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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
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Dated as of June 19, 2000
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS.......................................................2
ARTICLE II ORGANIZATIONAL MATTERS............................................16
Section 2.1 Organization..............................................16
Section 2.2 Name......................................................16
Section 2.3 Registered Office and Agent; Principal Office.............17
Section 2.4 Term......................................................17
ARTICLE III PURPOSE..........................................................17
Section 3.1 Purpose and Business......................................17
Section 3.2 Powers....................................................17
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES OF
PARTNERSHIP INTERESTS...................................................18
Section 4.1 Capital Contributions of the Partners.....................18
Section 4.2 Issuances of Partnership Interests........................18
Section 4.3 No Preemptive Rights......................................20
Section 4.4 Other Contribution Provisions.............................20
Section 4.5 No Interest on Capital....................................20
Section 4.6 Separate Agreements.......................................21
ARTICLE V DISTRIBUTIONS......................................................21
Section 5.1 Requirement and Characterization of Distributions.........21
Section 5.2 Amounts Withheld..........................................24
Section 5.3 Distributions Upon Liquidation............................24
Section 5.4 Revisions to Reflect Issuance of Partnership Interests....25
ARTICLE VI ALLOCATIONS.......................................................25
Section 6.1 Allocations For Capital Account Purposes..................25
Section 6.2 Revisions to Allocations to Reflect Issuance of
Partnership Interests............................................27
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS............................28
Section 7.1 Management................................................28
Section 7.2 Certificate of Limited Partnership........................32
Section 7.3 Title to Partnership Assets...............................33
Section 7.4 Reimbursement of the General Partner......................33
Section 7.5 Outside Activities of the General Partner;
Relationship of Shares to Partnership Units; Funding Debt........35
Section 7.6 Transactions with Affiliates..............................37
Section 7.7 Indemnification...........................................38
Section 7.8 Liability of the General Partner..........................40
Section 7.9 Other Matters Concerning the General Partner..............41
Section 7.10 Reliance by Third Parties.................................42
Section 7.11 Restrictions on General Partner's Authority...............43
Section 7.12 Loans by Third Parties....................................44
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS......................44
Section 8.1 Limitation of Liability...................................44
Section 8.2 Management of Business....................................44
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Section 8.3 Outside Activities of Limited Partners....................45
Section 8.4 Return of Capital.........................................45
Section 8.5 Rights of Limited Partners Relating to the Partnership....45
Section 8.6 Redemption Right..........................................47
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS............................50
Section 9.1 Records and Accounting....................................50
Section 9.2 Fiscal Year...............................................50
Section 9.3 Reports...................................................50
ARTICLE X TAX MATTERS........................................................51
Section 10.1 Preparation of Tax Returns................................51
Section 10.2 Tax Elections.............................................51
Section 10.3 Tax Matters Partner.......................................51
Section 10.4 Organizational Expenses...................................53
Section 10.5 Withholding...............................................53
ARTICLE XI TRANSFERS AND WITHDRAWALS.........................................54
Section 11.1 Transfer..................................................54
Section 11.2 Transfers of Partnership Interests of General Partner.....54
Section 11.3 Limited Partners' Rights to Transfer......................55
Section 11.4 Substituted Limited Partners..............................57
Section 11.5 Assignees.................................................58
Section 11.6 General Provisions........................................58
ARTICLE XII ADMISSION OF PARTNERS............................................60
Section 12.1 Admission of a Successor General Partner..................60
Section 12.2 Admission of Additional Limited Partners..................61
Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership......................................................61
ARTICLE XIII DISSOLUTION AND LIQUIDATION.....................................62
Section 13.1 Dissolution...............................................62
Section 13.2 Winding Up................................................63
Section 13.3 Compliance with Timing Requirements of Regulations;
Restoration of Deficit Capital Accounts..........................64
Section 13.4 Rights of Limited Partners................................66
Section 13.5 Notice of Dissolution.....................................66
Section 13.6 Cancellation of Certificate of Limited Partnership........66
Section 13.7 Reasonable Time for Winding Up............................66
Section 13.8 Waiver of Partition.......................................67
Section 13.9 Liability of Liquidator...................................67
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS................................................................67
Section 14.1 Amendments................................................67
Section 14.2 Meetings of the Partners..................................69
ARTICLE XV GENERAL PROVISIONS................................................70
Section 15.1 Addresses and Notice......................................70
Section 15.2 Titles and Captions.......................................70
Section 15.3 Pronouns and Plurals......................................70
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Section 15.4 Further Action............................................70
Section 15.5 Binding Effect............................................70
Section 15.6 Creditors.................................................70
Section 15.7 Waiver....................................................71
Section 15.8 Counterparts..............................................71
Section 15.9 Applicable Law............................................71
Section 15.10 Invalidity of Provisions..................................71
Section 15.11 Power of Attorney.........................................71
Section 15.12 Entire Agreement..........................................73
Section 15.13 No Rights as Shareholders.................................73
Section 15.14 Limitation to Preserve REIT Status........................73
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EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
EXHIBIT E-1
(CAP Agreement)
EXHIBIT E-2
(1120 Agreement)
EXHIBIT E-3
(Wright Runstad Agreement)
EXHIBIT E-4
(Galbreath Agreement)
EXHIBIT E-5
(Palo Alto Square Agreement)
EXHIBIT E-6
(Cornerstone Agreement)
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ATTACHMENT A
(Series A Preferred Units)
ATTACHMENT B
(Series B Preferred Units)
ATTACHMENT C
(Series C Preferred Units)
ATTACHMENT D
(Series D Preferred Units)
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of June 19, 2000, is entered into by and among Equity
Office Properties Trust, a Maryland real estate investment trust, as the General
Partner, and the Persons whose names are set forth on Exhibit A hereto as
Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, Equity Office Properties Trust, Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership II, an Illinois limited
Partnership, and certain other persons named therein entered into an Agreement
of Limited Partnership of EOP Operating Limited Partnership dated as of July 3,
1997, pursuant to which the Partnership was formed (the "Original Partnership
Agreement");
WHEREAS, the General Partner and the other Partners in the
Partnership entered into eleven amendments to the Original Partnership Agreement
(the "Prior Amendments") and 20 addenda to the Original Partnership Agreement
effecting the admission of Additional Limited Partners to the Partnership, the
withdrawal of certain Partners from the Partnership, and, in some cases, certain
amendments to provisions of the Original Partnership Agreement made in
connection therewith (the "Prior Addenda");
WHEREAS, the General Partner and the Persons named on Exhibit A
hereto as Limited Partners entered into the First Amended and Restated Agreement
of Limited Partnership, dated as of May 1, 2000, to incorporate the Original
Partnership Agreement, the Prior Amendments, and the Addenda (the "First Amended
and Restated Agreement"); and
WHEREAS, in connection with the merger of Cornerstone Properties
Limited Partnership, the General Partner and the other Partners in the
Partnership now desire to enter into amendments to the First Amended and
Restated Agreement of Limited Partnership by entering into this Second Amended
and Restated Agreement of Limited Partnership;
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, the parties hereto hereby amend
and restate the First Amended and Restated Agreement of Limited Partnership in
its entirety and agree to continue the Partnership as a limited partnership
under the Delaware Revised Uniform Limited Partnership Act, as amended from time
to time, as follows:
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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,
as it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained
for each Partner as of the end of each Partnership Year (i) increased by any
amounts which such Partner is obligated to restore pursuant to any provision of
this Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Protected Amount" means the aggregate balances of the
Protected Amounts, if any, of all Protected Partners, as determined on the date
in question.
