be treated as an
expense for the benefit of the Partnership for purposes of Section 7.4). In the
case of issuances of REIT Shares, other capital stock of the General Partner or
New Securities pursuant to any Stock Plan at a discount from fair market value
or for no value, the amount of such discount representing compensation to the
employee, as determined by the General Partner, shall be treated as an expense
for the benefit of the Partnership for purposes of Section 7.4 and, as a result,
the General Partner shall be deemed to have made a Capital Contribution to the
Partnership in an amount equal to the sum of any net proceeds of such issuance
plus the amount of such expense.
D. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for any class or series of Partnership Units, the
Percentage Interest in such class or series of Partnership Units shall be equal
to a fraction, the numerator of which is equal to the amount of cash and the
Agreed Value of the Property contributed as of the Business Day immediately
preceding the date on which the additional Capital Contributions are made (an
"Adjustment Date") and the
22
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the aggregate Agreed Value
of additional Capital Contributions contributed by all Partners and/or third
parties to the Partnership on such Adjustment Date in such class or series of
Partnership Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class or series not making a full pro rata Capital
Contribution shall be adjusted to equal a fraction, the numerator of which is
equal to the sum of (i) the Deemed Partnership Interest Value of such Limited
Partner in respect of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) and (ii) the Agreed Value of
additional Capital Contributions, if any, made by such Partner to the
Partnership in such class or series of Partnership Interests as of such
Adjustment Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class or series (computed as
of the Business Day immediately preceding the Adjustment Date), plus (ii) the
aggregate Agreed Value of additional Capital Contributions contributed by all
Partners and/or third parties to the Partnership on such Adjustment Date in such
class or series. Provided, however, solely for purposes of calculating a
Partner's Percentage Interest pursuant to this Section 4.3.D, (i) in the case of
cash Capital Contributions by the General Partner funded by an offering of REIT
Shares or other shares of capital stock of the General Partner and (ii) in the
case of the contribution of properties by the General Partner which were
acquired by the General Partner in exchange for REIT Shares or other shares of
capital stock of the General Partner immediately prior to such contribution, the
General Partner shall be issued a number of Partnership Units equal and
corresponding to the number of such shares issued by the General Partner in
exchange for such cash or Properties, the Partnership Units held by the other
Partners shall not be adjusted, and the Partners' Percentage Interests shall be
adjusted accordingly. The General Partner shall promptly give each Partner
written notice of its Percentage Interest, as adjusted.
Section 4.4 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 agreements with the
Partnership, in the form of a guarantee or contribution agreement, which have
the effect of providing a guarantee of certain obligations of the Partnership.
Section 4.5 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) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
23
ARTICLE 5.
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute
quarterly all, or such portion as the General Partner may in its discretion
determine, of Available Cash generated by the Partnership to the Partners who
are Partners on the applicable record date with respect to such distribution,
(1) first, with respect to any class or series of Partnership Interests that are
entitled to any preference in distributions, in accordance with the rights of
such class or series of Partnership Interests (and within such class or series,
pro rata in proportion to the respective Percentage Interests on the applicable
record date), and (2) second, with respect to any class or series of Partnership
Interests that are not entitled to any preference in distributions, pro rata to
each such class or series in accordance with the terms of such class or series
to the Partners who are Partners of such class or series on the Partnership
Record Date with respect to such distribution (and within each such class or
series, pro rata in proportion to the respective Percentage Interests on such
Partnership Record Date). Unless otherwise expressly provided for herein or in
an agreement, if any, entered into in connection with the creation of a new
class or series of Partnership Interests created 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 its qualification as a REIT, to cause the Partnership to distribute
sufficient amounts to enable the General Partner, for so long as the General
Partner has determined to qualify as a REIT, to pay stockholder dividends that
will (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 General Partner.
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.
Section 5.3 Distributions Upon Liquidation
Notwithstanding Section 5.1, 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 4.3.C, 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
24
Section 5.1 (without regard to this Section 5.4) with respect to the period
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 period, and the
denominator of which is the total number of days in such period.
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 Partner 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. Allocation of Net Income and Net Losses.
(1) Net Income. Except as otherwise provided in Section
6.3, Net Income for any Partnership Year shall be allocated to the Partners in
the following manner and order of priority:
(a) First, 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.A.2(c) for all prior Partnership Years
minus the cumulative Net Income allocated to the General Partner pursuant to
this Section 6.2.A.(1)(a) for all prior Partnership Years;
(b) Second, to each Limited Partner in an amount
equal to the remainder, if any, of the cumulative Net Losses allocated to each
such Limited Partner pursuant to Section 6.2.A.2(b) for all prior Partnership
Years minus the cumulative Net Income allocated to such Limited Partner pursuant
to this Section 6.2.A.(1)(b) for all prior Partnership Years;
(c) Third, to the General Partner and the
Limited Partners in an amount equal to the remainder, if any, of the cumulative
Net Losses allocated to each such Partner pursuant to Section 6.2.A.2(a) for all
prior Partnership Years minus the cumulative Net Income allocated to each
Partner pursuant to this Section 6.2.A.(1)(c) for all prior Partnership Years;
(d) Fourth, to each of the Partners in
accordance with their respective Percentage Interests.
To the extent the allocations of Net Income set forth above in
any paragraph of this Section 6.2.A.(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.
25
(2) Net Losses. Except as otherwise provided in Section
6.3, Net Losses for any Partnership Year shall be allocated to the Partners in
the following manner and order of priority:
(a) First, to the General Partner and the
Limited Partners in accordance with their respective Percentage Interests (to
the extent consistent with this Section 6.2.A(2)(a)) until the Adjusted Capital
Account (ignoring for this purpose any amounts a Partner 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)) of each such
Partner is zero;
(b) Second, to the Limited Partners to the
extent of, and in proportion to, the positive balance (if any) in their Adjusted
Capital Accounts; and
(c) Third, to the General Partner.
B. Allocations to Reflect Issuance of Additional Partnership
Interests. In the event that the Partnership issues additional Partnership
Interests to the General Partner, a Limited Partner or any Additional Limited
Partner pursuant to Section 4.3, the General Partner shall make such revisions
to this Section 6.2 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 in accordance with any
method selected by the General Partner.
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
26
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Holder's share of the net decrease
in Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Holder pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Sections
1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A(ii) is intended to qualify
as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of
Regulation Section 1.704-2(i) which shall be controlling in the event of a
conflict between such Regulation and this Section 6.3.A(ii).
(iii) Nonrecourse Deductions and Partner
Nonrecourse Deductions. Any Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Holders in accordance with their respective
Percentage Interests. 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-l(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 this 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-l(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 (1) the amount (if any) such Holder is obligated to restore
to the Partnership, and (2) 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 this 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, subject to the limitations of this Section 6.3.A(vi).
