UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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THE NEWKIRK MASTER LIMITED PARTNERSHIP
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PRELIMINARY COPY
THE NEWKIRK MASTER LIMITED PARTNERSHIP
7 Bulfinch Place
Suite 500
Boston, MA 02114
September __, 2005
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
Dear Limited Partner of The Newkirk Master Limited Partnership:
We are pleased to inform you that in connection with an agreement that your
partnership entered into with Newkirk Realty Trust, Inc., a newly-formed
Maryland corporation that intends to qualify as a real estate investment trust
("Newkirk REIT"), and certain other parties, your partnership intends to take
the following actions:
o Newkirk REIT will be appointed as the successor general partner of
your partnership in place of MLP GP LLC; and
o your partnership will adopt an amended and restated partnership
agreement which will contain various provisions that are necessary
and/or customary to provide for your partnership and Newkirk REIT to
operate in an umbrella real estate investment trust (UPREIT)
structure.
Under your partnership's existing limited partnership agreement, the consent of
the holders of a majority of all outstanding units in your partnership is
required to approve these actions. As of September __, 2005, 6,266,434 units
were issued and outstanding. Affiliates of Apollo Real Estate Investment Fund
III, L.P. and Vornado Realty Trust and entities through which employees and
executive officers of Winthrop Financial Associates hold units, currently own,
in the aggregate, 5,018,390 units, or approximately 80% of the outstanding
units. These entities have executed a written consent in favor of the actions
described above. Accordingly, approval of these actions is assured. We are
providing the attached Information Statement in order to notify you of the
actions and provide you with certain information.
The actions will be effective upon the consummation of Newkirk REIT's initial
public offering, but in no event sooner than twenty calendar days from the date
hereof.
Very truly yours,
MLP GP LLC
General Partner
THE NEWKIRK MASTER LIMITED PARTNERSHIP
7 Bulfinch Place
Suite 500
Boston, MA 02114
INFORMATION STATEMENT
September __, 2005
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished to all persons or entities (the
"Limited Partners" or "you") that hold limited partnership units ("Units") of
The Newkirk Master Limited Partnership, a Delaware limited partnership (your
"Partnership" or the "Partnership") as of the close of business on September __,
2005 (the "Record Date"). This Information Statement is being sent to you for
informational purposes only. No action is requested on your part.
This Information Statement is being furnished to you to inform you that on
_________ ___, 2005 holders of more than a majority of the Partnership's
outstanding Units have executed a written consent approving the following
actions (the "Actions"):
o the appointment of Newkirk Realty Trust, Inc., a newly-formed
Maryland corporation that intends to qualify as a real estate
investment trust ("Newkirk REIT") and have its shares listed on the
New York Stock Exchange, as the successor general partner of the
Partnership in place of MLP GP LLC (the "General Partner
Replacement"); and
o the adoption by your Partnership of an amended and restated
partnership agreement (the "Amended Partnership Agreement"), which
will contain various provisions that are necessary and/or customary
to provide for the Partnership and Newkirk REIT to operate in an
umbrella real estate investment trust (UPREIT) structure.
Under your Partnership's existing Agreement of Limited Partnership, which we
refer to as the Current Partnership Agreement, the consent of the holders of a
majority of all outstanding Units is required to effect the General Partner
Replacement. The Amended Partnership Agreement may be adopted upon both the
approval of your general partner, MLP GP LLC, and the consent of the holders of
a majority of all outstanding Units.
Your general partner has approved the Amended Partnership Agreement. Affiliates
of each of Apollo Real Estate Investment Fund III, L.P. ("Apollo") and Vornado
Realty Trust ("Vornado") and entities through which employees and executive
officers of Winthrop Financial Associates hold Units (the "WEM entities") hold
approximately 80% of the outstanding Units and have consented to and approved
the Actions.
The Actions will be effective upon the consummation of Newkirk REIT's initial
public offering, but in no event sooner than twenty calendar days from the date
hereof.
Questions may be directed to your Partnership, at its address set forth above.
This Information Statement is first being mailed to Limited Partners on or about
September __, 2005.
BACKGROUND OF THE ACTIONS
The Partnership was organized in October 2001 to facilitate the January
2002 exchange transaction in which 90 limited partnerships were merged into the
Partnership and the Partnership acquired various other assets related to the
management and capital structure of those limited partnerships. The
Partnership's current general partner, MLP GP LLC, is a Delaware limited
liability company that is owned by affiliates of Vornado and the WEM entities.
Currently, approximately 80% of the Partnership's outstanding Units are held by
affiliates of Apollo, Vornado and the WEM entities. The Current Partnership
Agreement was entered into as of October 23, 2001 between MLP GP LLC and Newkirk
Manager Corp., the Partnership's organizational limited partner.
Newkirk REIT is a Maryland corporation that was formed in July 2005 to
become the general partner of the Partnership. Newkirk REIT intends to qualify
as a real estate investment trust and to operate with the Partnership in an
umbrella partnership real estate investment trust or "UPREIT" structure,
beginning with its taxable year ended December 31, 2005. It is contemplated that
Newkirk REIT will acquire a controlling interest in the Partnership by making a
capital contribution to the Partnership in exchange for an ownership interest in
the Partnership, acquiring additional Units in the Partnership from certain
existing limited partners and commencing a tender offer to acquire additional
interests from holders of Units.
On August 5, 2005 the Partnership, Newkirk REIT, Apollo, affiliates of
Vornado, certain WEM entities and NKT Advisor LLC entered into an agreement (the
"REIT Formation Agreement") providing that, among other things, upon and/or
following consummation of Newkirk REIT's initial public offering, which we refer
to as the REIT IPO, the following actions will be taken:
o Newkirk REIT will be appointed as the successor general partner of
the Partnership in place of MLP GP LLC;
o the Current Partnership Agreement will be amended and restated to
provide that limited partners, other than Newkirk REIT, will have
the right, beginning on the 12 month anniversary of the consummation
of the REIT IPO, to cause the Partnership to redeem their interest
in the Partnership at a price that will be based on the trading
price of Newkirk REIT's common stock on the New York Stock Exchange
at the time of redemption. Newkirk REIT will be permitted to elect
to purchase tendered partnership interests of the Partnership for
the redemption price and to pay the redemption price either in cash
or by the issuance of shares of Newkirk REIT's common stock;
o the Amended Partnership Agreement will contain certain other
provisions as are necessary and/or customary to provide for an
umbrella real estate investment trust (UPREIT) structure;
o the Partnership will effect a Unit split such that each Unit will
have the same value with respect to the assets of the Partnership as
each share of Newkirk REIT's common stock and that each currently
outstanding Unit shall be treated consistently in such Unit split
with each other Unit;
o Newkirk REIT and the Partnership will retain NKT Advisors LLC (the
"Advisor") to manage the Partnership's assets and the day-to-day
operations of the Partnership and Newkirk REIT, subject to the
supervision of Newkirk REIT's board of directors;
o Newkirk REIT will acquire newly-issued Units from the Partnership
and currently outstanding Units from Apollo and the WEM entities for
an aggregate amount that we presently estimate to be between
$__________ and $__________. Following these purchases, we currently
estimate that Newkirk REIT will own between ____% and ____% of the
outstanding Units. The per Unit price to be paid by Newkirk REIT for
such Units will be equal to the per share offering price under the
REIT IPO, less underwriting commissions. However, the precise dollar
amounts and percentages described in this paragraph cannot be
ascertained until the consummation of the REIT IPO;
2
o Following consummation of the REIT IPO, Newkirk REIT will commence a
tender offer to purchase up to 1% of the then-outstanding Units
exclusive of Units owned by Newkirk REIT, for an aggregate purchase
price of what we presently estimate at between $______ and $______.
The per Unit price to be paid in the tender offer will be the same
price at which Units are purchased from the Partnership, Apollo and
the WEM entities. Assuming the tender offer is fully subscribed,
Newkirk REIT will own between ___% and ___% of the outstanding Units
following consummation of the tender offer. However, the precise
dollar amounts and percentages described in this paragraph cannot be
ascertained until the consummation of the REIT IPO. The WEM entities
and Vornado have agreed not to tender any Units to Newkirk REIT
under the tender offer, and Apollo has agreed to limit the number of
Units that it will tender to the extent the tender offer is
oversubscribed.
o The Advisor, or any successor advisor, will hold special voting
preferred stock of Newkirk REIT, entitling it to vote on all matters
for which Newkirk REIT common stockholders are entitled to vote. The
number of votes that the Advisor will be entitled to cast in respect
of the special voting preferred stock will initially equal the total
number of Units outstanding immediately following consummation of
the REIT IPO (excluding Units held by Newkirk REIT). As Units are
redeemed at the option of a Unitholder, the number of votes
attaching to the Advisor's special voting preferred stock will
decrease by an equivalent amount. The advisory agreement between the
Partnership, Newkirk REIT and the Advisor (the "Advisory Agreement")
will provide that on all matters for which the Advisor is entitled
to cast votes in respect of its special voting preferred stock, it
will cast its votes in direct proportion to the votes that are cast
by Limited Partners, other than Newkirk REIT, on such matters,
except that the Advisor (through its managing member) will be
entitled to vote in its sole discretion to the extent that the
voting rights of Vornado's affiliates that hold Units are limited,
as discussed under "DESCRIPTION OF THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP - Preferred Stock").
Pursuant to the REIT Formation Agreement, Apollo, Vornado and its
affiliates that hold Units, and the WEM entities have agreed to consent to the
General Partner Replacement and the Amendments.
DESCRIPTION OF THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
The following summary is qualified in its entirety by reference to the
full text of the Amended Partnership Agreement which is attached as Exhibit A to
this Information Statement.
Management
Under the Amended Partnership Agreement, Newkirk REIT, as the sole general
partner of the Partnership, generally will have full, exclusive and complete
responsibility and discretion in the management, operation and control of the
Partnership, including the ability to cause the Partnership to enter into
certain major transactions, including acquisitions and dispositions of loans and
other assets and refinancings of existing indebtedness. No Limited Partner may
take part in the operation, management or control of the business of the
Partnership by virtue of being a holder of Units. Pursuant to the Advisory
Agreement between the Partnership, Newkirk REIT and the Advisor, and subject to
the oversight of Newkirk REIT's board of directors, the Advisor will manage
Newkirk REIT's business, including Newkirk REIT's management and operation of
the Partnership.
Newkirk REIT may not be removed as general partner of the Partnership,
except that upon Newkirk REIT's bankruptcy or dissolution, the Limited Partners
may elect a successor general partner to continue the Partnership.
Newkirk REIT is not obligated to consider the interests of the Limited
Partners separately from the interests of Newkirk REIT's stockholders in
deciding whether to cause the Partnership to take or decline to take any
actions.
Transferability of Interests
General Partner
3
The Amended Partnership Agreement will provide that Newkirk REIT may not
sell, assign, transfer, pledge or otherwise dispose of Newkirk REIT's general
partner interest in the Partnership without the consent of the holders of a
majority of the Units, except for transfers:
o to a subsidiary of Newkirk REIT; or
o in connection with Newkirk REIT's merger into another entity, if the
surviving entity contributes substantially all its assets to the
Partnership.
Limited Partners
Except for certain transfers and assignments to family members of
individual Limited Partners, the Amended Partnership Agreement will prohibit the
sale, assignment, transfer, pledge or disposition of all or any portion of the
Limited Partners' Units without Newkirk REIT's consent, which consent may be
withheld in Newkirk REIT's sole and absolute discretion. Pursuant to the REIT
Formation Agreement, Newkirk REIT will consent to (i) the pledge by affiliates
of Apollo of Units in connection with a loan having a principal amount that is
no greater than 35% of the value of all Units held by such entities (based upon
the per share offering price of the REIT IPO), provided that the holder of the
loan agrees to assume any remaining lock-up period applicable to such Units in
the event of a foreclosure on the loan, and (ii) certain sales described below
by affiliates of Apollo. Subject to certain limitations, these sales may be made
on up to four occasions, each of which must involve the sale of at least 1.25
million Units at a sales price at least equal to the greater of (i) the public
offering price for the shares of Newkirk REIT's common stock in the REIT IPO or
(ii) the then prevailing market price for Newkirk REIT's shares of stock, less
in either case customary sales costs and discounts. These sales may only be made
to Newkirk REIT, First Union Real Estate Equity and Mortgage Investments, a New
York Stock Exchange listed real estate investment trust that we refer to as
"First Union", First Union's affiliates, the WEM entities and Vornado, provided
that any such transferee agrees to assume any remaining lock-up period
applicable to such Units. An offer must first be made to sell these Units to
Newkirk REIT and then to each of First Union and its affiliates, the WEM
entities and Vornado in proportion to the total number of Units and Newkirk REIT
shares held by each at such time. In addition, the Amended Partnership Agreement
will contain other restrictions on transfer of Units if, among other things,
Newkirk REIT determines that such transfer:
o may require registration of the Units under federal or state
securities laws,
o may cause Newkirk REIT to fail to comply with the REIT rules under
the Internal Revenue Code, or
o may cause the Partnership to be treated as a publicly traded
partnership under the Internal Revenue Code.
Unit Split
At the effective time of the Amended Partnership Agreement, the
Partnership will effect a Unit split such that each Unit will have the same
value with respect to the assets of the Partnership as each share of Newkirk
REIT's common stock and that each currently outstanding Unit shall be treated
consistently in such Unit split with each other Unit. (The Unit split will be a
tax-free transaction.) The Amended Partnership Agreement will give effect to the
Unit split.
Capital Contributions and Borrowings
Newkirk REIT will contribute a portion of the net proceeds of the REIT IPO
to the Partnership in exchange for additional Units. Newkirk REIT will also use
a portion of the proceeds of the REIT IPO to purchase Units from existing
Limited Partners at the same price.
We presently anticipate that up to $150,000,000 of the net proceeds from
the issuance of Units to Newkirk REIT will be used to reduce the outstanding
balance on the Partnership's existing credit facility with KeyBank/Bank of
America.
4
The Amended Partnership Agreement will provide that Newkirk REIT may
determine that the Partnership requires additional funds and that Newkirk REIT
may:
o on behalf of the Partnership, accept additional capital
contributions from existing partners or other persons,
o cause the Partnership to borrow funds from a financial institution
or other person,
o borrow such funds from a lending institution or other person and
subsequently lend such funds to the Partnership, or
o directly lend funds to the Partnership.
Under the Amended Partnership Agreement, following consummation of the
REIT IPO, Newkirk REIT will be obligated to contribute the proceeds of any
offering of stock as additional capital to the Partnership. The Partnership will
be authorized to issue partnership interests for less than fair market value if
Newkirk REIT concludes in good faith that such issuance is in both the
Partnership's and Newkirk REIT's best interests.
While the Limited Partners have no preemptive right to make additional
capital contributions, the Amended Partnership Agreement will provide that
subject to certain limitations, Newkirk REIT, as general partner, may make
additional capital contributions to the Partnership, in exchange for additional
limited partnership interests or additional assets, as Newkirk REIT determines
in good faith to be desirable to further the purposes or business of the
Partnership. If Newkirk REIT contributes additional capital to the Partnership
and receives additional limited partnership interests for such capital
contribution, Newkirk REIT's percentage interests will be increased on a
proportionate basis based on the amount of such additional capital contributions
and the value of the Partnership at the time of such contributions. Conversely,
the percentage interests of the other Limited Partners will be decreased on a
proportionate basis. In addition, if Newkirk REIT contributes additional capital
to the Partnership and receives additional partnership interests for such
capital contribution, Newkirk REIT may revalue the assets of the Partnership to
their fair market value (as determined by Newkirk REIT) and the capital accounts
of the partners will be adjusted to reflect the manner in which the unrealized
gain or loss inherent in such assets (that has not been reflected in the capital
accounts previously) would be allocated among the partners under the terms of
the Amended Partnership Agreement if there were a disposition of such assets for
such fair market value on the date of the revaluation. The Partnership could
also issue Units to the Advisor or its affiliates, or to third parties, in
exchange for assets contributed to or services provided for the Partnership.
Such transactions may give rise to a revaluation of the Partnership's assets and
an adjustment to partners' capital accounts.
The Partnership could also issue preferred partnership interests in
connection with acquisitions of assets or otherwise. Any such preferred
partnership interests would have priority over common partnership interests with
respect to distributions from the Partnership.
Redemption Right
Under the Amended Partnership Agreement, each Limited Partner (other than
Newkirk REIT and any of Newkirk REIT's subsidiaries that may hold Units and
other than with respect to Units that will be purchased by Newkirk REIT from
certain persons and entities at the time of the REIT IPO) will have the right,
beginning on the 12 month anniversary of the REIT IPO, to cause the Partnership
to redeem their Units. This right may be exercised at the election of that
Limited Partner by giving written notice, subject to some limitations. The
purchase price for each Unit to be redeemed will equal the fair market value of
one share of Newkirk REIT's common stock on the New York Stock Exchange (subject
to adjustments), calculated as the average of the daily closing prices for the
ten consecutive trading days immediately preceding the date of determination or,
if no closing price is available, the fair market value as determined in good
faith by the board of directors of Newkirk REIT. Newkirk REIT will be permitted
to elect to purchase tendered Units for the redemption price and to pay the
redemption price either in cash or by the issuance of a number of shares of
Newkirk REIT's common stock equal to the number of Units with respect to which
the right is being exercised, subject to adjustment based on stock splits, below
market issuances of common stock pursuant to rights, options or warrants to all
holders of common stock and dividends of common shares.
5
No Limited Partner may exercise its redemption right if Newkirk REIT could
not issue stock to the redeeming partner in satisfaction of the redemption
(regardless of whether Newkirk REIT would in fact do so instead of paying cash)
because of the ownership limitations contained in Newkirk REIT's charter, or if
the redemption would cause Newkirk REIT to violate the REIT requirements. The
relevant sections of Newkirk REIT's charter generally prohibit direct or
indirect ownership of more than 9.8% (by value or by number of shares, whichever
is more restrictive) of the outstanding shares of Newkirk REIT's common stock or
9.8% by value of Newkirk REIT's outstanding capital stock. Newkirk REIT's
charter provisions further prohibit any person from beneficially or
constructively owning shares of Newkirk REIT's stock that would result in
Newkirk REIT being "closely held" under Section 856(h) of the Internal Revenue
Code or otherwise cause Newkirk REIT to fail to qualify as a REIT. In addition,
no Limited Partner may exercise the redemption right:
o for fewer than 500 Units or, if a Limited Partner holds fewer than
500 Units, less than all of the Units held by such Limited Partner,
o unless permitted by Newkirk REIT, as general partner, more than once
each fiscal quarter; or
o if Newkirk REIT, as general partner, determines that allowing such
redemption may cause the Partnership to be treated as a publicly
traded partnership. Newkirk REIT currently intends to permit on an
annual basis, transfers (including redemptions) of up to 2% of the
outstanding Units, exclusive of Units held by Newkirk REIT, and
certain other exempt transfers.
The number of shares of REIT common stock issuable and the cash amount
payable upon a Limited Partner's exercise of the redemption right will be
adjusted to account for share splits, mergers, consolidations or similar pro
rata share transactions.
If a Limited Partner exercises its redemption right, it is generally
anticipated that the transaction will be a fully taxable sale to the redeeming
Limited Partner, and that such Limited Partner will be treated as realizing an
amount equal to the value of the REIT common stock (or cash, if any) received in
the exchange plus the amount of the Partnership's liabilities allocable to the
redeemed Units at the time of the redemption.
Operations
The Amended Partnership Agreement will allow Newkirk REIT to operate the
Partnership in a manner that permits Newkirk REIT to qualify as a REIT at all
times and to cause the Partnership not to take any action that would cause
Newkirk REIT to incur additional federal income or excise tax liability under
the Internal Revenue Code or that would cause the Partnership to be treated as a
corporation for federal income tax purposes. The Amended Partnership Agreement
will also provide that Newkirk REIT may not conduct any business other than in
connection with the management of the Partnership's business, Newkirk REIT's
operations as a REIT and related activities and generally obligates Newkirk REIT
to own its assets through the Partnership.
All of the operations of Newkirk REIT will be conducted through the
Partnership. The Partnership will reimburse Newkirk REIT for all expenses
incurred in connection with the Partnership's business, including:
o expenses relating to Newkirk REIT's ownership and management of the
Partnership;
o the management fees owing to the Advisor, and the fees or
compensation owing to directors, officers and employees; and
o the expense of Newkirk REIT's being a public company.
Distributions
6
The Amended Partnership Agreement will provide that the Partnership will
make cash distributions, in amounts determined by Newkirk REIT in its sole
discretion, to Limited Partners generally in accordance with the respective
percentage interests of the partners in the Partnership.
Upon liquidation of the Partnership, after payment of, or adequate
provisions for, debts and obligations of the Partnership, including any partner
loans, any remaining assets of the Partnership will be distributed to the
Limited Partners with positive capital accounts in accordance with the
respective positive capital account balances of the partners.
Preferred Stock
As discussed under "BACKGROUND OF THE ACTIONS", the Advisor will be
retained to manage the Partnership's assets and the day-to-day operations of the
Partnership and Newkirk REIT. Prior to the consummation of the REIT IPO, Newkirk
REIT will issue to the Advisor special voting preferred stock of Newkirk REIT
entitling the Advisor to vote on all matters for which Newkirk REIT's common
stockholders are entitled to vote. The number of votes that the Advisor will be
entitled to cast in respect of its special voting preferred stock will initially
equal the number of Units that are outstanding immediately following the REIT
IPO, exclusive of Units held by Newkirk REIT. As Units are redeemed at the
option of a Unitholder (see "Redemption Rights" above), the number of votes that
the Advisor will be entitled to cast in respect of its special voting preferred
stock will be decreased by an equivalent number. The Advisor will not be
entitled to any regular or special dividend payments or other distributions in
respect of its special voting preferred stock.
The Amended Partnership Agreement will provide that the Partnership's
general partner may only cause the Partnership to enter into the Advisory
Agreement if pursuant to the Advisory Agreement the Advisor will agree to cast
its votes in respect of the special voting preferred stock in direct proportion
to the votes cast by Limited Partners in the Partnership, other than Newkirk
REIT, subject to the following limitations. First, Vornado will not have the
right to vote its Units for Newkirk REIT board members during the first six
months following completion of the REIT IPO and at all times when any affiliate
of Vornado is serving or standing for election as a board member of Newkirk
REIT. In addition, at all other times, Vornado's right to vote its Units in the
election of Newkirk REIT directors will be limited to the number of Units that
it owns not to exceed 9.9% of Newkirk REIT's outstanding common stock on a fully
diluted basis. The Advisor (through its managing member) will be entitled to
vote in its sole discretion to the extent the voting rights of Vornado's
affiliates are so limited.
Amendments
The Amended Partnership Agreement will provide that, generally, Newkirk
REIT, as the general partner of the Partnership, may not amend the Amended
Partnership Agreement without the consent of the holders of the majority of the
Units, except that without the consent of any Limited Partner Newkirk REIT may
amend the agreement to:
o add to Newkirk REIT's obligations or surrender Newkirk REIT's
rights, as general partner, under the agreement for the benefit of
the Limited Partners;
o reflect the issuance of additional partnership units or the
admission, substitution, termination or withdrawal of partners in
accordance with the Amended Partnership Agreement;
o reflect inconsequential changes, cure any ambiguity, correct or
supplement any provision not inconsistent with law or another
provision of the Amended Partnership Agreement, or make other
changes concerning matters under the agreement not otherwise
inconsistent with the law or the agreement;
o satisfy requirements or guidelines under federal or state law;
o reflect changes that are reasonably necessary for Newkirk REIT, as
general partner, to satisfy the REIT requirements or reflect the
transfer of partnership interests from Newkirk REIT, as general
partner, to a subsidiary of Newkirk REIT;
7
o modify the manner in which capital accounts are computed but only to
the extent set forth in the Amended Partnership Agreement in order
to comply with the requirements of the Internal Revenue Code and the
Treasury regulations promulgated thereunder; or
o issue additional partnership interests in the Partnership.