"Agreed Value" means (i) in the case of any Contributed Property,
the 704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such
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property is subject when contributed, as the same is reflected in the books and
records of the Partnership; and (ii) in the case of any property distributed to
a Partner by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner upon such distribution or to which such property is
subject at the time of distribution as determined under Section 752 of the Code
and the regulations thereunder.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Assignee" means a Person to whom one or more Partnership Units
have been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus the
amount of any reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv)
below;
(b) less the sum of the following (except to the extent made with
the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital expenditures)
made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under this Agreement
and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established
during such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include
any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the
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Partnership's Book-Tax Disparities in all of its Contributed Property and
Adjusted Property will be reflected by the difference between such Partner's
Capital Account balance as maintained pursuant to Exhibit B and the hypothetical
balance of such Partner's Capital Account computed as if it had been maintained
strictly in accordance with federal income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in Chicago, Illinois are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed Property
or Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B, and to reflect changes, additions (including capital
improvements thereto) or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on the
Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and the
Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference
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herein to a specific section or sections of the Code shall be deemed to include
a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2.
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose any Limited Partnership Interests
held by the General Partner, any Person of which the General Partner owns or
controls more than fifty percent (50%) of the voting interests and any Person
directly or indirectly owning or controlling more than fifty percent (50%) of
the outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interest of all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means (i) the transactions whereby the
Partnership acquired interests in certain office properties owned by the
Opportunity Partnerships and certain asset management and property management
businesses that provided services to those properties and to other office
properties, in exchange for Partnership Units, and (ii) the merger of the ZML
Investors, Inc., ZML Investors II, Inc., Zell/Merrill Lynch Real Estate
Opportunity Partners III Trust and Zell/Merrill Lynch Real Estate Opportunity
Partners IV Trust with and into Equity Office Properties Trust, all as described
in a Joint Proxy Statement/Offering Memorandum dated March 25, 1997.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership. Once the
Carrying Value of a Contributed Property is adjusted pursuant to Exhibit B, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that, if the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner Entity
(the "Successor Entity"), the Conversion Factor shall be adjusted by multiplying
the Conversion Factor by a fraction, the numerator of which is the Value of one
Share of the Predecessor Entity, determined as of the date when the Successor
Entity becomes the General Partner Entity, and the denominator of which is the
Value of one Share of the Successor Entity, determined as of that same date.
(For purposes of the second proviso in the preceding sentence, if any
shareholders of the Predecessor Entity will
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receive consideration in connection with the transaction in which the Successor
Entity becomes the General Partner Entity, the numerator in the fraction
described above for determining the adjustment to the Conversion Factor (that
is, the Value of one Share of the Predecessor Entity) shall be the sum of the
greatest amount of cash and the fair market value (as determined in good faith
by the General Partner) of any securities and other consideration that the
holder of one Share in the Predecessor Entity could have received in such
transaction (determined without regard to any provisions governing fractional
shares).) Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of the event retroactive to the record
date, if any, for the event giving rise thereto, it being intended that (x)
adjustments to the Conversion Factor are to be made to avoid unintended dilution
or anti-dilution as a result of transactions in which Shares are issued,
redeemed or exchanged without a corresponding issuance, redemption or exchange
of Partnership 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 Conversion Factor applicable to such redemption shall be adjusted to
take into account such event.
"Convertible Funding Debt" has the meaning set forth in Section
7.5.F.
"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) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
"Declaration of Trust" means the Articles of Amendment and
Restatement of Declaration of Trust of Equity Office Properties Trust filed in
the State of Maryland on July 9, 1997, as amended or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any date
with respect to any class of Partnership Interests, (a) if the common shares of
beneficial interest (or other comparable equity interests) of the General
Partner Entity are Publicly Traded (i) the total number of shares of beneficial
interest (or other comparable equity interest) of the General Partner Entity
corresponding to such class of Partnership Interest (as provided for in Section
4.2.B) issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
beneficial interest (or other comparable equity interest) on such date divided
by (ii) the Percentage Interests of the General Partner, held directly or
indirectly through another entity, in such
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class of Partnership Interests on such date, and (b) otherwise, the aggregate
Value of such class of Partnership Interests determined as set forth in the
fourth and fifth sentences of the definition of Value. For purposes of clause
(a) of the preceding sentence, "Value" means the average of the daily market
price of such corresponding shares of beneficial interest (or other comparable
equity interests) of the General Partner Entity for such number of consecutive
trading days or the Business Day immediately preceding the date with respect to
which Value must be determined (which number of days or the Business Day shall
be determined by the General Partner in its sole discretion), with the market
price for each such trading day being the closing price, regular way, on such
day, or if no such sale takes place on such day, the average of the closing bid
and asked prices on such day. Notwithstanding any of the foregoing, with respect
to any class or series of Partnership Interests that is entitled to a preference
as compared to the class of Partnership Interests corresponding to common shares
of beneficial interests (or other comparable equity interests) of the General
Partner Entity, "Value" means the stated liquidation preference or value of such
class or series of Partnership Interests provided in the instrument establishing
such class or series of Partnership Interests (unless otherwise provided in such
instrument).