27
(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.
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 contributed to the
Partnership in connection with the General Partner's initial public offering or
pursuant to the Partnership's exercise of rights under any Option Agreement or
ROFO Agreement, 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 other properties contributed to the
Partnership, the Partnership shall account for such variation under any method
consistent with 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 (b) of the definition of
Gross Asset Value (provided in Article 1), subsequent allocations of Tax Items
with respect to such asset shall take account of the variation, if any, between
the adjusted basis of
28
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-l(b)(2)(iv)(g) using any method approved under Section
704(c) of the Code and the applicable regulations as chosen by the General
Partner, provided, however, that the "traditional method" as described in
Regulations Section 1.704-3(b) shall be used with respect to Partnership
Property that is contributed to the Partnership in connection with the General
Partner's initial public offering or pursuant to the Partnership's exercise of
rights under any Option Agreement or ROFO Agreement.
ARTICLE 7.
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are and shall
be exclusively vested in the General Partner, 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. The General Partner may not be removed
by the Limited Partners with or without cause. In addition to the powers now or
hereafter granted a general partner of a limited partnership under applicable
law or which are granted to the General Partner under any other provision of
this Agreement, the General Partner, subject to the other provisions hereof
including Sections 7.3 and 11.2, 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:
(1) 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 the General Partner (so long as the
General Partner 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 the General Partner 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 the
Partnership's assets) and the incurring of any obligations it deems necessary
for the conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership, the registration of
any class of securities of the Partnership under the Securities Exchange Act of
1934, as amended, and the listing of any debt securities of the Partnership on
any exchange;
(3) subject to the provisions of Section 11.2, 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;
29
(4) the acquisition, disposition, mortgage, pledge,
encumbrance or hypothecation of 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 or 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, and the making of capital contributions to its Subsidiaries;
(5) 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;
(6) 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,
including contracting with contractors, developers, consultants, accountants,
legal counsel, other professional advisors and other agents and the payment of
their expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(8) the establishment of one or more divisions of the
Partnership, 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;
(9) the maintenance of such insurance for the benefit of
the Partnership and the Partners and directors and officers of the Partnership
or the General Partner as it deems necessary or appropriate;
(10) 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 the General
Partner has determined to continue to qualify as a REIT, the Partnership may not
engage in any such formation, acquisition or contribution that could cause the
General Partner to fail to qualify as a REIT;
(11) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise, submission
to arbitration or any other form of dispute resolution, or abandonment of, any
claim, cause of action, liability, debt or damages, due or owing to or from the
Partnership, the commencement or defense of suits, legal proceedings,
30
administrative proceedings, arbitration or other forms of dispute resolution,
and the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the incurring of legal expense, and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(12) 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);
(13) 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;
(14) 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;
(15) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(16) the collection and receipt of revenues and income of
the Partnership;
(17) 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;
(18) 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;
(19) 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;
(20) 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 agreements in writing necessary or
appropriate in the judgment of the General Partner for the accomplishment of any
of the powers of the General Partner enumerated in this Agreement;
(21) the issuance of additional Partnership interests, as
appropriate, in connection with the contribution of Additional Funds pursuant to
Section 4.3;
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(22) the distribution of cash to acquire Partnership Units
held by a Limited Partner in connection with a Limited Partner's exercise of its
Redemption Right under Section 8.6 hereof; and
(23) the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Contributions and Percentage
Interests of the Partners as the same are adjusted from time to time to the
extent necessary to reflect redemptions, Capital Contributions, the issuance of
Partnership Units, the admission of any Additional Limited Partner or any
Substituted Limited Partner or otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the contrary, shall not be deemed
an amendment to this Agreement, as long as the matter or event being reflected
in Exhibit A hereto otherwise is authorized by this Agreement.
B. Each of the Limited Partners agrees that the General Partner
is authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provisions of this Agreement
(except as provided in Section 7.3 or 11.2), the Act or any applicable law, rule
or regulation to the fullest extent permitted under the Act or other applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.
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 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
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 shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by the General Partner. The General Partner and the Partnership
shall not have liability to a Partner under this Agreement 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.
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Section 7.2 Certificate of Limited Partnership
To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Maryland
and 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(4), 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 Maryland, 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 an express prohibition or limitation of this Agreement without the written
Consent of the Limited Partners and may not (i) 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 (ii) enter
into any contract, mortgage, loan or other agreement that prohibits or
restricts, or has the effect of prohibiting or restricting, the ability of a
Limited Partner to exercise its rights to a Redemption in full, except in each
case with the written consent of such Limited Partner.
B. The General Partner shall not, without the prior consent of
the Partners holding Percentage Interests that in the aggregate are greater than
66-2/3% of the aggregate Percentage Interests of all the Partners (in addition
to any Consent of the Limited Partners required by any other provision hereof),
or except as provided in Section 7.3.C, amend, modify or terminate this
Agreement.
C. Notwithstanding Section 7.3.B, the General Partner shall have
the exclusive power to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(1) 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;
(2) to reflect the issuance of additional Partnership
Interests pursuant to Sections 4.3.B, 5.4 and 6.2B. or the admission,
substitution, termination, or withdrawal of Partners in accordance with this
Agreement;
(3) 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, correct or supplement any provision in this
Agreement not inconsistent with law or with other provisions,
33
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;
(4) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law;
(5) to reflect such changes as are reasonably necessary
for the General Partner 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
(6) 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.C is taken.
D. Notwithstanding Sections 7.3.B and 7.3.C, this Agreement shall
not be amended with respect to any Partner adversely affected, and no action may
be taken by the General Partner, without the Consent of such 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 the allocations
specified in Article 6 (except as permitted pursuant to Sections 4.3, 5.4, 6.2.B
and Section 7.3.C(3)), (iv) materially alter or modify the rights to a
Redemption or the REIT Shares Amount as set forth in Section 8.6, and related
definitions hereof, or (v) amend this Section 7.3.D. Further, no amendment may
alter the restrictions on the General Partner's authority set forth elsewhere in
this Section 7.3 or in Section 11.2.B without the Consent specified in such
section. This Section 7.3D does not require unanimous consent of all Partners
adversely affected unless the amendment is to be effective against all partners
adversely affected.
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 Partnership shall be responsible for and shall pay all
expenses relating to the Partnership's and the General Partner's organization,
the ownership of its assets and its operations. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. Except to the extent
provided in this Agreement, the General Partner and its Affiliates 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 that the General
Partner and its Affiliates incur relating to the ownership and operation of, or
for the benefit of, the Partnership (including, without limitation,
administrative expenses); provided, that the amount of any such
34
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership. The Partners acknowledge that all such expenses of
the General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof. In the event that certain
expenses are incurred for the benefit of the Partnership and other entities
(including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. All payments and
reimbursements hereunder shall be characterized for federal income tax purposes
as expenses of the Partnership incurred on its behalf, and not as expenses of
the General Partner.