Newkirk REIT will not, without the consent of each Limited Partner
adversely affected, make any amendment to the Amended Partnership Agreement that
would (1) convert a limited partnership interest into a general partner interest
or modify the limited liability of a limited partner, (2) alter the distribution
rights or the allocations described in the agreement or (3) modify the
redemption rights described under "Redemption Right" above.
Exculpation and Indemnification of the General Partner
The Amended Partnership Agreement of the Partnership will provide that
neither Newkirk REIT, as general partner, nor any of Newkirk REIT's directors
and officers will be liable to the Partnership or to any of its partners as a
result of errors in judgment or mistakes of fact or law or of any act or
omission, if Newkirk REIT or such director or officer of Newkirk REIT acted in
good faith.
In addition, the Amended Partnership Agreement will require the
Partnership to indemnify and hold harmless Newkirk REIT, as general partner,
Newkirk REIT's directors, officers and any other person Newkirk REIT designates,
from and against any and all claims arising from the operations of the
Partnership in which any such indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that:
o the act or omission of the indemnitee was material to the matter
giving rise to the proceeding and was committed in bad faith or was
the result of active and deliberate dishonesty;
o the indemnitee actually received an improper personal benefit in
money, property or services; or
o in the case of any criminal proceeding, the indemnitee had
reasonable cause to believe that the act or omission was unlawful.
No indemnitee may subject any partner of the Partnership to personal
liability with respect to this indemnification obligation.
Term
The Amended Partnership Agreement will provide that the Partnership will
continue until dissolved upon:
o the general partner's bankruptcy or dissolution or withdrawal
(unless the Limited Partners elect to continue the partnership) or a
decree of judicial dissolution under Delaware law;
o the sale or other disposition of all or substantially all the assets
of the Partnership;
o the redemption of all Units (other than those held by Newkirk REIT
or Newkirk REIT's subsidiaries); or
o an election by Newkirk REIT, in its sole discretion, in its capacity
as the general partner.
Tax Matters
Newkirk REIT will be the tax matters partner of the Partnership, and will
have the authority to make tax elections under the Internal Revenue Code on
behalf of the Partnership.
8
CONFLICTS OF INTEREST;
INTERESTS OF CERTAIN PERSONS ON MATTERS TO BE ACTED UPON
Sale of Units by Affiliates
Affiliates of Apollo and executive officers and employees of Winthrop
Financial Associates, including the members of the management team of the
current general partner's manager (Michael Ashner, Peter Braverman, Thomas
Staples and Carolyn Tiffany), currently hold an aggregate of approximately 59%
of the outstanding Units. Pursuant to the REIT Formation Agreement, Newkirk REIT
will use a portion of the net proceeds from the REIT IPO as well as all of the
net proceeds that it will obtain, if any, from the exercise of the underwriters'
overallotment option in the REIT IPO, to purchase a portion of these Units from
Apollo. Newkirk REIT has also agreed to use approximately $5.0 million of the
net proceeds from the REIT IPO to purchase Units from executive officers and
employees of Winthrop Financial Associates, including the members of the
management team of the manager of the current general partner of the
Partnership. $2,500,000, $588,000, $412,000 and $588,000, respectively, of such
amount is allocable to purchases of Units owned by Michael Ashner, Peter
Braverman, Thomas Staples and Carolyn Tiffany, respectively. While Newkirk REIT
will afford all other Limited Partners an opportunity to sell to Newkirk REIT a
portion of the Units owned by such Limited Partners shortly following
consummation of the REIT IPO, Newkirk REIT will limit the Units that Newkirk
REIT acquires at that time to approximately 1% of the then outstanding Units. We
presently estimate that the aggregate purchase price for those Units will be
between $_____ and $_____. The sole purpose of this limitation is to avoid
certain adverse tax consequences to the Partnership. All of the purchases
referred to above will be made at a price equivalent to the public offering
price of the REIT IPO, net of underwriting discounts.
Exemption from Ownership Limitation
Newkirk REIT has agreed to grant exemptions from Newkirk REIT's 9.8%
ownership limitation to, among others, Vornado and its affiliates to the extent
they own up to 22.5% of Newkirk REIT's outstanding shares of common stock (on a
fully diluted basis assuming the redemption of all redeemable Units in exchange
for shares of Newkirk REIT's common stock, whether or not such Units are then
redeemable and, in the case of Vornado, excluding shares of Newkirk REIT's
common stock owned indirectly through their ownership of First Union), to Apollo
to the extent its share ownership would exceed the ownership limitation if it
received shares of Newkirk REIT's common stock in redemption of its Units and to
First Union to the extent it owns up to 17.5% of Newkirk REIT's common stock on
a fully diluted basis.
Advisory Agreement with the Advisor
Pursuant to the REIT Formation Agreement, the Partnership and Newkirk REIT
will enter into the Advisory Agreement with the Advisor pursuant to which the
Advisor will manage the Partnership's assets, provide Newkirk REIT with
investment advice and manage the day-to-day operations of Newkirk REIT and the
Partnership under the ultimate supervision of Newkirk REIT's board of directors.
For performing services under the Advisory Agreement, the Advisor will
receive a base management fee and incentive management fee calculated as
described below. Under the terms of the Amended Partnership Agreement, the
Partnership will be required to reimburse Newkirk REIT for all such management
fees paid by Newkirk REIT to the Advisor.
Base Management Fee. The Advisor will receive an annual base management
fee, as further discussed below. The base management fee is payable quarterly in
arrears in cash, calculated quarterly and is equal to 1.5% per annum of (1) the
common equity capital invested in Newkirk REIT at the date of consummation of
the REIT IPO which we estimate to be between $_______ and $__________, plus (2)
the sum of the net proceeds from any additional primary issuances of Newkirk
REIT common or preferred equity or from the issuance of Units, each after
deducting any underwriting discounts and commissions and other expenses and
costs relating to the issuance, less (3) any amount that Newkirk REIT or the
Partnership pays to repurchase shares of common stock of the Newkirk REIT or
Units (other than amounts paid with proceeds from the REIT IPO to purchase Units
in the Partnership from existing Limited Partners).
9
The first $4.2 million (subject to an annual consumer price index
increase) in base management fees per annum will be paid by the Advisor to
Winthrop Financial Associates for services to Newkirk REIT and the Partnership
that the Advisor will subcontract to Winthrop Financial Associates.
Incentive Management Fees. In addition, the Advisor is entitled to receive
incentive management fees each fiscal quarter, payable quarterly in arrears, in
an annual amount equal to:
20% of the amount by which adjusted funds from operations for the
Partnership, before incentive management fees but after providing for
dividends on any preferred equity issued in the future by Newkirk REIT,
exceeds, for the quarter then ended, the amount of adjusted funds from
operations required to produce an annualized return on the sum of:
(i) the gross equity proceeds of the REIT IPO, plus
(ii) the book value of partners' equity in the Partnership as of a date
prior to the REIT IPO, plus
(iii) the gross proceeds of any subsequent issuance of common equity by
Newkirk REIT or Units by the Partnership, minus
(iv) amounts paid by Newkirk REIT or the Partnership in any tender for or
repurchase of common equity of the Newkirk REIT or of Units (other than
proceeds of the REIT IPO that are used to purchase Units in the
Partnership from existing Limited Partners),
equal to the greater of the yield on 10-year Treasuries as of the last business
day of such quarter plus 250 basis points or the returns set forth below:
Year Return
---- ------
2005 and 2006 25%
2007 22%
2008 20%
2009 15%
2010 12%
Thereafter 10%
Adjusted funds from operations represent "funds from operations" as
determined in accordance with standards prescribed by the National Association
of Real Estate Investment Trusts, or NAREIT, adjusted to add back any asset
impairment charges and non-cash restricted stock issuances. NAREIT defines funds
from operations as net income, computed in accordance with GAAP, excluding gains
(or losses) from debt restructuring and sales of property, plus depreciation and
amortization on real estate assets and after adjustments for unconsolidated
partnerships and joint ventures. Adjusted funds from operations does not
represent cash generated from operating activities in accordance with GAAP and
should not be considered as an alternative to net income as an indication of our
performance or to cash flows as a measure of liquidity or ability to make
distributions.
As used in calculating the Advisor's incentive management fee, the term
"yield on 10-year Treasuries" means the arithmetic average of the weekly average
yield to maturity for actively traded current coupon U.S. Treasury fixed
interest rate securities (adjusted to constant maturities of 10 years) published
by the Federal Reserve Board during a quarter, or, if such rate is not published
by the Federal Reserve Board, any Federal Reserve Bank or agency or department
of the federal government selected by Newkirk REIT. If Newkirk REIT determines
in good faith that the 10-year U.S. Treasury rate cannot be calculated as
provided above, then the rate shall be the arithmetic average of the per annum
average yields to maturities, based upon closing ask prices on each business day
during a quarter, for each actively traded marketable U.S. Treasury fixed
interest rate security with a final maturity date not less than eight nor more
than 12 years from the date of the closing asked prices as chosen and quoted for
each business day in each such quarter in New York City by at least three
recognized dealers in U.S. government securities selected by Newkirk REIT.
10
The Advisor is 80% owned by FUR Holdings LLC and 20% owned by an affiliate
of Vornado. FUR Holdings LLC is controlled by Michael Ashner, and is 25%, 2.46%,
1.2% and 1.6% owned by Michael Ashner, Peter Braverman, Thomas Staples and
Carolyn Tiffany, respectively, the executive officers of the general partner's
manager. FUR Holdings LLC also currently holds 31.2% of the common shares of
First Union and is the sole owner of First Union's advisor. The members of the
management team of the general partner's manager also serve as senior management
of First Union.
Pursuant to an agreement between the Advisor and First Union, First Union
will receive the economic benefit of 80% of the incentive management fees
payable to the Advisor. FUR Holdings LLC will benefit from incentive management
fees which are paid to First Union because (a) incremental revenue for First
Union should enhance the value of First Union common shares owned by FUR
Holdings LLC and (b) FUR Holdings LLC shares in incentive management fees
payable by First Union after the shareholders of First Union receive
distributions in excess of a threshold amount. The remaining 20% of the
incentive management fee will be received by Vornado in respect of its interest
in the Advisor.
The first $4.2 million (subject to an annual consumer price index
increase) in base management fees earned per annum will be paid by the Advisor
to Winthrop Financial Associates for services that the Advisor will subcontract
to Winthrop Financial Associates. Winthrop Financial Associates is an entity
that is controlled by Michael Ashner and in which Michael Ashner, Peter
Braverman, Thomas Staples and Carolyn Tiffany hold a 23.07%, 6.46%, 4.15% and
6.46% economic interest, respectively. Winthrop Financial Assocites currently
receives approximately $1,881,951 (subject to an annual CPI adjustment) for
services it provides to the Partnership. This arrangement will be terminated
upon consummation of the REIT IPO. See "COMPENSATION OF THE GENERAL PARTNER".
The Advisor will also hold Newkirk REIT's special voting preferred stock
entitling it to vote on all matters submitted to a vote of Newkirk REIT's
stockholders. The Advisor will agree to cast those votes on any matter in direct
proportion to votes that are cast by Limited Partners of the Partnership (other
than Newkirk REIT) on such matter, except that the Advisor (through its managing
member) will be entitled to vote in its sole discretion to the extent the voting
rights of Vornado's affiliates are limited as described above under "DESCRIPTION
OF THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP - Preferred Stock".
To address some of these conflicts of interest, Newkirk REIT's internal
policies require that a majority of Newkirk REIT's board of directors be
independent directors and that a majority of Newkirk REIT's disinterested
directors make any determinations on Newkirk REIT's behalf with respect to the
relationships or transactions that present a conflict of interest for Newkirk
REIT's directors, officers and holders of greater than 4.9% of any class of
Newkirk REIT's or the Partnership's equity securities. Newkirk REIT's board of
directors will adopt a specific policy that requires decisions concerning the
Advisory Agreement, including termination, renewal and enforcement of the
Advisory Agreement, or Newkirk REIT's participation in any transactions with the
Advisor or its affiliates outside of the Advisory Agreement, to be reviewed and
approved by a majority of Newkirk REIT's independent directors.
Substantial Control by Michael Ashner
Michael Ashner is the chief executive officer of your general partner's
manager, the chairman and chief executive officer of Newkirk REIT and the
president and sole manager of the Advisor. We estimate that Michael Ashner and
entities controlled by or affiliated with Michael Ashner will beneficially own
between approximately ______% and _____% of the outstanding Units following the
REIT IPO. Following the initial 12 month period following the REIT IPO the Units
will be redeemable for cash, or, at Newkirk REIT's election, for shares of
Newkirk REIT's common stock. The Advisor will hold Newkirk REIT's special voting
preferred stock entitling it to vote on all matters submitted to a vote of
Newkirk REIT's stockholders. The Advisor will agree to cast those votes in
respect of the special voting preferred stock on any matter in direct proportion
to votes that are cast by Limited Partners of the Partnership (other than
Newkirk REIT) on such matter, including Limited Partners controlled by and/or
affiliated with Michael Ashner, except that the Advisor (through its managing
member) will be entitled to vote in its sole discretion to the extent the voting
rights of Vornado's affiliates are limited. See "DESCRIPTION OF THE AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP - Preferred Stock". It is anticipated
that First Union will own between ____% and ___% of Newkirk REIT's common stock
following the REIT IPO. FUR Holdings LLC, an entity controlled by Michael Ashner
11
and in which Michael Ashner has a significant economic interest, currently owns,
through a wholly-owned subsidiary, 31.2% of First Union's common shares. Michael
Ashner is also the chairman and chief executive officer of First Union, a
publicly-traded corporation that is controlled by a board of directors, a
majority of whom are independent, and is the chief executive officer and manager
of First Union's advisor. It is anticipated that Newkirk REIT will grant Michael
Ashner and such entities an exemption from the ownership limitations contained
in Newkirk REIT's articles of incorporation. Because of his position with
Newkirk REIT and the Advisor and his ability to effectively vote a substantial
amount of the Partnership's and Newkirk REIT's outstanding voting securities,
Michael Ashner has significant influence over the Partnership's policies and
strategy.
Transactions with Vornado and its Affiliates
Following the consummation of the REIT IPO, it is estimated that Vornado
and its affiliates will own between a ___% and _____% interest in the
Partnership representing between a ____% and _____% interest in Newkirk REIT on
a fully diluted basis, assuming all redeemable Units are redeemed for shares of
Newkirk REIT's common stock. During the six month period from and after the
consummation of the REIT IPO, Vornado will have the right to designate one
member of Newkirk REIT's board of directors. In addition, the Partnership and
Newkirk REIT have agreed with Vornado to restrict Newkirk REIT's activities in a
manner intended to facilitate and maintain Newkirk REIT's qualification as a
REIT. These restrictions will generally expire sixty business days following the
date on which Newkirk REIT notifies Vornado that its aggregate ownership in the
Partnership represents less than a 2% interest in Newkirk REIT, on a
fully-diluted basis, assuming the redemption of all redeemable Newkirk MLP units
for shares of Newkirk REIT common stock. A majority of Newkirk REIT's
disinterested directors will be required to make any determination on Newkirk
REIT's behalf with respect to any transaction with Vornado and its affiliates.
Transactions with First Union
Pursuant to the REIT Formation Agreement, First Union will acquire $50
million of shares of Newkirk REIT's common stock at the public offering price.
First Union will also assign to Newkirk REIT its exclusive right that requires
Michael Ashner to offer to it all business opportunities related to net lease
properties that are offered to or generated by him. For this assignment Newkirk
REIT will issue to First Union $20 million of shares of Newkirk REIT's common
stock, half of which will generally be subject to forfeiture over a three year
period. All shares of Newkirk REIT's common stock held by First Union will
generally be subject to a three year lock-up period commencing upon the closing
of the REIT IPO. In connection with these transactions, First Union will be
granted certain registration rights by Newkirk REIT. First Union will also be
granted an exemption from Newkirk REIT's ownership limitation to the extent that
it owns up to 17.5% of Newkirk REIT's common stock on a fully diluted basis
assuming the redemption of all redeemable Units, whether or not such Units are
then redeemable. Also, pursuant to an agreement between the Advisor and First
Union, First Union will receive the economic benefit of 80% of the incentive
management fees payable by Newkirk REIT to the Advisor (see "DESCRIPTION OF THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERHIP - Advisory Agreement with
the Advisor" above). In addition, First Union has agreed to issue to an
affiliate of Vornado or its subsidiary the lesser of 4 million shares or an
amount equal to 9.9% (after giving effect to such issuance) of its common shares
of beneficial interest, for $4 per share subject to customary closing conditions
and subject to completion of the REIT IPO. While Vornado will be obligated to
purchase these shares regardless of whether the REIT IPO is completed, First
Union will not be obligated to sell these shares if the REIT IPO is not
completed. Your general partner's senior management team has conflicts of
interest in structuring the transactions involving First Union in connection
with the REIT IPO because they also manage the operations of, and have a
significant economic interest in, First Union. See "DESCRIPTION OF THE AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP - Advisory Agreement with the
Advisor", above. To address this conflict, Newkirk REIT's bylaws provide that
following consummation of the REIT IPO any transaction involving Newkirk REIT
and First Union, or any entity controlled by First Union, must be approved by a
unanimous vote of Newkirk REIT's directors who are not directors or officers of
First Union and have no material financial interest in First Union or the
transaction.
12
NO APPRAISAL RIGHTS
Limited Partners are not entitled to dissenters' appraisal rights under
Delaware law or the Partnership Agreement in connection with the Amendment.
MANAGERS AND EXECUTIVE OFFICERS
The general partner of the Partnership is currently MLP GP LLC, a Delaware
limited liability company, that is owned by affiliates of Vornado and executive
officers of Winthrop Financial Associates. In addition, Winthrop Financial
Associates performs asset management services for the Partnership. MLP GP LLC
has no assets, liabilities or equity and does not have an equity interest in the
Partnership.
The manager of the Partnership's general partner is Newkirk MLP Corp., the
principal officers of which are Michael Ashner, Chief Executive Officer; Peter
Braverman, Executive Vice President; Thomas Staples, Chief Financial Officer;
and Carolyn Tiffany, Chief Operating Officer. Such persons also serve in those
capacities for Winthrop Financial Associates. These officers manage and control
the day-to-day operations of the Partnership on behalf of the Partnership's
general partner. However, significant transactions, whether by the Partnership
or any subsidiary partnership, such as sales, acquisitions, debt refinancings
and mergers, require the consent of the members of the general partner under the
limited liability company agreement of the general partner.
Upon consummation of the REIT IPO, Newkirk REIT will be appointed as the
successor general partner of the Partnership in place of MLP GP LLC. The
principal officers of Newkirk REIT will be Michael Ashner, Chief Executive
Officer; Peter Braverman, President; Thomas Staples, Chief Financial Officer;
Carolyn Tiffany, Chief Operating Officer and Secretary; and Lara Sweeney
Johnson, Executive Vice President.
The following table sets forth certain information about the executive
officers and directors of your current general partner's manager and of Newkirk
REIT.
Name Age Position
- ---- --- -----------------------------------------------------------------------------------
Michael Ashner 52 Chairman of the Board of Directors of Newkirk REIT, sole director of Newkirk MLP
Corp. and Chief Executive Officer of Newkirk REIT and Newkirk MLP Corp.
Peter Braverman................. 53 President of Newkirk REIT and Newkirk MLP Corp. and Director of Newkirk REIT
Thomas Staples.................. 49 Chief Financial Officer of Newkirk REIT and Newkirk MLP Corp.
Carolyn Tiffany................. 38 Chief Operating Officer and Secretary of Newkirk REIT and Newkirk MLP Corp.
Lara Sweeney Johnson............ 33 Executive Vice President and Director of Newkirk REIT
Harold First.................... 68 Director of Newkirk REIT
Richard Frary................... 58 Director of Newkirk REIT
Isidore Mayrock................. 49 Director of Newkirk REIT
Lewis Meltzer................... 65 Director of Newkirk REIT
Laura Pomerantz................. 57 Director of Newkirk REIT
Miles Stuchin................... 52 Director of Newkirk REIT
Steven Zalkind.................. 63 Director of Newkirk REIT
Information for each of the individuals listed above are set forth below.
Michael Ashner. Mr. Ashner is the chairman of Newkirk REIT's board of
directors and its chief executive officer. Mr. Ashner also serves as the sole
director and chief executive officer of Newkirk MLP Corp., the manager of the
general partner of the Partnership, a position he has held since January 2002 as
well as the chief executive officer of Winthrop Financial Associates, a position
he has held since January 1996. Mr. Ashner has been the chief executive officer
of First Union since December 31, 2003 and chairman since April 2004. Mr. Ashner
has also served as the Chief Executive Officer of Shelbourne Properties I, Inc.
("Shelbourne I"), Shelbourne Properties II, Inc. ("Shelbourne II") and
Shelbourne Properties III, Inc. ("Shelbourne III"), three separate
publicly-traded real estate investment trusts listed on the American Stock
Exchange that were recently liquidated. Mr. Ashner also currently serves on the
boards of directors of the following publicly traded companies: Atlantic Coast
Entertainment Holdings, Inc., a hotel and casino operator, Sizeler Property
Investors, Inc., a real estate investment trust, First Union, and NBTY Inc., a
manufacturer, marketer and retailer of nutritional supplements.
13
Peter Braverman. Mr. Braverman is the president of Newkirk REIT and a
member of its board of directors. Mr. Braverman has served as executive vice
president of Newkirk MLP Corp. since January 2002. Mr. Braverman has also served
as the executive vice president of Winthrop Financial Associates since January
1996. Mr. Braverman has been the president of First Union since August 2004 and
a director since April 2004 and was the executive vice president of First Union
from January 2004 to April 2004. Mr. Braverman has also served as the executive
vice president of Shelbourne I, Shelbourne II and Shelbourne III. Mr. Braverman
also serves on the board of directors of First Union.
Thomas Staples. Mr. Staples is the chief financial officer of Newkirk
REIT. Mr. Staples has served as chief financial officer of Newkirk MLP Corp.
since January 2002. Mr. Staples has been with Winthrop Financial Associates
since 1995 and has served as its chief financial officer since January 1999. Mr.
Staples has also been the chief financial officer of First Union since January
2004. Since August 2002, Mr. Staples has also served as assistant treasurer of
Shelbourne I, Shelbourne II and Shelbourne III. Mr. Staples is a certified
public accountant.
Carolyn Tiffany. Ms. Tiffany is the chief operating officer and secretary
of Newkirk REIT. Ms. Tiffany has been chief operating officer and secretary of
Newkirk MLP Corp. since January 2002 and First Union since January 2004. Since
December 1997, Ms. Tiffany has served as the chief operating officer of Winthrop
Financial Associates. Ms. Tiffany also served as vice president, treasurer,
secretary and chief financial officer of Shelbourne I, Shelbourne II and
Shelbourne III.
Lara Sweeney Johnson. Ms. Johnson is the executive vice president and a
member of the board of directors of Newkirk REIT. From April 1996 to March 2003,
and since April 2005 she has served as senior vice president of Winthrop
Financial Associates. Ms. Johnson has also served as a vice president of
Shelbourne I, Shelbourne II and Shelbourne III since April 1, 1996.
Harold First. Harold First has been a financial consultant since 1993.