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section 5.1.C.
"Effective Date" means the date of the closing of the Consolidation.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Partner" means either any (a) Limited Partner or (b)
holder of shares of beneficial interest in the General Partner that received
such Shares in the mergers of ZML Investors, Inc., ZML Investors II, Inc.,
Zell/Merrill Lynch Real Estate Opportunity Partners III Trust, and Zell/Merrill
Lynch Real Estate Opportunity Partners IV Trust into the General Partner, and
which Limited Partner or shareholder is either (i) an employee benefit plan
subject to Title I of ERISA or section 4975 of the Code, or (ii) a nominee for
or a trust established pursuant to such employee benefit plan, or (iii) which is
an entity whose underlying assets include assets of such employee benefit plan
by reason of such plan's investment in such entity.
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"ERISA Plan" means an "employee benefit plan" as that term is
defined in 29 U.S.C. sec. 1002(3), and which is not exempt from regulation under
ERISA by virtue of 29 U.S.C. sec. 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Value" shall have the meaning described in Section
7.09.E(iv).
"Funding Debt" means the incurrence of any Debt by or on behalf
of the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means Equity Office Properties Trust, a
Maryland real estate investment trust, or its successor, as general partner of
the Partnership.
"General Partner Entity" means the General Partner; provided,
however, that if (i) the common shares of beneficial interest (or other
comparable equity interests) of the General Partner are at any time not Publicly
Traded and (ii) the common shares of beneficial interest (or other comparable
equity interests) of an entity that owns, directly or indirectly, fifty percent
(50%) or more of the common shares of beneficial interest (or other comparable
equity interests) of the General Partner are Publicly Traded, the term "General
Partner Entity" shall refer to such entity whose common shares of beneficial
interest (or other comparable equity securities) are Publicly Traded. If both
requirements set forth in clauses (i) and (ii) above are not satisfied, then the
term "General Partner Entity" shall mean the General Partner.
"General Partnership Interest" means a Partnership Interest held
by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"General Partner Payment" has the meaning set forth in Section
15.14 hereof.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse, parents, descendants, nephews, nieces, brothers,
and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
who is a Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her Person or estate, (ii) as to any corporation which is a Partner, the filing
of a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership or limited liability
company which is a Partner, the dissolution and commencement of winding up of
the partnership or limited liability company, (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership, (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee) or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the
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Partner commences a voluntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the Partner, (c)
the Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver of liquidator has not been
vacated or stayed within ninety (90) days of such appointment or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of its status as (A) the General Partner, (B) a Limited Partner, or (C) a
trustee, director or officer of the Partnership, or the General Partner and (ii)
such other Persons (including Affiliates of the General Partner, a Limited
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.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A, as such Exhibit may be amended from time to time, or any Substituted
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"Limited Partnership 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 Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Net Income" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Income is subjected to the special allocation
rules in Exhibit C, Net Income or the resulting Net Loss, whichever the case may
be, shall be recomputed without regard to such item.
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"Net Loss" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Loss is subjected to the special allocation
rules in Exhibit C, Net Loss or the resulting Net Income, whichever the case may
be, shall be recomputed without regard to such item.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase Shares, excluding grants under any Share Option Plan, or (ii) any Debt
issued by the General Partner Entity that provides any of the rights described
in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable gain
that would be allocated to the Partners pursuant to Section 2.B of Exhibit C if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"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 a Notice of Redemption substantially
in the form of Exhibit D.
"Opportunity Partnerships" means, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership II, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership III, and Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership IV.
"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), and the amount of Partner Nonrecourse Deductions
with respect to a
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Partner Nonrecourse Debt for a Partnership Year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act
upon the terms and conditions set forth in the Original Partnership Agreement
and continued pursuant to this Agreement, or any successor to such limited
partnership.
"Partnership Interest" means a Limited Partnership Interest or a
General Partnership Interest 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 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 Record Date" means the record date established by
the General Partner either (i) for the distribution of Available Cash pursuant
to Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its shareholders
of some or all of its portion of such distribution, or (ii) if applicable, for
determining the Partners entitled to vote on or consent to any proposed action
for which the consent or approval of the Partners is sought pursuant to Section
14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units, Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A, as such Exhibit may be
amended from time to time.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A, as
such exhibit may be amended from time to time, multiplied by the aggregate
Percentage Interest allocable to such class of Partnership Interests. If the
Partnership shall at any time have outstanding more than one class of
Partnership Interests, the Percentage Interest attributable to each class of
Partnership Interests shall be determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
unincorporated
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organization, custodian, nominee or any other individual or entity in its own or
any representative capacity.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Protected Amount" means the amount specified on Exhibit E with
respect to any Protected Partner, as such Exhibit may be amended from time to
time.
"Protected Partner" means a Partner designated as a Protected
Partner on Exhibit E, as such Exhibit may be amended from time to time, which
Protected Partner is obligated to make certain contributions, not in excess of
such Protected Partner's Protected Amount, to the Partnership with respect to
any deficit balance in such Partner's Capital Account upon the occurrence of
certain events. A Protected Partner who is obligated to make any such
contribution only upon liquidation of the Partnership shall be designated on
Exhibit E as a Part I Protected Partner and a Protected Partner who is obligated
to make any such contribution to the Partnership either upon liquidation of the
Partnership or upon liquidation of such Protected Partner's Partnership Interest
shall be designated on Exhibit E as a Part II Protected Partner.
"Publicly Traded" means listed or admitted to trading on the New
York Stock Exchange, the American Stock Exchange or another national securities
exchange or designated for quotation on the NASDAQ National Market, or any
successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the General
Partner that is a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as defined
in Rule 501 promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or Section
743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized either as ordinary income or as
"unrecaptured Section 1250 gain" (as defined in Section 1(h)(7) of the Code
because it represents the recapture of deductions previously taken with respect
to such property or asset.