C. If the General Partner shall elect to purchase from its
stockholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
General Partner, any employee stock purchase plan adopted by the General
Partner, or any similar obligation or arrangement undertaken by the General
Partner in the future or for the purpose of retiring such REIT Shares, the
purchase price paid by the General Partner for such REIT Shares and any other
expenses incurred by the General Partner in connection with such purchase shall
be considered expenses of the Partnership and shall be advanced to the General
Partner or reimbursed to the General Partner, subject to the condition that: (i)
if such REIT Shares subsequently are sold by the General Partner, the General
Partner shall pay to the Partnership any proceeds received by the General
Partner for such REIT Shares (which sales proceeds shall include the amount of
dividends reinvested under any dividend reinvestment or similar program;
provided, that a transfer of REIT Shares for Partnership Units pursuant to
Section 8.6 would not be considered a sale for such purposes); and (ii) if such
REIT Shares are not retransferred by the General Partner within thirty (30) days
after the purchase thereof, or the General Partner otherwise determines not to
retransfer such REIT Shares, the General Partner, shall cause the Partnership to
redeem a number of Partnership Units held by the General Partner equal to the
number of such REIT Shares, as adjusted (x) pursuant to Section 7.5 (in the
event the General Partner acquires material assets, other than on behalf of the
Partnership) and (y) for stock dividends and distributions, stock splits and
subdivisions, reverse stock splits and combinations, distributions of rights,
warrants or options, and distributions of evidences of indebtedness or assets
relating to assets not received by the General Partner pursuant to a pro rata
distribution by the Partnership (in which case such advancement or reimbursement
of expenses shall be treated as having been made as a distribution in redemption
of such number of Partnership Units held by the General Partner).
D. As set forth in Section 4.3, the General Partner shall be
treated as having made a Capital Contribution in the amount of all expenses that
it incurs relating to the General Partner's offering of REIT Shares, other
shares of capital stock of the General Partner or New Securities.
E. 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.
35
Section 7.5 Outside Activities of the General Partner
A. Except in connection with a transaction authorized in Section
11.2, 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, its operation as a public reporting company with a class (or
classes) of securities registered under the Exchange Act, its operation as a
REIT and such activities as are incidental to the same. 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 minority interest in any
Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT
Subsidiary or limited liability company) 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 Charter. In the event the General Partner desires to contribute cash to
any Subsidiary Partnership to acquire or maintain an interest of 1% or less in
the capital of such partnership, the General Partner may acquire or maintain an
interest of 1% or less in the capital of such partnership, and the General
Partner may acquire such cash from the Partnership as a loan or in exchange for
a reduction in the General Partner's Partnership Units, in an amount equal to
the amount of such cash divided by the Fair Market Value of a REIT Share on the
day such cash is received by the General Partner. Notwithstanding the foregoing,
the General Partner may acquire Properties in exchange for REIT Shares, to the
extent such Properties are immediately contributed by the General Partner to the
Partnership, pursuant to the terms described in Section 4.3.D. Any Limited
Partner Interests acquired by the General Partner, whether pursuant to exercise
by a Limited Partner of its right of Redemption, or otherwise, shall be
automatically converted into a General Partner Interest comprised of an
identical number of Partnership Units with the same rights, priorities and
preferences as the class or series so acquired. If, at any time, the General
Partner acquires material assets (other than on behalf of the Partnership) the
definition of "REIT Shares Amount" and the definition of "Deemed Value of
Partnership Interests" shall be adjusted, as reasonably determined by the
General Partner, to reflect the relative Fair Market Value of a share of capital
stock of the General Partner relative to the Deemed Partnership Interest Value
of the related Partnership Unit. The General Partner's General Partner Interest
in the Partnership, its minority 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 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.A.
B. In the event the General Partner exercises its rights under
the Charter to purchase REIT Shares, other capital stock of the General Partner
or New Securities, as the case may be, then the General Partner shall cause the
Partnership to purchase from it a number of Partnership Units equal to the
number of REIT Shares, other capital stock of the General Partner or New
Securities, as the case may be, so purchased on the same terms that the General
Partner purchased such REIT Shares, other capital stock of the General Partner
or New Securities, as the case may be.
36
Section 7.6 Contracts with Affiliates
A. The Partnership may lend or contribute to Persons in which it
has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Person.
B. Except as provided in Section 7.5.A, the Partnership may
transfer assets to joint ventures, other partnerships, corporations or other
business entities in which it is or thereby becomes a participant upon such
terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner in its sole discretion deems advisable.
C. The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, 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. The General Partner also is expressly
authorized to cause the Partnership to issue to it Partnership Units
corresponding to REIT Shares issued by the General Partner pursuant to any Stock
Plan or any similar or successor plan and to repurchase such Partnership Units
from the General Partner to the extent necessary to permit the General Partner
to repurchase such REIT Shares in accordance with such plan.
D. Except as expressly permitted by this Agreement, neither the
General Partner nor any of its Affiliates shall sell, transfer or convey any
property to, or purchase any property from, the Partnership, directly or
indirectly, except pursuant to transactions that are determined by the General
Partner in good faith to be fair and reasonable.
E. The General Partner is expressly authorized to enter into, in
the name and on behalf of the Partnership, a right of first opportunity
arrangement and other conflict avoidance agreements with various Affiliates of
the Partnership and the General Partner, on such terms as the General Partner,
in its sole and absolute discretion, believes are advisable.
Section 7.7 Indemnification
A. To the fullest extent permitted by law, 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, fraud or was the result of
active and deliberate dishonesty; (ii) the Indemnitee actually received an
improper personal benefit in money, property or services; or (iii) in the case
of any criminal proceeding, the Indemnitee had reasonable cause to believe that
the act or omission was unlawful. Without limitation, the foregoing indemnity
shall extend to any liability of any Indemnitee, pursuant to a
37
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, except to the extent otherwise expressly
agreed to by such Partner and the Partnership.
B. Reasonable expenses incurred by an Indemnitee who is a party
to a proceeding may be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7 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 unless otherwise provided in a written agreement pursuant
to which such Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, 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 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
38
believed by it to be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is not opposed to the best
interests of the Partnership.
F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or
in part under this Section 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 10-107 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 nor any of its officers, directors,
agents or 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.