From December 1990 through January 1993, Mr. First served as Chief Financial
Officer of Icahn Holding Corp., a privately held holding company. Mr. First
currently serves on the Boards of Directors of Atlantic Coast Entertainment
Holdings, Inc., a casino gaming company, and Panaco Inc., an oil and gas
drilling company. He is a Certified Public Accountant.
Richard Frary. Mr. Frary is the founding partner and majority shareholder
of Tallwood Associates, Inc., a private merchant banking firm founded in 1990
primarily engaged in real estate acquisition, management and development. He
also serves on the boards of directors of Tarragon Corporation, a publicly
traded real estate investment trust, and Johns Hopkins University.
Isidore Mayrock. Mr. Mayrock has been a Principal Partner of Fortunoff, a
leading operator of full-line department stores selling jewelry and home
furnishings throughout the New York metropolitan area, since 1978. He has also
been Managing Partner of Westbury Properties Investment Corp., which manages the
Fortunoff real estate portfolio, since 1990.
Lewis Meltzer. Mr. Meltzer is an attorney and Managing Partner of the law
firm of Meltzer, Lippe, Goldstein & Breitstone, LLP, which he founded in 1970.
Mr. Meltzer's practice encompasses real estate, tax, corporate and high net
worth estate planning.
Laura Pomerantz. Ms. Pomerantz is a Principal of PBS Realty Advisors, LLC,
a company which provides commercial real estate advisory and brokerage services
to large institutional and corporate clients. The partnership was formed in
September of 2002. Prior to that time, she was associated with Newmark & Company
Real Estate, Inc., a commercial real estate company, as Senior Managing Director
and served in this capacity from August 1996 to August 2002. Ms. Pomerantz
served as Executive Vice President and a Director of the Leslie Fay Companies,
Inc., an apparel design and manufacturing company, from January 1993 to November
1994, and as Senior Vice President and Vice President of Leslie Fay from 1986
through 1992.
Miles M. Stuchin. Mr. Stuchin is the founder and CEO of Access Capital,
Inc., a New York based specialty finance and venture capital company, and of
Charter Realty, an owner-manager of Manhattan residential apartment buildings.
He is a Director of the Commercial Finance Association and the Vice-Chairman of
the Board of Trustees of Horace Mann School.
14
Steven Zalkind. Mr. Zalkind has been a principal with Resource Investments
Limited, L.L.C., a real estate management and investment company that currently
owns, operates and manages over 6,000 apartment units and 500,000 square feet of
retail shopping centers, for the past five years. Mr. Zalkind has extensive
experience in the operation, management and financing of real estate projects
including apartment buildings, shopping centers and office buildings and has
been involved in real estate acquisitions and resales totaling in excess of $1.5
billion.
There are no family relationships among any of the individuals listed
above.
ADDITIONAL INFORMATION ABOUT THE PARTNERSHIP
The Partnership is subject to the information and reporting requirements
of the Securities Exchange Act of 1934, as amended, and, in accordance
therewith, files reports and other information with the SEC relating to its
business, financial condition and other matters. Such reports and other
information may be inspected at the public reference facility maintained by the
Securities and Exchange Commission (the "SEC") at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1200, Washington, D.C. 20549. Copies of such material can
also be obtained from the Public Reference Room of the SEC in Washington, D.C.
at prescribed rates. The SEC also maintains a site on the world wide web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of Units held as of September __
2005 by (i) each person that, to our knowledge, beneficially owns more than 5%
of the total number of Units, (ii) each officer or director of the manager of
the Partnership's general partner, and (iii) the directors and executive
officers of the general partner's manager as a group:
Name and Address of Percent of
Beneficial Owner Number of Units Total Units
- ---------------- --------------- -----------
Michael Ashner 3,608,234 (2) (3) 57.58%
Apollo Real Estate Investment Fund III, L.P.
Apollo Real Estate Advisors III, L.P.
Apollo Real Estate Management III, L.P. (1)
Vornado Realty Trust 1,410,156 (3) (4) 22.5%
888 Seventh Avenue
New York, NY 10019
Peter Braverman (1) 0 --
Thomas Staples (1) 0 --
Carolyn Tiffany (1) 0 --
All executive officers and directors 3,608,234 (2) (3) 57.58%
as a group (4 individuals)
- ----------
(1) The address for Apollo Real Estate Investment Fund III, L.P. ("Apollo
Fund"), Apollo Real Estate Advisors III, L.P. ("Apollo Advisors"), and
Apollo Real Estate Management III, L.P. ("Apollo Management") is 2
Manhattanville Road, Purchase, New York 10577. The address for Mr. Ashner
and Mr. Braverman is Two Jericho Plaza, Wing A, Suite 111, Jericho, New
York 11753. The address for Mr. Staples and Ms. Tiffany is 7 Bulfinch
Place, Suite 500, Boston, Massachusetts 02114.
15
(2) Comprised of units that are held by Newkirk RE Holdings LLC, Newkirk NL
Holdings LLC, Newkirk Tender Holdings LLC, Marbax Venture LLC, AP-WIN
Associates, L.L.C., AP-III WEM WIN Tender LLC and AP-IV WEM WIN Tender
LLC, each of which is directly or indirectly controlled by either
WEM-Brynmawr Associates LLC, WEM Fund 1998 Limited Partnership or WEM-WIN
Tender Associates (the "WEM Entities") and by Apollo Fund. A substantial
majority of the interetss in the WEM Entities are owned by Apollo. For
purposes of Section 13 of the Securities Exchange Act of 1934 (the
"Exchange Act"), as the sole manager of each of the WEM Entities, Mr.
Ashner may be deemed to be the beneficial owner of all units beneficially
owned by the WEM Entities. In addition, for purposes of Section 13 of the
Exchange Act, as the general partner of Apollo Fund, Apollo Advisors may
be deemed to be the beneficial owner of all units beneficially owned by
Apollo Fund, and all such units may be deemed to be beneficially owned by
Apollo Management as the day-to-day manager of Apollo Fund.
(3) Due to the relationships between the individual and entities referred to
on this chart and in notes (2) and (4) thereto, such individual and
entities may be deemed to constitute a "group" for purposes of Section
13d-3 of the Exchange Act.
(4) Comprised of units that are held by VNK Corp., Vornado Newkirk L.L.C. and
Vornado Realty L.P., each of which is controlled by Vornado.
Changes in Control
Other than the election of Newkirk REIT as the Partnership's general
partner and the acquisition of Units by Newkirk REIT, there exists no
arrangement known to the Partnership the operation of which may at a subsequent
date result in a change in control of the Partnership.
Securities Authorized for Issuance under Equity Compensation Plans
The Partnership has no securities authorized for issuance under any equity
compensation plans of the Partnership.
COMPENSATION OF THE GENERAL PARTNER
None of the Partnership, the Partnership's current general partner or
Newkirk REIT presently have any employees. Newkirk REIT may hire employees to
perform acquisition, disposition and financing services. Following the
consummation of the REIT IPO, the Advisor will provide the services of its
executive officers and employees to perform asset management services and run
the Partnership's and Newkrk REIT's day-to-day operations. The Advisor will pay
its executive officers and employees from the proceeds of the base management,
incentive management and other fees it receives from Newkirk REIT. In addition,
none of the officers or directors of your general partner's manager who
currently hold an economic interest in Units will be entitled to grants under
Newkirk REIT's stock incentive plan until at least four years following
completion of the REIT IPO.
Winthrop Financial Associates presently provides the services of some of
its employees, including the executive officers of the manager of the
Partnership's current general partner, to perform asset management services for
the Partnership. Winthrop Financial Associates receives an annual fee which was
originally fixed at $1,800,000 (subject to adjustment based on increases in the
CPI) for 2002 for its services to the Partnership and certain other affiliated
partnerships. The CPI adjustment for 2003 was 2.4% bringing the fee to
$1,843,200 and for 2004 was 2.3% bringing the fee to $1,881,951. Following the
consummation of the REIT IPO, this arrangement will be terminated. However,
Newkirk REIT's Advisor intends to subcontract to Winthrop Financial Associates a
substantial portion of the services to be provided to Newkirk REIT and to the
Partnership. Winthrop Financial Associates will be entitled to receive the first
$4.2 million (subject to an annual consumer price index increase) in base
management fees earned by the Advisor per annum for such services.
16
Under the terms of the Amended Partnership Agreement, the Partnership will
be required to reimburse Newkirk REIT for all amounts Newkirk REIT spends in
connection with its position as general partner of the Partnership. See
"DESCRIPTION OF THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP -
Operations" above.
CERTAIN RELATED PARTY TRANSACTIONS
T-Two Partners; T-2 Certificate
T-Two Partners, an affiliate of Apollo, Vornado and the WEM entities (the
"MLP affiliates"), is the 100% beneficial owner of certain contract right
subordinate mortgage notes evidenced by an interest in a grantor trust or "T-2
Certificate" on 158 of the Partnership's properties as well as additional second
mortgages on 126 other triple net-leased properties.
As of August 31, 2005, the outstanding contractual balance, including
accrued interest, on the Partnership's contract right indebtedness beneficially
owned by T-Two Partners was approximately $276,322,000. That indebtedness bears
interest at rates ranging from 8.1% per annum to 13.9% per annum. During 2004
and the first six months of 2005, the Partnership paid approximately $71,862,000
and $16,405,000 on these obligations, approximately $59,974,000 and $16,218,000,
respectively of which was applied to the payment of interest, including deferred
interest. Of the amounts paid for 2004 and the first six months of 2005,
approximately $60,769,000 and $12,789,000, respectively, was applied by T-Two
Partners to make payments on a loan, which we refer to as the Original T-Two
Loan, that was guaranteed by the Partnership, and the balance was retained by
T-Two Partners as cash reserves. The Original T-Two Loan was made in November
2003 in the principal amount of $316.5 million and was secured by all of the
assets of T-Two Partners, including the contract right mortgage notes receivable
from the Partnership. In August 2005 T-Two Partners refinanced the Original
T-Two Loan with a new loan from KeyBank and Bank of America in the principal
amount of approximately $272.2 million. The new loan, which we refer to as the
New T-Two Loan, is also secured by all of the assets of T-Two Partners and
guaranteed by the Partnership. Currently, the Partnership believes that it has
no exposure to loss under the guarantee since the New T-Two Loan is
overcollateralized. The Partnership has an option to acquire of all the assets
of T-Two Partners by assuming the obligations of T-Two Partners under the New
T-Two Loan and intends to exercise this option prior to consummation of the REIT
IPO. Upon exercise of the option, the Partnership will also acquire the cash
reserves of T-Two Partners. As of August 31, 2005, the aggregate balance on all
of the mortgages owned by T-Two Partners, including the mortgages on the
Partnership's properties, was $269,870,000. In addition, as of August 31, 2004
the cash reserves of T-Two Partners were approximately $44,100,000 and the
outstanding balance on the T-Two Loan, including accrued interest, was
approximately $271,989,000.
Mortgage Indebtedness of Property
MLP affiliates own approximately 53% of the second mortgage indebtedness
encumbering properties owned by the Partnership in El Segundo, California. These
entities acquired this interest in December 2002 for a purchase price of
$1,012,486, exclusive of closing costs. During 2004 and the first six months of
2005, the Partnership incurred approximately $715,000 and $369,000 of interest
expense on this mortgage indebtedness, respectively, $66,000 and $33,000,
respectively, of which was paid to these entities and the balance of which was
added to the principal balance of the mortgage indebtedness. At December 31,
2004, the balance on the portion of this mortgage held by these entities was
$15,232,000.
Asset Management Agreement
Winthrop Financial Associates, an affiliate of the Advisor and your
general partner's management team presently provides the services of some of its
employees, including the executive officers of your general partner's manager,
to perform asset management services for the Partnership. Winthrop Financial
Associates receives an annual fee which was originally fixed at $1,800,000
(subject to adjustment based on increases in the CPI) for 2002 for its services
to the Partnership and certain other affiliated partnerships. The CPI adjustment
for 2003 was 2.4% bringing the fee to $1,843,200 and for 2004 was 2.3% bringing
the fee to $1,881,952. Following the consummation of the REIT IPO, this
arrangement will be terminated.
17
Sale of Property
On July 29, 2004, the Partnership sold 25 properties to Vornado, a limited
partner in the Partnership and an affiliate of the Partnership's general
partner, for a sales price of $63,800,000. The price paid by Vornado was in
excess of an offer received from an unaffiliated third party after the
properties had been marketed extensively. The Partnership used sales proceeds of
$31,541,000 to pay off contract right debt of which approximately $31,016,000
was paid to T-Two Partners and approximately $23,733,000 to pay down a note
payable to Bank of America.
SECTION 16 COMPLIANCE
Based solely upon a review of the filings furnished to the Partnership
pursuant to Rule 16a-3(e) promulgated under the Exchange Act and written
representations from its executive officers, general partner and persons who own
beneficially more than 10% of its outstanding Units, all filing requirements of
Section 16(a) of the Exchange Act were timely complied with through the date
hereof, except as follows:
(i) On one occasion in fiscal 2005, WEM-Brynmawr Associates LLC, Apollo
Real Estate Advisors III L.P., Apollo, Michael Ashner, Newkirk Tender Holdings
LLC, Newkirk RE Holdings LLC, and Apollo Real Estate Management III L.P. failed
to timely file a joint Statement of Changes in Beneficial Ownership on Form 4
("Form 4"). This form has since been filed. In addition, on one occasion in
fiscal 2005, Vornado, Vornado Realty LP, VNK Corp., and Vornado Newkirk LLC
(collectively, the "Vornado Filers") failed to file Form 4 for the same
transaction. This form has not yet been filed; and
(ii) On one occasion in fiscal 2004, WEM WIN Tender Associates LLC, AP4
WEM WIN Tender LLC, Apollo Real Estate Advisors III L.P., AP WIN Associates LLC,
Michael Ashner, AP3 WEM WIN Tender LLC, WEM Fund 1998 LP, Apollo Real Estate
Management III L.P., and Apollo failed to timely file a joint Statement of
Changes in Beneficial Ownership on Form 4. This form has since been filed. In
the same fiscal year, the Vornado Filers failed to timely file a Form 4, which
has since been filed.
NO CONSENTS REQUIRED
The Partnership has fixed September __, 2005 as the Record Date for
determining Limited Partners entitled to notice of the Actions.
Pursuant to the Current Partnership Agreement, the Partnership's general
partner may be removed, with or without cause, upon the consent of Limited
Partners who own a majority of the Partnership's outstanding Units. In addition,
amendments to the Current Partnership Agreement may be proposed only by the
Partnership's general partner. Following such proposal the general partner must
submit any proposed amendment to the Limited Partners. A proposed amendment will
be deemed adopted and effective if it is approved by the general partner and it
receives the consent of Limited Partners owning a majority of the Units.
As of the Record Date, there were 6,266,434 Units issued and outstanding.
Affiliates of Apollo and Vornado and the WEM entities currently own, in the
aggregate, 5,018,390 units or approximately 80%, of the outstanding Units. They
have consented to and approved the Actions. The general partner has also
approved the Amended Partnership Agreement.
The Actions will be effective upon the consummation of the REIT IPO, but
in no event sooner than twenty calendar days from the date hereof. If, for any
reason the REIT IPO is not consummated, the Actions will not be taken.
EXPENSES
The cost of preparing, assembling, printing and mailing this Information
Statement will be borne by the Partnership.
THE NEWKIRK MASTER LIMITED PARTNERSHIP
18
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE NEWKIRK MASTER LIMITED PARTNERSHIP
a Delaware limited partnership
dated as of ________, 2005
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS................................................... 1
ARTICLE II ORGANIZATIONAL MATTERS......................................... 17
Section 2.1 Organization............................................ 17
Section 2.2 Name.................................................... 17
Section 2.3 Registered Office and Agent; Principal Office .......... 17
Section 2.4 Power of Attorney ...................................... 18
Section 2.5 Term ................................................... 19
ARTICLE III PURPOSE ...................................................... 19
Section 3.1 Purpose and Business ................................... 19
Section 3.2 Powers ................................................. 19
Section 3.3 Partnership Only for Partnership Purposes .............. 20
Section 3.4 Representations and Warranties by the Parties .......... 20
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS....................................... 22
Section 4.1 Capital Contributions of the Partners .................. 22
Section 4.2 Issuances of Additional Partnership Interests .......... 22
Section 4.3 Additional Funds and Capital Contributions ............. 24
Section 4.4 Stock Option Plan ...................................... 25
Section 4.5 No Interest; No Return ................................. 26
Section 4.6 Conversion or Redemption of Preferred Shares ........... 26
Section 4.7 Conversion or Redemption of Junior Shares .............. 27
Section 4.8 Other Contribution Provisions .......................... 27
Section 4.9 Not Publicly Traded .................................... 27
Section 4.10 Restricted Units ....................................... 27
ARTICLE V DISTRIBUTIONS................................................... 28
Section 5.1 Requirement and Characterization of Distributions ...... 28
Section 5.2 Distributions in Kind .................................. 28
Section 5.3 Amounts Withheld ....................................... 29
Section 5.4 Distributions Upon Liquidation ......................... 29
Section 5.5 Distributions to Reflect Issuance of Additional
Partnership Units ...................................... 29
Section 5.6 Restricted Distributions ............................... 29
ARTICLE VI ALLOCATIONS ................................................... 29
Section 6.1 Timing and Amount of Allocations of Net Income and
Net Loss ............................................... 29
Section 6.2 General Allocations .................................... 29
Section 6.3 Additional Allocation Provisions ....................... 30
Section 6.4 Tax Allocations ........................................ 32
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS ........................ 33
Section 7.1 Management ............................................. 33
Section 7.2 Certificate of Limited Partnership ..................... 37
Section 7.3 Reimbursement of the General Partner ................... 37
Section 7.4 Outside Activities of the General Partner .............. 38
Section 7.5 Contracts with Affiliates .............................. 38
Section 7.6 Indemnification ........................................ 39
Section 7.7 Liability of the General Partner ....................... 41
Section 7.8 Other Matters Concerning the General Partner ........... 42
Section 7.9 Title to Partnership Assets ............................ 43
Section 7.10 Reliance by Third Parties .............................. 43
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS .................. 44
Section 8.1 Limitation of Liability ................................ 44
Section 8.2 Management of Business ................................. 44
Section 8.3 Outside Activities of Limited Partners ................. 44
Section 8.4 Return of Capital ...................................... 44
Section 8.5 Redemption Factor....................................... 45
Section 8.6 Redemption Rights of Qualifying Parties ................ 45
Section 8.7 Partnership Right to Call Limited Partner Interests .... 48
Section 8.8 Mergers ................................................ 49
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS ........................ 49
Section 9.1 Records and Accounting ................................. 49
Section 9.2 Partnership Year ....................................... 49
Section 9.3 Reports ................................................ 49
ARTICLE X TAX MATTERS .................................................... 50
Section 10.1 Preparation of Tax Returns ............................. 51
Section 10.2 Tax Elections .......................................... 51
Section 10.3 Tax Matters Partner .................................... 51
Section 10.4 Withholding ............................................ 51
Section 10.5 Organizational Expenses ................................ 52
ARTICLE XI TRANSFERS AND WITHDRAWALS ..................................... 52
Section 11.1 Transfer ............................................... 52
Section 11.2 Transfer of General Partner's Partnership Interest ..... 53
Section 11.3 Transfer of Limited Partners' Partnership Interests .... 54
Section 11.4 Substituted Limited Partners ........................... 55
Section 11.5 Assignees .............................................. 55
Section 11.6 General Provisions ..................................... 56
ARTICLE XII ADMISSION OF PARTNERS ........................................ 57
Section 12.1 Admission of Successor General Partner ................. 57
Section 12.2 Admission of Additional Limited Partners ............... 57
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership ............................................ 58
Section 12.4 Limit on Number of Partners ............................ 58
ii
ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION .................... 59
Section 13.1 Dissolution ............................................ 59
Section 13.2 Winding Up ............................................. 59
Section 13.3 Deemed Distribution and Recontribution ................. 61
Section 13.4 Rights of Limited Partners ............................. 61
Section 13.5 Notice of Dissolution .................................. 61
Section 13.6 Cancellation of Certificate of Limited Partnership ..... 62
Section 13.7 Reasonable Time for Winding-Up ......................... 62
ARTICLE XIV PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS ............................ 62
Section 14.1 Procedures for Actions and Consents of Partners ........ 62
Section 14.2 Amendments ............................................. 62
Section 14.3 Meetings of the Partners ............................... 64
ARTICLE XV GENERAL PROVISIONS ............................................ 64
Section 15.1 Addresses and Notice ................................... 64
Section 15.2 Titles and Captions .................................... 65
Section 15.3 Pronouns and Plurals ................................... 65
Section 15.4 Further Action ......................................... 65
Section 15.5 Binding Effect ......................................... 65
Section 15.6 Waiver ................................................. 65
Section 15.7 Counterparts ........................................... 65
Section 15.8 Applicable Law ......................................... 66
Section 15.9 Entire Agreement ....................................... 66
Section 15.10 Invalidity of Provisions ............................... 66
Section 15.11 Limitation to Preserve REIT Status ..................... 66
Section 15.12 No Partition ........................................... 67
Section 15.13 No Third-Party Rights Created Hereby ................... 67
Section 15.14 No Rights as Stockholders .............................. 67
Exhibit A Notice of Redemption.................................... A-1
Exhibit B Form of Unit Certificate................................ B-1
iii
AMENDED AND RESTATED AGREEMENT
OF
LIMITED PARTNERSHIP
OF
THE NEWKIRK MASTER LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF The Newkirk
Master Limited Partnership, made effective as of ______________, 2005, is
entered into by and among MLP GP LLC, a Delaware limited partnership (the
"Withdrawing General Partner"), Newkirk Realty Inc., a Maryland corporation
(defined herein as the "General Partner"), as the general partner of and a
limited partner in the Partnership, and the General Partner, on behalf of and as
attorney in fact for each of the persons and entities currently reflected on the
books and records of the Partnership as a Limited Partner in the Partnership,
together with any other Persons who become Partners in the Partnership as
provided herein.
WHEREAS, the Partnership was formed under the name "The Newkirk Master
Limited Partnership" on October 11, 2001, and, on October 23, 2001, the
Partnership adopted an Agreement of Limited Partnership (the "Prior Agreement");
WHEREAS, as of the time that shares of the General Partner are initially
sold pursuant to its initial public offering of Common Shares (the "Effective
Time"), (i) the General Partner is making a capital contribution to the
Partnership in exchange for a general partner's interest and limited partner's
interest and (ii) the General Partner is being appointed as the successor
general partner to MLP GP LLC, pursuant to Section 12.2 of the Prior Agreement;
WHEREAS, the Withdrawing General Partner and the General Partner have
determined that it is in the best interest of the Partnership and its partners
to amend and, in connection therewith, to restate the Prior Agreement to
reflect, among things, the withdrawal of the Withdrawing General Partner as a
general partner of the Partnership, and the admission of the General Partner as
the general partner of the Partnership.
WHEREAS, in accordance with the terms of the Prior Agreement, the Prior
General Partner and a majority in interest of the Limited Partners have
consented to the amendment and restatement of the Prior Agreement as provided
for herein, effective as of the Effective Time;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, General Partner hereby amends and restates the
Prior Agreement in its entirety as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act (6 Del.
C. ss. 17-101 et seq.), as it may be amended from time to time, and any
successor to such statute.
"Actions" has the meaning set forth in Section 7.6 hereof.
"Additional Funds" has the meaning set forth in Section 4.3.A hereof.