"Recourse Liabilities" means the amount of liabilities owed by
the Partnership (other than Nonrecourse Liabilities and liabilities to which
Partner Nonrecourse Deductions are attributable in accordance with Section
1.704-(2)(i) of the Regulations).
"Redeeming Partner" has the meaning set forth in Section 8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of
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the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the Redemption Amount in the form of the
Shares Amount. A Redeeming Partner shall have no right, without the General
Partner's consent, in its sole and absolute discretion, to receive the
Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
"Regulations" means the Treasury Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of
the Code.
"REIT Requirements" has the meaning set forth in Section 5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means the 8.98% Series A Cumulative
Redeemable Preferred Shares of Equity Office Properties Trust issued in
connection with the merger of Beacon Properties Corporation into Equity Office
Properties Trust on December 19, 1997.
"Series A Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 8.98%
Series A Cumulative Redeemable Preferred Units with the designations,
preferences and other rights set forth in Attachment A hereto.
"Series B Preferred Shares" means the 5.25% Series B Convertible,
Cumulative Preferred Shares of the Company, with the preferences, conversion and
other rights, voting powers , restrictions, limitations as to distributions,
qualifications and terms and conditions of redemption of shares as described in
the Articles Supplementary to the Declaration of Trust filed with the State
Department of Assessments and Taxation of Maryland on February 19, 1998,
establishing the series of preferred shares, designated Series B Preferred
Shares.
"Series B Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 5.25% B
Convertible, Cumulative Preferred Units, with the preferences, conversion and
other rights, voting powers, restrictions, limitations as to distributions,
qualification and terms and conditions of redemption of units set forth in
Attachment B hereto.
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"Series C Preferred Shares" means the 8 5/8% Series C Cumulative
Redeemable Preferred Shares of Beneficial Interest of the Company issued and
sold in the underwritten public offering made pursuant to the Company's
effective shelf registration statement on Form S-3 (Reg. No. 333-58729), its
prospectus dated July 22, 1998, and its related prospectus supplement dated
December 1, 1998.
"Series C Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 8 5/8%
Series C Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment C hereto.
"Series D Preferred Units" means the series of Partnership Units
representing units of Limited Partnership Interest designated as the 7%
Cumulative Convertible Preferred Units, with the designations, preferences and
other rights set forth in Attachment D hereto.
"704(c) Value" of any Contributed Property means the fair market
value of such property at the time of contribution as determined by the General
Partner using such reasonable method of valuation as they may adopt; provided,
however, subject to Exhibit B, the General Partner shall, in its sole and
absolute discretion, use such method as it deems reasonable and appropriate to
allocate the aggregate of the 704(c) Value of Contributed Properties in a single
or integrated transaction among each separate property on a basis proportional
to its fair market values.
"Share" means a share of beneficial interest (or other comparable
equity interest) of the General Partner Entity. Shares may be issued in one or
more classes or series in accordance with the terms of the Declaration of Trust
(or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). If there is more than
one class or series of Shares, the term "Shares" shall, as the context requires,
be deemed to refer to the class or series of Shares that correspond to the class
or series of Partnership Interests for which the reference to Shares is made.
When used with reference to Class A Units, the term "Shares" refers to common
shares of beneficial interest (or other comparable equity interest) of the
General Partner Entity.
"Shares Amount" means a number of Shares equal to the product of
the number of Partnership Units offered for redemption by a Redeeming Partner
times the Conversion Factor; provided that, if the General Partner Entity issues
to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive.
"Share Option Plan" means any equity incentive plan of the
General Partner, the General Partner Entity, the Partnership and/or any
Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, if the
Shares are not
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Publicly Traded, the Specified Redemption Date means the thirtieth Business Day
after receipt by the General Partner of a Notice of Redemption.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, trust, partnership or joint venture, or other entity
of which a majority of (i) the voting power of the voting equity securities or
(ii) the outstanding equity interests is owned, directly or indirectly, by such
Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Successor Entity" has the meaning set forth in the definition of
"Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash 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 for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the General Partner
of a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily market
price for the ten consecutive trading days immediately preceding the date with
respect to which value must be determined. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices on
such day. If the outstanding Shares of the General Partner Entity are Publicly
Traded and the Shares Amount includes rights that a holder of Shares would be
entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. If the
Shares of the General Partner Entity are not Publicly Traded, the Value of the
Shares Amount per Partnership Unit offered for redemption (which will be the
Cash Amount per Partnership Unit offered for redemption payable pursuant to
Section 8.6.A) means the amount that a holder of one Partnership Unit would
receive if each of the assets of the Partnership were to be sold for
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its fair market value on the Specified Redemption Date, the Partnership were to
pay all of its outstanding liabilities, and the remaining proceeds were to be
distributed to the Partners in accordance with the terms of this Agreement. Such
Value shall be determined by the General Partner, acting in good faith and based
upon a commercially reasonable estimate of the amount that would be realized by
the Partnership if each asset of the Partnership (and each asset of each
partnership, limited liability company, trust, joint venture or other entity in
which the Partnership owns a direct or indirect interest) were sold to an
unrelated purchaser in an arms' length transaction where neither the purchaser
nor the seller were under economic compulsion to enter into the transaction
(without regard to any discount in value as a result of the Partnership's
minority interest in any property or any illiquidity of the Partnership's
interest in any property). In connection with determining the Deemed Value of
the Partnership Interest for purposes of determining the number of additional
Partnership Units issuable upon a Capital Contribution funded by an underwritten
public offering or an arm's length private placement of shares of beneficial
interest (or other comparable equity interest) of the General Partner, the Value
of such shares shall be the public offering or arm's length private placement
price per share of such class of beneficial interest (or other comparable equity
interest) sold.
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 conditions set forth in the
Original Agreement, as amended by the Prior Amendments, the Prior Addenda, and
the First Amended and Restated Agreement. The Partners hereby agree to continue
the business of the Partnership on the terms 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 EOP Operating 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 any of the General
Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.,"
"Ltd." or similar words or letters shall be included in the Partnership's name
where necessary for the purposes of complying with the laws of any jurisdiction
that so requires. The General Partner in its sole and absolute discretion may
change the name of the Partnership at any time and from time to time and shall
notify the Limited Partners of such change in the next regular communication to
the Limited Partners.