39
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. The General Partner is under no
obligation to give priority to the separate interests of the Limited Partners or
the General Partner's stockholders (including, without limitation, the tax
consequences to Limited Partners or Assignees or to stockholders) in deciding
whether to cause the Partnership to take (or decline to take) any actions. If
there is a conflict between the interests of the stockholders of the General
Partner on one hand and the Limited Partners on the other, the General Partner
shall endeavor in good faith to resolve the conflict in a manner not adverse to
either the stockholders of the General Partner or the Limited Partners;
provided, however, that for so long as the General Partner, owns a controlling
interest in the Partnership, any such conflict that cannot be resolved in a
manner not adverse to either the stockholders of the General Partner or the
Limited Partners shall be resolved in favor of the stockholders. The General
Partner shall not be liable under this Agreement to the Partnership or to any
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 employee's liability 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
40
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 (i) to protect the ability
of the General Partner, for so long as the General Partner has determined to
qualify as a REIT, to continue to qualify as a REIT or (ii) to avoid the General
Partner 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.
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 held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be recorded as the property
of the Partnership 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
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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, 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. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, 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 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 Person.
Section 8.4 Return of Capital
Except pursuant to the rights of Redemption set forth in
Section 8.6 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, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of
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Capital Contributions, or otherwise expressly provided in this Agreement, or 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.C, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at such Limited Partner's expense:
(1) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and Exchange Commission by the
General Partner pursuant to the Securities Exchange Act, and each communication
sent to the stockholders of the General Partner;
(2) to obtain a copy of the Partnership's federal, state
and local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) 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
(5) 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. The Partnership shall notify each Limited Partner in writing
of any adjustment made in the calculation of the REIT Shares Amount within a
reasonable time after the date such change becomes effective.
C. 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.
Section 8.6 Redemption Rights
A. On or after the date fourteen (14) months after (i) the
Effective Date, with respect to the Partnership Units acquired on or
contemporaneously with the Effective Date, (ii) the respective Option Agreement
Effective Date, with respect to the Partnership Units received pursuant to
Option Agreements, (iii) the ROFO Agreement Effective Date, with respect to the
Partnership Units received pursuant to the ROFO Agreement, or on or after such
later date as
43
expressly provided in an agreement entered into between the Partnership and any
Limited Partner, each Limited Partner shall have the right (subject to the terms
and conditions set forth herein and in any other such agreement, as applicable)
to require the Partnership to redeem all or a portion of the Partnership Units
held by such Limited Partner (such Partnership Units being hereafter referred to
as "Tendered Units") in exchange for the Cash Amount (a "Redemption"); provided
that the terms of such Partnership Units do not provide that such Partnership
Units are not entitled to a right of Redemption. Unless otherwise expressly
provided in this Agreement or in a separate agreement entered into between the
Partnership and the holders of such Partnership Units, all Partnership Units
shall be entitled to a right of Redemption hereunder. The Tendering Partner
shall have no right, with respect to any Partnership Units so redeemed, to
receive any distributions paid on or after the Specified Redemption Date. Any
Redemption shall be exercised pursuant to a Notice of Redemption delivered to
the General Partner by the Limited Partner who is exercising the right (the
"Tendering Partner"). The Cash Amount shall be payable to the Tendering Partner
within ten (10) days of the Specified Redemption Date.
B. Notwithstanding Section 8.6.A above, if a Limited Partner has
delivered to the General Partner a Notice of Redemption then the General Partner
may, in its sole and absolute discretion, (subject to the limitations on
ownership and transfer of REFT Shares set forth in the Charter) elect to acquire
some or all of the Tendered Units from the Tendering Partner in exchange for the
REIT Shares Amount (as of the Specified Redemption Date) and, if the General
Partner so elects, the Tendering Partner shall sell the Tendered Units to the
General Partner in exchange for the REIT Shares Amount. In such event, the
Tendering Partner shall have no right to cause the Partnership to redeem such
Tendered Units. The General Partner shall promptly give such Tendering Partner
written notice of its election, and the Tendering Partner may elect to withdraw
its redemption request at any time prior to the acceptance of the cash or REIT
Shares Amount by such Tendering Partner.
C. The REIT Shares Amount, if applicable, shall be delivered as
duly authorized, validly issued, fully paid and nonassessable REIT Shares and,
if applicable, free of any pledge, lien, encumbrance or restriction, other than
those provided in the Charter, the Bylaws of the General Partner, the Securities
Act, relevant state securities or blue sky laws and any applicable registration
rights agreement with respect to such REIT Shares entered into by the Tendering
Partner. Notwithstanding any delay in such delivery (but subject to Section
8.6.E), the Tendering Partner shall be deemed the owner of such REIT Shares for
all purposes, including without limitation, rights to vote or consent, and
receive dividends, as of the Specified Redemption Date. In addition, the REIT
Shares for which the Partnership Units might be exchanged shall also bear a
legend which generally provides the following:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND TRANSFER
FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST ("REIT") UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY
PROVIDED IN THE CORPORATION'S ARTICLES OF AMENDMENT AND RESTATEMENT, (i) NO
PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S COMMON
STOCK IN EXCESS OF 9.8% (BY VALUE
44
OR BY NUMBER OF SHARES, WHICHEVER IS MORE RESTRICTIVE) OF THE OUTSTANDING COMMON
STOCK OF THE CORPORATION; (ii) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN
SHARES OF COMMON STOCK THAT WOULD RESULT IN THE CORPORATION BEING "CLOSELY HELD"
UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO
QUALIFY AS A REIT; AND (iii) NO PERSON MAY TRANSFER SHARES OF COMMON STOCK IF
SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED
BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR
ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF COMMON STOCK IN
VIOLATION OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF
ANY OF THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SHARES OF
COMMON STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE
OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN ADDITION,
THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND CONDITIONS SPECIFIED BY THE
BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF THE BOARD OF DIRECTORS DETERMINES
THAT OWNERSHIP OR A TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS
DESCRIBED ABOVE. FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED
TRANSFERS IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB
INITIO. ALL TERMS IN THIS LEGEND THAT ARE DEFINED IN THE ARTICLES OF AMENDMENT
AND RESTATEMENT OF THE CORPORATION SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
THE ARTICLES OF AMENDMENT AND RESTATEMENT OF THE CORPORATION, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON
TRANSFER AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SHARES OF COMMON
STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED TO
THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE.
D. Each Limited Partner covenants and agrees with the General
Partner that all Tendered Units shall be delivered to the General Partner free
and clear of all liens, claims and encumbrances whatsoever and should any such
liens, claims and/or encumbrances exist or arise with respect to such Tendered
Units, the General Partner shall be under no obligation to acquire the same.
Each Limited Partner further agrees that, in the event any state or local
property transfer tax is payable as a result of the transfer of its Tendered
Units to the General Partner (or its designee), such Limited Partner shall
assume and pay such transfer tax.