"Additional Limited Partner" means a Person who is admitted to the
Partnership as a Limited Partner pursuant to Section4.2 and Section 12.2 hereof
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 Partnership Year, after giving effect to the following adjustments:
(i) decrease such deficit by any amounts that such Partner is
obligated to restore pursuant to this Agreement or by operation of law upon
liquidation of such Partner's Partnership Interest or is deemed to be obligated
to restore pursuant to the penultimate sentence of each of Regulations Sections
1.704-2(g) (1) and 1.704-2 (i)(5); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2) (ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2) (ii)(d) and
shall be interpreted consistently therewith.
"Advisor" means NKT Advisors LLC, a Delaware limited liability company, or
any successor-in-interest thereto or assignee of NKT Advisors LLC's interest in
and obligations under the Advisory Agreement.
"Advisor Voting Direction Exclusions" means the following two permissible
exclusions to the Voting Direction Provision: (1) Vornado Realty Trust will not
be granted LP Direction Votes with respect to the election of members of the
General Partner's board of directors at any time when any affiliate of Vornado
Realty Trust is serving or standing for election as a member of the General
Partner's board of directors and (2) at all other times, Vornado Realty Trust's
right to LP Direction Votes with respect to the election of the General
Partner's board of directors will be limited to the number of Partnership Common
Units that Vornado Realty Trust then owns, not to exceed an amount of
Partnership Common Units equal to 9.9% of the Common Shares, on a fully diluted
basis that assumes the acquisition by the General Partner of all Partnership
Common Units that are subject to the Redemption right set forth in Section 8.6A
in exchange for REIT Consideration (whether or not such Redemption right is then
exercisable).
"Advisory Agreement" means that certain Advisory Agreement that the
Partnership currently anticipates entering into with the Advisor and the General
Partner, as the same may be amended or supplemented from time to time.
2
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership of The Newkirk Master Limited Partnership, as it may be amended,
supplemented or restated from time to time.
"Applicable Percentage" has the meaning set forth in Section 8.6.B hereof.
"Appraisal" means, with respect to any assets, the written 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.
"Articles of Incorporation" means the Articles of Incorporation of the
General Partner filed with the State Department of Assessments and Taxation of
Maryland, as amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Common 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 hereof.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts are authorized or required by
law to close.
"Capital Account" means, with respect to any Partner, the Capital Account
maintained by the General Partner for such Partner on the Partnership's books
and records in accordance with the following provisions:
A. Capital Accounts shall be maintained in compliance with Regulations
Sections 1.704-1(b) and 1.704-2.
B. The General Partner 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 that unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or
Section 1.704-2.
3
C. Immediately prior to the General Partner's Capital Contribution, the
Capital Accounts of the existing Partners were adjusted to reflect
their allocable share (under the Prior Agreement) of the Net Income
created by adjusting the Gross Asset Values of the Partnership's
properties to equal their respective fair market values.
"Capital Account Deficit" has the meaning set forth in Section 13.2.C
hereof.
"Capital Contribution" means, with respect to any Partner, the amount of
money and the initial Gross Asset Value of any Contributed Property that such
Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.3
hereof or is deemed to contribute pursuant to Section 4.4 hereof.
"Cash Amount" means, with respect to a Tendering Party, an amount of cash
equal to the product of (a) the Value of a Common Share and (b) such Tendering
Party's Common Shares Amount determined as of the date of receipt by the General
Partner of such Tendering Party's Notice of Redemption or, if such date is not a
Business Day, the immediately preceding Business Day.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Closing Price" has the meaning set forth in the definition of "Value."
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time or any successor statute thereto, as interpreted by the
applicable Regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Common Share" means a share of the General Partner's Common Stock, par
value $.01 per share. Where relevant in this Agreement, "Common Shares" includes
shares of the General Partner's Common Stock, par value $.01 per share, issued
upon conversion of Preferred Shares or Junior Shares.
"Common Shares Amount" means a number of Common Shares equal to the
product of (a) the number of Tendered Units and (b) the Redemption Factor in
effect on the Specified Redemption Date with respect to such Tendered Units;
provided, however, that, in the event that the General Partner issues to all
holders of Common Shares as of a certain record date rights, options, warrants
or convertible or exchangeable securities entitling the General Partner's
shareholders to subscribe for or purchase Common Shares or any other securities
or property (collectively, the "Rights"), with the record date for such Rights
issuance falling within the period starting on the date of the Notice of
Redemption and ending on the day immediately preceding the Specified Redemption
Date but which Rights will not be distributed before the relevant Specified
Redemption Date, then the Common Shares Amount shall also include such Rights
that a holder of that number of Common Shares would be entitled to receive,
expressed, where relevant hereunder, in a number of Common Shares determined by
the General Partner in good faith.
4
"Company Employees" means the employees of the Partnership, the General
Partner and any of their subsidiaries.
"Consent" means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in accordance with Article XIV hereof.
"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, except as
otherwise provided in this Agreement, may be given or withheld by a Majority in
Interest of the Limited Partners.
"Contributed Property" means each item of Property or other non-cash asset
contributed to the Partnership.
"Cut-Off Date" means the fifth (5th) Business Day after the General
Partner's receipt of a Notice of Redemption.
"Debt" means, as to any Person, as of any date of determination, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
that, in accordance with generally accepted accounting principles, should be
capitalized.
"Depreciation" means, for each Partnership Year or other applicable
period, an amount equal to the federal income tax 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 period, Depreciation shall be in an amount that 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 or
period is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"Distributed Right" has the meaning set forth in the definition of
"Redemption Factor."
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
5
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Family Members" means, as to a Person that is an individual, such
Person's spouse, ancestors, descendants(whether by blood or by adoption),
brothers and sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants(whether by blood or by adoption),
brothers and sisters are beneficiaries.
"Funding Debt" means any Debt incurred by or on behalf of the General
Partner for the purpose, in whole or in part, of providing funds to the
Partnership.
"General Partner" means Newkirk Realty Trust Inc., a Maryland corporation,
and its successors and assigns, as the general partner of the Partnership in its
capacity as general partner of the Partnership.
"General Partner Interest" means the Partnership Interest held by the
General Partner, which Partnership Interest is an interest as a general partner
under the Act. A General Partner Interest may be expressed as a number of
Partnership Common Units, Partnership Preferred Units or any other Partnership
Units.
"General Partner Loan" has the meaning set forth in Section 4.3.D hereof.
"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 General Partner and agreed to by the contributing Partner. In
any case in which the General Partner and the contributing Partner are unable to
agree as to the gross fair market value of any contributed asset or assets, such
gross fair market value shall be determined by Appraisal.
(b) The Gross Asset Values of all assets held by the Partnership
immediately prior to the General Partner's Capital Contribution were adjusted to
equal their gross fair market values, as determined by the General Partner and
the Withdrawing General Partner, and shall be adjusted immediately prior to the
occurrence of any event described in clause (i), clause (ii), clause (iii),
clause (iv) or clause (v) hereof to equal their respective gross fair market
values, as determined by the General Partner using such reasonable method of
valuation as it may adopt, as of the following times:
(i) the acquisition of an interest in the Partnership (other
than in connection with the execution of this Agreement but including, without
limitation, acquisitions pursuant to Section 4.2 hereof or contributions or
deemed contributions by the General Partner pursuant to Section 4.2 hereof) 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;
6
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount 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);
(iv) upon the admission of a successor General Partner
pursuant to Section 12.1 hereof; and
(v) at such other times as the General Partner shall
reasonably determine necessary or advisable in order to comply with Regulations
Sections 1.704-1(b) and 1.704-2.
(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 General Partner.
(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 1.704-1(b)(2) (iv)(m); provided, however, that
Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the
extent that the General Partner reasonably determines that an adjustment
pursuant to subsection (b) above is necessary or appropriate in connection with
a transaction that would otherwise result in an adjustment pursuant to this
subsection (d).
(e) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a), subsection (b) or
subsection(d) above, 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 any Partner, and any Assignee which is treated as a partner
in the Partnership for federal income tax purposes.
"Incapacity" or "Incapacitated" means, (i) as to any Partner who is an
individual, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her person
or his or her estate; (ii) as to any Partner that is a corporation or limited
liability company, the filing of a certificate of dissolution, or its
equivalent, or the revocation of the corporation's charter; (iii) as to any
Partner that is a partnership, the dissolution and commencement of winding up of
the partnership; (iv) as to any Partner that is an estate, the distribution by
the fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust that 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 of or against such Partner
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
7
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) above is not vacated within ninety (90)
days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by reason
of its status as (a) the General Partner, or (b) a director of the General
Partner or an officer or employee of the Partnership, 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.
"Independent Director" shall have the meaning assigned to such term under
the rules and regulations of the principal national securities exchange or
interdealer quotation system on which the Common Shares are then listed.
"IRS" means the Internal Revenue Service.
"Junior Share" means a share of capital stock of the General Partner now
or hereafter authorized or reclassified that has dividend rights, or rights upon
liquidation, winding up and dissolution, that are inferior or junior to the
Common Shares.
"Limited Partner" means any Person reflected as a Limited Partner on the
books and records of the Partnership, 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 in the Partnership 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 Common Units, Partnership Preferred Units or other
Partnership Units.
8
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Lock-Out Date" means, unless otherwise agreed by the Partnership and a
Limited Partner, one-year from the date of the Effective Time.
"LP Direction Votes" has the meaning set forth in Section 7.1A(6).
"Majority in Interest of the Limited Partners" means Limited Partners
holding more than fifty percent (50%) of the outstanding Partnership Common
Units held by all Limited Partners.
"Market Price" has the meaning set forth in the definition of "Value."
"Net Income" or "Net Loss" means, for each Partnership Year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a) (1) shall be included in taxable income or
loss), with the following adjustments:
(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 (or
subtracted from, as the case may be) such taxable income (or loss);
(b) Any expenditure of the Partnership described in Code Section
705(a)(2)(b) or treated as a Code Section 705(a)(2)(b) expenditure pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income (or Net Loss) pursuant to this definition of "Net
Income" or "Net Loss," shall be subtracted from (or added to, as the case may
be) such taxable income (or loss);
(c) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subsection (b) or subsection (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 that would otherwise be taken into account in computing such
taxable income or loss, there shall be taken into account Depreciation for the
period;
9
(f) To the extent that an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(g) Notwithstanding any other provision of this definition of "Net
Income" or "Net Loss," any item that is specially allocated pursuant to Section
6.3 hereof 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 hereof shall be
determined by applying rules analogous to those set forth in this definition of
"Net Income" or "Net Loss."
"Nonrecourse Deductions" has the meaning set forth in Regulations Section
1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in the
form of Exhibit A attached to this Agreement.
"Other Securities" means (i) any rights, options, warrants or convertible
or exchangeable securities having the right to subscribe for or purchase Common
Shares or Preferred Shares, excluding Preferred Shares, Junior Shares and grants
under the Stock Option Plans, or (ii) any Debt issued by the General Partner
that provides any of the rights described in clause (i).
"Ownership Limit" means the applicable restriction or restrictions on
ownership of shares of the General Partner imposed under the Articles of
Incorporation.
"Partner" means the 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" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has 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).
10
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor thereto.
"Partnership Common Unit" means a fractional share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but
does not include any Partnership Preferred Unit or any other Partnership Unit
specified in a Partnership Unit Designation or this Agreement as being other
than a Partnership Common Unit; provided, however, that the General Partner
Interest and the Limited Partner Interests shall have the differences in rights
and privileges as specified in this Agreement. The ownership of Partnership
Common Units may be (but need not, in the sole and absolute discretion of the
General Partner) evidenced by the form of certificate for Partnership Common
Units attached hereto as Exhibit B.
"Partnership Interest" means an ownership interest in the Partnership held
by 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. A Partnership Interest
may be expressed as a number of Partnership Common Units, Partnership Preferred
Units or other Partnership Units.
"Partnership Junior Unit" means a fractional share of the Partnership
Interests that the General Partner has authorized pursuant to Section 4.1,
Section 4.2 or Section 4.3 hereof that has distribution rights, or rights upon
liquidation, winding up and dissolution, that are inferior or junior to the
Partnership Common Units.
"Partnership Minimum Gain" has 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 Preferred Unit" means a fractional share of the Partnership
Interests that the General Partner has authorized pursuant to Section 4.1,
Section 4.2 or Section 4.3 hereof that has distribution rights, or rights upon
liquidation, winding up and dissolution, that are superior or prior to the
Partnership Common Units.
"Partnership Record Date" means a record date established by the General
Partner for a distribution pursuant to Section 5.1 hereof, which record date
shall generally be the same as the record date established by the General
Partner for a distribution to its shareholders of some or all of its share of
such distribution.
"Partnership Unit" shall mean a Partnership Common Unit, a Partnership
Preferred Unit, a Partnership Junior Unit or any other fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1, Section 4.2 or Section 4.3 hereof.
11
"Partnership Unit Designation" shall have the meaning set forth in Section
4.2 hereof.
"Partnership Year" means the fiscal year of the Partnership, which shall
be the calendar year.
"Percentage Interest" means, as to each Partner, its interest, if any, in
the Partnership Common Units as determined by dividing the Partnership Common
Units owned by such Partner by the total number of Partnership Common Units then
outstanding. To the extent that the Partnership issues more than one class or
series of Partnership Interests, the interest of such class or series shall be
determined as set forth in this Agreement or any amendment hereto.
"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association, limited liability company or other
entity.
"Preferred Share" means a share of capital stock of the General Partner
now or hereafter authorized or reclassified that has dividend rights, or rights
upon liquidation, winding up and dissolution, that are superior or prior to the
Common Shares.
"Property" or "Properties" means any assets and property of the
Partnership such as, but not limited to, interests in real property and personal
property, including, without limitation, fee interests, interests in ground
leases, interests in limited liability companies, joint ventures or
partnerships, interests in mortgages, and Debt instruments as the Partnership
may hold from time to time, and "Property" shall mean any one such asset or
property.
"Qualified REIT Subsidiary" means a qualified REIT subsidiary of the
General Partner within the meaning of Code Section 856(i)(2).
"Qualified Transferee" means an "accredited investor" as defined in Rule
501 promulgated under the Securities Act.
"Qualifying Party" means (a) a Limited Partner (other than the General
Partner to the extent it is also a Limited Partner), (b) an Additional Limited
Partner, or (c) a Substituted Limited Partner succeeding to all or part of a
Limited Partner Interest of a Limited Partner or an Additional Limited Partner.
"Redemption" has the meaning set forth in Section 8.6.A hereof.
"Redemption Factor" means 1.0; provided, however, that in the event that:
(i) the General Partner (a) declares or pays a dividend on its
outstanding Common Shares in Common Shares or makes a distribution to all
holders of its outstanding Common Shares in Common Shares, (b) splits or
subdivides its outstanding Common Shares or (c) effects a reverse stock split or
otherwise combines its outstanding Common Shares into a smaller number of Common
Shares, the Redemption Factor shall be adjusted by multiplying the Redemption
Factor previously in effect by a fraction, (i) the numerator of which shall be
the number of Common Shares issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
12
subdivision, reverse split or combination has occurred as of such time) and (ii)
the denominator of which shall be the actual number of Common Shares (determined
without the above assumption) issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination;
(ii) the General Partner distributes any rights, options or
warrants to all holders of its Common Shares to subscribe for or to purchase or
to otherwise acquire Common Shares (or other securities or rights convertible
into, exchangeable for or exercisable for Common Shares) at a price per share
less than the Value of a Common Share on the record date for such distribution
(each a "Distributed Right"), then the Redemption Factor shall be adjusted by
multiplying the Redemption Factor previously in effect by a fraction (a) the
numerator of which shall be the number of Common Shares issued and outstanding
on the record date plus the maximum number of Common Shares purchasable under
such Distributed Rights and (b) the denominator of which shall be the number of
Common Shares issued and outstanding on the record date plus a fraction (1) the
numerator of which is the maximum number of Common Shares purchasable under such
Distributed Rights times the minimum purchase price per Common Share under such
Distributed Rights and (2) the denominator of which is the Value of a Common
Share as of the record date; provided, however, that, if any such Distributed
Rights expire or become no longer exercisable, then the Redemption Factor shall
be adjusted, effective retroactively to the date of distribution of the
Distributed Rights, to reflect a reduced maximum number of Common Shares or any
change in the minimum purchase price for the purposes of the above fraction; and
(iii) the General Partner shall, by dividend or otherwise,
distribute to all holders of its Common Shares evidences of its indebtedness or
assets (including securities, but excluding any dividend or distribution
referred to in subsection (i) above), which evidences of indebtedness or assets
relate to assets not received by the General Partner pursuant to a pro rata
distribution by the Partnership, then the Redemption Factor shall be adjusted to
equal the amount determined by multiplying the Redemption Factor in effect
immediately prior to the close of business on the date fixed for determination
of shareholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be such Value of a Common Share on the date fixed for
such determination and (ii) the denominator of which shall be the numerator less
the then fair market value (as determined by the General Partner, whose
determination shall be conclusive) of the portion of the evidences of
indebtedness or assets so distributed applicable to one Common Share.
Any adjustments to the Redemption Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
it being intended that (x) adjustments to the Redemption Factor are to be made
to avoid unintended dilution or anti-dilution as a result of transactions in
which Common Shares are issued, redeemed or exchanged without a corresponding
issuance, redemption or exchange of Partnership Common Units and (y) if a
Specified Redemption Date shall fall between the record date and the effective
date of any event of the type described above, that the Redemption Conversion
Factor applicable to such redemption shall be adjusted to take into account such
event, provided, however, that any Limited Partner may waive, by written notice
to the General Partner, the effect of any adjustment to the Redemption Factor
applicable to the Partnership Common Units held by such Limited Partner, and,
thereafter, such adjustment will not be effective as to such Partnership Common
Units.
13
"Regulations" means the applicable income tax regulations under the Code,
whether such regulations are in proposed, temporary or final form, as such
regulations may be amended from time to time (including corresponding provisions
of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section 6.3.B(viii)
hereof.
"Restricted Partnership Common Units" has the meaning set forth in Section
4.10 hereof.
"REIT" means a real estate investment trust qualifying under Code Section
856.
"REIT Consideration" means the aggregate number of Common Shares equal to
the product of the Common Shares Amount and the Applicable Percentage.
"REIT Expenses" means (i) costs and expenses relating to the continuity of
existence of the General Partner and any Person (other than the Partnership) in
which the General Partner owns an equity interest, to the extent not prohibited
by Section 7.4 (which Persons shall, for purposes of this definition, be
included within the definition of "General Partner"), including taxes, fees and
assessments associated therewith (other than federal, state or local income
taxes imposed upon the General Partner as a result of the General Partner's
failure to distribute to its shareholders an amount equal to its taxable
income), any and all costs, expenses or fees payable to any trustee or director
of the General Partner, (ii) costs and expenses relating to any offer or
registration of securities by the General Partner (the proceeds of which will be
contributed or advanced to the Partnership) and all statements, reports, fees
and expenses incidental thereto, including underwriting discounts and selling
commissions applicable to any such offer of securities, (iii) costs and expenses
associated with the preparation and filing of any periodic reports by the
General Partner under federal, state or local laws or regulations, including
filings with the SEC, (iv) costs and expenses associated with compliance by the
General Partner with laws, rules and regulations promulgated by any regulatory
body, including the SEC, and (v) all other operating or administrative costs of
the General Partner incurred in the ordinary course of its business; provided,
however, that any of the foregoing expenses that are determined by the General
Partner to be expenses relating to the ownership and operation of, or for the
benefit of, the Partnership shall be treated as reimbursable expenses under
Section 7.3.B hereof rather than as "REIT Expenses."
"REIT Partner" means (a) a Partner, including, without limitation, the
General Partner, that maintains an election to qualify as, a REIT, (b) any
Qualified REIT Subsidiary of any Partner that maintains an election to qualify
as a REIT and (c) any Partner that is a Qualified REIT Subsidiary of a REIT.
"REIT Payment" has the meaning set forth in Section 15.11 hereof.
14
"REIT Requirements" means the requirements for qualification as a REIT
under the Code and Regulations, including, without limitation, the distribution
requirements contained in Section 857(a) of the Code.
"Related Party" means, with respect to any Person, any other Person whose
ownership of shares of the General Partner's capital stock would be attributed
to the first such Person under Code Section 544 (as modified by Code Section
856(h)(1)(b)).
"Rights" has the meaning set forth in the definition of "Common Shares
Amount."
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Services Agreement" means any management, development or advisory
agreement with a property and/or asset manager for the provision of property
management, asset management, leasing, development and/or similar services with
respect to the Properties and any agreement for the provision of services of
accountants, legal counsel, appraisers, insurers, brokers, transfer agents,
registrars, developers, financial advisors and other professional services,
including, without limitation, the Advisory Agreement.
"Special Voting Preferred Stock" means shares of Special Voting Preferred
Stock, $0.01 par value per share, of the General Partner, as designated by
articles supplementary to the Articles of Incorporation.
"Specified Redemption Date" means the tenth (10th) Business Day after the
receipt by the General Partner of a Notice of Redemption; provided, however,
that a Specified Redemption Date, as well as the closing of a Redemption or an
acquisition of Tendered Units by a REIT Partner pursuant to Section 8.6.B hereof
on any Specified Redemption Date, may be deferred, in the General Partner's sole
and absolute discretion, for such time (but in any event not more than one
hundred fifty (150) days in the aggregate) as may reasonably be required to
effect, as applicable, (i) compliance with the Securities Act or other laws
(including, but not limited to, (a) state "blue sky" or other securities laws
and (b) the expiration or termination of the applicable waiting period, if any,
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended), or
(ii) satisfaction or waiver of other commercially reasonable and customary
closing conditions and requirements for a transaction of such nature.
"Stock Option Plan" means any stock option plan hereafter adopted by the
Partnership or the General Partner.
"Subsidiary" means, with respect to any Person, any other Person (which is
not an individual) 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.
15
"Substituted Limited Partner" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4 hereof.
"Taxable REIT Subsidiary" has the meaning set forth in Section 856(l) of
the Code.
"Tax Items" has the meaning set forth in Section 6.4.A hereof.
"Tendered Units" has the meaning set forth in Section 8.6.A hereof.
"Tendering Party" has the meaning set forth in Section 8.6.A hereof.
"Tender Offer" means the tender offer for Partnership Common Units
currently contemplated to be made by the General Partner following the
conclusion of its initial public offering.
"Terminating Capital Transaction" means any sale or other disposition of
all or substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership; except that sales or
other dispositions of assets to a Subsidiary will not be deemed a Terminating
Capital Transaction.
"Transfer," when used with respect to a Partnership Unit, or all or any
portion of a Partnership Interest, means any sale, assignment, bequest,
conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that except as otherwise provided in Article XI, when the term is used
in Article XI hereof, "Transfer" does not include (a) any Redemption of
Partnership Common Units by the Partnership, or acquisition of Tendered Units by
a REIT Partner, pursuant to Section 8.6 hereof or (b) any redemption of
Partnership Units pursuant to any Partnership Unit Designation. The terms
"Transferred" and "Transferring" have correlative meanings.
"Unitholder" means the General Partner or any Holder of Partnership Units.
"Value" means, on any date of determination with respect to a Common
Share, the average of the daily Market Prices for ten (10) consecutive trading
days immediately preceding the date of determination except that, as provided in
Section 4.4.B. hereof, the Market Price for the trading day immediately
preceding the date of exercise of a stock option under any Stock Option Plan
shall be substituted for such average of daily market prices for purposes of
Section 4.4 hereof. For purposes of Section 8.6, the "date of determination"
shall be the date of receipt by the General Partner of a Notice of Redemption
or, if such date is not a Business Day, the immediately preceding Business Day.