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SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the
State of Delaware shall be located at Corporation Trust Center, 1209 Orange
Street, Wilmington, County of New Castle, Delaware 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Two North Riverside Plaza, Suite 2100, Chicago,
Illinois 60606, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
SECTION 2.4 TERM
The term of the Partnership commenced on November 1, 1996, and
shall continue until December 31, 2095, unless it is dissolved sooner pursuant
to the provisions of Article XIII or as otherwise provided by law.
ARTICLE III
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 Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify or is not qualified as a REIT for any
reason or reasons not related to the business conducted by the Partnership, (ii)
to enter into any corporation, partnership, joint venture, trust, 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. In connection with the foregoing, the Partners acknowledge that the
status of the General Partner Entity as a REIT inures to the benefit of all the
Partners and not solely to the General Partner Entity or its Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided,
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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 Entity
to continue to qualify as a REIT, (ii) could subject the General Partner Entity
to any taxes under Section 857 or Section 4981 of the Code or (iii) could
violate any law or regulation of any governmental body or agency having
jurisdiction over either the General Partner or the General Partner Entity or
its securities, unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
Prior to the execution of this Agreement, the Partners have made
the Capital Contributions as set forth in Exhibit A. The Partners own
Partnership Units in the amounts set forth in Exhibit A and have Percentage
Interests in the Partnership as set forth in Exhibit A, which number of
Partnership Units and Percentage Interest shall be adjusted in Exhibit A from
time to time by the General Partner to the extent necessary to reflect
accurately redemptions, Capital Contributions, the issuance of additional
Partnership Units or similar events having an effect on a Partner's Percentage
Interest occurring after the date hereof in accordance with the terms of this
Agreement. To the extent the Partnership acquires any property by the merger of
any other Person into the Partnership, Persons who receive Partnership Interests
in exchange for their interests in the Person merging into the Partnership shall
become Partners and shall be deemed to have made Capital Contributions as
provided in the applicable merger agreement and as set forth in Exhibit A. A
number of Partnership Units held by the General Partner equal to one percent
(1%) of the aggregate number of Partnership Units owned by the General Partner
shall be deemed to be the General Partner Partnership Units and shall be the
General Partnership Interest of the General Partner. All other Partnership Units
held by the General Partner shall be deemed to be Limited Partnership Interests
and shall be held by the General Partner in its capacity as a Limited Partner in
the Partnership. Except as provided in Sections 7.5, 10.5, and 13.3 hereof, the
Partners shall have no obligation to make any additional Capital Contributions
or provide any additional funding to the Partnership (whether in the form of
loans, repayments of loans or otherwise). Except as otherwise set forth in
Section 13.3 hereof, no Partner shall have any obligation to restore any deficit
that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to cause the
Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such
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designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined, subject to applicable
Delaware law, by the General Partner in its sole and absolute discretion,
including, without limitation, (i) the allocations of items of Partnership
income, gain, loss, deduction and credit to each such class or series of
Partnership Interests, (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions and (iii) the rights
of each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; provided that no such Partnership Units or other
Partnership Interests shall be issued to the General Partner unless either (a)
the Partnership Interests are issued in connection with the grant, award or
issuance of Shares or other equity interests in the General Partner having
designations, preferences and other rights such that the economic interests
attributable to such Shares or other equity interests are substantially similar
to the designations, preferences and other rights (except voting rights) of the
Partnership Interests issued to the General Partner in accordance with this
Section 4.2.A or (b) the additional Partnership Interests are issued to all
Partners holding Partnership Interests in the same class in proportion to their
respective Percentage Interests in such class. If the Partnership issues
Partnership Interests pursuant to this Section 4.2.A, the General Partner shall
make such revisions to this Agreement (including but not limited to the
revisions described in Section 5.4, Section 6.2 and Section 8.6) as it deems
necessary to reflect the issuance of such Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units and so long as the Partnership
shall have outstanding more than one class of Partnership Interests, the
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the amount of cash, if any, plus the Agreed Value of
Contributed Property, if any, contributed with respect to such additional
Partnership Units and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests for all outstanding classes (computed
as of the Business Day immediately preceding the date on which the additional
Capital Contributions are made (an "Adjustment Date")) plus (ii) the aggregate
amount of additional Capital Contributions contributed to the Partnership on
such Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the Deemed Partnership Interest
Value of such Limited Partner (computed as of the Business Day immediately
preceding the Adjustment Date) plus (ii) the amount of additional Capital
Contributions (such amount being equal to the amount of cash, if any, plus the
Agreed Value of Contributed Property, if any, so contributed), if any, made by
such Partner to the Partnership in respect of such Partnership Interest as of
such Adjustment Date and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of all outstanding classes (computed
as of the Business Day immediately preceding such Adjustment Date) plus (ii) the
aggregate amount of the additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Partnership
Interests. For purposes of calculating a Partner's Percentage Interest pursuant
to this Section 4.2.B, cash Capital Contributions by the General Partner will be
deemed to equal the cash contributed by the General Partner plus (a) in the case
of
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cash contributions funded by an offering of any equity interests in or other
securities of the General Partner, the offering costs attributable to the cash
contributed to the Partnership, and (b) in the case of Partnership Units issued
pursuant to Section 7.5.E, an amount equal to the difference between the Value
of the Shares sold pursuant to any Share Option Plan and the net proceeds of
such sale.
C. Classes of Partnership Units. Subject to Section 4.2.A above
and Section 4.2.D below, the Partnership shall have two classes of Partnership
Units entitled "Class A Units" and "Class B Units." Either Class A Units or
Class B Units, at the election of the General Partner, in its sole and absolute
discretion, may be issued to newly admitted Partners in exchange for the
contribution by such Partners of cash, real estate partnership interests, stock,
notes or other assets or consideration; provided that any Partnership Unit that
is not specifically designated by the General Partner as being of a particular
class shall be deemed to be a Class A Unit. Each Class B Unit shall be converted
automatically into a Class A Unit on the day immediately following the
Partnership Record Date for the Distribution Period (as defined in Section
5.1.C) in which such Class B Unit was issued, without the requirement for any
action by either the Partnership or the Partner holding the Class B Unit.