E. Notwithstanding the provisions of Section 8.6. A, 8.6.B, 8.6.C
or any other provision of this Agreement, a Limited Partner (i) shall not be
entitled to effect a Redemption for cash or an exchange for REIT Shares to the
extent the ownership or right to acquire REIT Shares pursuant to such exchange
by such Partner on the Specified Redemption Date could cause such Partner or any
other Person to violate the restrictions on ownership and transfer of REIT
Shares set forth in the Charter and (ii) shall have no rights under this
Agreement to acquire REIT Shares which would otherwise be prohibited under the
Charter. To the extent any attempted Redemption or exchange for REIT Shares
would be in violation of this Section 8.6.E, it shall be null and void ab initio
and such Limited Partner shall not acquire any rights or economic interest
45
in the cash otherwise payable upon such Redemption or the REIT Shares otherwise
issuable upon such exchange.
F. Notwithstanding anything herein to the contrary (but subject
to Section 8.6.E), with respect to any Redemption or exchange for REIT Shares
pursuant to this Section 8.6:
(1) All Partnership Units acquired by the General Partner
pursuant thereto shall automatically, and without further action required, be
converted into and deemed to be General Partner Interests comprised of the same
number and class of Partnership Units.
(2) Without the consent of the General Partner, each
Limited Partner may not effect a Redemption for less than 1,000 Partnership
Units or, if the Limited Partner holds less than 1,000 Partnership Units, all of
the Partnership Units held by such Limited Partner.
(3) Without the consent of the General Partner, each
Limited Partner may not effect a Redemption during the period after the
Partnership Record Date with respect to a distribution and before the record
date established by the General Partner for a distribution to its stockholders
of some or all of its portion of such distribution.
(4) The consummation of any Redemption or exchange for
REIT Shares shall be subject to the expiration or termination of the applicable
waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
(5) Each Tendering Partner shall continue to own all
Partnership Units subject to any Redemption or exchange for REIT Shares, and be
treated as a Limited Partner with respect to such Partnership Units for all
purposes of this Agreement, until such Partnership Units are transferred to the
General Partner and paid for or exchanged on the Specified Redemption Date.
Until a Specified Redemption Date, the Tendering Partner shall have no rights as
a stockholder of the General Partner with respect to such Tendering Partner's
Partnership Units.
G. In the event that the Partnership issues additional
Partnership Interests to any Additional Limited Partner pursuant to Section
4.3.B, the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such additional Partnership
Interests.
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 any information storage device,
provided, that the records so maintained are convertible into clearly legible
written form within a reasonable period of time.
46
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. As soon as practicable, but in no event later than 105 days
after the close of each Partnership Year, or such earlier date as they are filed
with the Securities and Exchange Commission, the General Partner shall cause to
be mailed to each Limited Partner as of the close of the Partnership Year, an
annual report containing financial statements of the Partnership, or of the
General Partner if such statements are prepared solely on a consolidated basis
with the General Partner, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner.
B. As soon as practicable, but in no event later than 45 days
after the close of each calendar quarter (except the last calendar quarter of
each year), or such earlier date as they are filed with the Securities and
Exchange Commission, the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the General Partner, if
such statements are prepared solely on a consolidated basis with the applicable
law or regulation, or as the General Partner determines to be appropriate.
Section 9.4 Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the
General Partner may keep confidential from the Limited Partners any information
that the General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interest 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 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 any information
reasonably requested by the General Partner relating to any Contributed Property
contributed (directly or indirectly) by such Limited Partner to the Partnership.
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Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code, 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:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner 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 (i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) 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);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner 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;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) 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;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Partner for tax purposes, or an item affected by such
item; and
48
(6) 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 60-month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
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 receivable of the Partnership from such Limited Partner, which
receivable shall be paid by such Limited Partner within 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. 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.
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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 Partner
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. The term "transfer" when used in this Article
11 does not include any Redemption or exchange for REIT Shares pursuant to
Section 8.6 except as otherwise provided herein. 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 or consented to by the General Partner.
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 Partnership Interest
A. Except in connection with a Termination Transaction permitted
under Section 11.2.B, 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 or consolidation, liquidation or
otherwise) without the Consent of the Limited Partners, which may be given or
withheld by each Limited Partner in its sole and absolute discretion, and only
upon the admission of a successor General Partner pursuant to Section 12.1. Upon
any transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a Substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. 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 General 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 General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its obligations under this Agreement without the Consent of the Limited
Partners, in their reasonable discretion. In the event the General Partner
withdraws from the Partnership, in violation of this Agreement or otherwise, or
otherwise dissolves or terminates, or upon the Incapacity of the General
Partner,
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all of the remaining Partners may elect to continue the Partnership business by
selecting a Substitute General Partner in accordance with the Act.
B. The General Partner shall not engage in any merger,
consolidation or other combination with or into another person, sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of its outstanding equity interests ("Termination Transaction") unless
(1) the Termination Transaction has been approved by a Consent of the Partners
and (2) either clause (a) or (b) below is satisfied:
(a) in connection with such Termination
Transaction all Limited Partners either will receive, or will have the right to
elect to receive, for each Partnership Unit an amount of cash, securities, or
other property equal to the product of the REIT Shares Amount and the greatest
amount of cash, securities or other property paid to a holder of one REIT Share
in consideration of one REIT Share at any time during the period commencing upon
and continuing after the date on which the Termination Transaction is
consummated; provided, that, if, in connection with the Termination Transaction,
a purchase, tender or exchange offer shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of Partnership Units shall receive, or shall have the right to elect to
receive, the greatest amount of cash, securities, or other property which such
holder would have received had it exercised its right to Redemption (as set
forth in Section 8.6) and received REIT Shares in exchange for its Partnership
Units immediately prior to the expiration of such purchase, tender or exchange
offer and had thereupon accepted such purchase, tender or exchange offer and
then such Termination Transaction shall have been consummated; or
(b) the following conditions are met: (i)
substantially all of the assets directly or indirectly owned by the surviving
entity are held directly or indirectly by the Partnership or another limited
partnership or limited liability company which is the survivor of a merger,
consolidation or combination of assets with the Partnership (in each case, the
"Surviving Partnership"); (ii) the holders of Partnership Units own a percentage
interest of the Surviving Partnership based on the relative fair market value of
the net assets of the Partnership and the other net assets of the Surviving
Partnership immediately prior to the consummation of such transaction; (iii) the
rights, preferences and privileges of such holders in the Surviving Partnership
are at least as favorable as those in effect immediately prior to the
consummation of such transaction and as those applicable to any other limited
partners or non-managing members of the Surviving Partnership; and (iv) such
rights of the Limited Partners include at least one of the following: (a) the
right to redeem their interests in the Surviving Partnership for the
consideration available to such persons pursuant to Section 11.2.B(2)(a); or (b)
the right to redeem their Partnership Units for cash on terms equivalent to
those in effect with respect to their Partnership Units immediately prior to the
consummation of such transaction, or, if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity securities, such common
equity securities, with an exchange ratio based on the determination of relative
fair market value of such securities and the REIT Shares.