The term "Market Price" on any date shall mean, with respect to any class or
series of outstanding Common Shares, the Closing Price for such Common Shares on
such date. The "Closing Price" on any date shall mean the last sale price for
such Common Shares, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, for such
Common Shares, in either case as reported in the principal consolidated
16
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such Common Shares are not listed
or admitted to trading on the New York Stock Exchange, as reported on the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such Common Shares
are listed or admitted to trading or, if such Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in use,
the principal other automated quotation system that may then be in use or, if
such Common Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such Common Shares selected by the Board of Directors of the General
Partner or, in the event that no trading price is available for such Common
Shares, the fair market value of the Common Shares as determined in good faith
by the Board of Directors of the General Partner.
In the event that the Common Shares Amount includes Rights (as defined in
the definition of "Common Shares Amount") that a holder of Common Shares would
be entitled to receive, then the Value of such Rights shall be determined by the
General Partner acting in good faith.
"Voting Direction Provision" has the meaning set forth in Section 7.1A(6).
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization. The Partnership is a limited partnership
organized pursuant to the provisions of the Act and upon the terms and subject
to the conditions set forth in this Agreement. Except as expressly provided
herein to the contrary, 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 "The Newkirk Master
Limited Partnership." 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," "LP," "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 Partners of such change in the next regular
communication to the Partners.
Section 2.3 Registered Office and Agent; Principal Office. The address of
the registered office of the Partnership in the State of Delaware is located at
2711 Centerville Road, Suite 400, Wilmington, New Castle County, Delaware
19808,and the registered agent for service of process on the Partnership in the
State of Delaware at such registered office is Corporation Service Company. The
principal office of the Partnership is located at 7 Bulfinch Place, Suite 500,
PO Box 9507, Boston, Massachusetts 02114, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
17
Section 2.4 Power of Attorney.
A. Each Limited Partner hereby constitutes and appoints the General
Partner, any Liquidator, and authorized officers and attorneys-in-fact of each,
and each of those acting singly, in each case with full power of substitution,
as its true and lawful agent and attorney-in-fact, with full power and authority
in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments, supplements or restatements thereof) that the General
Partner or the Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as a limited
partnership(or a partnership in which the Limited Partners have limited
liability) in the State of Delaware and in all other jurisdictions in which the
Partnership may or plans to conduct business or own property; (b) all
instruments that the General Partner 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 the 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,
Article XI, Article XII or Article XIII hereof 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 relating to
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 and absolute 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 XIV
hereof or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, in recognition of the fact that each of
the Limited Partners and Assignees 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 or Partnership Interest and shall extend to such
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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 that may be available to contest,
negate or disaffirm the action of the General Partner or any Liquidator, taken
in good faith under such power of attorney. Each Limited Partner or Assignee
shall execute and deliver to the General Partner or the Liquidator, within
fifteen (15) days after receipt of the General Partner's or the 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. Pursuant to Section 17-217(d) of the Act, the term of
the Partnership commenced on October 11, 2001 and shall continue until the
Partnership is dissolved pursuant to the provisions of Article XIII hereof or as
otherwise provided by law.
ARTICLE XII
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 and avoid the imposition of federal income and excise taxes on the General
Partner, unless the General Partner ceases to qualify, or is not qualified, as a
REIT for any reason or reasons; (ii) to enter into any partnership, joint
venture, limited liability company or other similar arrangement to engage in any
of the foregoing or the ownership of interests in any entity engaged, directly
or indirectly, in any of the foregoing; and (iii) to do anything necessary or
incidental to the foregoing. Notwithstanding the foregoing, the General Partner
may terminate its status as a REIT under the Code at any time to the full extent
permitted under the Articles of Incorporation.
Section 3.2 Powers. The Partnership shall have full power and authority 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, 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, that 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 additional 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 such
action (or inaction) shall have been specifically consented to by the General
Partner in writing.
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Section 3.3 Partnership Only for Partnership Purposes. This Agreement
shall not be deemed to create a company, venture or partnership between or 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 hereof.
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, and the Partnership shall
not 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 provisions of this
Agreement and the Act.
Section 3.4 Representations and Warranties by the Parties.
A. Each Additional Limited Partner and Substituted Limited Partner that is
an individual, as a condition to becoming an Additional Limited Partner or a
Substituted Limited Partner, respectively, shall, by executing this Agreement or
a counterpart thereof, represent and warrant to each other Partner that (i) 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 material agreement by which such Partner or any of such Partner's property
is bound, or any statute, regulation, order or other law to which such Partner
is subject, (ii) subject to the last sentence of this Section 3.4.A, such
Partner is neither a "foreign person" within the meaning of Code Section 1445(f)
nor a "foreign partner" within the meaning of Code Section 1446(e), (iii) such
Partner does not own, directly or indirectly, (a) nine and eight tenths percent
(9.8%) or more of the total combined voting power of all classes of stock
entitled to vote, or nine and eight tenths percent (9.8%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant of
either (A) the General Partner or any Qualified REIT Subsidiary, (B) the
Partnership or (C) any partnership, venture or limited liability company of
which the General Partner, any Qualified REIT Subsidiary or the Partnership is a
member, as reflected on the then current tenant list to be maintained by the
General Partner (the "Tenant List") or (b) an interest of nine and eight tenths
percent (9.8%) or more in the assets or net profits of any tenant of either (A)
the General Partner or any Qualified REIT Subsidiary, (B) the Partnership or (C)
any partnership, venture, or limited liability company of which the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member, as
reflected on the Tenant List and (iv) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms. Notwithstanding
anything contained herein to the contrary, in the event that the representation
contained in the foregoing clause (ii) would be inaccurate if given by a
Partner, such Partner(w) shall not be required to make and shall not be deemed
to have made such representation, if it delivers to the General Partner in
connection with or prior to its execution of this Agreement written notice that
it may not truthfully make such representation, (x) hereby agrees that it is
subject to, and hereby authorizes the General Partner to withhold, all
withholdings to which such a "foreign person" or "foreign partner", as
applicable, is subject under the Code and (y) hereby agrees to cooperate fully
with the General Partner with respect to such withholdings, including by
effecting the timely completion and delivery to the General Partner of all
governmental forms required in connection therewith.
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B. Each Additional Limited Partner and Substituted Limited Partner that is
not an individual, as a condition to becoming an Additional Limited Partner or a
Substituted Limited Partner, respectively, shall, by executing this Agreement or
a counterpart thereof, represent and warrant to each other Partner(s) that (i)
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 shareholder(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 partnership or operating agreement, trust agreement, articles,
charter or bylaws, as the case may be, any material agreement by which such
Partner or any of such Partner's properties or any of its partners, members,
beneficiaries, trustees or shareholders, 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, members, trustees, beneficiaries or shareholders, as the case may be,
is or are subject, (iii) subject to the last sentence of this Section 3.4.B,
such Partner is neither a "foreign person" within the meaning of Code Section
1445(f) nor a "foreign partner" within the meaning of Code Section 1446(e), (iv)
such Partner does not own, directly or indirectly, (a) except as otherwise
disclosed by the Partner in writing to the Partnership, nine and eight tenths
percent (9.8%) or more of the total combined voting power of all classes of
stock entitled to vote, or nine and eight tenths percent (9.8%) or more of the
total number of shares of all classes of stock, of any corporation that is a
tenant of either (A) the General Partner or any Qualified REIT Subsidiary, (B)
the Partnership or (C) any partnership, venture or limited liability company of
which the General Partner, any Qualified REIT Subsidiary or the Partnership is a
member, as reflected on the Tenant List or (b) except as otherwise identified by
the Partner in writing to the Partnership, an interest of nine and eight tenths
percent (9.8%) or more in the assets or net profits of any tenant of either (A)
the General Partner or any Qualified REIT Subsidiary, (B) the Partnership or (C)
any partnership, venture or limited liability company for which the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member, as
reflected on the Tenant List and (vi) this Agreement is binding upon, and
enforceable against, such Partner in accordance with its terms. Notwithstanding
anything contained herein to the contrary, in the event that the representation
contained in the foregoing clause (iii) would be inaccurate if given by a
Partner, such Partner (w) shall not be required to make and shall not be deemed
to have made such representation, if it delivers to the General Partner in
connection with or prior to its execution of this Agreement written notice that
it may not truthfully make such representation, (x) hereby agrees that it is
subject to, and hereby authorizes the General Partner to withhold, all
withholdings to which such a "foreign person" or "foreign partner", as
applicable, is subject under the Code and (y) hereby agrees to cooperate fully
with the General Partner with respect to such withholdings, including by
effecting the timely completion and delivery to the General Partner of all
internal revenue forms required in connection therewith.
C. Each Partner (including, without limitation, each Additional Limited
Partner or Substituted Limited Partner as a condition to becoming an Additional
Limited Partner or a Substituted Limited Partner) represents, warrants and
agrees that it has acquired and continues to hold its interest in the
Partnership for its own account for investment purposes only and not for the
purpose of, or with a view toward, the resale or distribution of all or any part
thereof, and not with a view toward selling or otherwise distributing such
interest or any part thereof at any particular time or under any predetermined
21
circumstances. Each Partner further represents and warrants that it is a
sophisticated investor, able and accustomed to handling sophisticated financial
matters for itself, particularly real estate investments, and that it has a
sufficiently high net worth that it does not anticipate a need for the funds
that it has invested in the Partnership in what it understands to be a highly
speculative and illiquid investment.
D. The representations and warranties contained in Sections 3.4.A, 3.4.B
and 3.4.C hereof shall survive the execution and delivery of this Agreement by
each Partner (and, in the case of an Additional Limited Partner or a Substituted
Limited Partner, the admission of such Additional Limited Partner or Substituted
Limited Partner as a Limited Partner in the Partnership) and the dissolution,
liquidation and termination of the Partnership.
E. Each Partner (including, without limitation, each Additional Limited
Partner or Substituted Limited Partner as a condition to becoming an Additional
Limited Partner or a Substituted Limited 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, that 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.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES OF PARTNERSHIP INTERESTS
Section 4.1 General. As of the Effective Time, each outstanding unit of
limited partnership interest of the Partnership shall be subject to a pro rata
unit split, such that, as of the Effective Time, each Partnership Unit will have
the same value with respect to the assets of the Partnership as each Common
Share. The precise calculation of the unit split shall be in the sole discretion
of the General Partner. At or about the Effective Time, the General Partner will
make a Capital Contribution to the Partnership in exchange for Partnership
Units.
Section 4.2 Issuances of Additional Partnership Interests.
A. General. The General Partner is hereby authorized to cause the
Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner) or to other Persons, and
to admit such Persons as Additional Limited Partners, for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units (i) upon the
conversion, redemption or exchange of any Debt, Partnership Units or other
securities issued by the Partnership, (ii) for less than fair market value, so
long as the General Partner concludes in good faith that such issuance is in the
best interests of the General Partner and the Partnership, and (iii) in
connection with any merger of any other Person into the Partnership or any
Subsidiary of the Partnership if the applicable merger agreement provides that
22
Persons are to receive Partnership Units in exchange for their interests in the
Person merging into the Partnership or any Subsidiary of the Partnership.
Subject to Delaware law, any additional Partnership Interests may be issued 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 as shall be determined by the General Partner, in its
sole and absolute discretion without the approval of any Limited Partner, and
set forth in this Agreement or a written document thereafter attached to and
made an exhibit to this Agreement (each, a "Partnership Unit Designation").
Without limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests.
B. Issuances to the General Partner. No additional Partnership Units shall
be issued to the General Partner unless (i) the additional Partnership Units are
issued to all Partners in proportion to their respective Percentage Interests
with respect to the class of Partnership Units so issued, (ii) (a) the
additional Partnership Units are (x) Partnership Common Units issued in
connection with an issuance of Common Shares, or (y) Partnership Units (other
than Partnership Common Units) issued in connection with an issuance, conversion
or exercise of Preferred Shares, Other Securities or other interests in the
General Partner (other than Common Shares), which Preferred Shares, Other
Securities or other interests have designations, preferences and other rights,
terms and provisions that are substantially the same as the designations,
preferences and other rights, terms and provisions of the additional Partnership
Units issued to the General Partner, and (b) the General Partner contributes or
otherwise causes to be transferred to the Partnership the cash proceeds or other
consideration received in connection with the issuance of such Common Shares,
Preferred Shares, Other Securities or other interests in the General Partner,
(iii) the additional Partnership Units are issued upon the conversion,
redemption or exchange of Debt, Partnership Units or other securities issued by
the Partnership, or (iv) the additional Partnership Units are issued pursuant to
Sections 4.3B, 4.4, 4.6 or Section 4.7.
C. No Preemptive Rights. No Person, including, without limitation, any
Partner or Assignee, shall have any preemptive, preferential, participation or
similar right or rights to subscribe for or acquire any Partnership Interest.
Section 4.3 Additional Funds 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 or development of additional Properties, for the redemption
of Partnership Units or for such other purposes as the General Partner may
determine in its sole and absolute discretion. Additional Funds may be obtained
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 without the
approval of any Limited Partners.
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B. Additional Capital Contributions. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by accepting Capital Contributions
from any Partners or other Persons. In connection with any such Capital
Contribution (of cash or property), the General Partner is hereby authorized to
cause the Partnership from time to time to issue additional Partnership Units
(as set forth in Section 4.2 above) in consideration therefor and the Percentage
Interests of the General Partner and the Limited Partners shall be adjusted
appropriately to reflect the issuance of such additional Partnership Units.
C. Loans by Third Parties. The General Partner, on behalf of the
Partnership, may obtain any Additional Funds by causing the Partnership to incur
Debt to any Person upon such terms as the General Partner determines
appropriate, including making such Debt convertible, redeemable or exchangeable
for Partnership Units; provided, however, that the Partnership shall not incur
any such Debt if (i) a breach, violation or default of such Debt would be deemed
to occur by virtue of the Transfer by any Limited Partner of any Partnership
Interest, or (ii) such Debt is recourse to any Partner (unless the Partner
otherwise agrees).
D. General Partner Loans. The General Partner may provide Additional Funds
by causing the Partnership to incur Debt to the General Partner (each, a
"General Partner Loan") if (i) such Debt is, to the extent permitted by law, on
substantially the same terms and conditions (including interest rate, repayment
schedule, and conversion, redemption, repurchase and exchange rights) as Funding
Debt incurred by the General Partner, the net proceeds of which are lent to the
Partnership to provide such Additional Funds, or (ii) such Debt is on terms and
conditions no less favorable to the Partnership than would be available to the
Partnership from any third party; provided, however, that the Partnership shall
not incur any such Debt if (a) a breach, violation or default of such Debt would
be deemed to occur by virtue of the Transfer by any Limited Partner of any
Partnership Interest, or (b) such Debt is recourse to any Partner (unless the
Partner otherwise agrees).
E. Issuance of Securities by the General Partner.
(1) The General Partner shall contribute the cash proceeds or
other consideration received from any issuances from and after the date hereof
of Common Shares, Preferred Shares, Junior Shares or Other Securities, as the
case may be, and from the exercise of the rights contained in any such
additional Other Securities, to the Partnership in exchange for (x) in the case
of an issuance of Common Shares, Partnership Common Units, or (y) in the case of
an issuance of Preferred Shares, Junior Shares or Other Securities, Partnership
Units with designations, preferences and other rights, terms and provisions that
are substantially the same as the designations, preferences and other rights,
terms and provisions of such Preferred Shares, Junior Shares or Other
Securities; provided, however, that the General Partner may utilize a portion of
the proceeds obtained by it from its initial public offering of Common Shares to
purchase Partnership Common Units from existing Limited Partners in such amounts
as the General Partner shall determine in its sole and absolute discretion.
Notwithstanding anything herein to the contrary, no redemption rights pursuant
to Section 8.6 hereof shall attach to any such Partnership Common Units referred
to in the immediately preceding proviso.
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(2) [Intentionally Omitted]
(3) The General Partner shall not issue any additional Common
Shares, Preferred Shares, Junior Shares or Other Securities unless the General
Partner contributes the cash proceeds or other consideration received from the
issuance of such additional Common Shares, Preferred Shares, Junior Shares or
Other Securities, as the case may be, and from the exercise of the rights
contained in any such additional Other Securities, to the Partnership in
exchange for (x) in the case of an issuance of Common Shares, Partnership Common
Units, or (y) in the case of an issuance of Preferred Shares, Junior Shares or
Other Securities, Partnership Units with designations, preferences and other
rights, terms and provisions that are substantially the same as the
designations, preferences and other rights, terms and provisions of such
Preferred Shares, Junior Shares or Other Securities; provided, however, that
notwithstanding the foregoing, the General Partner may issue Common Shares,
Preferred Shares, Junior Shares or Other Securities (a) pursuant to Section 4.4
or Section 8.6.B hereof, (b) pursuant to a dividend or distribution (including
any stock split) of Common Shares, Preferred Shares, Junior Shares or Other
Securities to all of the holders of Common Shares, Preferred Shares, Junior
Shares or Other Securities, as the case may be, (c) upon a conversion,
redemption or exchange of Preferred Shares, (d) upon a conversion of Junior
Shares into Common Shares, (e) upon a conversion, redemption, exchange or
exercise of Other Securities, or (f) in connection with an acquisition of a
property or other asset to be owned, directly or indirectly, by the General
Partner if the General Partner determines that such acquisition is in the best
interests of the Partnership. In the event of any issuance of additional Common
Shares, Preferred Shares, Junior Shares or Other Securities by the General
Partner, the Partnership shall pay the General Partner's expenses associated
with such issuance, including any underwriting discounts or commissions (it
being understood that payment of some or all of such expenses may be made by the
General Partner on behalf of the Partnership out of the gross proceeds of such
issuance prior to the contribution of such proceeds by the General Partner).
Section 4.4 Stock Option Plan.
A. Options Granted to Company Employees and Independent Directors. If at
any time or from time to time, in connection with a Stock Option Plan, a stock
option granted to a Company Employee or an Independent Director is duly
exercised:
(1) the General Partner shall, as soon as practicable after
such exercise, make a Capital Contribution to the Partnership in an amount equal
to the exercise price paid to the General Partner by such exercising party in
connection with the exercise of such stock option;
(2) on the date that the General Partner makes a capital
contribution pursuant to 4.4.A (1) hereof, the General Partner shall be deemed
to have contributed to the Partnership as a Capital Contribution, in
consideration of an additional Limited Partner Interest (expressed in and as
additional Partnership Common Units), an amount equal to the Value of a Common
Share as of the date of exercise multiplied by the number of Common Shares then
being issued in connection with the exercise of such stock option; and
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(3) An equitable Percentage Interest adjustment shall be made
in which the General Partner shall be treated as having made a cash contribution
equal to the amount described in Section 4.4.A(2) hereof.
B. Special Valuation Rule. For purposes of this Section 4.4, in
determining the Value of a Common Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plan
shall be considered.
C. Future Stock Incentive Plans. Nothing in this Agreement shall be
construed or applied to preclude or restrain the General Partner from adopting,
modifying or terminating stock incentive plans, including any Stock Option Plan,
for the benefit of employees, directors or other business associates of the
General Partner, the Partnership or any of their Affiliates. In the event that
any such plan is adopted, modified or terminated by the General Partner,
amendments to this Section 4.4 may become necessary or advisable and that any
approval or consent of the Limited Partners required pursuant to the terms of
this Agreement in order to effect any such amendments requested by the General
Partner shall not be unreasonably withheld or delayed.
Section 4.5 No Interest; No Return. No Partner shall be entitled to
interest on its Capital Contribution or on such Partner's Capital Account.
Except as provided herein or by law, no Partner shall have any right to demand
or receive the return of its Capital Contribution from the Partnership.
Section 4.6 Conversion or Redemption of Preferred Shares.
A. Conversion of Preferred Shares. If, at any time, any of the Preferred
Shares are converted into Common Shares, in whole or in part, then a number of
Partnership Preferred Units equal to the number of Preferred Shares so converted
shall automatically be converted into a number of Partnership Common Units equal
to (i) the number of Common Shares issued upon such conversion divided by (ii)
the Redemption Factor then in effect, and the Percentage Interests of the
General Partner and the Limited Partners shall be adjusted to reflect such
conversion.
B. Redemption of Preferred Shares. If, at any time, any Preferred Shares
are redeemed (whether by exercise of a put or call, automatically or by means of
another arrangement) by the General Partner for cash, the Partnership shall,
immediately prior to such redemption of Preferred Shares, redeem an equal number
of Partnership Preferred Units held by the General Partner, upon the same terms
and for the same price per Partnership Preferred Unit, as such Preferred Shares
are redeemed.
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Section 4.7 Conversion or Redemption of Junior Shares.
A. Conversion of Junior Shares. If, at any time, any of the Junior Shares
are converted into Common Shares, in whole or in part, then a number of
Partnership Common Units equal to (i) the number of Common Shares issued upon
such conversion divided by (ii) the Redemption Factor then in effect shall be
issued to the General Partner, and the Percentage Interests of the General
Partner and the Limited Partners shall be adjusted to reflect such conversion.
B. Redemption of Junior Shares. If, at any time, any Junior Shares are
redeemed (whether by exercise of a put or call, automatically or by means of
another arrangement) by the General Partner for cash, the Partnership shall,
immediately prior to such redemption of Junior Shares, redeem an equal number of
Partnership Junior Units held by the General Partner, upon the same terms and
for the same price per Partnership Junior Unit, as such Junior Shares are
redeemed.
Section 4.8 Other Contribution Provisions. In the event that any Partner
is admitted to the Partnership and is given a Capital Account in exchange for
services rendered to the Partnership, unless otherwise determined by the General
Partner in its sole and absolute discretion, such transaction shall be treated
by the Partnership and the affected Partner as if the Partnership had
compensated such partner in cash and such Partner had contributed the cash to
the capital of the Partnership. In addition, with the consent of the General
Partner, one or more Limited Partners may enter into contribution agreements
with the Partnership which have the effect of providing a guarantee of certain
obligations of the Partnership.
Section 4.9 Not Publicly Traded. The General Partner, on behalf of the
Partnership, shall use commercially reasonable efforts not to take any action
which would result in the Partnership being a "publicly traded partnership"
under and as such term is defined in Section 7704(b) of the Code.
Section 4.10 Restricted Units. In accordance with Section 4.3E, to the
extent the General Partner issues shares of restricted common stock pursuant to
a stock incentive plan, the Partnership shall issue to the General Partner an
equal number of Partnership Common Units that are subject to a similar vesting
schedule, forfeiture provisions and other terms and conditions that correspond
to those of the restricted common stock ("Restricted Partnership Common Units").
The terms of such Restricted Partnership Common Units shall comply in all
respects with the elective safe harbor provided in proposed Regulations Section
1.83-3(l) and the proposed revenue procedure issued as part of IRS Notice
2005-43, as each of the same may be revised and finalized. The Partnership is
authorized and directed to elect such safe harbor, and the Partnership and each
of its partners (including the General Partner, as holder of such Restricted
Partnership Common Units, and any other holder of Partnership Units transferred
in connection with the performance of services) agrees to comply with all
requirements of the safe harbor with respect to all Restricted Partnership
Common Units (or other Partnership Units transferred in connection with the
performance of services) while this election remains effective.
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ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions.