D. Preferred Units Outstanding. Pursuant to Section 4.2.A, the
Partnership has heretofore established and issued Series A Preferred Units,
Series B Preferred Units, and Series C Preferred Units, and the Partnership is
establishing and issuing the Series D Preferred Units in connection with the
adoption of this Agreement. The terms and conditions of the Series A Preferred
Units, the Series B Preferred Units, the Series C Preferred Units, and the
Series D Preferred Units are set forth in Attachment A, Attachment B, Attachment
C, and Attachment D, respectively, attached hereto and made part hereof.
SECTION 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
SECTION 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
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SECTION 4.6 SEPARATE AGREEMENTS
In connection with the issuance of Partnership Units to certain
Additional Limited Partners, the Partnership has entered into separate
agreements that set forth additional rights and obligations of such Additional
Limited Partners and additional terms and conditions of such Additional Limited
Partner's Partnership Interests. Such agreements are described in Exhibits E-1
through E-6 attached hereto and made part hereof.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein, in
Attachment A, Attachment B, Attachment C, and Attachment D hereto, with respect
to Series A Preferred Units, Series B Preferred Units, Series C Preferred Units,
and Series D Preferred Units, respectively, or in an agreement at the time a new
class or series of Partnership Interests is created in accordance with Article
IV hereof, no Partnership Interest shall be entitled to a distribution in
preference to any other Partnership Interest. 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 Entity as a REIT,
to distribute Available Cash (a) to Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of property
to the Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided, that, the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated, and (b) to the
General Partner in an amount sufficient to enable the General Partner Entity to
make distributions to its shareholders that will enable the General Partner
Entity to (1) satisfy the requirements for qualification as a REIT under the
Code and the Regulations (the "REIT Requirements"), and (2) avoid any federal
income or excise tax liability.
B. Method. (i) Each holder of Partnership Interests that is
entitled to any preference in distribution (including, without limitation, the
preferences in distribution set forth in Attachment A, Attachment B, Attachment
C, and Attachment D hereto with respect to Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and Series D Preferred Units,
respectively) shall be entitled to a distribution in accordance with the rights
of any such class of Partnership Interests (and,
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within such class, pro rata in proportion to the respective Percentage Interests
on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within each such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for any
quarter or shorter period with respect to which a distribution is to be made (a
"Distribution Period") Class B Units are outstanding on the Partnership Record
Date for such Distribution Period, the General Partner shall allocate the
Available Cash with respect to such Distribution Period available for
distribution with respect to the Class A Units and Class B Units collectively
between the Partners who are holders of Class A Units ("Class A") and the
Partners who are holders of Class B Units ("Class B") as follows:
(1) Class A shall receive that portion of the
Available Cash (the "Class A Share") determined by multiplying
the amount of Available Cash by the following fraction:
A x Y
----------------------
(A x Y)+(B x X)
(2) Class B shall receive that portion of the
Available Cash (the "Class B Share") determined by multiplying
the amount of Available Cash by the following fraction:
B x X
----------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing formulas,
(i) "A" equals the number of Class A Units outstanding on the
Partnership Record Date for such Distribution Period; (ii) "B"
equals the number of Class B Units outstanding on the
Partnership Record Date for such
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<PAGE> 29
Distribution Period; (iii) "Y" equals the number of days in
the Distribution Period; and (iv) "X" equals the number of
days in the Distribution Period for which the Class B Units
were issued and outstanding.
The Class A Share shall be distributed among Partners holding
Class A Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to a
Share for which such Class A Unit has been redeemed or exchanged. The Class B
Shares shall be distributed among the Partners holding Class B Units on the
Partnership Record Date for the Distribution Period in accordance with the
number of Class B Units held by each Partner on such Partnership Record Date. In
no event shall any Class B Units be entitled to receive any distribution of
Available Cash for any Distribution Period ending prior to the date on which
such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on Different
Dates. If Class B Units which have been issued on different dates are
outstanding on the Partnership Record Date for any Distribution Period, then the
Class B Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of making the allocation of Available
Cash for such Distribution Period among the holders of Partnership Units (and
the formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class B Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, "Series B(1)" and
"Series B(2)" would be as follows:
(1) Series B(1) shall receive that portion of
the Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
B(1) x X(1)
------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(2) Series B(2) shall receive that portion of
the Available Cash determined by multiplying the amount of
Available Cash by the following fraction:
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<PAGE> 30
B(2) x X(2)
------------------------------
(A x Y)+(B(1) x X(1))+(B(2) x X(2))
(3) For purposes of the foregoing formulas the
definitions set forth in Section 5.1.C.3 remain the same
except that (i) "B(1)" equals the number of Partnership Units
in Series B(1) outstanding on the Partnership Record Date for
such Distribution Period; (ii) "B(2)" equals the number of
Partnership Units in Series B(2) outstanding on the
Partnership Record Date for such Distribution Period; (iii)
"X(1)" equals the number of days in the Distribution Period
for which the Partnership Units in Series B(1) were issued and
outstanding; and (iv) "X(2)" equals the number of days in the
Distribution Period for which the Partnership Units in Series
B(2) were issued and outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the Shares of
the General Partner Entity are not Publicly Traded, the General Partner shall
make cash distributions with respect to the Class A Units at least annually for
each taxable year of the Partnership beginning prior to the fifteenth (15th)
anniversary of the Effective Date in an aggregate amount with respect to each
such taxable year at least equal to 95% of the Partnership's taxable income for
such year allocable to the Class A Units, with such distributions to be made not
later than 60 days after the end of such year.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2.