Section 11.3 Limited Partners' Rights to Transfer
A. Prior to the fourteen (14) months after the closing of the
initial public offering of REIT Shares, no Limited Partner shall transfer all or
any portion of its Partnership Interest to any
51
transferee without the consent of the General Partner, which consent may be
withheld in its sole and absolute discretion; provided, however, that any
Limited Partner may, at any time (whether prior to or after such fourteen (14)
month period), 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, another original
Limited Partner 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, pledge (a "Pledge") all or any portion of its Partnership Interest
to a lending institution, which is not an Affiliate of such Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, and
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension or credit,
and the transfer of such pledged Partnership Interest by the lender to any
transferee. After such fourteen (14) month anniversary, each Limited Partner or
Assignee (resulting from a transfer made pursuant to clauses (i)-(iv) of the
proviso of the preceding sentence) shall have the right to transfer all or any
portion of its Partnership Interest, subject to the provisions of Section 11.6
and the satisfaction of each of the following conditions (in addition to the
right of each such Limited Partner or Assignee to continue to make any such
transfer permitted by clauses (i)-(iv) of such proviso without satisfying either
of the following conditions):
(1) General Partner Right of First Refusal. The
transferring Partner shall give written notice of the proposed transfer to the
General Partner, which notice shall state (i) the identity of the proposed
transferee, and (ii) the amount and type of consideration proposed to be
received for the transferred Partnership Units. The General Partner shall have
ten (10) days upon which to give the transferring Partner notice of its election
to acquire the Partnership Units on the proposed terms. If it so elects, it
shall purchase the Partnership Units on such terms within ten (10) days after
giving notice of such election. If it does not so elect, the transferring
Partner may transfer such Partnership Units to a third party, on economic terms
no more favorable to the transferee than the proposed terms, subject to the
other conditions of this Section 11.3.
(2) Qualified Transferee. 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 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 Charter and to the representations 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 Substitute 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.
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B. If a 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 Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate, and such power as the Incapacitated 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 Section 11.3 by a 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.
Section 11.4 Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his or her place (including any transferee
permitted by Section 11.3). The General Partner shall, however, have the right
to consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion. 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.
Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion,
does not consent 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
53
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 Redemption provided in Section 8.6,
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 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 permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 and the transferee(s) of
such Partnership Units being admitted to the Partnership as a Substituted
Limited Partner or (ii) pursuant to the exercise of its right of Redemption of
all of such Limited Partner's Partnership Units under Section 8.6; provided that
after such transfer, exchange or redemption such Limited Partner owns no
Partnership Units.
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 Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 shall cease to be a Limited Partner;
provided that after such transfer, exchange or redemption such Limited Partner
owns no Partnership Units.
C. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, 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 Section 8.6, 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 using a
method selected by the General Partner that is in accordance with Section 706(d)
of the Code. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such transfer, assignment,
exchange or redemption shall be made to the transferor Partner, and all
distributions of Available Cash thereafter, in the case of a transfer or
assignment other than a redemption, shall be made to the transferee Partner.
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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 pursuant to a Redemption or exchange for REIT
Shares pursuant to Section 8.6) 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 could cause a termination of
the Partnership for federal or state income tax purposes (except as a result of
the Redemption or exchange for REIT Shares of all Partnership Units held by all
Limited Partners or pursuant to a transaction expressly permitted under Section
11.2); (v) if in the opinion of counsel to the Partnership such transfer could
cause the Partnership to cease to be classified as a partnership for federal
income tax purposes (except as a result of the Redemption or exchange for REIT
Shares of all Partnership Units held by all Limited Partners); (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 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 (1) could be treated as effectuated through an "established securities
market" or a "secondary market" (or the substantial equivalent thereof) within
the meaning of Section 7704 of the Code, (2) could cause the Partnership to
become a "Publicly Traded Partnership," as such term is defined in Sections
469(k)(2) or 7704(b) of the Code or (3) could cause the Partnership to fail one
or more of the Safe Harbors (as defined below); (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) except with the consent of the General Partner,
which may be given or withheld in its sole discretion, if the transferee or
assignee of such Partnership Interest is unable to make the representations set
forth in Section 3.4.C; (xii) if such transfer is 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, except with the consent of the General
Partner, which may be given or withheld in its sole and absolute discretion; and
provided, that, as a condition to granting such consent the lender may be
required to enter into an arrangement with the Partnership and the General
Partner to redeem or exchange for the REIT Shares Amount 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; or (xiii)
if in the opinion of legal counsel for the Partnership such transfer could
adversely affect the ability of the General Partner to continue to qualify as a
REIT or, except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code.
55
F. The General Partner shall monitor the transfers of interests
in the Partnership 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 the "safe harbors" set forth in Regulations Section 1.7704-1 (or
such other 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 the
authority (but shall not be required) 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 one or more 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. After the admission to the Partnership of the initial Limited
Partners on the date hereof, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 and (ii) such other
documents or instruments as may be required in the discretion of the General
Partner in order to effect such Person's admission as an Additional Limited
Partner.
B. Notwithstanding anything to the contrary in this Section 12.2,
no Person shall be admitted as an Additional Limited Partner without the consent
of the General Partner, which consent may be given or withheld in the General
Partner's sole and absolute discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner and the consent of the General Partner to such admission. If any
Additional Limited Partner is admitted
56
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 using a method selected by
the General Partner that is in accordance with Section 706(d) of the Code. All
distributions of Available Cash with respect to which the Partnership Record
Date is before the date of such admission shall be made solely to Partners and
Assignees other than the Additional Limited Partner (other than in its capacity
as an Assignee) and, except as otherwise agreed to by the Additional Limited
Partners and the General Partner, all distributions of Available Cash thereafter
shall be made to all Partners and Assignees including such Additional Limited
Partner.