A. General. The General Partner shall have the exclusive right and
authority to declare and cause the Partnership to make distributions as and when
the General Partner deems appropriate or desirable in its sole discretion.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution with respect to a Partnership Unit for a quarter
or shorter period if such Partner is entitled to receive a distribution for such
quarter or shorter period with respect to a Share for which such Partnership
Unit has been redeemed or exchanged. Unless otherwise expressly provided for
herein or in an agreement at the time a new class of Partnership Unit is created
in accordance with Article IV hereof, no Partnership Unit shall be entitled to a
distribution in preference to any other Partnership Unit. For so long as the
General Partner elects to qualify as a REIT, the General Partner shall make such
reasonable efforts, as determined by it in its sole and absolute discretion and
consistent with the qualification of the General Partner as a REIT, to make
distributions to the Partners in amounts such that the General Partner will
receive amounts sufficient to enable the General Partner to pay shareholder
dividends that will (1) satisfy the REIT Requirements and (2) avoid any federal
income or excise tax liability for the General Partner.
B. Method. When, as and if declared by the General Partner, the
Partnership will make distributions to the General Partner in any amount
necessary to enable the General Partner to pay REIT Expenses, and thereafter (i)
first, with respect to any Partnership Interests that are entitled to any
preference in distribution, in accordance with the rights of such class(es) of
Partnership Interests (and, within such class(es), pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date), and (ii)
second, with respect to any Partnership Interests that are not entitled to any
preference in distribution, in accordance with the rights of such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date). Each holder of
Partnership Interests that are entitled to any preference in distribution shall
be entitled to a distribution in accordance with the rights of any such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
Notwithstanding anything to the contrary contained herein, in no event shall any
holder of a Partnership Common Unit receive a distribution with respect to such
Partnership Unit for any quarter until such time as the Partnership has
distributed to the holders of the Partnership Preferred Units all distributions
payable with respect to such Partnership Preferred Units through the last day of
such quarter, in accordance with the instruments designating such Partnership
Preferred Units.
Section 5.2 Distributions in Kind. No right is given to any Unitholder to
demand and receive property other than cash as provided in this Agreement. The
General Partner may determine, in its sole and absolute discretion, to make a
distribution in kind of Partnership assets to the Unitholders, 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 hereof.
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Section 5.3 Amounts Withheld. All amounts withheld pursuant to the Code or
any provisions of any state or local tax law and Section 10.4 hereof with
respect to any allocation, payment or distribution to any Unitholder shall be
treated as amounts paid or distributed to such Unitholder pursuant to Section
5.1 hereof for all purposes under this Agreement.
Section 5.4 Distributions Upon Liquidation. Notwithstanding the other
provisions of this Article V, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to the
Unitholders in accordance with Section 13.2 hereof.
Section 5.5 Distributions to Reflect Issuance of Additional Partnership
Units. Subject to Section 14.2.D, in the event that the Partnership issues
additional Partnership Units pursuant to the provisions of Article IV hereof,
the General Partner is hereby authorized to make such revisions to this Article
V as it determines are necessary or desirable to reflect the issuance of such
additional Partnership Units, including, without limitation, making preferential
distributions to certain classes of Partnership Units.
Section 5.6 Restricted Distributions. Notwithstanding any provision to the
contrary contained in this Agreement, neither the Partnership nor the General
Partner, on behalf of the Partnership, shall make a distribution to any
Unitholder on account of its Partnership Interest or interest in Partnership
Units if such distribution would violate Section 17-607 of the Act or other
applicable law.
ARTICLE VI
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 Partnership Year of the Partnership as of the end of each
such year. Except as otherwise provided in this Article VI, an allocation to a
Unitholder of a share of Net Income or Net Loss shall be treated as an
allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2 General Allocations.
A. In General. Subject to the terms of any Partnership Unit Designation
and Sections 4.10 and 11.6.C and except as otherwise provided in this Article
VI, Net Income and Net Loss shall be allocated to each of the Holders of
Partnership Common Units in accordance with their respective Percentage
Interests at the end of each Partnership Year.
B. Allocations to Reflect Issuance of Additional Partnership Units. In the
event that the Partnership issues additional Partnership Units pursuant to the
provisions of Article IV hereof, the General Partner is hereby authorized to
make such revisions to this Section 6.2 as it determines are necessary or
desirable to reflect the terms of the issuance of such additional Partnership
Units, including, without limitation, making preferential allocations to certain
classes of Partnership Units.
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Section 6.3 Additional Allocation Provisions. Notwithstanding the
foregoing provisions of this Article VI:
A. Special Allocations Regarding Partnership Preferred Units. If any
Partnership Preferred Units are redeemed pursuant to Section 4.6.B hereof
(treating a full liquidation of the General Partner Interest for purposes of
this Section 6.3.A as including a redemption of any then outstanding Partnership
Preferred Units pursuant to Section 4.6.B hereof), for the Partnership Year that
includes such redemption (and, if necessary, for subsequent Partnership Years)
(a) gross income and gain shall be allocated to the General Partner to the
extent that the amounts paid or payable with respect to the Partnership
Preferred Units so redeemed (or treated as redeemed) exceed the aggregate
Capital Contributions (net of liabilities assumed or taken subject to by the
Partnership) per Partnership Preferred Unit allocable to the Partnership
Preferred Units so redeemed (or treated as redeemed) and (b) deductions and
losses shall be allocated to the General Partner to the extent that the
aggregate Capital Contributions (net of liabilities assumed or taken subject to
by the Partnership) per Partnership Preferred Unit allocable to the Partnership
Preferred Units so redeemed (or treated as redeemed) exceed the amount paid or
payable with respect to the Partnership Preferred Units so redeemed (or treated
as redeemed).
B. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), notwithstanding any other provision of this
Article VI, if there is a net decrease in Partnership Minimum Gain during any
Partnership Year, each Holder of Partnership Units 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.B(i) is intended to
qualify as a "minimum gain chargeback" within the meaning of Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise provided
in Regulations Section 1.704-2(i)(4) or in Section 6.3.B(i) hereof, if there is
a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse
Debt during any Partnership Year, each Holder of Partnership Units who has a
share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Holder's share of the
net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each General Partner, Limited
Partner and other 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.B(ii) is intended to qualify as a "chargeback of
partner nonrecourse debt minimum gain" within the meaning of Regulations Section
1.704-2(i) and shall be interpreted consistently therewith.
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(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any
Nonrecourse Deductions for any Partnership Year shall be specially allocated to
the Holders of Partnership Units in accordance with their Partnership Units. Any
Partner Nonrecourse Deductions for any Partnership 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 Section 1.704-2(i).
(iv) Qualified Income Offset. If any Holder of Partnership Units
unexpectedly receives an adjustment, allocation or distribution described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership
income and gain shall be allocated, in accordance with Regulations Section
1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of such Holder as quickly as possible, provided that an
allocation pursuant to this Section 6.3.B(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 VI have been tentatively made as if
this Section 6.3.B(iv) were not in the Agreement. It is intended that this
Section 6.3.B(iv) qualify and be construed as a "qualified income offset" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(v) Gross Income Allocation. In the event that any Holder of
Partnership Units has an Adjusted Capital Account Deficit at the end of any
Partnership Year, each such Holder shall be specially allocated items of
Partnership income and gain in the amount of such excess to eliminate such
deficit as quickly as possible, provided that an allocation pursuant to this
Section 6.3.B(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 VI have been tentatively made as if this Section
6.3.B(v) were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the extent that any
allocation of Net Loss would cause or increase an Adjusted Capital Account
Deficit as to any Holder of Partnership Units, such allocation of Net Loss shall
be reallocated among the other Holders of Partnership Units in accordance with
their respective Partnership Units, subject to the limitations of this Section
6.3.B(vi).
(vii) Section 754 Adjustment. To the extent that 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 of Partnership Units in complete liquidation of its
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 applicable Holders in
accordance with the aforesaid Regulations.
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(viii) Curative Allocations. The allocations set forth in Sections
6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (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 Section 6.1 hereof, the Regulatory Allocations
shall be taken into account in allocating other items of income, gain, loss and
deduction among the Holders of Partnership Units so that to the extent possible
without violating the requirements giving rise to the Regulatory Allocations,
the net amount of such allocations of other items and the Regulatory Allocations
to each Holder of a Partnership Unit shall be equal to the net amount that would
have been allocated to each such Holder if the Regulatory Allocations had not
occurred.
C. Special Allocations Upon Liquidation. Notwithstanding any provision in
this Article VI to the contrary, Net Income or Net Loss realized in connection
with a Terminating Capital Transaction or for any period thereafter (and, if
necessary, constituent items of income, gain, loss and deduction) shall be
specially allocated among the Partners as required so as to cause liquidating
distributions pursuant to Section 13.2.A(4) hereof to be made in the same
amounts and proportions as would have resulted had such distributions instead
been made pursuant to Section 5.1 hereof.
D. Allocation of Excess Nonrecourse Liabilities. The Partnership shall
allocate "nonrecourse liabilities" (within the meaning of Regulations Section
1.752-1(a)(2)) of the Partnership that are secured by multiple Properties under
any reasonable method chosen by the General Partner in accordance with
Regulations Section 1.752-3(a)(3)(b). The Partnership shall allocate "excess
nonrecourse liabilities" of the Partnership under any method approved under
Regulations Section 1.752-3(a)(3) as chosen by the General Partner. 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 equal to
such Holder's share of Partnership Units.
Section 6.4 Tax Allocations.
A. In General. Except as otherwise provided in this Section 6.4, for
income tax purposes under the Code and the Regulations each Partnership item of
income, gain, loss and deduction (collectively, "Tax Items") shall be allocated
among the Holders of Partnership Common Units 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 hereof.
B. Allocations Respecting Section 704(c) Revaluations. Notwithstanding
Section 6.4.A hereof, Tax Items with respect to Property whose Gross Asset Value
varies from its adjusted tax basis in the hands of the Partnership shall be
allocated among the Holders of Partnership Units for income tax purposes
pursuant to Regulations promulgated under Code Section 704(c) so as to take into
account such variation. The Partnership shall account for such variation under
the traditional method as described in Regulations Section 1.704-3.
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ARTICLE VII
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 Partners with or without cause, except with the consent of the General
Partner. In addition to the powers now or hereafter granted to a general partner
of a limited partnership under applicable law or that are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to the other provisions hereof, shall have full power and authority to
do all things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans and
borrowing money or selling assets 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 desires to maintain or restore its status as a
REIT) to avoid the payment of any federal income tax (including, for this
purpose, any excise tax pursuant to Code Section 4981) and to make distributions
sufficient to permit the General Partner to maintain or restore REIT status or
otherwise to satisfy the REIT Requirements), 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 deed to secure
debt, mortgage, deed of trust or other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations that it deems necessary for the
conduct of the activities of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, sale, lease, transfer, exchange or other
disposition of any, all or substantially all of the assets of the Partnership
(including, but not limited to, the exercise or grant of any conversion, option,
privilege or subscription right or any other right available in connection with
any assets at any time held by the Partnership) or the merger, consolidation,
reorganization or other combination of the Partnership with or into another
entity;
(4) the mortgage, pledge, encumbrance or hypothecation of any
assets of the Partnership, 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 that it sees fit, including, without limitation,
the financing of the operations and activities of the General Partner, the
Partnership or any of the Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the Partnership's Subsidiaries)
and the repayment of obligations of the Partnership, its Subsidiaries and any
other Person in which the Partnership has an equity investment, and the making
of capital contributions to and equity investments in the Partnership's
Subsidiaries;
33
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property, including,
without limitation, any Contributed Property, or other asset of the Partnership
or any Subsidiary, whether pursuant to a Services Agreement or otherwise;
(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, the Advisor's other professional advisors and other agents and
the payment of their expenses and compensation out of the Partnership's assets;
provided, however, that the Advisory Agreement must contain a provision (the
"Voting Direction Provision") that requires the Advisor to vote the shares of
Special Voting Preferred Stock in proportion to the votes (the "LP Direction
Votes") that the Advisor receives from the holders of Partnership Units (other
than the General Partner), subject to the Advisor Voting Direction Exclusions.
The Advisor shall be entitled to vote its Special Voting Preferred Stock in its
sole discretion to the extent Vornado Realty Trust is not granted LP Direction
Votes in respect of its Partnership Units by virtue of the Advisor Voting
Direction Exclusions;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement, the holding, management, investment
and reinvestment of cash and other assets of the Partnership, and the collection
and receipt of revenues, rents and income of the Partnership;
(8) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate, including,
without limitation, (i) casualty, liability and other insurance on the
Properties and (ii) liability insurance for the Indemnitees hereunder;
(9) the formation of, or acquisition of an interest in, and
the contribution of property to, any further limited or general partnerships,
limited liability companies, 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);
(10) 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,
administrative proceedings, arbitrations 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;
34
(11) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any other
Person (including, without limitation, the contribution of Property or
contribution or loan of funds by the Partnership to such Persons);
(12) except as otherwise specifically set forth 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 the requirements
of this Agreement;
(13) the enforcement of any rights against any Partner
pursuant to representations, warranties, covenants and indemnities relating to
such Partner's contribution of property or assets to the Partnership;
(14) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any asset or investment held
by the Partnership;
(15) 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;
(16) 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;
(17) 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;
(18) the issuance of additional Partnership Units, as
appropriate and in the General Partner's sole and absolute discretion, in
connection with Capital Contributions by Additional Limited Partners and
additional Capital Contributions by Partners pursuant to Article IV hereof;
(19) the selection and dismissal of Company Employees
(including, without limitation, employees having titles or offices such as
president, vice president, secretary and treasurer), and agents, outside
attorneys, accountants, consultants and contractors of the Partnership or the
General Partner, the determination of their compensation and other terms of
employment or hiring and the delegation to any such Company Employee the
authority to conduct the business of the Partnership in accordance with the
terms of this Agreement; and
35
(20) an election to dissolve the Partnership pursuant to
Section 13.1.B hereof.
B. Except as provided in Section 14.2 hereof, the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement, the
Act or any applicable law, rule or regulation. The execution, delivery or
performance by the General Partner or the Partnership of any agreement
authorized or permitted under this Agreement shall not constitute a breach by
the General Partner of any duty that the General Partner may owe the Partnership
or the Limited Partners or any other Persons under this Agreement or of any duty
stated or implied by law or equity.
C. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain working capital and other
reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
D. 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 by it. The
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of an income tax liability incurred
by such Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.
E. The General Partner may not take any action in contravention of this
Agreement, including, without limitation:
(1) taking any action that would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise provided in
this Agreement;
(2) possessing Property, or assigning any rights in specific
Property, for other than a Partnership purpose except as otherwise provided in
this Agreement, including, without limitation, Section 7.9;
(3) admitting a Person as a Partner, except as otherwise
provided in this Agreement;
(4) performing any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other liability except
as provided Section 10.4 hereof or under the Act; or
(5) entering into any contract, mortgage, loan or other
agreement that prohibits or restricts the ability of (a) the General Partner or
the Partnership from satisfying its obligations under Section 8.6 hereof in full
or (b) a Limited Partner from exercising its rights under Section 8.6 hereof to
effect a Redemption in full, except, in either case, with the written consent of
such Limited Partner affected by the prohibition or restriction.
36
Section 7.2 Certificate of Limited Partnership. To the extent that such
action is determined by the General Partner to be reasonable and necessary or
appropriate, the General Partner shall file amendments to and restatements of
the Certificate and do all the things to maintain the Partnership as a limited
partnership(or a partnership in which the limited partners have limited
liability) under the laws of the State of Delaware and each other state, the
District of Columbia or any other jurisdiction, in which the Partnership may
elect to do business or own property. Except as otherwise required under the
Act, 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 to the extent provided by applicable law) in the
State of Delaware and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Section 7.3 Reimbursement of the General Partner.
A. The General Partner shall not be compensated for its services as
general partner of the Partnership except as provided in this Agreement
(including the provisions of Articles 5 and 6 hereof regarding distributions,
payments and allocations to which it may be entitled in its capacity as the
General Partner).
B. The Partnership shall be liable for, and shall reimburse the General
Partner on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all sums expended and all
expenses incurred in connection with the Partnership's business, including,
without limitation, (i) expenses relating to the ownership of interests in and
management and operation of, or for the benefit of, the Partnership, (ii)
compensation of officers and employees, including, without limitation, payments
under future compensation plans of the General Partner that may provide for
stock units, or phantom stock, pursuant to which employees of the General
Partner will receive payments based upon dividends on or the value of Common
Shares, (iii) director fees and expenses, (iv) all amounts due under a Services
Agreement and (v) all costs and expenses of the General Partner being a public
company, including costs of filings with the SEC, reports and other
distributions to its shareholders. Such reimbursements shall be in addition to
any reimbursement of the General Partner as a result of indemnification pursuant
to Section 7.6 hereof. To the extent practicable, Partnership expenses shall be
billed directly to and paid by the Partnership.
C. Reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.3 shall be treated for federal income tax
purposes as non-income reimbursements and not as "guaranteed payments" within
the meaning of Code Section 707(c) or other form or gross income. If and to the
extent that any reimbursement made pursuant to this Section 7.3 cannot be so
characterized, it shall be treated as a distribution to the General Partner
pursuant to Section 5.1.B.
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Section 7.4 Outside Activities of the General Partner. The General Partner
shall not directly or indirectly enter into or conduct any business, other than
in connection with (a) the ownership, acquisition and disposition of Partnership
Interests as General Partner, (b) the management of the business of the
Partnership, (c) the operation of the General Partner as a reporting company
under the Exchange Act, (d) the General Partner's operations as a REIT, (e) the
offering, sale, syndication, private placement or public offering of stock,
bonds, securities or other interests, (f) financing or refinancing of any type
related to the Partnership or its assets or activities, (g) any of the foregoing
activities as they relate to a Subsidiary of the Partnership or of the General
Partner and (h) such activities as are incidental thereto. Nothing contained
herein shall be deemed to prohibit the General Partner from executing guarantees
of Partnership debt for which it would otherwise be liable in its capacity as
General Partner. Except as otherwise provided herein, the General Partner shall
not own any assets or take title to assets (other than temporarily in connection
with an acquisition prior to contributing such assets to the Partnership) other
than interests in the Partnership or Subsidiaries of the Partnership or the
General Partner, and other than such cash and cash equivalents, bank accounts or
similar instruments or accounts as the General Partner deems reasonably
necessary, taking into account Section 7.1.D hereof and the requirements
necessary for the General Partner to carry out its responsibilities contemplated
under this Agreement and the Articles of Incorporation and to qualify as a REIT.
Section 7.5 Contracts with Affiliates.
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other 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
Subsidiary or any other Person.
B. Except as provided in Section 7.4 hereof and subject to Section 3.1
hereof, the Partnership may transfer assets to joint ventures, limited liability
companies, partnerships, corporations, business trusts 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 and absolute discretion, believes to be
advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property to
the Partnership, directly or indirectly, except pursuant to transactions that
are determined by the General Partner in good faith to be fair and reasonable
and which shall have been approved by a majority of the independent directors of
the General Partner.
D. 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 or any of the
Partnership's Subsidiaries.
38
E. Subject to the proviso contained Section 7.1A(6), the General Partner
is expressly authorized to enter into, in the name and on behalf of the
Partnership, any Services Agreement with Affiliates of any of the Partnership or
the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.
Section 7.6 Indemnification.
A. To the fullest extent permitted by applicable law, the Partnership
shall indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities(whether joint or several), expenses (including, without
limitation, attorney's fees and other legal fees and expenses), judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative,
that relate to the operations of the Partnership ("Actions") as set forth in
this Agreement in which such Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise; provided, however, that the Partnership shall
not indemnify an Indemnitee (i) for the act or omission of the Indemnitee
material to the matter giving rise to the proceeding which was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) for any
transaction for which such Indemnitee received an improper personal benefit (in
money, property or services) in violation or breach of any provision of this
Agreement; or (iii) in the case of a criminal proceeding, for an unlawful act or
omission by the Indemnitee for which the Indemnitee had reasonable cause to
believe was unlawful. Without limitation, the foregoing indemnity shall extend
to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise,
for any indebtedness of the Partnership or any Subsidiary of the Partnership
(including, without limitation, any indebtedness which the Partnership or any
Subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the Partnership, to
enter into one or more indemnity agreements consistent with the provisions of
this Section 7.6 in favor of any Indemnitee having or potentially having
liability for any such indebtedness. It is the intention of this Section 7.6.A
that the Partnership indemnify each Indemnitee to the fullest extent permitted
by law. 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 7.6.A. The termination of any proceeding by
conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent
by an Indemnitee, or an entry of an order of probation against an Indemnitee
prior to judgment, does not create a presumption that such Indemnitee acted in a
manner contrary to that specified in this Section 7.6.A with respect to the
subject matter of such proceeding. Any indemnification pursuant to this Section
7.6 shall be made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to contribute
to the capital of the Partnership or otherwise provide funds to enable the
Partnership to fund its obligations under this Section 7.6.
B. To the fullest extent permitted by law, expenses incurred by an
Indemnitee who is a party to a proceeding or otherwise subject to or the focus
of or is involved in any Action shall be paid or reimbursed by the Partnership
as incurred by the Indemnitee in advance of the final disposition of the Action
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 7.6.A has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.
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C. The indemnification provided by this Section 7.6 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 and shall inure to the benefit of the heirs, successors, assigns
and administrators of the Indemnitee unless otherwise provided in a written
agreement with such Indemnitee or in the writing pursuant to which such
Indemnitee is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any 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. Any liabilities which an Indemnitee incurs as a result of acting on
behalf of the Partnership or the General Partner (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an
employee benefit plan or any related trust or funding mechanism (whether such
liabilities are in the form of excise taxes assessed by the IRS, penalties
assessed by the Department of Labor, restitutions to such a plan or trust or
other funding mechanism or to a participant or beneficiary of such plan, trust
or other funding mechanism, or otherwise) shall be treated as liabilities or
judgments or fines under this Section 7.6, unless such liabilities arise as a
result of (i) the act or omission of the Indemnitee material to the matter
giving rise to the proceeding which was committed in bad faith or was the result
of active and deliberate dishonesty; (ii) any transaction for which such
Indemnitee received an improper personal benefit (in money, property or
services) in violation or breach of any provision of this Agreement; or (iii) in
the case of a criminal proceeding, an unlawful act or omission by the Indemnitee
for which the Indemnitee had reasonable cause to believe was unlawful.
F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.6 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.6 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 7.6 or any provision hereof
shall be prospective only and shall not in any way affect the obligations of the
Partnership or the limitations on the Partnership's liability to any Indemnitee
40
under this Section 7.6 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. It is the intent of the Partners that any amounts paid by the
Partnership to the General Partner pursuant to this Section 7.6 that are not
treated for federal income tax purposes as repayments of advances made by the
General Partner on behalf of the Partnership shall be treated as "guaranteed
payments" within the meaning of Code Section 707(c).
Section 7.7 Liability of the General Partner.
A. Notwithstanding anything to the contrary set forth in this Agreement,
neither the General Partner nor any of its directors or officers shall be liable
or accountable in damages or otherwise to the Partnership, any Partners or any
Assignees for losses sustained, liabilities incurred or benefits not derived as
a result of errors in judgment or mistakes of fact or law or of any act or
omission if the General Partner or such director or officer acted in good faith.
B. That the General Partner is under no obligation to give priority to the
separate interests of the Limited Partners or the General Partner's shareholders
(including, without limitation, the tax consequences to Limited Partners,
Assignees or the General Partner's shareholders) in deciding whether to cause
the Partnership to take(or decline to take) any actions.
C. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its employees or agents(subject to the
supervision and control of the General Partner). 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. To the extent that, at law or in equity, the General Partner has duties
(including fiduciary duties) and liabilities relating thereto to the Partnership
or the Limited Partners, the General Partner shall not be liable to the
Partnership or to any other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of the General Partner otherwise
existing at law or in equity, to replace such other duties and liabilities of
such General Partner.