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SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article V and Exhibit A as it
deems necessary to reflect the issuance of such additional Partnership Interests
without the requirements for any other consents or approvals.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's items
of income, gain, loss and deduction (computed in accordance with Exhibit B)
shall be allocated among the Partners in each taxable year (or portion thereof)
as provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 1 of Exhibit C of the Partnership Agreement,
Net Income shall be allocated:
(1) first, to the General Partner to the extent that
cumulative Net Losses previously allocated the General
Partner pursuant to Section 6.1.B(6) exceed cumulative Net
Income previously allocated to the General Partner
pursuant to this clause (1);
(2) second, to each Protected Partner until the cumulative
Net Income allocated such Protected Partner under this
clause (2) equals the cumulative Net Losses allocated such
Protected Partner under Section 6.1.B(5) (and, within the
class of Protected Partners, pro rata in proportion to
their respective percentages of the cumulative Net Losses
allocated all Protected Partners pursuant to Section
6.1.B(5) hereof);
(3) third, to the General Partner until the cumulative Net
Income allocated under this clause (3) equals the
cumulative Net Losses allocated the General Partner under
Section 6.1.B(4);
(4) fourth, to the holders of any Partnership Interests
that are entitled to any preference upon liquidation until
the cumulative Net Income allocated under this clause (4)
equals the cumulative Net Losses allocated to such
Partners under Section 6.1.B(3);
(5) fifth, to the holders of any Partnership Interests
that are entitled to any preference in distribution in
accordance with the rights of any such class of
Partnership Interests until each such Partnership Interest
has been allocated, on a cumulative basis pursuant to this
clause (5), Net Income equal to the amount of
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distributions received which are attributable to the
preference of such class of Partnership Interests (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the
period for which such allocation is being made); and
(6) finally, with respect to Partnership Interests that
are not entitled to any preference in the allocation of
Net Income, pro rata to each such class in accordance with
the terms of such class (and, within such class, pro rata
in proportion to the respective Percentage Interests as of
the last day of the period for which such allocation is
being made).
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated:
(1) first, to the holders of Partnership Interests, in
proportion to their share of the Net Income previously
allocated pursuant to Section 6.1.A(6), to the extent that
any prior allocations of Net Income to such Partners
pursuant to Section 6.1.A(6) exceed, on a cumulative
basis, distributions with respect to such Partnership
Interests pursuant to clause (ii) of Section 5.1.B;
(2) second, with respect to classes of Partnership
Interests that are not entitled to any preference in
distribution upon distribution, pro rata to each such
class in accordance with the terms of such class (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of the
period for which such allocation is being made); provided
that Net Losses shall not be allocated to any Partner
pursuant to this Section 6.1.B(2) to the extent that such
allocation would cause such Partner to have an Adjusted
Capital Account Deficit (or increase any existing Adjusted
Capital Account Deficit) (determined in each case (i) by
not including in the Partners' Adjusted Capital Accounts
any amount that a Partner is obligated to contribute to
the Partnership with respect to any deficit in its Capital
Account pursuant to Section 13.3 and (ii) in the case of a
Partner who also holds classes of Partnership Interests
that are entitled to any preferences in distribution upon
liquidation, by subtracting from such Partners' Adjusted
Capital Account the amount of such preferred distribution
to be made upon liquidation) at the end of such taxable
year (or portion thereof);
(3) third, with respect to classes of Partnership
Interests that are entitled to any preference in
distribution upon liquidation, in reverse order of the
priorities of each such class (and within each such class,
pro rata in proportion to their respective Percentage
Interests as of the last day of the period for which such
allocation is being made; provided that Net Losses shall
not be allocated to any Partner pursuant to this Section
6.1.B(3) to the extent that such allocation
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<PAGE> 33
would cause such Partner to have an Adjusted Capital
Account Deficit (or increase any existing Adjusted Capital
Account Deficit) (determined in each case by not including
in the Partners' Adjusted Capital Accounts any amount that
a Partner is obligated to contribute to the Partnership
with respect to any deficit in its Capital Account
pursuant to Section 13.3) at the end of such taxable year
(or portion thereof);
(4) fourth, to the General Partner in an amount equal to
the excess of (a) the amount of the Partnership Recourse
Liabilities over (b) the Aggregate Protected Amount;
(5) fifth, to and among the Protected Partners, in
proportion to their respective Protected Amounts, until
such time as the Protected Partners as a group have been
allocated cumulative Net Losses pursuant to this clause
(5) equal to the Aggregate Protected Amount; and
(6) thereafter, to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulation
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated by the
General Partner by taking into account facts and circumstances relating to each
Partner's respective interest in the profits of the Partnership. For this
purpose, the General Partner will have discretion in any fiscal year to allocate
such excess Nonrecourse Liabilities among the Partners in any manner permitted
under Code Section 752 and the Regulations thereunder.
D. Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall, to the extent
possible after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
SECTION 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF PARTNERSHIP
INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article VI and Exhibit A as it
deems necessary to reflect the terms of the issuance of such Partnership
Interests, including making preferential allocations to classes of Partnership
Interests that are entitled thereto. Such revisions shall not require the
consent or approval of any other Partner.
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<PAGE> 34
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
A. Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership.