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 (each a "Liquidating
Event"):
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 90 days after the withdrawal, all of the remaining
Partners agree in writing, in their sole and absolute discretion, to continue
the business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a substitute General Partner;
C. subject to compliance with Section 11.2 an election to
dissolve the Partnership made by the General Partner, in its sole and absolute
discretion;
D. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
57
E. any sale or other disposition of all or substantially all of
the assets of the Partnership or a related series of transactions that, taken
together, result in the sale or other disposition of all or substantially all of
the assets of the Partnership;
F. the Incapacity of the General Partner, unless all of the
remaining Partners in their sole and absolute discretion agree in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such Incapacity, of a substitute General Partner;
G. the Redemption or exchange for REIT Shares of all Partnership
Units (other than those of the General Partner) pursuant to this Agreement; or
H. 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 the entry of such order or judgment all of the remaining
Partners agree 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 property 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 in the General Partner) shall be applied and distributed
in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other Partners; and
(4) The balance, if any, to the General Partner and
Limited Partners in accordance with their positive Capital Account balances,
determined after taking into account all Capital Account adjustments for all
prior periods and 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(4)).
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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.
Section 13.3 Capital Contribution Obligation
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 at any time shall
not be considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever, except to the extent otherwise expressly agreed to by such
Partner and the Partnership.
Section 13.4 Compliance with Timing Requirements of Regulations
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:
(1) 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
(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the Partnership,
provided, that such withheld or escrowed amounts shall be
59
distributed to the General Partner and Limited Partners in the manner and
priority set forth in Section 13.2.A as soon as practicable.
Section 13.5 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-l(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 contributed all of its assets
and liabilities to a new partnership in exchange a for an interest in the new
partnership. Immediately thereafter, the Partnership shall be deemed to
distribute interests in the new partnership to the General Partner and Limited
Partners in proportion to their respective interests in the Partnership in
liquidation of the Partnership.
Section 13.6 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.
Section 13.7 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 30 days thereafter, provide
written notice thereof to each of the Partners and to all other parties with
whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
Section 13.8 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 Maryland shall be
cancelled and such other actions as may be necessary to terminate the
Partnership shall be taken.
Section 13.9 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.
60
Section 13.10 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 Section 7.3, 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. The General Partner shall seek the written consent of
the Limited Partners on 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 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) with
respect to the proposal; 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 Limited Partners. The notice 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 30 days prior to the date of
such meeting. Partners may vote in person or by proxy at such meeting. Whenever
the vote or Consent of the Limited Partners or of the 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 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
61
the Limited Partner or his attorney-in-fact. No proxy shall be valid after the
expiration of 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. 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 first class United States mail or by other means of written communication to
the Partner or Assignee at the address set forth in Exhibit A or such other
address as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
62
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 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 Maryland, without regard to the principles
of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
Section 15.11 Entire Agreement
This Agreement 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.
63
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Agreement of Limited Partnership as of the date first written above.
MAGUIRE PROPERTIES, L.P.
By: Maguire Properties, Inc.,
a Maryland corporation
Its General Partner
By: /s/ Dallas E. Lucas
-----------------------------
Dallas E. Lucas
Executive Vice President and
Chief Financial Officer
LIMITED PARTNERS:
/s/ Robert F. Maguire III
-------------------------------------
Robert F. Maguire III
Maguire Partners, Inc.
a California corporation
By: /s/ Robert F. Maguire III
----------------------------------
Robert F. Maguire III
Title:
Maguire Partners SCS, Inc.
a California corporation
By: /s/ Robert F. Maguire III
----------------------------------
Robert F. Maguire III
Title:
Maguire Partners BGHS, LLC
a California limited liability company
By: /s/ Robert F. Maguire III
----------------------------------
Robert F. Maguire III
Title:
Signature Page to Amended and Restated Agreement of Limited Partnership
of Maguire Properties, L.P.
S-1
Maguire Partners Pasadena Gen Par, Inc.
a Delaware corporation
By: /s/ Robert F. Maguire III
-----------------------------------
Robert F. Maguire III
Title:
Maguire Partners WFC Holdings, LLC
a Delaware limited liability company
By: /s/ Robert F. Maguire III
-----------------------------------
Robert F. Maguire III
Title:
Maguire Partners-Investments, LLC
a California limited liability company
By: /s/ Robert F. Maguire III
-----------------------------------
Robert F. Maguire III
Title:
Maguire Partners-Master Investments, LLC
a California limited liability company
By: Maguire Partners, Inc.
Its: Managing Member
By: /s/ Robert F. Maguire III
-----------------------------------
Robert F. Maguire III
Title:
Signature Page to Amended and Restated Agreement of Limited Partnership
of Maguire Properties, L.P.
S-2
Philadelphia Plaza-Phase II
a Pennsylvania general partnership
By: Maguire Thomas Partners-Commerce
Square II, Ltd., a California
limited partnership
Its: Partner
By: Thomas Partners Inc., a California
corporation
Its: General Partner
By: /s/James A. Thomas
----------------------------
James A. Thomas
Title: President
/s/ Daniel F. Gifford
----------------------------------------
Daniel F. Gifford
/s/ Timothy H. Walker
----------------------------------------
Timothy H. Walker
/s/ William Thomas Allen
----------------------------------------
William Thomas Allen
Signature Page to Amended and Restated Agreement of Limited Partnership
of Maguire Properties, L.P.