E. Notwithstanding anything herein to the contrary, except for fraud,
willful misconduct or gross negligence, or pursuant to any express indemnities
given to the Partnership by any Partner pursuant to any other written
instrument, no Partner shall have any personal liability whatsoever, to the
Partnership or to the other Partner(s), for the debts or liabilities of the
Partnership or the Partnership's obligations hereunder, and the full recourse of
the other Partner(s) shall be limited to the interest of that Partner in the
Partnership. To the fullest extent permitted by law, no officer, director or
shareholder of the General Partner shall be liable to the Partnership for money
damages except for (i) active and deliberate dishonesty established by a
non-appealable final judgment or (ii) actual receipt of an improper benefit or
profit in money, property or services. Without limitation of the foregoing, and
41
except for fraud, willful misconduct or gross negligence, or pursuant to any
such express indemnity, no property or assets of any Partner, other than its
interest in the Partnership, shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment(or other judicial
process) in favor of any other Partner(s) and arising out of, or in connection
with, this Agreement. This Agreement is executed by the officers of the General
Partner solely as officers of the same and not in their own individual
capacities.
F. Any amendment, modification or repeal of this Section 7.7 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the General Partner's, and its officers' and directors',
liability to the Partnership and the Limited Partners under this Section 7.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.
Section 7.8 Other Matters Concerning the General Partner.
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture or other paper
or document believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters that the General Partner reasonably believes to be within
such Person's professional or expert competence shall be conclusively presumed
to have been done or omitted in good faith and in accordance with such opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty that
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provision of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision of
the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of the General Partner to continue
to qualify as a REIT, (ii) for the General Partner otherwise to satisfy the REIT
Requirements, or (iii) to avoid the General Partner incurring any taxes under
Code Section 857 or Code Section 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
Section 7.9 Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
or collectively with other Partners or Persons, shall have any ownership
42
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. 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 7.10 Reliance by Third Parties. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority,
without the consent or approval of any other Partner or Person, to encumber,
sell or otherwise use in any manner any and all assets of the Partnership and to
enter into any contracts on behalf of the Partnership, and take any and all
actions on behalf of the Partnership, and such Person shall be entitled to deal
with the General Partner as if 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 that 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 expediency 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 in good faith thereon or claiming
thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability. The Limited Partners shall have no
liability under this Agreement (other than for breach thereof) except as
expressly provided in Section 10.4 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,
member, 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
43
or any officer, director, member, employee, partner, agent, representative, 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 pursuant to Section 7.5.E hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate, member or shareholder 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 that are in direct or indirect competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partner 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
General Partner, to the extent expressly provided herein), and such Person shall
have no obligation pursuant to this Agreement, subject to Section 7.5.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the General Partner, the Partnership or a Subsidiary, 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 that, 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 hereof, no Limited Partner shall be entitled to the
withdrawal or return of its Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except to the extent provided in Article VI
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.
Section 8.5 Redemption Factor. The Partnership shall notify any Limited
Partner that is a Qualifying Party, on request, of the then current Redemption
Factor or any change made to the Redemption Factor.
Section 8.6 Redemption Rights of Qualifying Parties.
A. From and after the Lock-Out Date, subject to Section 11.6.D, a
Qualifying Party, but no other Limited Partner or Assignee, shall have the right
(subject to the terms and conditions set forth herein) to require the
Partnership to redeem (a "Redemption") all or a portion of the Partnership
Common Units held by such Qualifying Party (such Partnership Common Units being
hereafter "Tendered Units") in exchange for the Cash Amount payable on the
Specified Redemption Date. Any Redemption shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner by such Qualifying Party
(the "Tendering Party") when exercising the Redemption right. The Partnership's
obligation to effect a Redemption, however, shall not arise or be binding
against the Partnership before the Business Day following the Cut-Off Date.
Regardless of the binding or non-binding nature of a pending Redemption, a
44
Tendering Party shall have no right to receive distributions with respect to any
Tendered Units (other than the Cash Amount) paid after delivery of the Notice of
Redemption, whether or not the Partnership Record Date for such distribution
precedes or coincides with such delivery of the Notice of Redemption. In the
event of a Redemption, the Cash Amount shall be delivered as a certified check
payable to the Tendering Party or, in the General Partner's sole and absolute
discretion, in immediately available funds.
B. Notwithstanding the provisions of Section 8.6.A hereof, on or before
the close of business on the Cut-Off Date, the General Partner may, in its sole
and absolute discretion but subject to the Ownership Limit and the transfer
restrictions and other limitations of the Articles of Incorporation, elect to
acquire, up to 100% of the Tendered Units from the Tendering Party (the
percentage elected to be acquired by the General Partner being referred to as
the "Applicable Percentage") in exchange for the REIT Consideration. It shall be
a condition to the General Partner's ability to deliver the REIT Consideration
that any such consideration shall consist of shares of Common Stock which shall,
upon issuance, be duly authorized, validly issued, fully paid and nonassessable.
In making such election, the General Partner shall act in a fair, equitable and
reasonable manner that neither prefers one group or class of Qualifying Parties
over another nor discriminates against a group or class of Qualifying Parties.
If the General Partner so elects, on the Specified Redemption Date the Tendering
Party shall sell the Applicable Percentage of the Tendered Units to the General
Partner in exchange for the REIT Consideration. The Tendering Party shall submit
(i) such information, certification or affidavit as the General Partner may
reasonably require in connection with the application of the Ownership Limit and
any other restrictions and limitations imposed by the Articles of Incorporation
on such acquisition and (ii) such written representations, investment letters,
legal opinions or other instruments necessary in the view of the General Partner
to effect compliance with the Securities Act. In the event of a purchase of any
Tendered Units by the General Partner pursuant to this Section 8.6.B, the
Tendering Party shall no longer have the right to cause the Partnership to
effect a Redemption of such Tendered Units, and, upon notice to the Tendering
Party by the General Partner given on or before the close of business on the
Cut-Off Date, that the General Partner has elected to acquire some or all of the
Tendered Units pursuant to this Section 8.6.B, the Partnership shall have no
obligation to effect a Redemption of the Tendered Units as to which the notice
by the General Partner relates. The REIT Consideration shall be delivered by the
General Partner as duly authorized, validly issued, fully paid and
non-assessable Common Shares and, if applicable, Rights, free of any pledge,
lien, encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Articles of Incorporation, the Bylaws of the
General Partner, the Securities Act and relevant state securities or "blue sky"
laws. Neither any Tendering Party whose Tendered Units are acquired by the
General Partner pursuant to this Section 8.6.B, any Partner nor any other
interested Person shall have any right to require or cause the General Partner
to register, qualify or list any Common Shares owned or held by such Person,
whether or not such Common Shares are issued pursuant to this Section 8.6.B,
with the SEC, with any state securities commissioner, department or agency,
under the Securities Act or the Exchange Act or with any stock exchange;
provided, however, that this limitation shall not be in derogation of any
registration or similar rights granted pursuant to any other written agreement
between the General Partner and any such Person. Notwithstanding any delay in
45
such delivery, the Tendering Party shall be deemed the owner of such Common
Shares and Rights for all purposes, including, without limitation, rights to
vote or consent, receive dividends, and exercise rights, as of the Specified
Redemption Date. Common Shares issued upon an acquisition of the Tendered Units
by the General Partner pursuant to this Section 8.6.B may contain such legends
regarding restrictions under the Securities Act and applicable state securities
laws as the General Partner in good faith determines to be necessary or
advisable in order to ensure compliance with such laws.
C. Notwithstanding the provisions of Sections 8.6.A and 8.6.B hereof, no
Tendering Party shall have any rights (including any right to a Redemption
pursuant to Section 8.6A) under this Agreement that would otherwise be
prohibited under the Articles of Incorporation with respect to the Ownership
Limit. To the extent that any attempted Redemption or acquisition of the
Tendered Units by the General Partner pursuant to Section 8.6.B hereof would be
in violation of this Section 8.6.C, it shall be null and void ab initio, and the
Tendering Party shall not acquire any rights or economic interests in Common
Shares otherwise issuable by the General Partner under Section 8.6.B hereof.
D. [intentionally omitted]
E. Notwithstanding the provisions of Section 8.6.B hereof, the General
Partner shall not, under any circumstances, elect to acquire Tendered Units in
exchange for the REIT Consideration if such exchange would be prohibited under
the Articles of Incorporation.
F. Notwithstanding anything herein to the contrary (but subject to Section
8.6.C hereof), with respect to any Redemption (or any tender of Partnership
Common Units for Redemption if the Tendered Units are acquired by the General
Partner pursuant to Section 8.6.B hereof) pursuant to this Section 8.6:
(1) All Partnership Common Units acquired by the General
Partner pursuant to Section 8.6.B hereof may, at the election of the General
Partner, be converted into and deemed to be a General Partner Interest comprised
of the same number of Partnership Common Units.
(2) Subject to the Ownership Limit, no Tendering Party may
effect a Redemption for less than five hundred (500) Partnership Common Units
or, if such Tendering Party holds (as a Limited Partner or, economically, as an
Assignee) less than five hundred (500) Partnership Common Units, all of the
Partnership Common Units held by such Tendering Party.
(3) Each Tendering Party (a) may effect a Redemption only once
in each fiscal quarter of a twelve-month period, unless otherwise permitted by
the General Partner, in its sole and absolute discretion and (b) 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 shareholders of some or all of its portion of such
Partnership distribution.
(4) The consummation of such Redemption (or an acquisition of
Tendered Units by the General Partner pursuant to Section 8.6.B hereof, as the
case may be) 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.
46
(5) Subject to Section 8.6.A, the Tendering Party shall
continue to own all Partnership Common Units subject to any Redemption, and be
treated as a Limited Partner, as applicable, with respect to such Partnership
Common Units for all purposes of this Agreement, until such Partnership Common
Units are either paid for by the Partnership pursuant to Section 8.6.A hereof or
transferred to the General Partner and paid for, by the issuance of the Common
Shares, pursuant to Section 8.6.B hereof on the Specified Redemption Date. Until
a Specified Redemption Date and an acquisition of the Tendered Units by the
General Partner pursuant to Section 8.6.B hereof, the Tendering Party shall have
no rights as a shareholder of the General Partner with respect to the Common
Shares issuable in connection with such acquisition.
(6) 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.
(7) No Limited Partner may require a Redemption hereunder to
the extent that the issuance of REIT Consideration pursuant to Section 8.6.B
hereof would violate ownership limitations contained in the Articles of
Incorporation or would violate any REIT Requirement (notwithstanding that any
such Tendered Units could otherwise be acquired for cash pursuant to Section
8.6.A hereof).
For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.
G. In connection with an exercise of Redemption rights pursuant to this
Section 8.6, the Tendering Party shall submit the following to the General
Partner, in addition to the Notice of Redemption:
(1) A written affidavit, dated the same date as the Notice of
Redemption, (a) disclosing the actual and constructive ownership, as determined
for purposes of Code Sections 856(a)(6) and 856(h), of Common Shares by (i) such
Tendering Party and (ii) any Related Party and (b) representing that, after
giving effect to the Redemption or an acquisition of the Tendered Units by the
General Partner pursuant to Section 8.6.B hereof, neither the Tendering Party
nor any Related Party will own Common Shares in excess of the Ownership Limit;
(2) A written representation that neither the Tendering Party
nor any Related Party has any intention to acquire any additional Common Shares
prior to the closing of the Redemption or an acquisition of the Tendered Units
by a REIT Partner pursuant to Section 8.6.B hereof on the Specified Redemption
Date; and
47
(3) An undertaking to certify, at and as a condition to the
closing of (i) the Redemption or (ii) the acquisition of the Tendered Units by
the General Partner pursuant to Section 8.6.B hereof on the Specified Redemption
Date, that either (a) the actual and constructive ownership of Common Shares by
the Tendering Party and any Related Party remain unchanged from that disclosed
in the affidavit required by Section 8.6.G (1) or (b) after giving effect to the
Redemption or an acquisition of the Tendered Units by the General Partner
pursuant to Section 8.6.B hereof, neither the Tendering Party nor any Related
Party shall own Common Shares in violation of the Ownership Limit.
Section 8.7 Partnership Right to Call Limited Partner Interests.
Notwithstanding any other provision of this Agreement, on and after the date on
which the aggregate Percentage Interests of the Limited Partners are less than
one percent (1%), the Partnership shall have the right, but not the obligation,
from time to time and at any time to redeem any and all outstanding Limited
Partner Interests by treating any Limited Partner as a Tendering Party who has
delivered a Notice of Redemption pursuant to Section 8.6 hereof for the amount
of Partnership Common Units to be specified by the General Partner, in its sole
and absolute discretion, by notice to such Limited Partner that the Partnership
has elected to exercise its rights under this Section 8.7. Such notice given by
the General Partner to a Limited Partner pursuant to this Section 8.7 shall be
treated as if it were a Notice of Redemption delivered to the General Partner by
such Limited Partner. For purposes of this Section 8.7, (a) any Limited Partner
(whether or not otherwise a Qualifying Party) may, in the General Partner's sole
and absolute discretion, be treated as a Qualifying Party that is a Tendering
Party and (b) the provisions of Sections 8.6.F(2), and 8.6.F(3) hereof shall not
apply, but the remainder of Section 8.6 hereof shall apply, mutatis mutandis.
Section 8.8 Mergers. The General Partner shall not permit the Partnership
to be a party to any consolidation, merger, combination or other transaction
pursuant to which the Partnership Common Units are converted or changed into or
exchanged for partnership interests and/or other securities of another operating
partnership in an UPREIT or similar structure, in each case without the
affirmative vote of the holders of at least a majority of the outstanding Common
Units, voting separately as a class, unless upon consummation of any such
consolidation, merger, combination or other transaction, the holders of Common
Units shall receive shares of stock or beneficial interest or other equity
securities of the parent REIT of such operating partnership with preferences,
rights and privileges not materially inferior to the preferences, rights and
privileges of Common Shares. This Section 8.8 shall not be amended or modified
without the prior consent of the holders of at least a majority of the Common
Units.
48
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting.
A. The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the Partnership
in the regular course of its business may be kept on, or be in the form for,
magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time.
B. The books of the Partnership shall be maintained, for financial and tax
reporting purposes, on an accrual basis in accordance with generally accepted
accounting principles, or on such other basis as the General Partner determines
to be necessary or appropriate. To the extent permitted by sound accounting
practices and principles, the Partnership and the General Partner may operate
with integrated or consolidated accounting records, operations and principles.
Section 9.2 Partnership Year. The Partnership Year of the Partnership
shall be the calendar year.
Section 9.3 Reports.
A. As soon as practicable, but in no event later than one hundred twenty
(120) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner of record 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 one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner of record 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
General Partner, and such other information as may be required by applicable law
or regulation or as the General Partner determines to be appropriate.
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ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns. The General Partner shall arrange
for the preparation and timely filing of all returns with respect to Partnership
income, gains, deductions, losses and other items required of the Partnership
for federal and state income tax purposes and shall use all reasonable effort to
furnish, within ninety (90) days of the close of each taxable year, the tax
information reasonably required by Limited Partners for federal and state income
tax reporting purposes. The Limited Partners shall promptly provide the General
Partner with such information relating to the Contributed Properties, including
tax basis and other relevant information, as may be reasonably requested by the
General Partner from time to time.
Section 10.2 Tax Elections. Except as otherwise provided herein, the
General Partner shall, in its sole and absolute discretion, determine whether to
make or revoke any available election pursuant to the Code, including, but not
limited to, the election under Code Section 754.
Section 10.3 Tax Matters Partner.
A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. The tax matters partner shall
receive no compensation for its services. All third-party costs and expenses
incurred by the tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the Partnership in
addition to any reimbursement pursuant to Section 7.3 hereof. 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. At
the request of any Limited Partner, the General Partner agrees to consult with
such Limited Partner with respect to the preparation and filing of any returns
and with respect to any subsequent audit or litigation relating to such returns;
provided, however, that the filing of such returns shall be in the sole and
absolute discretion of the General Partner.
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 Code
Section 6231) or a member of a "notice group" (as defined in Code Section
6223(b)(2));
(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
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the filing of a petition for readjustment with the United States 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 that 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
(6) to take any other action on behalf of the Partners 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 7.6 hereof shall be fully applicable to the tax matters partner in
its capacity as such.
Section 10.4 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 Section 1441, 1442, 1445 or
1446 of the Code. Any amount paid on behalf of or with respect to a Limited
Partner shall constitute a recourse loan by the Partnership to such Limited
Partner, which loan shall be repaid by such Limited Partner within fifteen (15)
days after notice from the General Partner that such payment must be made unless
(i) the Partnership withholds such payment from a distribution that 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 that would, but for such payment, be
distributed to the Limited Partner. Any amounts withheld pursuant to the
foregoing clause (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 Interests to secure such Limited Partner's obligation to pay to the
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Partnership any amounts required to be paid pursuant to this Section 10.4. In
the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.4 when due, the General Partner may, in
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting Limited
Partner (including, without limitation, the right to receive distributions). Any
amounts payable by a Limited Partner hereunder shall bear interest at the base
rate on corporate loans at large United States money center commercial banks, as
published from time to time in The Wall Street Journal, plus four (4) percentage
points (but not higher than the maximum lawful rate) from the date such amount
is due (i.e., fifteen (15) days after demand) until such amount is paid in full.
Each Limited Partner shall take such actions as the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
Section 10.5 Organizational Expenses. The Partnership shall elect to
deduct expenses, if any, incurred by it in organizing the Partnership ratably
over the period provided in Section 709 of the Code.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer.
A. No part of the interest of a Partner shall be subject to the claims of any
creditor, to any spouse for alimony or support, or to legal process, and may not
be voluntarily or involuntarily alienated or encumbered except as may be
specifically provided for in this Agreement.
B. No Partnership Interest shall be Transferred, in whole or in part, except in
accordance with the terms and conditions set forth in this Article XI. Any
Transfer or purported Transfer of a Partnership Interest not made in accordance
with this Article XI shall be null and void ab initio.
C. Notwithstanding the other provisions of this Article XI (other than Section
11.6.D hereof), the Partnership Interests of the General Partner may be
Transferred, in whole or in part, at any time or from time to time, to any
Person that is, at the time of such Transfer, a Qualified REIT Subsidiary. Any
transferee of the entire General Partner Interest pursuant to this Section
11.1.C shall automatically become, without further action or Consent of any
Limited Partners, the sole general partner of the Partnership, subject to all
the rights, privileges, duties and obligations under this Agreement and the Act
relating to a general partner. Upon any Transfer permitted by this Section
11.1.C, the transferor Partner shall be relieved of all its obligations under
this Agreement. The provisions of Section 11.2.B (other than the last sentence
thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer permitted
by this Section 11.1.C.
D. No Transfer of any Partnership Interest may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability, without the consent of the General Partner
in its sole and absolute discretion; provided that as a condition to such
consent, the lender will be required to enter into an arrangement with the
52
Partnership and the General Partner to redeem or exchange for the REIT
Consideration any Partnership Units in which a security interest is held by such
lender concurrently with such time as 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.
Section 11.2 Transfer of General Partner's Partnership Interest.
A. The General Partner may not Transfer any of its General Partner
Interest or withdraw from the Partnership except as provided in Sections 11.1.C,
11.2.B and 11.2.C hereof.
B. Except as set forth in Section 11.1.C above and Section 11.2.C below,
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,
disposition, statutory merger or consolidation, liquidation or otherwise)
without the Consent of the Limited Partners, which Consent may be given or
withheld in the sole and absolute discretion of the Limited Partners. Upon any
Transfer of such a Partnership Interest pursuant to the Consent of the Limited
Partners and otherwise in accordance with the provisions of this Section 11.2.B,
the transferee shall become a successor 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 such Transfer shall relieve the transferor General Partner of its
obligations under this Agreement without the Consent of the Limited Partners. In
the event that the General Partner withdraws from the Partnership, in violation
of this Agreement or otherwise, or otherwise dissolves or terminates, or upon
the bankruptcy of the General Partner, a Majority in Interest of the Limited
Partners may elect to continue the Partnership business by selecting a successor
General Partner in accordance with the Act.
C. Notwithstanding Section 11.2.B, the General Partner may merge with
another entity if immediately after such merger substantially all of the assets
of the surviving entity, other than the General Partner Interest held by the
General Partner, are contributed to the Partnership as a Capital Contribution in
exchange for Partnership Units.
Section 11.3 Transfer of Limited Partners' Partnership Interests.
A. General. No Limited Partner shall Transfer all or any portion of its
Partnership Interest to any transferee without the consent of the General
Partner, which consent may be withheld in its sole and absolute discretion,
provided, however, that subject to Section 11.3.E hereof, any Limited Partner
that is an individual may transfer all or any portion of his Partnership
Interest to his immediate family or a trust for his immediate family without the
consent of the General Partner, provided, further, that the General Partner has
the right not to admit such transferee as a Substituted Limited Partner in the
Partnership.
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B. Conditions to Transfer Consent. Without limiting the generality of
Section 11.3.A hereof, it is expressly understood and agreed that the General
Partner will not consent to any Transfer of all or any portion of any
Partnership Interest pursuant to Section 11.3.A above unless such Transfer meets
each of the following conditions:
(1) Qualified Transferee. Such Transfer is made only to a
single Qualified Transferee; provided, however, that, for such purposes, all
Qualified Transferees that are Affiliates, or that comprise investment accounts
or funds managed by a single Qualified Transferee and its Affiliates, shall be
considered together to be a single Qualified Transferee.
(2) Assumption of Obligations. The transferee in such Transfer
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; provided, that no such Transfer (unless made 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 sole and absolute
discretion. Notwithstanding the foregoing, any transferee of any Transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Articles of Incorporation that may limit or restrict such
transferee's ability to exercise its Redemption rights, including, without
limitation, the Ownership Limit. Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take subject to the obligations of the
transferor hereunder. Unless admitted as a Substituted Limited Partner, no
transferee, whether by a voluntary Transfer, by operation of law or otherwise,
shall have any rights hereunder, other than the rights of an Assignee as
provided in Section 11.5 hereof.
(3) Effective Date. Such Transfer is to be effective as of the
first day of a fiscal quarter of the Partnership.
C. Incapacity. 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 its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
D. Opinion of Counsel. In connection with any proposed Transfer of a
Limited Partner Interest, the General Partner shall have the right to receive an
opinion of counsel reasonably satisfactory to it to the effect that the proposed
Transfer may be effected without registration under the Securities Act and will
not otherwise violate any federal or state securities laws or regulations
applicable to the Partnership or the Partnership Interests Transferred.
E. Adverse Tax Consequences. No Transfer by a Limited Partner of its
Partnership Interests may be made to or by any person if (i) in the opinion of
legal counsel for the Partnership, it would result in the Partnership being
treated as an association taxable as a corporation or would result in a
54
termination of the Partnership under Code Section 708, or (ii) such Transfer
would be effectuated through an "established securities market" or a "secondary
market (or the substantial equivalent thereof)" within the meaning of Code
Section 7704.
Section 11.4 Substituted Limited Partners.
A. A transferee of the interest of a Limited Partner pursuant to a
Transfer consented to by the General Partner pursuant to Section 11.3.A may be
admitted as a Substituted Limited Partner only with the consent of the General
Partner, which consent may be given or withheld by the General Partner in its
sole and absolute discretion. The failure or refusal by the General Partner 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
the General Partner. Subject to the foregoing, an Assignee shall not be admitted
as a Substituted Limited Partner until and unless it furnishes to the General
Partner (i) evidence of acceptance, in form and substance satisfactory to the
General Partner, of all the terms, conditions and applicable obligations of this
Agreement, (ii) a counterpart signature page to this Agreement executed by such
Assignee and (iii) such other documents and instruments as may be required or
advisable, in the sole and absolute discretion of the General Partner, to effect
such Assignee's admission as a Substituted Limited Partner.