The General Partner may not be removed by the Limited Partners with or without
cause. In addition to the powers now or hereafter granted a general partner of a
limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to Section 7.11, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
to exercise all powers set forth in Section 3.2 and to effectuate the purposes
set forth in Section 3.1, including, without limitation:
(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans and borrowing money to
permit the Partnership to make distributions to its
Partners in such amounts as are required under
Section 5.1.E or will permit the General Partner
Entity (so long as the General Partner Entity
qualifies as REIT) to avoid the payment of any
federal income tax (including, for this purpose,
any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its shareholders
sufficient to permit the General Partner Entity to
maintain REIT status), the assumption or guarantee
of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of
indebtedness (including the securing of same by
mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the
incurring of any obligations the General Partner
deems necessary for the conduct of the activities
of the Partnership;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to
governmental or other agencies having jurisdiction
over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or
all of the assets of the Partnership (including the
exercise or grant of any conversion, option,
privilege or subscription right or other right
available in connection with any assets at any time
held by the Partnership) or the merger or other
combination of the
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<PAGE> 35
Partnership with or into another entity on such
terms as the General Partner deems proper;
(4) the use of the assets of the Partnership
(including, without limitation, cash on hand) for
any purpose consistent with the terms of this
Agreement and on any terms it sees fit, including,
without limitation, the financing of the conduct of
the operations of the General Partner, the
Partnership or any of the Partnership's
Subsidiaries, the lending of funds to other Persons
(including, without limitation, the General
Partner, its Subsidiaries and the Partnership's
Subsidiaries) and the repayment of obligations of
the Partnership and its Subsidiaries and any other
Person in which the Partnership has an equity
investment and the making of capital contributions
to its Subsidiaries;
(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of
any real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or
any Person in which the Partnership has made a
direct or indirect equity investment;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that
the General Partner considers useful or necessary
to the conduct of the Partnership's operations or
the implementation of the General Partner's powers
under this Agreement, including contracting with
contractors, developers, consultants, accountants,
legal counsel, other professional advisors and
other agents and the payment of their expenses and
compensation out of the Partnership's assets;
(7) the mortgage, pledge, encumbrance or hypothecation
of any assets of the Partnership, and the use of
the assets of the Partnership (including, without
limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without
limitation, the financing of the conduct or the
operations of the General Partner or the
Partnership, the lending of funds to other Persons
(including, without limitation, any Subsidiaries of
the Partnership) and the repayment of obligations
of the Partnership, any of its Subsidiaries and any
other Person in which it has an equity investment;
(8) the distribution of Partnership cash or other
Partnership assets in accordance with this
Agreement;
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<PAGE> 36
(9) the holding, managing, investing and reinvesting of
cash and other assets of the Partnership;
(10) the collection and receipt of revenues and income
of the Partnership;
(11) the selection, designation of powers, authority and
duties and the dismissal of employees of the
Partnership (including, without limitation,
employees having titles such as "president," "vice
president," "secretary" and "treasurer") and
agents, outside attorneys, accountants, consultants
and contractors of the Partnership and the
determination of their compensation and other terms
of employment or hiring;
(12) the maintenance of such insurance for the benefit
of the Partnership and the Partners as it deems
necessary or appropriate;
(13) the formation of, or acquisition of an interest
(including non-voting interests in entities
controlled by Affiliates of the Partnership or
third parties) in, and the contribution of property
to, any further limited or general partnerships,
joint ventures, limited liability companies or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of funds or
property to, or making of loans to, its
Subsidiaries and any other Person in which it has
an equity investment from time to time, or the
incurrence of indebtedness on behalf of such
Persons or the guarantee of the obligations of such
Persons); provided that, as long as the General
Partner has determined to continue to qualify as a
REIT, the Partnership may not engage in any such
formation, acquisition or contribution that would
cause the General Partner to fail to qualify as a
REIT;
(14) 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, 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;
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<PAGE> 37
(15) the determination of the fair market value of any
Partnership property distributed in kind, using
such reasonable method of valuation as the General
Partner may adopt;
(16) 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 assets or
investment held by the Partnership;
(17) 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,
individually or jointly with any such Subsidiary or
other Person;
(18) 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
any interest pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering 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 other 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; and
(20) the distribution of cash to acquire Partnership
Units held by a Limited Partner in connection with
a Limited Partner's exercise of its Redemption
Right under Section 8.6; and
(21) the amendment and restatement of Exhibit A to
reflect accurately at all times the Capital
Contributions and Percentage Interests of the
Partners as the same are adjusted from time to time
to the extent necessary to reflect redemptions,
Capital Contributions, the issuance of Partnership
Units, the admission of any Additional Limited
Partner or any Substituted Limited Partner or
otherwise, which amendment and restatement,
notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this
Agreement, as long as the matter or event being
reflected in Exhibit A otherwise is authorized by
this Agreement.
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<PAGE> 38
B. No Approval by Limited Partners. Except as provided in Section
7.11, each of the Limited Partners agrees that the General Partner is authorized
to execute, deliver and perform the above-mentioned agreements and transactions
on behalf of the Partnership without any further act, approval or vote of the
Partners, notwithstanding any other provision of this Agreement, the Act or any
applicable law, rule or regulation, to the full extent permitted under the Act
or other applicable law. 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. Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership and (ii)
liability insurance for the Indemnitees hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Section
13.
E. No Obligations to Consider Tax Consequences of Limited
Partners. In exercising their authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by any of them. The General Partner and the Partnership shall not
have liability to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited Partner
in connection with such decisions, provided that the General Partner has acted
in good faith and pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with the
Secretary of State of Delaware. 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 other
jurisdiction in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware
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<PAGE> 39
and any other state, the District of Columbia or other jurisdiction in which the
Partnership may elect to do business or own property.
SECTION 7.3 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. 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 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as the general
partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall
be responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the operations of the General Partner and to the management and administration
of any Subsidiaries of the General Partner or the Partnership or Affiliates of
the Partnership, such as auditing expenses and filing fees); provided that the
amount of any such reimbursement shall be reduced by (i) any interest earned by
the General Partner with respect to bank accounts or other instruments or
accounts held by it on behalf of the Partnership as permitted in Section 7.5.A
(which interest is considered to belong to the Partnership and shall be paid
over to the Partnership to the extent not applied to reimburse the General
Partner for expenses hereunder); and (ii) any amount derived by the General
Partner from any investments permitted in Section 7.5.A. The General Partner
shall determine in good faith the amount of expenses incurred by it related to
the ownership and operation of, or for the benefit of, the Partnership. If
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and reasonable. Such reimbursements
shall be in addition to any reimbursement to the General Partner pursuant to
Section 10.3.C and as a result of indemnification pursuant to
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Section 7.7. All payments and reimbursements hereunder shall be characterized
for federal income tax purposes as expenses of the Partnership incurred on its
behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
Partnership Interests, Shares, Debt of the Partnership or the General Partner or
rights, options, warrants or convertible or exchangeable securities pursuant to
Article IV (including, without limitation, all costs, expenses, damages and
other payments resulting from or arising in connection with litigation related
to any of the foregoing), all of which expenses are considered by the Partners
to constitute expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. If the General
Partner exercises its rights under the Declaration of Trust to purchase Shares
or otherwise elects to purchase from its shareholders Shares in connection with
a share repurchase or similar program or for the purpose of delivering such
Shares to satisfy an obligation under any dividend reinvestment or equity
purchase program adopted by the General Partner, any employee equity purchase
plan adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, the purchase price paid by the
General Partner for those Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be reimbursable to the General Partner, subject to the
conditions that: (i) if those Shares subsequently are to be sold by the General
Partner, the General Partner shall pay to the Partnership any proceeds received
by the General Partner for those Shares (provided that a transfer of Shares for
Partnership Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such Shares are not retransferred by the General
Partner within thirty (30) days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units (rounded to
the nearest whole Partnership Unit) held by the General Partner equal to the
product attained by multiplying the number of those Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
F. Funding for Certai