S-3
EXHIBIT A-1
(DATED JUNE 27, 2003)
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
General Partner
Maguire Properties, Inc. $693,690,000 - $693,690,000 36,510,000 72.91619%
Limited Partners
Robert F. Maguire III $30,000,012 $ 30,000,012 1,578,948 3.15341%
Robert F. Maguire III $32,656,250 $ 32,656,250 1,718,750 3.43261%
Robert F. Maguire III $20,000,008 $ 20,000,008 1,052,632 2.10227%
Robert F. Maguire III $ 4,378,778 $ 4,378,778 230,462 0.46027%
Maguire Partners, Inc. $ 3,661,527 $ 3,661,527 192,712 0.38488%
Maguire Partners SCS, Inc. $ 7,710 $ 7,710 406 0.00081%
Maguire Partners BGHS, LLC $ 1,883,481 $ 1,883,481 99,131 0.19798%
Maguire Partners Pasadena
Gen Par, Inc. $ 86,392 $ 86,392 4,547 0.00908%
Bunker Hill Equity, LLC. $ 6,173,327 $ 6,173,327 324,912 0.64890%
Maguire Partners WFC
Holdings, LLC $20,000,008 $ 20,000,008 1,052,632 2.10227%
Maguire Partners WFC
Holdings, LLC $25,480,843 $ 25,480,843 1,341,097 2.67838%
Maguire Partners-
Investments, LLC $49,673,960 $ 49,673,960 2,614,419 5.22140%
Maguire Partners - Master
Investments, LLC $49,422,097 $ 49,422,097 2,601,163 5.19493%
Philadelphia Plaza-Phase II $ 1,150,000 $ 1,150,000 60,526 0.12088%
The Daniel and Linda Gifford
Family Trust $ 5,000,000 $ 5,000,000 263,158 0.52557%
Timothy H. Walker $ 4,000,000 $ 4,000,000 210,526 0.42045%
A-1
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
William Thomas Allen $ 4,088,116 $ 4,088,116 215,164 0.42972%
* Net of Debt (if any)
A-2
EXHIBIT A-2
(DATED JUNE 27, 2003)
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
General Partner
Maguire Properties, Inc. $693,690,000 - $693,690,000 36,510,000 76.84795%
Limited Partners
Robert F. Maguire III $30,000,012 $ 30,000,012 1,578,948 3.32344%
Robert F. Maguire III $32,656,250 $ 32,656,250 1,718,750 3.61771%
Robert F. Maguire III $20,000,008 $ 20,000,008 1,052,632 2.21563%
Robert F. Maguire III $ 4,378,778 $ 4,378,778 230,462 0.48509%
Maguire Partners, Inc. $ 3,661,527 $ 3,661,527 192,712 0.40563%
Maguire Partners SCS, Inc. $ 7,710 $ 7,710 406 0.00085%
Maguire Partners BGHS, LLC $ 1,883,481 $ 1,883,481 99,131 0.20866%
Maguire Partners Pasadena
Gen Par, Inc. $ 86,392 $ 86,392 4,547 0.00957%
Bunker Hill Equity, LLC. $ 6,173,327 $ 6,173,327 324,912 0.68389%
Maguire Partners WFC
Holdings, LLC $20,000,008 $ 20,000,008 1,052,632 2.21563%
Maguire Partners WFC
Holdings, LLC $25,480,843 $ 25,480,843 1,341,097 2.82280%
Maguire Partners-
Investments, LLC $49,422,097 $ 49,422,097 2,601,163 5.47505%
Maguire Partners - Master
Investments, LLC $ 1,000,000 $ 1,000,000 52,632 0.11078%
Thomas Master Investments,
LLC $ 1,150,000 $ 1,150,000 60,526 0.12740%
The Daniel and Linda Gifford
Family Trust $ 5,000,000 $ 5,000,000 263,158 0.55391%
Timothy H. Walker $ 4,000,000 $ 4,000,000 210,526 0.44312%
William Thomas Allen $ 4,088,116 $ 4,088,116 215,164 0.45289%
* Net of Debt (if any)
A-3
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
*Net of Debt (if any)
A-4
EXHIBIT A-3
(DATED JULY 8, 2003)
PARTNERS, CONTRIBUTIONS AND PARTNERSHIP INTERESTS
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
General Partner
Maguire Properties, Inc. $693,690,000 - $693,690,000 36,510,000 68.90513%
Maguire Properties, Inc. $104,053,500 - $104,053,500 5,476,500 10.33577%
Limited Partners
Robert F. Maguire III $30,000,012 $ 30,000,012 1,578,948 2.97994%
Robert F. Maguire III $32,656,250 $ 32,656,250 1,718,750 3.24379%
Robert F. Maguire III $20,000,008 $ 20,000,008 1,052,632 1.98663%
Robert F. Maguire III $ 4,378,778 $ 4,378,778 230,462 0.43495%
Maguire Partners, Inc. $ 3,661,527 $ 3,661,527 192,712 0.36370%
Maguire Partners SCS, Inc. $ 7,710 $ 7,710 406 0.00077%
Maguire Partners BGHS, LLC $ 1,883,481 $ 1,883,481 99,131 0.18709%
Maguire Partners Pasadena
Gen Par, Inc. $ 86,392 $ 86,392 4,547 0.00858%
Bunker Hill Equity, LLC. $ 6,173,327 $ 6,173,327 324,912 0.61320%
Maguire Partners WFC
Holdings, LLC $20,000,008 $ 20,000,008 1,052,632 1.98663%
Maguire Partners WFC
Holdings, LLC $25,480,843 $ 25,480,843 1,341,097 2.53105%
Maguire Partners-
Investments, LLC $49,422,097 $ 49,422,097 2,601,163 4.90916%
Maguire Partners - Master
Investments, LLC $ 1,000,000 $ 1,000,000 52,632 0.09933%
Thomas Master Investments,
LLC $ 1,150,000 $ 1,150,000 60,526 0.11423%
A-5
AGREED VALUE OF
NAME AND ADDRESS GROSS ASSET CASH CONTRIBUTED TOTAL PARTNERSHIP PERCENTAGE
OF PARTNER VALUE CONTRIBUTIONS PROPERTY* CONTRIBUTIONS UNITS INTEREST
---------- ----- ------------- --------- ------------- ----- --------
The Daniel and Linda
Gifford Family Trust $ 5,000,000 $ 5,000,000 263,158 0.49666%
Timothy H. Walker $ 4,000,000 $ 4,000,000 210,526 0.39732%
William Thomas Allen $ 4,088,116 $ 4,088,116 215,164 0.40608%
* Net of Debt (if any)
A-6
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) transfers _____________
Limited Partnership Units in Maguire Properties, L.P. in accordance with the
terms of the Limited Partnership Agreement of Maguire Properties, L.P. and the
rights of 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, REIT Shares) deliverable upon Redemption or
exchange be delivered to the address specified below, and if applicable, that
such REIT Shares 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 REIT Shares to:
Please insert social security or identifying number:
Name:
B-1
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined through the
application of the constructive ownership rules of Section 318 of the Code, as
modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:
a. an individual is considered as owning the Ownership Interest
that is owned, actually or constructively, by or for his spouse, his children,
his grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or
constructively, by or for a partnership, limited liability company or estate is
considered as owned proportionately by its partners 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 (10) percent 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 to 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 (10) percent 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
C-1
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-2
EXHIBIT D
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
MAGUIRE PROPERTIES, L.P.
No.______________ _____________UNITS
Maguire Partners, Inc., as the General Partner of Maguire Properties,
L.P., a Maryland 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 Amended and Restated Agreement of Limited Partnership of Maguire Properties,
L.P., (the "Partnership Agreement"'), under which the Operating Partnership is
existing and as filed in the office of the Maryland State Department of
Assessments and Taxation (copies of which are on file at the Operating
Partnership's principal office at 555 West Fifth Street, Suite 5000, Los
Angeles, California 90013), represent______________units of limited partnership
interest in the Operating Partnership.
THE 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 AS OF JUNE
27,2003 AS IT MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH
THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN SUCH AGREEMENT, THE
UNITS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION,
UNLESS THE TRANSFEROR DELIVERS TO THE GENERAL PARTNER AN OPINION OF COUNSEL
SATISFACTORY TO THE GENERAL PARTNER, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT
AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
DATED:_________________________
MAGUIRE PROPERTIES, INC.
General Partner of
Maguire Properties, L.P.
ATTEST:
By:___________________________ By:___________________________
D-1
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
None
E-1
EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
None
F-1