B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article XI shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General
Partner shall amend its books and records to reflect the name, address and
number of Partnership Units of such Substituted Limited Partner and to eliminate
or adjust, if necessary, the name, address and number of Partnership Units 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 transferee of any
Partnership Interest as a Substituted Limited Partner in connection with a
transfer permitted by the General Partner pursuant to Section 11.3.A, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses and other items of
income, gain, loss, deduction and credit of the Partnership attributable to the
Partnership Units assigned to such transferee, and the rights to Transfer the
Partnership Units in accordance with the provisions of this Article XI, 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 or vote or
effect a Redemption with respect to such Partnership Units on any matter
presented to the Limited Partners for approval (such right to Consent or vote or
effect a Redemption, to the extent provided in this Agreement or under the Act,
fully remaining with the transferor Limited Partner). In the event that 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 XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
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Section 11.6 General Provisions.
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted Transfer of all of such Limited Partner's Partnership
Units in accordance with this Article XI, with respect to which the transferee
becomes a Substituted Limited Partner, or pursuant to a redemption (or
acquisition by the General Partner) of all of its Partnership Units pursuant to
a Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit
Designation.
B. Any Limited Partner who shall Transfer all of its Partnership Units in
a Transfer (i) consented to by the General Partner pursuant to this Article XI
where such transferee was admitted as a Substituted Limited Partner, (ii)
pursuant to the exercise of its rights to effect a redemption of all of its
Partnership Units pursuant to a Redemption under Section 8.6 hereof and/or
pursuant to any Partnership Unit Designation or (iii) to the General Partner,
whether or not pursuant to Section 8.6.B hereof, shall cease to be a Limited
Partner.
C. If any Partnership Unit is Transferred in compliance with the
provisions of this Article XI, or is redeemed by the Partnership, or acquired by
the General Partner pursuant to Section 8.6 hereof, on any day other than the
first day of a Partnership Year, then Net Income, Net Losses, each item thereof
and all other items of income, gain, loss, deduction and credit attributable to
such Partnership Unit for such Partnership Year shall be allocated to the
transferor Partner or the Tendering Party, as the case may be, and, in the case
of a Transfer or assignment other than a Redemption, to the transferee Partner,
by taking into account their varying interests during the Partnership Year in
accordance with Code Section 706(d), using the "interim closing of the books"
method or another permissible method selected by the General Partner. Solely for
purposes of making such allocations, each of such items for the calendar month
in which a Transfer occurs shall be allocated to the transferee Partner and none
of such items for the calendar month in which a Transfer or a Redemption occurs
shall be allocated to the transferor Partner or the Tendering Party, as the case
may be, if such Transfer occurs on or before the fifteenth (15th) day of the
month, otherwise such items shall be allocated to the transferor. All
distributions pursuant to Section 5.1 attributable to such Partnership Unit with
respect to which the Partnership Record Date is before the date of such
Transfer, assignment or Redemption shall be made to the transferor Partner or
the Tendering Party, as the case may be, and, in the case of a Transfer other
than a Redemption, all distributions pursuant to Section 5.1 thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.
D. In no event may any Transfer or assignment of a Partnership Interest by
any Partner (including any Redemption, any acquisition of Partnership Units by
the General Partner or any other acquisition of Partnership Units by the
Partnership) 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) 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) in the event that such Transfer would
cause the General Partner to cease to comply with the REIT Requirements; (v) if
such Transfer would, in the opinion of counsel to the Partnership or the General
Partner, cause a termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption (or acquisition by a REIT
Partner) of all Partnership Common Units held by all Limited Partners); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership, cause
the Partnership to cease to be classified as a partnership for federal income
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tax purposes (except as a result of the Redemption (or acquisition by a REIT
Partner) of all Partnership Common Units held by all Limited Partners); (vii) 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 ERISA Section 3(14)) or a "disqualified person" (as defined in Code
Section 4975(c)); (viii) if such Transfer would, in the opinion of legal 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; (ix) if such Transfer requires the registration
of such Partnership Interest pursuant to any applicable federal or state
securities laws; (x) if such Transfer causes the Partnership to become a
"publicly traded partnership," as such term is defined in Code 7704(b); or (xi)
if such Transfer subjects the Partnership to regulation under the Investment
Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as
amended.
ARTICLE XII
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 hereof
who is proposed to be admitted as a successor General Partner shall be admitted
to the Partnership as the General Partner, effective immediately prior to such
Transfer. Any such successor 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.
Section 12.2 Admission of Additional Limited Partners.
A. After the date hereof, a Person (other than an existing Partner) 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
and substance 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 hereof, (ii) a counterpart signature page to
this Agreement executed by such Person and (iii) such other documents or
instruments as may be required in the sole and absolute 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 consent of the General Partner to such admission.
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C. If any Additional Limited Partner is admitted to the Partnership on any
day other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items of income, gain, loss, deduction and
credit allocable among Partners and Assignees for such Partnership Year shall be
allocated pro rata among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
General Partner. Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all the Partners and Assignees including
such Additional Limited Partner, in accordance with the principles described in
Section 11.6.C hereof. All distributions pursuant to Section 5.1 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,
and all distributions pursuant to Section 5.1 thereafter shall be made to all
the 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 and, if required by law, shall prepare
and file an amendment to the Certificate and may for this purpose exercise the
power of attorney granted pursuant to Section 2.4 hereof.
Section 12.4 Limit on Number of Partners. If the Partnership shall no
longer be a reporting company under the Exchange Act, then unless otherwise
permitted by the General Partner, no Person shall be admitted to the Partnership
as an Additional Limited Partner if the effect of such admission would be to
cause the Partnership to have a number of Partners (including as Partners for
this purpose those Persons indirectly owning an interest in the Partnership
through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.
ARTICLE XIII
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 13.1 Dissolution. The Partnership shall not be dissolved by the
admission of 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 shall continue
the business of the Partnership without dissolution. However, 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"):
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A. an event of withdrawal, as defined in the Act (including, without
limitation, bankruptcy), of the sole General Partner unless, within ninety (90)
days after the withdrawal, a Majority in Interest of the remaining Limited
Partners agree in writing, in their sole and absolute discretion, to continue
the business of the Partnership and to the appointment, effective as of the date
of withdrawal, of a successor General Partner;
B. an election to dissolve the Partnership made by the General Partner in
its sole and absolute discretion, with or without the Consent of the Limited
Partners;
C. entry of a decree of judicial dissolution of the Partnership pursuant
to the provisions of the Act; or
D. the occurrence of a Terminating Capital Transaction.
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.
After the occurrence of a Liquidating Event, 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 that there is no remaining General Partner or the General Partner has
dissolved, become bankrupt within the meaning of the Act or ceased to operate,
any Person elected by a Majority in Interest of the Limited Partners (the
General Partner or such other Person being referred to herein as the
"Liquidator")) shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property, 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 satisfaction of all of the Partnership's
debts and liabilities to creditors other than the Partners and their Assignees
(whether by payment or the making of reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the Partnership's
debts and liabilities to the General Partner (whether by payment or the making
of reasonable provision for payment thereof), including, but not limited to,
amounts due as reimbursements under Section 7.3 hereof;
(3) Third, to the satisfaction of all of the Partnership's
debts and liabilities to the other Partners and any Assignees (whether by
payment or the making of reasonable provision for payment thereof); and
(4) Subject to the terms of any Partnership Unit Designation,
the balance, if any, to the General Partner, the Limited Partners and any
Assignees in accordance with and in proportion to their positive Capital Account
balances, after giving effect to all contributions, distributions and
allocations for all periods.
59
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Notwithstanding the provisions of Section 13.2.A hereof that 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 hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the event that the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XIII to the Partners and Assignees that have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2) to the
extent of, and in proportion to, positive Capital Account balances. If any
Partner has a deficit balance in its Capital Account (after giving effect to all
contributions, distributions and allocations for all taxable years, including
the year during which such liquidation occurs) (a "Capital Account Deficit"),
such Partner shall have no obligation to make a contribution to the capital of
the Partnership on account of such deficit, and such Capital Account Deficit
shall not be considered a debt owed to the Partnership or any other person for
any purpose whatsoever. In the sole and absolute discretion of the General
Partner or the Liquidator, a pro rata portion of the distributions that would
otherwise be made to the Partners pursuant to this Article XIII may be:
1. distributed to a trust established for the benefit of the General
Partner and the Limited Partners for the purpose 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 and/or Partnership
activities. The assets of any such trust shall be distributed to the General
Partner and the Limited Partners, from time to time, in the reasonable
discretion of the General Partner, in the same proportions and amounts as would
otherwise have been distributed to the General Partner and the 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
60
such withheld or escrowed amounts shall be distributed to the General Partner
and Limited Partners in the manner and order of priority set forth in Section
13.2.A hereof as soon as practicable.
Section 13.3 Deemed Distribution and Recontribution. Notwithstanding any
other provision of this Article XIII, in the event that the Partnership is
liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but
no Liquidating Event has occurred, the Partnership's Property shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged and
the Partnership's affairs shall not be wound up. Instead, for federal income tax
purposes the Partnership shall be deemed to have contributed all of its assets
and liabilities to a new partnership in exchange for an interest in the new
partnership; and, immediately thereafter, distributed interests in the new
partnership to the Partners in accordance with their respective Capital Accounts
in liquidation of the Partnership, and the new partnership is deemed to continue
the business of the Partnership. Nothing in this Section 13.3 shall be deemed to
have constituted any Assignee as a Substituted Limited Partner without
compliance with the provisions of Section 11.4 hereof.
Section 13.4 Rights of Limited Partners. Except as otherwise provided in
this Agreement, (a) each Limited Partner shall look solely to the assets of the
Partnership for the return of its Capital Contribution, (b) no Limited Partner
shall have the right or power to demand or receive property other than cash from
the Partnership and (c) no Limited Partner(other than any Limited Partner who
holds Partnership Preferred Units, to the extent specifically set forth herein
and in the applicable Partnership Unit Designation) shall have priority over any
other Limited Partner as to the return of its Capital Contributions,
distributions or allocations.
Section 13.5 Notice of Dissolution. In the event that a Liquidating Event
occurs or an event occurs that would, but for an election or objection by one or
more Partners pursuant to Section 13.1 hereof, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and, in the General
Partner's sole and absolute discretion or as required by the Act, to all other
parties with whom the Partnership regularly conducts business (as determined in
the sole and absolute discretion of the General Partner), and the General
Partner may, or, if required by the Act, shall, publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).
Section 13.6 Cancellation of Certificate of Limited Partnership. Upon the
completion of the liquidation of the Partnership cash and property as provided
in Section 13.2 hereof, the Partnership shall be terminated, a certificate of
cancellation shall be filed with the State of Delaware, all qualifications of
the Partnership as a foreign limited partnership or association in jurisdictions
other than the State of Delaware shall be cancelled, and such other actions as
may be necessary to terminate the Partnership shall be taken.
Section 13.7 Reasonable Time for Winding-Up. A reasonable time shall be
allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 13.2 hereof,
in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.
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ARTICLE XIV
PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS
Section 14.1 Procedures for Actions and Consents of Partners. The actions
requiring consent or approval of Limited Partners pursuant to this Agreement or
otherwise pursuant to applicable law, are subject to the procedures set forth in
this Article XIV.
Section 14.2 Amendments.
A. Amendments to this Agreement may be proposed by the General Partner or
by a Majority in Interest of the Limited Partners. Following such proposal, the
General Partner shall submit any proposed amendment to the 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 the General Partner may deem appropriate. For purposes of
obtaining a written consent, the General Partner may require a response within a
reasonable specified time, but not less than fifteen (15) days, and failure to
respond in such time period shall constitute a consent that is consistent with
the General Partner's recommendation with respect to the proposal; provided,
however, that an action shall become effective at such time as requisite
consents are received even if prior to such specified time.
B. The General Partner shall not, without the prior Consent of the Limited
Partners, except as provided in Sections 4.2.A, 5.5, 6.2.B and 14.2.C hereof,
amend, modify or terminate this Agreement.
C. Notwithstanding Section 14.2.B hereof, the General Partner shall have
the power, (i) with the consent of Vornado Realty Trust only to amend the
definition of "Advisor Voting Direction Exclusions" and (ii) without the Consent
of the Limited Partners, 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 admission, substitution or withdrawal of
Partners or the termination of the Partnership 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, 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;
62
(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) (a) to reflect such changes as are reasonably necessary
for the General Partner to maintain or restore its status as a REIT or to
satisfy the REIT Requirements; or (b) to reflect the Transfer of all or any part
of a Partnership Interest between the General Partner and any Qualified REIT
Subsidiary or Taxable REIT Subsidiary;
(6) to modify the manner in which Capital Accounts are
computed (but only to the extent set forth in the definition of "Capital
Account" or contemplated by the Code or the Regulations); and
(7) to issue additional Partnership Interests in accordance
with Section 4.2.
D. Notwithstanding Sections 14.2.B and 14.2.C hereof, this Agreement shall
not be amended, and no action may be taken by the General Partner, without the
Consent of each Partner adversely affected thereby, if such amendment or action
would (i) convert a Limited Partner Interest in the Partnership into a General
Partner Interest (except as a result of the General Partner acquiring such
Partnership Interest), (ii) modify the limited liability of a Limited Partner,
(iii) alter the rights of any Partner to receive the distributions to which such
Partner is entitled, pursuant to Article V or Section 13.2.A hereof, or alter
the allocations specified in Article VI hereof (except, in any case, as
permitted pursuant to Sections 4.2, 5.5, 6.2.B and 14.2.C hereof), (iv) alter or
modify the Redemption rights, Cash Amount, REIT Consideration, or Common Shares
Amount as set forth in Sections 8.6 and 11.2 hereof, or amend or modify any
related definitions, (v) permit the removal of the General Partner without its
consent or (vi) amend this Section 14.2.D; provided, however, that the Consent
of each Partner adversely affected shall not be required for any amendment or
action that affects all Partners holding the same class or series of Partnership
Units on a uniform or pro rata basis. Further, no amendment may alter the
restrictions on the General Partner's authority set forth elsewhere in this
Section 14.2 without the Consent specified therein. Any such amendment or action
consented to by any Partner shall be effective as to that Partner,
notwithstanding the absence of such consent by any other Partner.
Section 14.3 Meetings of 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 a
Majority in Interest of the Limited Partners. The call shall state the nature of
the business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than sixty (60) 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 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 14.3.B hereof.
63
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 a majority of the Percentage Interests of the
Partners (or such other 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 a majority of
the Percentage Interests of the Partners (or such other percentage as is
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 it
by proxy on all matters in which a Limited Partner is entitled to participate,
including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Limited Partner or its
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy (or there is
receipt of a proxy authorizing a later date). Every proxy shall be revocable at
the pleasure of the Limited Partner executing it, such revocation to be
effective upon the Partnership's receipt of written notice of such revocation
from the Limited Partner executing such proxy. The use of proxies will be
governed in the same manner as in the case of corporations organized under the
General Corporation Law of Delaware (including Section 212 thereof).
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 in its sole and absolute discretion. Without limitation, meetings of
Partners may be conducted in the same manner as meetings of the General
Partner's shareholders and may be held at the same time as, and as part of, the
meetings of the General Partner's shareholders.
ARTICLE XV
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 (including by telecopy, facsimile, or commercial courier
service) to the Partner or Assignee at the address set forth in the books and
records of the Partnership or such other address of which the Partner shall
notify the General Partner in writing.
Section 15.2 Titles and Captions. All article or section titles or
captions in this Agreement are for convenience only. They shall not be deemed
part of this Agreement and in no way define, limit, extend or describe the scope
or intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" or "Sections" are to Articles and Sections of this
Agreement.
64
Section 15.3 Pronouns and Plurals. Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
Section 15.4 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.
Section 15.6 Waiver.
A. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
B. The restrictions, conditions and other limitations on the rights and
benefits of the Limited Partners contained in this Agreement, and the duties,
covenants and other requirements of performance or notice by the Limited
Partners, are for the benefit of the Partnership and, except for an obligation
to pay money to the Partnership, may be waived or relinquished by the General
Partner, in its sole and absolute discretion, on behalf of the Partnership in
one or more instances from time to time and at any time; provided, however, that
any such waiver or relinquishment may not be made if it would have the effect of
(i) creating liability for any other Limited Partner, (ii) causing the
Partnership to cease to qualify as a limited partnership, (iii) reducing the
amount of cash otherwise distributable to the Limited Partners, (iv) resulting
in the classification of the Partnership as an association or publicly traded
partnership taxable as a corporation or (v) violating the Securities Act, the
Exchange Act or any state "blue sky" or other securities laws; provided,
further, that any waiver relating to compliance with the Ownership Limit or
other restrictions in the Articles of Incorporation shall be made and shall be
effective only as provided in the Articles of Incorporation.
Section 15.7 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 15.8 Applicable Law. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Delaware,
without regard to the principles of conflicts of law. In the event of a conflict
between any provision of this Agreement and any non-mandatory provision of the
Act, the provisions of this Agreement shall control and take precedence.
65
Section 15.9 Entire Agreement. This Agreement contains all of the
understandings and agreements between and among the Partners with respect to the
subject matter of this Agreement and the rights, interests and obligations of
the Partners with respect to the Partnership.
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 Limitation to Preserve REIT Status. Notwithstanding anything
else in this Agreement, to the extent that the amount paid, credited,
distributed or reimbursed by the Partnership to any REIT Partner or its
officers, directors, employees or agents, whether as a reimbursement, fee,
expense or indemnity (a "REIT Payment"), would constitute gross income to the
REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3),
then, notwithstanding any other provision of this Agreement, the amount of such
REIT Payments, as selected by the General Partner in its discretion from among
items of potential distribution, reimbursement, fees, expenses and indemnities,
shall be reduced for any Partnership Year so that the REIT Payments, as so
reduced, for or with respect to such REIT Partner shall not exceed the lesser
of:
(i) an amount equal to the excess, if any, of (a) four and
nine-tenths percent (4.9%) of the REIT Partner's total gross income (but
excluding the amount of any REIT Payments) for the Partnership Year that is
described in subsections (A) through (H) of Code Section 856(c)(2) over (b) the
amount of gross income (within the meaning of Code Section 856(c)(2)) derived by
the REIT Partner from sources other than those described in subsections (A)
through (H) of Code Section 856(c)(2) (but not including the amount of any REIT
Payments); or
(ii) an amount equal to the excess, if any, of (a) twenty-four
percent (24%) of the REIT Partner's total gross income (but excluding the amount
of any REIT Payments) for the Partnership Year that is described in subsections
(A) through (I) of Code Section 856(c)(3) over (b) the amount of gross income
(within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from
sources other than those described in subsections (A) through (I) of Code
Section 856(c)(3) (but not including the amount of any REIT Payments);
provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
REIT. To the extent that REIT Payments may not be made in a Partnership Year as
a consequence of the limitations set forth in this Section 15.11, such REIT
Payments shall carry over and shall be treated as arising in the following
Partnership Year(s). The purpose of the limitations contained in this Section
15.11 is to prevent any REIT Partner from failing to qualify as a REIT under the
Code by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 15.11 shall be interpreted and applied to
effectuate such purpose.
66
Section 15.12 No Partition. No Partner nor any successor-in-interest to a
Partner shall have the right while this Agreement remains in effect to have any
property of the Partnership partitioned, or to file a complaint or institute any
proceeding at law or in equity to have such property of the Partnership
partitioned, and each Partner, on behalf of itself and its successors and
assigns hereby waives any such right. It is the intention of the Partners that
the rights of the parties hereto and their successors-in-interest to Partnership
property, as among themselves, shall be governed by the terms of this Agreement,
and that the rights of the Partners and their successors-in-interest shall be
subject to the limitations and restrictions as set forth in this Agreement.
Section 15.13 No Third-Party Rights Created Hereby. The provisions of this
Agreement are solely for the purpose of defining the interests of the Partners,
inter se; and no other person, firm or entity (i.e., a party who is not a
signatory hereto or a permitted successor to such signatory hereto) shall have
any right, power, title or interest by way of subrogation or otherwise, in and
to the rights, powers, title and provisions of this Agreement. No creditor or
other third party having dealings with the Partnership(other than as expressly
set forth herein with respect to Indemnitees) shall have the right to enforce
the right or obligation of any Partner to make Capital Contributions or loans to
the Partnership or to pursue any other right or remedy hereunder or at law or in
equity. None of the rights or obligations of the Partners herein set forth to
make Capital Contributions or loans to the Partnership shall be deemed an asset
of the Partnership for any purpose by any creditor or other third party, nor may
any such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or any of the Partners.
Section 15.14 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 receive notice
as stockholders in respect of any meeting of stockholders for the election of
directors of the General Partner or any other matter.
[The next page is the signature page.]
67
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
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Exhibit A
NOTICE OF REDEMPTION
To: Newkirk Realty Trust Inc.
7 Bulfinch Place
Suite 500
PO Box 9507
Boston, Massachusetts 02114
The undersigned Limited Partner hereby irrevocably tenders for Redemption
__________________ Partnership Common Units in The Newkirk Master Limited
Partnership in accordance with the terms of the Amended and Restated Agreement
of Limited Partnership of The Newkirk Master Limited Partnership (the
"Agreement"), and the Redemption rights referred to therein. The undersigned
Limited Partner:
(a) undertakes (i) to surrender such Partnership Common Units and
any certificate therefor at the closing of the Redemption and (ii) to furnish to
the General Partner, prior to the Specified Redemption Date, the documentation,
instruments and information required under Section 8.6.G of the Agreement;
(b) directs that the certified check representing the Cash Amount,
or the Common Shares Amount, as applicable, deliverable upon the closing of such
Redemption be delivered to the address specified below;
(c) represents, warrants, certifies and agrees that:
(i) the undersigned Limited Partner is a Qualifying Party,
(ii) the undersigned Limited Partner has, and at the closing
of the Redemption will have, good, marketable and unencumbered title to such
Partnership Common Units, free and clear of the rights or interests of any other
person or entity,
(iii) the undersigned Limited Partner has, and at the closing
of the Redemption will have, the full right, power and authority to tender and
surrender such Partnership Common Units as provided herein, and
(iv) the undersigned Limited Partner has obtained the consent
or approval of all persons and entities, if any, having the right to consent to
or approve such tender and surrender; and
(d) acknowledges that he will continue to own such Partnership
Common Units until and unless either (1) such Partnership Common Units are
acquired by the General Partner pursuant to Section 8.6.B of the Agreement or
(2) such redemption transaction closes.
B-1
All capitalized terms used herein and not otherwise defined shall have the
same meaning ascribed to them respectively in the Agreement.
Dated: ____________
Name of Limited Partner:
(Signature of Limited Partner or Assignee)
(Street Address)
(City) (State) (zip Code)
Signature Guaranteed by:
Issue Check Payable to:
Please insert social security
or identifying number:
B-2
Exhibit B
FORM OF UNIT CERTIFICATE
THE SECURITY EVIDENCED HEREBY HAS 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 PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, 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. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE NEWKIRK MASTER
LIMITED PARTNERSHIP, DATED AS OF ___________, 200[5] A COPY OF WHICH MAY BE
OBTAINED FROM NEWKIRK REALTY TRUST, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.
Certificate Number ____________
THE NEWKIRK MASTER LIMITED PARTNERSHIP
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
C-1
This certifies that
is the owner of
FULLY PAID PARTNERSHIP COMMON UNITS OF
THE NEWKIRK MASTER LIMITED PARTNERSHIP
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Amended and Restated
Agreement of Limited Partnership, as the same may be amended and/or supplemented
from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated:
By: