SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of earliest event reported: May 14, 1997
First Industrial, L.P.
(Exact name of registrant as specified in its charter)
Delaware 333-21873 36-3924586
(State or other (Reporting File (I.R.S. Employer
jurisdiction of organization) Number) Identification No.)
150 N. Wacker Drive, Suite 150
Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 704-9000
(Registrant's telephone number, including area code)
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Item 7. Financial Statements and Exhibits
Exhibit
Number Exhibit
10 Third Amended and Restated Limited Partnership Agreement of
First Industrial, L.P.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
FIRST INDUSTRIAL, L.P.
By: First Industrial Realty Trust, Inc.
By: /s/ Michael J. Havala
-----------------------------------
Name: Michael J. Havala
Title: Chief Financial Officer,
Treasurer and Secretary
Date: May 15, 1997
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Exhibit Index
Exhibit
Number Exhibit
10 Third Amended and Restated Limited Partnership Agreement of First
Industrial, L.P.
FIRST INDUSTRIAL, L.P.
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS PURSUANT TO A REGISTRATION OR EXEMPTION THEREFROM.
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TABLE OF CONTENTS
Page
ARTICLE I - INTERPRETIVE PROVISIONS
Section 1.1 Certain Definitions ........................ 1
Section 1.2 Rules of Construction ...................... 11
ARTICLE II - CONTINUATION
Section 2.1 Continuation ............................... 12
Section 2.2 Name ....................................... 12
Section 2.3 Place of Business; Registered Agent ........ 12
ARTICLE III - BUSINESS PURPOSE
Section 3.1 Business ................................... 12
Section 3.2 Authorized Activities ...................... 13
ARTICLE IV - CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions ...................... 13
Section 4.2 Additional Partnership Interests ........... 13
Section 4.3 No Third Party Beneficiaries ............... 14
Section 4.4 Capital Accounts ........................... 14
Section 4.5 Return of Capital Account; Interest ........ 15
Section 4.6 Preemptive Rights .......................... 16
Section 4.7 REIT Share Purchases ....................... 16
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Limited Liability .......................... 16
Section 5.2 Profits, Losses and Distributive Shares .... 16
Section 5.3 Distributions .............................. 21
Section 5.4 Distribution upon Redemption................ 22
Section 5.5 Distributions upon Liquidation ............. 22
Section 5.6 Amounts Withheld ........................... 22
ARTICLE VI - PARTNERSHIP MANAGEMENT
Section 6.1 Management and Control of Partnership
Business.................................. 21
Section 6.2 No Management by Limited Partners;
Limitation of Liability .................. 23
Section 6.3 Limitations on Partners .................... 23
Section 6.4 Business with Affiliates ................... 23
Section 6.5 Compensation; Reimbursement of Expenses .... 24
Section 6.6 Liability for Acts and Omissions ........... 24
Section 6.7 Indemnification ............................ 25
ARTICLE VII - ADMINISTRATIVE, FINANCIAL AND TAX MATTERS
Section 7.1 Books and Records .......................... 25
Section 7.2 Annual Audit and Accounting ................ 25
Section 7.3 Partnership Funds .......................... 25
Section 7.4 Reports and Notices ........................ 26
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Page
Section 7.5 Tax Matters ................................ 26
Section 7.6 Withholding ................................ 26
ARTICLE VIII - TRANSFER OF PARTNERSHIP INTERESTS; ADMISSIONS
OF PARTNERS
Section 8.1 Transfer by General Partner ................ 27
Section 8.2 Obligations of a Prior General Partner ..... 27
Section 8.3 Successor General Partner .................. 27
Section 8.4 Restrictions on Transfer and Withdrawal
by Limited Partner ....................... 28
Section 8.5 Substituted Limited Partner ................ 29
Section 8.6 Timing and Effect of Transfers ............. 29
Section 8.7 Additional Limited Partners ................ 29
Section 8.8 Amendment of Agreement and Certificate ..... 30
ARTICLE IX - REDEMPTION
Section 9.1 Right of Redemption ........................ 30
Section 9.2 Timing of Redemption ....................... 30
Section 9.3 Redemption Price ........................... 30
Section 9.4 Assumption of Redemption Obligation ........ 31
Section 9.5 Further Assurances;
Representations........................... 31
Section 9.6 Effect of Redemption ....................... 31
Section 9.7 Registration Rights ........................ 31
ARTICLE X - DISSOLUTION AND LIQUIDATION
Section 10.1 Term and Dissolution ....................... 32
Section 10.2 Liquidation of Partnership Assets .......... 32
Section 10.3 Effect of Treasury Regulations ............. 33
Section 10.4 Time for Winding-Up ........................ 34
ARTICLE XI - AMENDMENTS AND MEETINGS
Section 11.1 Amendment Procedure ........................ 34
Section 11.2 Meetings and Voting ........................ 35
Section 11.3 Voting of LB Units.......................... 35
ARTICLE XII - MISCELLANEOUS PROVISIONS
Section 12.1 Title to Property .......................... 35
Section 12.2 Other Activities of Limited Partners ....... 35
Section 12.3 Power of Attorney .......................... 36
Section 12.4 Notices .................................... 37
Section 12.5 Further Assurances ......................... 37
Section 12.6 Titles and Captions ........................ 37
Section 12.7 Applicable Law ............................. 37
Section 12.8 Binding Agreement .......................... 37
Section 12.9 Waiver of Partition ........................ 37
Section 12.10 Counterparts and Effectiveness ............. 37
Section 12.11 Survival of Representations ................ 37
Section 12.12 Entire Agreement ........................... 38
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Exhibit 1A - First Highland Partners
Exhibit 1B - Schedule of Partners
Exhibit 1C - LB Partners
Exhibit 1D - Contributor Partners
Exhibit 2 - Form of Redemption Notice
Exhibit 3 - Form of Registration Rights Agreement
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FIRST INDUSTRIAL, L.P.
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
The undersigned, being the sole general partner of First Industrial, L.P.
(the "Partnership"), a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act, does hereby amend and restate the Second
Partnership Agreement (as described below) this 14th day of May 1997, as
follows:
R E C I T A L S:
A. The Partnership was formed pursuant to a Certificate of Limited
Partnership filed on November 23, 1993 with the Secretary of State of the State
of Delaware under the name "ProVest, L.P." and a Limited Partnership Agreement
dated November 23, 1993 (the "Original Partnership Agreement").
B. The Original Partnership Agreement was amended and restated as of
January 28, 1994 (such amended and restated partnership agreement, the "Prior
Partnership Agreement").
C. A Second Amended and Restated Limited Partnership Agreement was executed
as of June 30, 1994 (the "Second Partnership Agreement").
D. The General Partner desires to amend and restate the Second Partnership
Agreement (as amended to date) to (i) reflect the interests granted to the Class
B Limited Partner (as hereinafter defined), (ii) to set forth the understandings
and agreements, including certain rights and obligations, among the Partners (as
hereinafter defined) with respect to the Partnership.
ARTICLE I - INTERPRETIVE PROVISIONS
Section 1.1 Certain Definitions. The following terms have the definitions
hereinafter indicated whenever used in this Agreement with initial capital
letters:
Act: The Delaware Revised Uniform Limited Partnership Act, ss.ss. 17-101 to
17-1109 of the Delaware Code Annotated, Title 6, as amended from time to time.
Additional Limited Partner: A Person admitted to the Partnership as a
Limited Partner in accordance with Section 8.7 hereof and who is shown as such
on the books and records of the Partnership.
Adjusted Capital Account: With respect to any Partner, such Partner's
Capital Account maintained in accordance with Section 4.4 hereof, as of the end
of the relevant Fiscal Year of the Partnership, after giving effect to the
following adjustments:
(A) Credit to such Capital Account such Partner's share of Partnership
Minimum Gain determined in accordance with Treasury Regulations Section
1.704-2(g)(1) and such Partner's share of Partner Minimum Gain determined in
accordance with Treasury Regulations Section 1.704-2(i)(5).
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(B) Debit to such Capital Account the items described in Treasury
Regulations Section 1.704- 1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Sections 1.704-1(b)(2)(ii)
and 1.704-2 and shall be interpreted consistently therewith.
Adjusted Capital Account Deficit: With respect to any Partner, the deficit
balance, if any, in that Partner's Adjusted Capital Account as of the end of the
relevant Fiscal Year of the Partnership.
Affiliate: With respect to any referenced Person, (i) a member of such
Person's immediate family; (ii) any Person who directly or indirectly owns,
controls or holds the power to vote ten percent (10%) or more of the outstanding
voting securities of the Person in question; (iii) any Person ten percent (10%)
or more of whose outstanding securities are directly or indirectly owned,
controlled, or held with power to vote by the Person in question; (iv) any
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with the Person in question; (v) if the Person in
question is a corporation, any executive officer or director of such Person or
of any corporation directly or indirectly controlling such Person; and (vi) if
the Person in question is a partnership, any general partner of the partnership
or any limited partner owning or controlling ten percent (10%) or more of either
the capital or profits interest in such partnership. As used herein, "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
Aggregate Protected Amount: With respect to the Contributor Partners, as a
group, the aggregate balances of the Protected Amounts, if any, of the
Contributor Partners, as determined on the date in question.
Agreed Value: In the case of any (i) Contributed Property acquired pursuant
to a Contribution Agreement, the value (exclusive of any related indebtedness
assumed by the Partnership or to which such Contributed Property is taken
subject) of such Contributed Property as set forth in such Contribution
Agreement or, if no such value is set forth for such Contributed Property, the
portion of the consideration provided for under such Contribution Agreement
allocable to such Contributed Property (exclusive of any related indebtedness
assumed by the Partnership or to which such Contributed Property is taken
subject), as determined by the General Partner in its reasonable discretion,
(ii) Contributed Property acquired other than pursuant to a Contribution
Agreement, the fair market value of such property at the time of contribution,
as determined by the General Partner using such method of valuation as it may
adopt in its reasonable discretion and (iii) property distributed to a Partner
by the Partnership, the Partnership's Book 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 Code Section 752 and the Treasury
Regulations thereunder.
Agreement: This Third Amended and Restated Limited Partnership Agreement
and all Exhibits attached hereto, as the same may be amended or restated and in
effect from time to time.
Assignee: Any Person to whom one or more Partnership Units have been
Transferred as permitted under this Agreement but who has not become a
Substituted Limited Partner in accordance with the provisions hereof.
Bankruptcy: Either (i) a referenced Person's making an assignment for the
benefit of creditors, (ii) the filing by a referenced Person of a voluntary
petition in bankruptcy, (iii) a referenced Person's being adjudged insolvent or
having entered against him an order for relief in any bankruptcy or insolvency
proceeding, (iv) the filing by a referenced Person of an answer seeking any
reorganization, composition, readjustment, liquidation, dissolution, or
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similar relief under any law or regulation, (v) the filing by a referenced
Person of an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against him in any proceeding of
reorganization, composition, readjustment, liquidation, dissolution, or for
similar relief under any statute, law or regulation or (vi) a referenced
Person's seeking, consenting to, or acquiescing in the appointment of a trustee,
receiver or liquidator for all or substantially all of his property (or court
appointment of such trustee, receiver or liquidator).
Book-Tax Disparity: With respect to any item of Contributed Property, or
property the Book Value of which has been adjusted in accordance with Section
4.4(D), as of the date of determination, the difference between the Book Value
of such property and the adjusted basis of such property for federal income tax
purposes.
Book Value: With respect to any Contributed Property, the Agreed Value of
such property reduced (but not below zero) by all Depreciation with respect to
such property properly charged to the Partners' Capital Accounts and with
respect to any other asset, the asset's adjusted basis for federal income tax
purposes; provided, however, (a) the Book Value of all Partnership Assets shall
be adjusted in the event of a revaluation of Partnership Assets in accordance
with Section 4.4(D) hereof, (b) the Book Value of any Partnership Asset
distributed to any Partner shall be the fair market value of such asset on the
date of distribution as determined by the General Partner and (c) such Book
Value shall be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
Capital Account: The account maintained by the Partnership for each Partner
described in Section 4.4 hereof.
Capital Contribution: The total amount of cash or cash equivalents and the
Agreed Value of Contributed Property which a Partner contributes or is deemed to
contribute to the Partnership pursuant to the terms of this Agreement.
Cash Payment: The payment to a Redeeming Party of a cash amount determined
by multiplying (i) the number of Partnership Units tendered for redemption by
such Redeeming Party pursuant to a validly proffered Redemption Notice by (ii)
the Unit Value on the date the Redemption Notice is received by the General
Partner.
Class B Limited Partner: First Industrial Realty Trust, Inc., a Maryland
corporation, in its capacity as a limited partner in the Partnership holding
Class B Units.
Class B Unit: The Partnership Interest held by the Class B Limited Partner,
each full Class B Unit representing a $2,500 Capital Contribution.
Class B Redemption: As defined in Section 9.1 hereof.
Class B Redemption Price: As defined in Section 9.1 hereof.
Certificate: The Partnership's Certificate of Limited Partnership filed in
the office of the Secretary of State of the State of Delaware, as amended from
time to time.
Code: The Internal Revenue Code of 1986, as amended from time to time.
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Consent: Either the written consent of a Person or the affirmative vote of
such Person at a meeting duly called and held pursuant to this Agreement, as the
case may be, to do the act or thing for which the consent is required or
solicited, or the act of granting such consent, as the context may require.
Contributed Property: Each property or other asset (excluding cash and cash
equivalents) contributed or deemed contributed to the Partnership (whether as a
result of a Code Section 708 termination or otherwise).
Contribution Agreements: Those certain agreements among one or more of the
Initial Limited Partners (or Persons in which such Initial Limited Partners have
direct or indirect interests) and the Partnership pursuant to which, inter alia,
the Initial Limited Partners (or such Persons), directly or indirectly are
contributing property to the Partnership on the Effective Date in exchange for
Partnership Units.
Contributor Partner(s): That or those Limited Partner(s) listed as
Contributor Partner(s) on Exhibit 1D attached hereto and made a part hereof, as
such Exhibit may be amended from time to time by the General Partner, whether by
express amendment to this Partnership Agreement or by execution of a written
instrument by and between any additional Contributor Partner(s) being affected
thereby and the General Partner, acting on behalf of the Partnership and without
the prior consent of the Limited Partners (whether or not Contributor Partners
other than the Contributor Partner(s) being affected thereby). For purposes
hereof, any successor, assignee, or transferee of the Interest of a Contributor
Partner (other than the Partnership in connection with a redemption pursuant to
Article IX hereof) shall be considered a Contributor Partner for purposes
hereof.
Conversion Factor: The factor applied for converting Partnership Units to
REIT Shares, which shall initially be 1.0; provided, however, in the event that
the REIT (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) subdivides its outstanding REIT Shares or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date (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 REIT Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
distribution, subdivision or combination; provided further, in the event that
the Partnership (a) declares or pays a distribution on the outstanding
Partnership Units in Partnership Units or makes a distribution to all Partners
in Partnership Units, (b) subdivides the outstanding Partnership Units or (c)
combines the outstanding Partnership Units into a smaller number of Partnership
Units, the Conversion Factor shall be adjusted by multiplying the Conversion
Factor by a fraction, the numerator of which shall be the actual number of
Partnership Units issued and outstanding on the record date (determined without
giving effect to such dividend, distribution, subdivision or combination), and
the denominator of which shall be the actual number of Partnership Units
(determined after giving effect to such dividend, distribution, subdivision or
combination) issued and outstanding on such record date. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
Depreciation: For each Fiscal Year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period, except that if the Book 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 adjusted as
necessary so as to be an amount which bears the same ratio to such beginning
Book Value as the federal income tax depreciation, amortization, or other cost
recovery deduction for such year or other period bears to the beginning adjusted
tax basis; provided, however, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period is
zero, Depreciation
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for such year or other period shall be determined with reference to such
beginning Book Value using any reasonable method approved by the General
Partner.
Deemed Original Issue Date: (i) in the case of any Class B Unit which is
part of the first issuance of such units or part of a subsequent issuance of
such units prior to July 1, 1997, the date of such first issuance and (ii) in
the case of any such unit which is part of a subsequent issuance of such units
on or after July 1, 1997, the later of (x) July 1, 1997 and (y) the last
Distribution Period Commencement Date which precedes the date of issuance of
such unit and which succeeds the last Distribution Period for which full
cumulative Priority Return Amounts have been paid; provided, however, that, in
the case of any such unit which is part of a subsequent issuance on or after
July 1, 1997, the date of issuance of which falls between (a) the record date
for dividends payable on the Series B Preferred Shares on the first succeeding
dividend payment date on such stock and (b) such dividend payment date, the
"Deemed Original Issue Date" means the date of the Distribution Period
Commencement Date that immediately follows the date of issuance of such unit.
Distributable Cash: with respect to any period, and without duplication:
(i) all cash receipts of the Partnership during such period
from all sources;
(ii) less all cash disbursements of the Partnership during such
period, including, without limitation, disbursements for operating expenses,
taxes, debt service (including, without limitation, the payment of principal,
premium and interest), redemption of Partnership Interests and capital
expenditures;
(iii) less amounts added to reserves in the sole discretion of
the General Partner, plus amounts withdrawn from reserves in the reasonable
discretion of the General Partner.
Distribution Period: The Initial Distribution Period and each quarterly
distribution period thereafter, commencing on January 1, April 1, July 1 and
October 1 of each year and ending on and including the day preceding the next
Distribution Period Commencement Date.
Distribution Period Commencement Date: January 1, April 1, July 1 and
October 1 of each year, commencing on July 1, 1997.
Effective Date: June 30, 1994.
ERISA: The Employee Retirement Income Security Act of 1976, as
amended from time to time.
First Highland Limited Partners: Those Limited Partners identified on
Exhibit 1A hereto.
First Highland Properties: Those certain properties acquired by the
Partnership pursuant to that certain Contribution Agreement, dated as of
March 19, 1996.
First Highland Units: The Partnership Units issued to the First
Highland Limited Partners in connection with the acquisition of the First
Highland Properties by the Partnership.
Fiscal Year: The calendar year or such other twelve (12) month period
designated by the General Partner.
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General Partner: First Industrial Realty Trust, Inc., a Maryland
corporation, and its respective successor(s) who or which become Successor
General Partner(s) in accordance with the terms of this Agreement.
General Partner Interest: A Partnership Interest held by the General
Partner that is a general partner interest. A General Partner Interest may be
expressed as a number of Partnership Units.
Initial Distribution Period: The period from the Deemed Original Issue Date
for a Class B Unit to, but excluding July 1, 1997.
Involuntary Withdrawal: As to any (i) individual shall mean such
individual's death, incapacity or adjudication of incompetence, (ii) corporation
shall mean its dissolution or revocation of its charter (unless such revocation
is promptly corrected upon notice thereof), (iii) partnership shall mean the
dissolution and commencement of winding up of its affairs, (iv) trust shall mean
the termination of the trust (but not the substitution of trustees), (v) estate
shall mean the distribution by the fiduciary of the estate's complete interest
in the Partnership and (vi) any Partner shall mean the Bankruptcy of such
Partner.
IRS: The Internal Revenue Service, which administers the internal revenue
laws of the United States.
LB Closing Date: January 31, 1997.
LB Partners: The persons identified on Exhibit 1C hereto, following their
admission to the Partnership as Additional Limited Partners.
LB Units: The Partnership Units issued to the LB Partners in connection
with the acquisition by the Partnership of certain properties on the LB Closing
Date.
Limited Partner: Those Persons listed as such on Exhibit 1B attached hereto
and made a part hereof, as such Exhibit may be amended from time to time,
including any Person who becomes a Substituted Limited Partner or an Additional
Limited Partner in accordance with the terms of this Agreement; provided such
term shall not include the Class B Limited Partner.
Limited Partner Interest: A Partnership Interest held by a Limited Partner
that is a limited partner interest. A Limited Partner Interest may be expressed
as a number of Partnership Units.
Nonrecourse Liability: A liability as defined in Treasury Regulations
Section 1.704-2(b)(3).
Notice: A writing containing the information required by this Agreement to
be communicated to a Person and delivered to such Person in accordance with
Section 12.4; provided, however, that any written communication containing such
information actually received by such Person shall constitute Notice for all
purposes of this Agreement.
Partner Minimum Gain: The gain (regardless of character) which would be
realized by the Partnership if property of the Partnership subject to a partner
nonrecourse debt (as such term is defined in Treasury Regulation Section
1.704-2(b)(4)) were disposed of in full satisfaction of such debt on the
relevant date. The adjusted basis of property subject to more than one partner
nonrecourse debt shall be allocated in a manner consistent with the allocation
of basis for purposes of determining Partnership Minimum Gain hereunder. Partner
Minimum Gain shall
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be computed hereunder using the Book Value, rather than the adjusted tax basis,
of the Partnership property in accordance with Treasury Regulations Section
1.704-2(d)(3).
Partner Nonrecourse Deductions: With respect to any partner nonrecourse
debt (as such term is defined in Treasury Regulation Section 1.704-2(b)(4)), the
increase in Partner Minimum Gain during the tax year plus any increase in
Partner Minimum Gain for a prior tax year which has not previously generated a
Partner Nonrecourse Deduction hereunder. The determination of which Partnership
items constitute Partner Nonrecourse Deductions shall be made in a manner
consistent with the manner in which Partnership Nonrecourse Deductions are
determined hereunder.
Partners: The General Partner, the Class B Limited Partner and the Limited
Partners as a group. The term "Partner" shall mean a General Partner, the Class
B Limited Partner or a Limited Partner. Such terms shall be deemed to include
such other Persons who become Partners pursuant to the terms of this Agreement.
Partnership: The Delaware limited partnership referred to herein as First
Industrial, L.P., as such partnership may from time to time be constituted.
Partnership Assets: At any particular time, any assets or property
(tangible or intangible, choate or inchoate, fixed or contingent) owned by the
Partnership.
Partnership Interest or Interest: As to any Partner, such Partner's
ownership interest in the Partnership and including such Partner's right to
distributions under this Agreement and any other rights or benefits which such
Partner has in the Partnership, together with any and 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: The aggregate gain (regardless of character)
which would be realized by the Partnership if all of the property of the
Partnership subject to nonrecourse debt (other than partner nonrecourse debt as
such term is defined in Treasury Regulations Section 1.704-2(b)(4)) were
disposed of in full satisfaction of such debt and for no other consideration on
the relevant date. In the case of any Nonrecourse Liability of the Partnership
which is not secured by a mortgage with respect to any specific property of the
Partnership, any and all property of the Partnership to which the holder of said
liability has recourse shall be treated as subject to such Nonrecourse Liability
for purposes of the preceding sentence. Partnership Minimum Gain shall be
computed separately for each Nonrecourse Liability of the Partnership. For this
purpose, the adjusted basis of property subject to two or more liabilities of
equal priority shall be allocated among such liabilities in proportion to the
outstanding balance of such liabilities, and the adjusted basis of property
subject to two or more liabilities of unequal priority shall be allocated to the
liability of inferior priority only to the extent of the excess, if any, of the
adjusted basis of such property over the outstanding balance of the liability of
superior priority. Partnership Minimum Gain shall be computed hereunder using
the Book Value, rather than the adjusted tax basis, of the Partnership property
in accordance with Treasury Regulations Section 1.704-2(d)(3).
Partnership Nonrecourse Deductions: The amount of Partnership deductions
equal to the increase, if any, in the amount of the aggregate Partnership
Minimum Gain during the tax year (plus any increase in Partnership Minimum Gain
for a prior tax year which has not previously generated a Partnership
Nonrecourse Deduction) reduced (but not below zero) by the aggregate
distributions made during the tax year of the proceeds of a Nonrecourse
Liability of the Partnership which are attributable to an increase in
Partnership Minimum Gain within the meaning of Treasury Regulations Section
1.704-2(d). The Partnership Nonrecourse Deductions for a Partnership tax year
shall consist first of depreciation or cost recovery deductions with respect to
each property of the
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Partnership giving rise to such increase in Partnership Minimum Gain on a pro
rata basis to the extent of each such increase, with any excess made up pro rata
of all items of deduction.
Partnership Unit: A fractional, undivided share of the Partnership
Interests of all Partners (other than the Class B Limited Partner) issued
pursuant to Section 4.1 hereof.
Percentage Interest: As to any Partner, the percentage in the Partnership,
as determined by dividing the Partnership Units then owned by such Partner by
the total number of Partnership Units then outstanding, as the same may be
automatically adjusted from time to time to reflect the issuance and redemption
of Partnership Units in ac cordance with this Agreement, without requiring the
amendment of Exhibit 1B to reflect any such issuance or redemption.
Person: Any individual, partnership, corporation, trust or other entity.
Priority Return Amount: With respect to each Class B Unit, (i) for the
Initial Distribution Period, the pro rata portion of the amount referred to in
clause (ii) of this definition, computed in accordance with the last sentence of
Section 5.3(A) hereof, and (ii) for each Distribution Period thereafter, an
amount equal to 2.1875% of that portion of the Capital Contribution of the Class
B Limited Partner allocable to each such unit. Priority Return Amounts on each
Class B Unit that are not distributed as provided in Section 5.3(A) shall be
cumulative from the Deemed Original Issue Date of such unit.
Profits and Losses: For each Fiscal Year or other period, an amount equal
to the Partnership's taxable income or loss (as the case may be) for such year
or period, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
a. Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or
loss;
b. Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to
this definition, shall be subtracted from such taxable income or loss;
c. Gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Book Value of
the property disposed of notwithstanding that the adjusted tax basis of
such property differs from such Book Value;
d. In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Fiscal
Year or other period, computed in accordance with the definition of
"Depreciation" herein; and
e. In the event that any item of income, gain, loss or deduction
that has been included in the initial computation of Profit or Loss is
subject to the special allocation rules of Sections 5.2(C) and 5.2(D),
Profit or Loss shall be recomputed without regard to such item.
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Protected Amount: With respect to any Contributor Partner, the amount set
forth opposite the name of such Contributor Partner on Exhibit 1D attached
hereto and made a part hereof, as such Exhibit may be modified from time to time
by an amendment to the Partnership Agreement or by execution of a written
instrument by and between the Contributor Partner being affected thereby and the
General Partner, acting on behalf of the Partnership and without the prior
written consent of the Limited Partners (whether or not Contributor Partners
other than the Contributor Partner being affected thereby).
Record Date: The record date established by the General Partner for
distributions pursuant to Section 5.3 hereof, which record date shall be the
same as the record date established by the General Partner for a distribution to
its stockholders of some or all of its portion of such distribution.
Recourse Liabilities: The amount of liabilities owed by the Partnership
(other than nonrecourse liabilities and liabilities to which Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations Section
1.704-2(i)) owned by the Partnership.
Redeeming Party: A Limited Partner or Assignee (other than the General
Partner) who tenders Partnership Units for redemption pursuant to a Redemption
Notice.
Redemption Date: The date for redemption of Partnership Units as set forth
in Section 9.2.
Redemption Effective Date: The first date on which a Redeeming Party may
elect to redeem Partnership Units, which date shall be the later of (i) the
first anniversary of the execution of this Agreement and (ii) the effective date
of any registration statement filed by the Partnership with respect to the REIT
Shares to be issued upon redemption of Partnership Units by a Redeeming Party.
Redemption Notice: A Notice to the General Partner by a Redeeming Party,
substantially in the form attached as Exhibit 2, pursuant to which the Redeeming
Party requests the redemption of Partnership Units in accordance with Article
IX.
Redemption Obligation: The obligation of the Partnership to redeem the
Partnership Units as set forth in Section 9.1(A).
Redemption Period: The 45-day period immediately following the filing with
the SEC by the General Partner of an annual report of the General Partner on
Form 10-K or a quarterly report of the General Partner on Form 10-Q or such
other period or periods as the General Partner may otherwise determine.
Redemption Price: As defined in Section 8.4 hereof.
Redemption Restriction: A restriction on the ability of the Partnership to
redeem the Partnership Units as set forth in Section 9.1(A).
Registration Rights Agreement: A Registration Rights Agreement,
substantially in the form of Exhibit 3 hereto, pursuant to which First
Industrial will agree to register under the Securities Act of 1933, as amended,
REIT Shares issued in connection with Share Payments made under Article IX
hereof.
REIT: A real estate investment trust, as defined in Code Section 856.
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REIT Charter: The Articles of Incorporation of First Industrial filed with
the Department of Assessments and Taxation of the State of Maryland on August
10, 1993, as the same may be amended or restated and in effect from time to
time.
REIT Share: A share of common stock representing an ownership interest in
the General Partner.
REIT Share Rights: Rights to acquire additional REIT Shares issued to all
holders of REIT Shares, whether in the form of rights, options, warrants or
convertible or exchangeable securities, to the extent the same have been issued
without additional consideration after the initial acquisition of such REIT
Shares.
SEC: The Securities and Exchange Commission.
Series B Preferred Shares: 8 3/4% Series B Cumulative Preferred Stock of
First Industrial Realty Trust, Inc.
Share Payment: The payment to a Redeeming Party of a number of REIT Shares
determined by multiplying (i) the number of Partnership Units tendered for
redemption by such Redeeming Party pursuant to a validly proffered Redemption
Notice by (ii) the Conversion Factor. In the event the General Partner grants
any REIT Share Rights prior to such payment, any Share Payment shall include for
the Redeeming Party his ratable share of such REIT Share Rights other than REIT
Share Rights which have expired.
Subsidiary: With respect to any Person, any corporation 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: That Person or those Persons admitted to the
Partnership as substitute Limited Partner(s), in accordance with the provisions
of this Agreement. A Substituted Limited Partner, upon his admission as such,
shall succeed to the rights, privileges and liabilities of his predecessor in
interest as a Limited Partner.
Successor General Partner: Any Person who is admitted to the Partnership as
substitute General Partner pursuant to this Agreement. A Successor General
Partner, upon its admission as such, shall succeed to the rights, privileges and
liabilities of its predecessor in interest as General Partner, in accordance
with the provisions of the Act.
Tax Matters Partner: The General Partner or such other Partner who becomes
Tax Matters Partner pursuant to the terms of this Agreement.
Terminating Capital Transaction: The sale or other disposition of all or
substantially all of the Partnership Assets or a related series of transactions
that, taken together, result in the sale or other disposition of all or
substantially all of the Partnership Assets.
Threshold Percentage: A percentage equal to 85% on the LB Closing Date and
thereafter adjusted upwards (but not downwards) immediately prior to each
solicitation of any vote of, or the seeking of any consent, approval or waiver
from, the Limited Partners generally, to the sum of (i) 85% and (ii) the number
of percentage points equal to the positive difference, if any, between (a) the
aggregate Percentage Interest represented by the LB Units immediately following
the LB Closing Date and (b) the aggregate Percentage Interest represented by the
LP
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Units immediately prior to any such solicitation. For example, if on the LB
Closing Date the LB Units represent a 10% aggregate Percentage Interest, and if
immediately prior to a solicitation the Threshold Percentage is 85% and the
aggregate Percentage Interest represented by the LB Units is 8%, the Threshold
Percentage would be increased to 87% (85% = (10% - 8%)).
Transfer: With respect to any Partnership Unit shall mean a transaction in
which a Partner assigns his Partnership Interest to another Person and includes
any sale, assignment, gift, pledge, mortgage, exchange, hypothecation,
encumbrance or other disposition by law or otherwise; provided, however, the
redemption of any Partnership Interest pursuant to Article IX hereof shall not
constitute a "transfer" for purposes hereof.
Transfer Restriction Date: June 23, 1995.
Treasury Regulations: The Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
Unit Value: With respect to any Partnership Unit, the average of the daily
market price for a REIT Share for the ten (10) consecutive trading days
immediately preceding the date of receipt of a Redemption Notice by the General
Partner multiplied by the Conversion Factor. If the REIT Shares are traded on a
securities exchange or the NASDAQ-National Market System, the market price for
each such trading day shall be the reported last sale price on such day or, if
no sales take place on such day, the average of the closing bid and asked prices
on such day. If the REIT Shares are not traded on a securities exchange or the
NASDAQ-National Market System, the market price for each such trading day shall
be determined by the General Partner using any reasonable method of valuation.
If a Share Payment would include any REIT Share Rights, the value of such REIT
Share Rights shall be determined by the General Partner using any reasonable
method of valuation, taking into account the Unit Value determined hereunder and
the factors used to make such determination and the value of such REIT Share
Rights shall be included in the Unit Value.
Voting Termination Date: The first date after the LB Closing Date on which
either (i) the General Partner holds 90% or more of all Partnership Units or
(ii) the aggregate number of Partnership Units held by the General Partner and
the LB Partners is less than the product of the Threshold Percentage and the
total number of Partnership Units then outstanding.
Section 1.2 Rules of Construction. The following rules of construction
shall apply to this Agreement:
(A) All section headings in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section.
(B) All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders, the
singular shall include the plural, and vice versa, as the context may require.
(C) Each provision of this Agreement shall be considered severable
from the rest, and if any provision of this Agreement or its application to any
Person or circumstances shall be held invalid and contrary to any existing or
future law or unenforceable to any extent, the remainder of this Agreement and
the application of any other provision to any Person or circumstances shall not
be affected thereby and shall be interpreted and enforced to the greatest extent
permitted by law so as to give effect to the original intent of the parties
hereto.
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(D) Unless otherwise specifically and expressly limited in the
context, any reference herein to a decision, determination, act, action,
exercise of a right, power or privilege, or other procedure by the General
Partner shall mean and refer to the decision, determination, act, action,
exercise or other procedure by the General Partner in its sole and absolute
discretion.
ARTICLE II - CONTINUATION
Section 2.1 Continuation. The Partners hereby continue the Partnership
as a limited partnership under the Act. The General Partner shall take all
action required by law to perfect and maintain the Partnership as a limited
partnership under the Act and under the laws of all other jurisdictions in which
the Partnership may elect to conduct business, including but not limited to the
filing of amendments to the Certificate with the Delaware Secretary of State,
and qualification of the Partnership as a foreign limited partnership in the
jurisdictions in which such qualification shall be required, as determined by
the General Partner. The General Partner shall also promptly register the
Partnership under applicable assumed or fictitious name statutes or similar
laws.
Section 2.2 Name. The name of the Partnership is First Industrial, L.P.
The General Partner may adopt such assumed or fictitious names as it deems
appropriate in connection with the qualifications and registrations referred to
in Section 2.1.
Section 2.3 Place of Business; Registered Agent. The principal office
of the Partnership is located at 150 N. Wacker Drive, Suite 150, Chicago,
Illinois 60606, which office may be changed to such other place as the General
Partner may from time to time designate. The Partnership may establish offices
for the Partnership within or without the State of Delaware as may be determined
by the General Partner. The initial registered agent for the Partnership in the
State of Delaware is The Corporation Trust Company, whose address is c/o
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
ARTICLE III - BUSINESS PURPOSE
Section 3.1 Business. The business of the Partnership shall be (i)
conducting any business that may be lawfully conducted by a limited partnership
pursuant to the Act including, without limitation, acquiring, owning, managing,
developing, leasing, marketing, operating and, if and when appropriate, selling,
industrial properties, (ii) entering into any partnership, joint venture or
other relationship to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, (iii) making loans,
guarantees, indemnities or other financial accommodations and borrowing money
and pledging its assets to secure the repayment thereof, (iv) to do any of the
foregoing with respect to any Affiliate or Subsidiary and (v) doing anything
necessary or incidental to the foregoing; provided, however, that business of
the Partnership shall be limited so as to permit the General Partner to elect
and maintain its status as a REIT (unless the General Partner determines no
longer to qualify as a REIT).
Section 3.2 Authorized Activities. In carrying out the purposes of the
Partnership, but subject to all other provisions of this Agreement, the
Partnership is authorized to engage in any kind of lawful activity, and perform
and carry out contracts of any kind, necessary or advisable in connection with
the accomplishment of the purposes and business of the Partnership described
herein and for the protection and benefit of the Partnership;
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provided that the General Partner shall not be obligated to cause the
Partnership to take, or refraining from taking, any action which, in the
judgment of the General Partner, (i) could adversely affect the ability of the
General Partner to qualify and continue to qualify as a REIT, (ii) could subject
the General Partner to additional taxes under Code Section 857 or 4981 or (iii)
could violate any law or regulation of any governmental body or agency having
jurisdiction over the General Partner or its securities.
ARTICLE IV - CAPITAL CONTRIBUTIONS
Section 4.1 Capital Contributions.
(A) Upon the contribution to the Partnership of property in
accordance with a Contribution Agreement, Partnership Units shall be issued in
accordance with, and as contemplated by, such Contribution Agreement, and the
Persons receiving such Partnership Units shall become Partners and shall be
deemed to have made a Capital Contribution as set forth on Exhibit 1. Exhibit 1
also sets forth the initial number of Partnership Units owned by each Partner
and the Percentage Interest of each Partner, which Percentage Interest shall be
adjusted from time to time by the General Partner to reflect the issuance of
additional Partnership Units, the redemption of Partnership Units, additional
Capital Contributions and similar events having an effect on a Partner's
Percentage Interest. Except as set forth in Section 4.2 (regarding issuance of
additional Partnership Units) or Section 7.6 (regarding withholding
obligations), no Partner shall be required under any circumstances to contribute
to the capital of the Partnership any amount beyond that sum required pursuant
to this Article IV.
(B) Anything in the foregoing Section 4.1(A) or elsewhere in this
Agreement notwithstanding, the Partnership Units held by the General Partner
shall, at all times, be deemed to be General Partner units and shall constitute
the General Partner Interest.
Section 4.2 Additional Partnership Interests.
(A) The Partnership may issue additional limited partnership
interests in the form of Partnership Units for any Partnership purpose at any
time or from time to time, to any Partner or other Person (other than the
General Partner, except in accordance with Section 4.2(B) below).
(B) The Partnership also may from time to time issue to the General
Partner additional Partnership Units or other Partnership Interests in such
classes and having such designations, preferences and relative rights (including
preferences and rights senior to the existing Limited Partner Interests) as
shall be determined by the General Partner in accordance with the Act and
governing law. Except as provided in Article IX, any such issuance of
Partnership Units or Partnership Interests to the General Partner shall be
conditioned upon (i) the undertaking by the General Partner of a related
issuance of its capital stock (with such shares having designations, rights and
preferences such that the economic rights of the holders of such capital stock
are substantially similar to the rights of the additional Partnership Interests
issued to the General Partner) and the General Partner making a Capital
Contribution (a) in an amount equal to the net proceeds raised in the issuance
of such capital stock, in the event such capital stock is sold for cash or cash
equivalents or (b) the property received in consideration for such capital
stock, in the event such capital stock is issued in consideration for other
property or (ii) the issuance by the General Partner of capital stock under any
stock option or bonus plan and the General Partner making a Capital Contribution
in an amount equal to the exercise price of the option exercised pursuant to
such stock option or other bonus plan.
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(C) Except as contemplated by Article IX (regarding redemptions) or
Section 4.2(B), the General Partner shall not issue any (i) additional REIT
Shares, (ii) rights, options or warrants containing the right to subscribe for
or purchase REIT Shares or (iii) securities convertible or exchangeable into
REIT Shares (collectively, "Additional REIT Securities") other than to all
holders of REIT Shares, pro rata, unless (x) the Partnership issues to the
General Partner (i) Partnership Interests, (ii) rights, options or warrants
containing the right to subscribe for or purchase Partnership Interests or (iii)
securities convertible or exchangeable into Partnership Interests such that the
General Partner receives an economic interest in the Partnership substantially
similar to the economic interest in the General Partner represented by the
Additional REIT Securities and (y) the General Partner contributes to the
Partnership the net proceeds from, or the property received in consideration
for, the issuance of the Additional REIT Securities and the exercise of any
rights contained in any Additional REIT Securities.
Section 4.3 No Third Party Beneficiaries. The foregoing provisions of
this Article IV are not intended to be for the benefit of any creditor of the
Partnership or other Person to whom any debts, liabilities or obligations are
owed by (or who otherwise has any claim against) the Partnership or any of the
Partners and no such creditor or other Person shall obtain any right under any
such foregoing provision against the Partnership or any of the Partners by
reason of any debt, liability or obligation (or otherwise).
Section 4.4 Capital Accounts.
(A) The Partnership shall establish and maintain a separate Capital
Account for each Partner in accordance with Code Section 704 and Treasury
Regulations Section 1.704-1(b)(2)(iv). The Capital Account of each Partner shall
be credited with:
(1) the amount of all Capital Contributions made to the
Partnership by such Partner in accordance with this Agreement; plus
(2) all income and gain of the Partnership computed in
accordance with this Section 4.4 and allocated to such Partner pursuant to
Article V (including for purposes of this Section 4.4(A), income and gain exempt
from tax);
and shall be debited with the sum of:
(1) all losses or deductions of the Partnership computed in
accordance with this Section 4.4 and allocated to such Partner pursuant to
Article V,
(2) such Partner's distributive share of expenditures of the
Partnership described in Code Section 705(a)(2)(B), and
(3) all cash and the Agreed Value of any property actually
distributed or deemed distributed by the Partnership to such Partner pursuant to
the terms of this Agreement.
Any reference in any section or subsection of this Agreement to the
Capital Account of a Partner shall be deemed to refer to such Capital Account as
the same may be credited or debited from time to time as set forth above.
(B) For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts, the
determination, recognition and classification of each such item shall
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be the same as its determination, recognition and classification for federal
income tax purposes, determined in accordance with Code Section 703(a), with the
following adjustments:
(1) any income, gain or loss attributable to the taxable
disposition of any Partnership Asset shall be determined by treating the
adjusted basis of such property as of the date of such disposition as equal to
the Book Value of such property as of such date;
(2) the computation of all items of income, gain, loss and
deduction shall be made without regard to any Code Section 754 election that may
be made by the Partnership, except to the extent required in accordance with the
provisions of Treasury Regulations Section 1.704-1(b)(2)(iv)(m);
(3) in lieu of depreciation, amortization and other cost
recovery deductions taken into account in computing Profit and Loss, there shall
be taken into account Depreciation for such Fiscal Year;
(4) in the event the Book Value of any Partnership Asset is
adjusted pursuant to Section 4.4(D) below, the amount of such adjustment shall
be treated as gain or loss from the disposition of such asset.
(C) Any transferee of a Partnership Interest shall succeed to a pro
rata portion of the transferor's Capital Account transferred unless such
Transfer causes a Code Section 708 termination of the Partnership, in which case
the Book Value of all Partnership Assets shall be adjusted immediately prior to
the deemed distribution pursuant thereto as provided in Section 4.4(D).
(D) Consistent with the provisions of Treasury Regulations Section
1.704-1(b)(2)(iv)(f), (i) immediately prior to the acquisition of an additional
Partnership Interest by any new or existing Partner in connection with the
contribution of money or other property (other than a de minimis amount) to the
Partnership, (ii) immediately prior to the distribution by the Partnership to a
Partner of Partnership property (other than a de minimis amount) as
consideration for a Partnership Interest and (iii) immediately prior to the
liquidation of the Partnership as defined in Treasury Regulations Section
1.704-1(b)(2)(ii)(g), the Book Value of all Partnership Assets shall be revalued
upward or downward to reflect the fair market value of each such Partnership
Asset as determined by the General Partner using such reasonable method of
valuation as it may adopt.
(E) The foregoing provisions of this Section 4.4 are intended to
comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and
applied in a manner consistent with such Treasury Regulations. In the event the
General Partner shall determine that it is prudent to modify the manner in which
the Partners' Capital Accounts are computed hereunder in order to comply with
such Treasury Regulations, the General Partner may make such modification if
such modification is not likely to have a material effect on the amount
distributable to any Partner under the terms of this Agreement and the General
Partner notifies the other Partners in writing of such modification prior to
making such modification.
Section 4.5 Return of Capital Account; Interest. Except as otherwise
specifically provided in this Agreement, (i) no Partner shall have any right to
withdraw or reduce its Capital Contributions or Capital Account, or to demand
and receive property other than cash from the Partnership in return for its
Capital Contributions or Capital Account; (ii) no Partner shall have any
priority over any other Partners as to the return of its Capital Contributions
or Capital Account; (iii) any return of Capital Contributions or Capital
Accounts to the Partners shall be solely from the Partnership Assets, and no
Partner shall be personally liable for any such return; and (iv) no interest
shall be paid by the Partnership on Capital Contributions or on balances in
Partners' Capital Accounts.
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Section 4.6 Preemptive Rights. No Person shall have any preemptive or
similar rights with respect to the issuance or sale of additional Partnership
Units.
Section 4.7 REIT Share Purchases. If the General Partner acquires
additional REIT Shares pursuant to Article IX of the REIT Charter, the
Partnership shall purchase from the General Partner that number of Partnership
Units determined by applying the Conversion Multiple to the number of REIT
Shares purchased by the General Partner at the same price and on the same terms
as those upon which the General Partner purchased such REIT Shares.
ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS
Section 5.1 Limited Liability. For bookkeeping purposes, the Profits of
the Partnership shall be shared, and the Losses of the Partnership shall be
borne, by the Partners as provided in Section 5.2 below; provided, however, that
except as expressly provided in this Agreement, neither any Limited Partner (in
its capacity as a Limited Partner) nor the Class B Limited Partner (in its
capacity as Class B Limited Partner) shall be personally liable for losses,
costs, expenses, liabilities or obligations of the Partnership in excess of its
Capital Contribution required under Article IV hereof.
Section 5.2 Profits, Losses and Distributive Shares.
(A) Profits. After giving effect to the special allocations, if
any, provided in Section 5.2(C), (D), and (I) Profits in each Fiscal Year shall
be allocated in the following order:
(1) First to the General Partner until the cumulative Profits
allocated to the General Partner under this Section 5.2(A)(1) equal the
cumulative Profits allocated to such Partner under Section 5.2(B)(6);
(2) Second, to the Class B Limited Partner, until the Cumulative
Profits allocated to such Partner under this Section 5.2(A)(2) equal the
cumulative losses allocated to each Partner under Section 5.2(B)(5);
(3) Third, to each Partner in proportion to the cumulative Losses
allocated to such Partner under Section 5.2(B)(4), until the cumulative Profits
allocated to such Partner under this Section 5.2(A)(3) equal the cumulative
Losses allocated to such Partner under Section 5.2(B)(4);
(4) Fourth, to the General Partner in proportion to the cumulative
Losses allocated to the General Partner under this Section 5.2(A)(4) equal the
cumulative Losses allocated to such Partner under Section 5.2(B)(3);
(5) Fifth, to each Partner in proportion to the cumulative Losses
allocated to such Partner under Section 5.2(B)(2), until the cumulative Profits
allocated to such Partner under this Section 5.2(A)(5) equal the cumulative
Losses allocated to such Partner under Section 5.2(B)(2);
(6) Sixth, to each Partner in proportion to the cumulative Losses
allocated to such Partner under Section 5.2(B)(1), until the cumulative Profits
allocated to such Partner under this Section 5.2(A)(6) equal the cumulative
Losses allocated to such Partner under Section 5.2(B)(1); and
(7) then, the balance, if any, to the Partners in proportion to
their respective Partnership Interests.
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(B) Losses. After giving effect to the special allocations, if any,
provided in Section 5.2(C), (D) and (I), Losses in each Fiscal Year shall be
allocated in the following order of priority:
(1) First, to the Partners (other than the Class B Limited
Partners), in proportion to their respective Partnership Interests, but not in
excess of the positive Capital Account balance of any Partner prior to the
allocation provided for in this Section 5.2(B)(1);
(2) Second, to the Partners (other than the Class B Limited
Partner) with positive Capital Account balances prior to the allocation provided
for in this Section 5.2(B)(2), in proportion to the amount of such balances
until all such balances are reduced to zero;
(3) Third, to the General Partner in an amount equal to the excess
of (i) the amount of Recourse Liabilities over (ii) the Aggregate Protected
Amount;
(4) Fourth, to and among the Contributor Partners, in accordance
with their respective Protected Amounts, until such time as the Contributor
Partners have been allocated an aggregate amount of Loss pursuant to this
Section 5.2(B)(4) equal to the Aggregate Protected Amount; and
(5) Fifth, to the Class B Limited Partner, until its Adjusted
Capital Account is reduced to zero;
(6) Thereafter, to the General Partner;
provided, however, (i) that, from and following the first date upon which a
Contributor Partner is no longer a Partner of the Partnership, the provisions of
this Section 5.2(B) shall be null, void and without further force and effect
with respect to such Contributor Partner; (ii) that, this Section 5.2(B) shall
control, notwithstanding any reallocation or adjustment of taxable income, loss
or other items by the Internal Revenue Service or any other taxing authority;
provided, however, that neither the Partnership nor the General Partner (nor any
of their respective affiliates) is required to indemnify any Contributor Partner
(or its affiliates) for the loss of any tax benefit resulting from any
reallocation or adjustment of taxable income, loss or other items by the
Internal Revenue Service or other taxing authority; and (iii) that, during such
period as there are Contributor Partners in the Partnership, the provisions of
Section 5.2(B)(4) shall not be amended in a manner which adversely affects the
Contributor Partners (without the consent of each Contributor Partner).
(C) Special Allocations. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following order
and priority:
(1) Partnership Minimum Gain Chargeback. Notwithstanding any
other provision of this Article V, if there is a net decrease in Partnership
Minimum Gain during any tax year or other period for which allocations are made,
each Partner will be specially allocated items of Partnership income and gain
for that tax year or other period (and, if necessary, subsequent periods) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain during such tax year or other period determined in accordance with Treasury
Regulations Section 1.704-2(g). Allocations pursuant to the preceding sentence
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 5.2(C)(1) is intended to comply with the minimum
gain chargeback requirements set forth in Treasury Regulations Section
1.704-2(f) and shall be interpreted consistently therewith, including the
exceptions to the minimum gain chargeback requirement set forth in Treasury
Regulations Section 1.704-2(f) and (3). If the General Partner
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concludes, after consultation with tax counsel, that the Partnership meets the
requirements for a waiver of the minimum gain chargeback requirement as set
forth in Treasury Regulations Section 1.704-2(f)(4), the General Partner may
take steps reasonably necessary or appropriate in order to obtain such waiver.
(2) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Section (other than Section
5.2(C)(1) which shall be applied before this Section 5.2(C)(2)), if there is a
net decrease in Partner Minimum Gain during any tax year or other period for
which allocations are made, each Partner with a share of Partner Minimum Gain
determined in accordance with Treasury Regulations Section 1.704-2(i)(5) shall
be specially allocated items of Partnership income and gain for that period
(and, if necessary, subsequent periods) in an amount equal to such Partner's
share of the net decrease in Partner Minimum Gain determined in accordance with
Treasury Regulations Section 1.704-2(i)(4). The items to be so allocated shall
be determined in accordance with Treasury Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii). This Section 5.2(C)(2) is intended to comply with the minimum
gain chargeback requirements of Treasury Regulations Section 1.704-2(i)(4) and
shall be interpreted consistently therewith, including the exceptions set forth
in Treasury Regulations Section 1.704-2(f)(2) and (3) to the extent such
exceptions apply to Treasury Regulations Sections 1.704-2(i)(4). If the General
Partner concludes, after consultation with tax counsel, that the Partnership
meets the requirements for a waiver of the Partner Minimum Gain chargeback
requirement set forth in Treasury Regulation 1.704-2(f), but only to the extent
such exception applies to Treasury Regulations Section 1.704-2(i)(4), the
General Partner may take steps necessary or appropriate to obtain such waiver.
(3) Qualified Income Offset. A Partner who unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially
allocated items of Partnership income and gain in an amount and manner
sufficient to eliminate, to the extent required by Treasury Regulations
1.704-1(b)(2)(ii)(d), the Adjusted Capital Account Deficit of the Partner as
quickly as possible, provided that an allocation pursuant to this Section
5.2(C)(3) shall be made if and only to the extent that such Partner would have
an Adjusted Capital Account Deficit after all other allocations provided for in
this Article V have been tentatively made as if this Section 5.2(C)(3) were not
contained in this Agreement.
(4) Partnership Nonrecourse Deductions. Partnership Nonrecourse
Deductions for any taxable year or other period for which allocations are made
will be allocated among the Partners in proportion to their respective
Partnership Interests in the Partnership.
(5) Partner Nonrecourse Deductions. Notwithstanding anything to
the contrary in this Agreement, any Partner Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be allocated to
the Partner who bears the economic risk of loss with respect to the liability to
which the Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
(6) Code Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Partnership asset under Code Section 734(b) or
743(b) is required to be taken into account in determining Capital Accounts
under Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4), the amount of
the adjustment to the Capital Accounts will be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis of the asset), and the gain or loss will be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted under Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
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(7) Depreciation Recapture. In the event there is any recapture
of Depreciation or investment tax credit, the allocation thereof shall be made
among the Partners in the same proportion as the deduction for such Depreciation
or investment tax credit was allocated.
(8) Interest in Partnership. Notwithstanding any other
provision of this Agreement, no allocation of Profit or Loss (or item of Profit
or Loss) will be made to a Partner if the allocation would not have "economic
effect" under Treasury Regulations Section 1.704-1(b)(2)(ii)(a) or otherwise
would not be in accordance with the Partner's interest in the Partnership within
the meaning of Treasury Regulations Section 1.704-1(b)(3).
(D) Curative Allocations. The allocations set forth in Section
5.2(C)(1) through (8) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations Sections 1.704- 1(b) and 1.704-2.
The Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is authorized to further allocate Profits, Losses, and other items among
the Partners in a reasonable manner so as to prevent the Regulatory Allocations
from distorting the manner in which Partnership distributions would be divided
among the Partners under Section 5.3, but for application of the Regulatory
Allocations. In general, the reallocation will be accomplished by specially
allocating other Profits, Losses and items of income, gain, loss and deduction,
to the extent they exist, among the Partners so that the net amount of the
Regulatory Allocations and the special allocations to each Partner is zero. The
General Partner may accomplish this result in any reasonable manner that is
consistent with Code Section 704 and the related Treasury Regulations.
(E) Tax Allocations.
(1) Except as otherwise provided in Section 5.2(E)(2), each
item of income, gain, loss and deduction shall be allocated for federal income
tax purposes in the same manner as each correlative item of income, gain, loss
or deduction, is allocated for book purposes pursuant to the provisions of
Section 5.1 hereof.
(2) Notwithstanding anything to the contrary in this Article V,
in an attempt to eliminate any Book-Tax Disparity with respect to a Contributed
Property, items of income, gain, loss or deduction with respect to each such
property shall be allocated for federal income tax purposes among the Partners
as follows:
(a) Depreciation, Amortization and Other Cost Recovery
Items. In the case of each Contributed Property with a
Book-Tax Disparity, any item of depreciation, amortization
or other cost recovery allowance attributable to such
property shall be allocated as follows: (x) first, to
Partners (the "Non-Contributing Partners") other than the
Partners who contributed such property to the Partnership
(or are deemed to have contributed the property pursuant to
Section 4.1(A) (the "Contributing Partners") in an amount up
to the book allocation of such items made to the
Non-Contributing Partners pursuant to Section 5.1 hereof,
pro rata in proportion to the respective amount of book
items so allocated to the Non-Contributing Partners pursuant
to Section 5.1 hereof; and (y) any remaining depreciation,
amortization or other cost recovery allowance to the
Contributing Partners in proportion to their Percentage
Interests. In no event shall the total depreciation,
amortization or other cost recovery allowance allocated
hereunder exceed the amount of the Partnership's
depreciation, amortization or other cost recovery allowance
with respect to such property.
(b) Gain or Loss on Disposition. In the event the
Partnership sells or otherwise disposes of a Contributed
Property with a Book-Tax Disparity, any gain or loss
recognized by the
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Partnership in connection with such sale or other
disposition shall be allocated among the Partners as
follows: (x) first, any gain or loss shall be allocated to
the Contributing Partners in proportion to their Percentage
Interests to the extent required to eliminate any Book-Tax
Disparity with respect to such property; and (y) any
remaining gain or loss shall be allocated among the Partners
in the same manner that the correlative items of book gain
or loss are allocated among the Partners pursuant to Section
5.1 hereof.
(3) In the event the Book Value of a Partnership Asset
(including a Contributed Property) is adjusted pursuant to Section 4.4(D)
hereof, and such asset has not been deemed distributed by, and recontributed to
the Partnership pursuant to Code Section 708 subsequent thereto, all items of
income, gain, loss or deduction in respect of such property shall be allocated
for federal income tax purposes among the Partners in the same manner as
provided in Section 5.2(E)(2) hereof to take into account any variation between
the fair market value of the property, as determined by the General Partner
using such reasonable method of valuation as it may adopt, and the Book Value of
such property, both determined as of the date of such adjustment.
(4) The General Partner shall have the authority to elect
alternative methods to eliminate the Book-Tax Disparity with respect to one or
more Contributed Properties, as permitted by Treasury Regulations Sections
1.704-3 and 1.704-3T, and such election shall be binding on all of the Partners.
(5) The Partners hereby intend that the allocation of tax items
pursuant to this Section 5.2(E) comply with the requirements of Code Section
704(c) and Treasury Regulations Sections 1.704-3 and 1.704-3T.
(6) The allocation of items of income, gain, loss or deduction
pursuant to this Section 5.2(E) are solely for federal, state and local income
tax purposes, and the Capital Account balances of the Partners shall be adjusted
solely for allocations of "book" items in respect of Partnership Assets pursuant
to Section 5.1 hereof.
(F) Other Allocation Rules. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement, all Profits,
Losses and other items allocated to the Partners will be allocated among them in
proportion to their Percentage Interests.
(2) For purposes of determining the Profits, Losses or any
other item allocable to any period, Profits, Losses and other items will be
determined on a daily, monthly or other basis, as determined by the General
Partner using any permissible method under Code Section 706 and the related
Treasury Regulations.
(3) Except as otherwise provided in this Agreement, all items
of Partnership income, gain, loss and deduction, and other allocations not
provided for in this Agreement will be divided among the Partners in the same
proportions as they share Profits and Losses, provided that any credits shall be
allocated in accordance with Treasury Regulations Section 1.704-1(b)(4)(ii).
(4) For purposes of Treasury Regulations Section 1.752-3(a),
the Partners hereby agree that any nonrecourse liabilities of the Partnership in
excess of the sum of (i) the Partnership Minimum Gain and (ii) the aggregate
amount of taxable gain that would be allocated to the Partners under Section
704(c) (or in the same manner as Section 704(c) in connection with a revaluation
of Partnership property) if the Partnership disposed of (in a taxable
transaction) all Partnership property subject to one or more nonrecourse
liabilities of the Partnership in full satisfaction of such liabilities and for
no other consideration, shall be allocated among the Partners in
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accordance with their respective shares of Profits. The General Partner shall
have discretion in any Fiscal Year to allocate such excess nonrecourse
liabilities among the Partners (a) in a manner reasonably consistent with
allocations (that have substantial economic effect) of some other significant
item of Partnership income or gain or (b) in accordance with the manner in which
it is reasonably expected that the deductions attributable to the excess
nonrecourse liabilities will be allocated.
(G) Partner Acknowledgment. The Partners agree to be bound by the
provisions of this Section 5.2 in reporting their shares of Partnership income,
gain, loss, deduction and credit for income tax purposes.
(H) Regulatory Compliance. The foregoing provisions of this Section
5.2 relating to the allocation of Profits, Losses and other items for federal
income tax purposes are intended to comply with Treasury Regulations Sections
1.704-1(b), 1.704-2, 1.704-3 and 1.704-3T and shall be interpreted and applied
in a manner consistent with such Treasury Regulations.
(I) Priority Allocation. The holder of a Class B Unit shall be
allocated (i) gross income such that, over the life of the Partnership, the sum
of all priority allocations pursuant to this Section 5.2(I) equals (or
approaches as nearly as possible) the sum of all Priority Return Amounts
distributed pursuant to Section 5.3(A), plus (ii) a further amount of gross
income equal to any Priority Return Amount that is expected to be so distributed
in the Fiscal Year succeeding the Fiscal Year in which the allocation is being
made, to the extent allocable to a Distribution Period or portion thereof that
falls within the Fiscal Year preceding the Fiscal Year in which such
distribution is expected to occur.
Section 5.3 Distributions.
(A) The General Partner shall cause the Partnership to distribute
to the holder of each Class B Unit an amount in cash equal to the cumulative
undistributed Priority Return Amount (but not in excess of the Distributable
Cash) on March 31, June 30, September 30 and December 31 of each year,
commencing on June 30, 1997 (or in the case of a Class B Unit with a Deemed
Original Issue Date after June 30, 1997, on the first such distribution date
following the applicable Deemed Original Issue Date); provided that, if any such
distribution date shall be a Saturday, Sunday or day on which banking
institutions in the State of New York are authorized or obligated by law to
close, or a day which is declared a national or New York State holiday (any of
the foregoing, a "Non-business Day"), then such distribution shall be made on
the next succeeding day which is not a Non-business Day. Priority Return Amounts
that are distributable with respect to a period greater or less than a full
Distribution Period shall be computed on the basis of a 360-day year consisting
of 12 30-day months.
(B) After giving effect to Section 5.3(A), if applicable, the
General Partner shall have the authority to cause the Partnership to make
distributions from time to time as it determines, including without limitation,
distributions which are sufficient to enable the General Partner to (i) maintain
its status as a REIT, (ii) avoid the imposition of any tax under Code Section
857 and (iii) avoid the imposition of any excise tax under Code Section 4981;
except that the first distribution paid on Units issued after June 1, 1996 shall
be pro rated to reflect the actual portion of the period for which the
distribution is being paid during which such Units were outstanding, or shall be
in such other amount or computed on such other basis as may be agreed by the
General Partner and the holders of such Units, provided that such other amount
or the amount so computed, as applicable, may not exceed the aforementioned pro
rated amount.
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(C) Distributions pursuant to Section 5.3(B) shall be made pro rata
among the Partners of record on the Record Date established by the General
Partner for the distribution, in accordance with their respective Percentage
Interests, without regard to the length of time the record holder has been such.
(D) The General Partner shall use its reasonable efforts to make
distributions to the Partners so as to preclude any distribution or portion
thereof from being treated as part of a sale of property to the Partnership by a
Partner under Section 707 of the Code or the Treasury 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 Partner being so treated.
Section 5.4 Distribution upon Redemption. Notwithstanding any other
provision hereof, proceeds of a Class B Redemption shall be distributed to the
Class B Limited Partner in accordance with Section 9.1(C).
Section 5.5 Distributions upon Liquidation. Notwithstanding any other
provision hereof, proceeds of a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 10.2.
Section 5.6 Amounts Withheld. All amounts withheld pursuant to the Code
or any provision of state or local tax law and Section 7.6 of this Agreement
with respect to any allocation, payment or distribution to the General Partner,
the Class B Limited Partner, the Limited Partners or Assignees shall be treated
as amounts distributed to such General Partner, the Class B Limited Partner, the
Limited Partner or Assignees, as applicable, pursuant to Section 5.3 of this
Agreement.
ARTICLE VI - PARTNERSHIP MANAGEMENT
Section 6.1 Management and Control of Partnership Business.
(A) Except as otherwise expressly provided or limited by the
provisions of this Agreement, the General Partner shall have full, exclusive and
complete discretion to manage the business and affairs of the Partnership, to
make all decisions affecting the business and affairs of the Partnership and to
take all such action as it deems necessary or appropriate to accomplish the
purposes of the Partnership as set forth herein. Except as set forth in this
Agreement, the Limited Partners shall not have any authority, right, or power to
bind the Partnership, or to manage, or to participate in the management of the
business and affairs of the Partnership in any manner whatsoever. Such
management shall in every respect be the full and complete responsibility of the
General Partner alone as herein provided.
(B) In carrying out the purposes of the Partnership, the General
Partner shall be authorized to take all actions it deems necessary and
appropriate to carry on the business of the Partnership. The Limited Partners
and the Class B Limited Partner, by execution hereof, agrees that the General
Partner is authorized to execute, deliver and perform any agreement and/or
transaction on behalf of the Partnership.
(C) The General Partner and its Affiliates may acquire Limited
Partner Interests from Limited Partners who agree so to transfer Limited Partner
Interests or from the Partnership in accordance with Section 4.2(a). Any Limited
Partner Interest acquired by the General Partner shall be converted into a
General Partner Interest. Upon acquisition of any Limited Partner Interest, any
Affiliate of the General Partner shall have all the rights of a Limited Partner.
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Section 6.2 No Management by Limited Partners; Limitation of Liability.
(A) Neither the Limited Partners, in their capacity as Limited
Partners, nor the Class B Limited Partner, in its capacity as Class B Limited
Partner, shall take part in the day-to-day management, operation or control of
the business and affairs of the Partnership or have any right, power, or
authority to act for or on behalf of or to bind the Partnership or transact any
business in the name of the Partnership. Neither the Limited Partners nor the
Class B Limited Partner, in its capacity as Class B Limited Partner, shall have
any rights other than those specifically provided herein or granted by law where
consistent with a valid provision hereof. Any approvals rendered or withheld by
the Limited Partners or the Class B Limited Partner pursuant to this Agreement
shall be deemed as consultation with or advice to the General Partner in
connection with the business of the Partnership and, in accordance with the Act,
shall not be deemed as participation by the Limited Partners or the Class B
Limited Partner in the business of the Partnership and are not intended to
create any inference that the Limited Partners or the Class B Limited Partner
should be classified as general partners under the Act.
(B) Neither the Limited Partner nor the Class B Limited Partner
shall have any liability under this Agreement except with respect to withholding
under Section 7.6, in connection with a violation of any provision of this
Agreement by such Limited Partner or the Class B Limited Partner or as provided
in the Act.
(C) The General Partner shall not take any action which would
subject a Limited Partner (in its capacity as Limited Partner) or the Class B
Limited Partner (in its capacity as Class B Limited Partner) to liability as a
general partner.
Section 6.3 Limitations on Partners.
(A) No Partner or Affiliate of a Partner shall have any authority
to perform (i) any act in violation of any applicable law or regulation
thereunder, (ii) any act prohibited by Section 6.2(C), or (iii) any act which is
required to be Consented to or ratified pursuant to this Agreement without such
Consent or ratification.
(B) No action shall be taken by a Partner if it would cause the
Partnership to be treated as an association taxable as a corporation for federal
income tax purposes or, without the consent of the General Partner, as a
publicly-traded partnership within the meaning of Section 7704 of the Code. A
determination of whether such action will have the above described effect shall
be based upon a declaratory judgment or similar relief obtained from a court of
competent jurisdiction, a favorable ruling from the IRS or the receipt of an
opinion of counsel.
Section 6.4 Business with Affiliates.
(A) The General Partner, in its discretion, may cause the
Partnership to transact business with any Partner or its Affiliates for goods or
services reasonably required in the conduct of the Partnership's business;
provided that any such transaction shall be effected only on terms competitive
with those that may be obtained in the marketplace from unaffiliated Persons.
The foregoing proviso shall not apply to transactions between the Partnership
and its Subsidiaries. In addition, neither the General Partner nor any Affiliate
of the General Partner may sell, transfer or otherwise convey any property to,
or purchase any property from, the Partnership, except (i) on terms competitive
with those that may be obtained in the marketplace from unaffiliated Persons or
(ii) where the General Partner determines, in its sole judgment, that such sale,
transfer or conveyance confers benefits on the General Partner or the
Partnership in respect of matters of tax or corporate or financial structure;
provided, in the case of this clause (ii), such sale, transfer, or conveyance is
not being effected for the purpose of materially disadvantaging the Limited
Partners.
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(B) In furtherance of Section 6.4(A), the Partnership may lend or
contribute to its Subsidiaries on terms and conditions established by the
General Partner.
Section 6.5 Compensation; Reimbursement of Expenses. In consideration
for the General Partner's services to the Partnership in its capacity as General
Partner, the Partnership shall pay on behalf of or reimburse to the General
Partner (i) all expenses of the General Partner incurred in connection with the
management of the business and affairs of the Partnership, including all
employee compensation of employees of the General Partner and indemnity or other
payments made pursuant to agreements entered into in furtherance of the
Partnership's business, (ii) all amounts payable by the General Partner under
the Registration Rights Agreement and (iii) all general and administrative
expenses incurred by the General Partner. Except as otherwise set forth in this
Agreement, the General Partner shall be fully and entirely reimbursed by the
Partnership for any and all direct and indirect costs and expenses incurred in
connection with the organization and continuation of the Partnership pursuant to
this Agreement. In addition, the General Partner shall be reimbursed for all
expenses incurred by the General Partner in connection with (i) the initial
public offering of REIT Shares by the General Partner and (ii) any other
issuance of additional Partnership Interests or REIT Shares.
Section 6.6 Liability for Acts and Omissions.
(A) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or any of the other
Partners for any act or omission performed or omitted in good faith on behalf of
the Partnership and in a manner reasonably believed to be (i) within the scope
of the authority granted by this Agreement and (ii) in the best interests of the
Partnership or the stockholders of the General Partner. In exercising its
authority hereunder, the General Partner may, but shall not be under any
obligation to, take into account the tax consequences to any Partner of any
action it undertakes on behalf of the Partnership. Neither the General Partner
nor the Partnership shall have any liability as a result of any income tax
liability incurred by a Partner as a result of any action or inaction of the
General Partner hereunder and, by their execution of this Agreement, the Limited
Partners acknowledge the foregoing.
(B) Unless otherwise prohibited hereunder, the General Partner
shall be entitled to exercise any of the powers granted to it and perform any of
the duties required of it under this Agreement directly or through any agent.
The General Partner shall not be responsible for any misconduct or negligence on
the part of any agent; provided that the General Partner selected or appointed
such agent in good faith.
(C) The General Partner acknowledges that it owes fiduciary duties
both to its stockholders and to the Limited Partners and it shall use its
reasonable efforts to discharge such duties to each; provided, however, that in
the event of a conflict between the interests of the stockholders of the General
Partner and the interests of the Limited Partners, the Limited Partners agree
that the General Partner shall discharge its fiduciary duties to the Limited
Partners by acting in the best interests of the General Partner's stockholders.
Nothing contained in the preceding sentence shall be construed as entitling the
General Partner to realize any profit or gain from any transaction between the
General Partner and the Partnership (except in connection with a distribution in
accordance with this Agreement), including from the lending of money by the
General Partner to the Partnership or the contribution of property by the
General Partner to the Partnership, it being understood that in any such
transaction the General Partner shall be entitled to cost recovery only.
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Section 6.7 Indemnification.
(A) The Partnership shall indemnify the General Partner and each
director, officer and stockholder of the General Partner and each Person
(including any Affiliate) designated as an agent by the General Partner in its
reasonable discretion (each, an "Indemnified Party") to the fullest extent
permitted under the Act (including any procedures set forth therein regarding
advancement of expenses to such Indemnified Party) from and against any and all
losses, claims, damages, liabilities, expenses (including reasonable attorneys'
fees), judgments, fines, settlements and any other amounts arising out of or in
connection with any claims, demands, actions, suits or proceedings (civil,
criminal or administrative) relating to or resulting (directly or indirectly)
from the operations of the Partnership, in which such Indemnified Party becomes
involved, or reasonably believes it may become involved, as a result of the
capacity referred to above.
(B) The Partnership shall have the authority to purchase and
maintain such insurance policies on behalf of the Indemnified Parties as the
General Partner shall determine, which policies may cover those liabilities the
General Partner reasonably believes may be incurred by an Indemnified Party in
connection with the operation of the business of the Partnership. The right to
procure such insurance on behalf of the Indemnified Parties shall in no way
mitigate or otherwise affect the right of any such Indemnified Party to
indemnification pursuant to Section 6.7(A) hereof.
(C) The provisions of this Section 6.7 are for the benefit of the
Indemnified Parties, their heirs, successors, assigns and administrators and
shall not be deemed to create any rights in or benefit to any other Person.
ARTICLE VII - ADMINISTRATIVE, FINANCIAL AND TAX MATTERS
Section 7.1 Books and Records. The General Partner shall maintain at
the office of the Partnership full and accurate books of the Partnership showing
all receipts and expenditures, assets and liabilities, profits and losses, names
and current addresses of Partners, and all other records necessary for recording
the Partnership's business and affairs. Each Limited Partner shall have, upon
written demand and at such Limited Partner's expense, the right to receive true
and complete information regarding Partnership matters to the extent required
(and subject to the limitations) under Delaware law.
Section 7.2 Annual Audit and Accounting. The books and records of the
Partnership shall be kept for financial and tax reporting purposes on the
accrual basis of accounting in accordance with generally accepted accounting
principles ("GAAP"). The accounts of the Partnership shall be audited annually
by a nationally recognized accounting firm of independent public accountants
selected by the General Partner (the "Independent Accountants").
Section 7.3 Partnership Funds. The General Partner shall have
responsibility for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its direct or indirect possession or control. All
funds of the Partnership not otherwise invested shall be deposited in one or
more accounts maintained in such banking institutions as the General Partner
shall determine, and withdrawals shall be made only in the regular course of
Partnership business on such signatures as the General Partner may from time to
time determine.
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Section 7.4 Reports and Notices. The General Partner shall provide all
Partners with the following reports no later than the dates indicated or as soon
thereafter as circumstances permit:
(A) By March 31 of each year, IRS Form 1065 and Schedule K-1, or
similar forms as may be required by the IRS, stating each Partner's allocable
share of income, gain, loss, deduction or credit for the prior Fiscal Year;
(B) Within ninety (90) days after the end of each of the first
three (3) fiscal quarters, as of the last day of the fiscal quarter, a report
containing unaudited financial statements of the Partnership, or of the General
Partner if such statements are prepared on a consolidated basis with the General
Partner, and such other information as may be legally required or determined to
be appropriate by the General Partner; and
(C) Within one hundred twenty (120) days after the end of each
Fiscal Year, as of the close of the Fiscal Year, an annual report containing
audited financial statements of the Partnership, or of the General Partner if
such statements are prepared on a consolidated basis with the General Partner,
presented in accordance with GAAP and certified by the Independent Accountants.
Section 7.5 Tax Matters.
(A) The General Partner shall be the Tax Matters Partner of the
Partnership for federal income tax matters pursuant to Code Section
6231(a)(7)(A). The Tax Matters Partner is authorized and required to represent
the Partnership (at the expense of the Partnership) in connection with all
examinations of the affairs of the Partnership by any federal, state, or local
tax authorities, including any resulting administrative and judicial
proceedings, and to expend funds of the Partnership for professional services
and costs associated therewith. The Tax Matters Partner shall deliver to the
Limited Partners within ten (10) business days of the receipt thereof a copy of
any notice or other communication with respect to the Partnership received from
the IRS (or other governmental tax authority), or any court, in each case with
respect to any administrative or judicial proceeding involving the Partnership.
The Partners agree to cooperate with each other in connection with the conduct
of all proceedings pursuant to this Section 7.5(A).
(B) The Tax Matters Partner shall receive no compensation for its
services in such capacity. If the Tax Matters Partner incurs any costs related
to any tax audit, declaration of any tax deficiency or any administrative
proceeding or litigation involving any Partnership tax matter, such amount shall
be an expense of the Partnership and the Tax Matters Partner shall be entitled
to full reimbursement therefor.
(C) The General Partner shall cause to be prepared all federal,
state and local income tax returns required of the Partnership at the
Partnership's expense.
(D) Except as set forth herein, the General Partner shall determine
whether to make (and, if necessary, revoke) any tax election available to the
Partnership under the Code or any state tax law; provided, however, upon the
request of any Partner, the General Partner shall make the election under Code
Section 754 and the Treasury Regulations promulgated thereunder. The Partnership
shall elect to deduct expenses, if any, incurred by it in organizing the
Partnership in accordance with the provisions of Code Section 709.
Section 7.6 Withholding. Each Partner hereby authorizes the Partnership
to withhold from or pay to any taxing authority on behalf of such Partner any
tax that the General Partner determines the Partnership is required to withhold
or pay with respect to any amount distributable or allocable to such Partner.
Any amount paid
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to any taxing authority which does not constitute a reduction in the amount
otherwise distributable to such Partner shall be treated as a loan from the
Partnership to such Partner, which loan shall bear interest at the "prime rate"
as published from time to time in The Wall Street Journal plus two (2)
percentage points, and shall be repaid within ten (10) business days after
request for repayment from the General Partner. The obligation to repay any such
loan shall be secured by such Partner's Partnership Interest and each Partner
hereby grants the Partnership a security interest in his Partnership Interest
for the purposes set forth in this Section 7.6, this Section 7.6 being intended
to serve as a security agreement for purposes of the Uniform Commercial Code
with the General Partner having in respect hereof all of the remedies of a
secured party under the Uniform Commercial Code. Each Partner agrees to take
such reasonable actions as the General Partner may request to perfect and
continue the perfection of the security interest granted hereby. In the event
any Partner fails to repay any deemed loan pursuant to this Section 7.6 the
Partnership shall be entitled to avail itself of any rights and remedies it may
have. Furthermore, upon the expiration of ten (10) business days after demand
for payment, the General Partner shall have the right, but not the obligation,
to make the payment to the Partnership on behalf of the defaulting Partner and
thereupon be subrogated to the rights of the Partnership with respect to such
defaulting Partner.
ARTICLE VIII - TRANSFER OF PARTNERSHIP INTERESTS; ADMISSIONS OF PARTNERS
Section 8.1 Transfer by General Partner. The General Partner may not
voluntarily withdraw or Transfer all or any portion of its General Partner
Interest. Notwithstanding the foregoing, the General Partner may pledge its
General Partner Interest in furtherance of the Partnership's business (including
without limitation, in connection with a loan agreement under which the
Partnership is a borrower) without the consent of any Partner.
Section 8.2 Obligations of a Prior General Partner. Upon an Involuntary
Withdrawal of the General Partner and the subsequent Transfer of the General
Partner's Interest, such General Partner shall (i) remain liable for all
obligations and liabilities (other than Partnership liabilities payable solely
from Partnership Assets) incurred by it as General Partner before the effective
date of such event and (ii) pay all costs associated with the admission of its
Successor General Partner. However, such General Partner shall be free of and
held harmless by the Partnership against any obligation or liability incurred on
account of the activities of the Partnership from and after the effective date
of such event, except as provided in this Agreement.
Section 8.3 Successor General Partner. A successor to all of a General
Partner's General Partner Interest who is proposed to be admitted to the
Partnership as a Successor General Partner shall be admitted as the General
Partner, effective upon the Transfer. Any such transferee shall carry on the
business of the Partnership without dissolution. In addition, the following
conditions must be satisfied:
(A) The Person shall have accepted and agreed to be bound by all
the terms and provisions of this Agreement by executing a counterpart thereof
and such other documents or instruments as may be required or appropriate in
order to effect the admission of such Person as a General Partner; and
(B) An amendment to this Agreement evidencing the admission of such
Person as a General Partner shall have been executed by all General Partners and
an amendment to the Certificate shall have been filed for recordation as
required by the Act.
(C) Any consent required under Section 10.1(A) shall have been
obtained.
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Section 8.4 Restrictions on Transfer and Withdrawal by Limited Partner.
(A) Subject to the provisions of Section 8.4(D), no Limited Partner
may Transfer all or any portion of his Partnership Interest without first
obtaining the Consent of the General Partner, which Consent may be granted or
withheld in the sole and absolute discretion of the General Partner. Any such
purported transfer undertaken without such Consent shall be considered to be
null and void ab initio and shall not be given effect. Each Limited Partner
acknowledges that the General Partner has agreed not to grant any such consent
prior to the Transfer Restriction Date.
(B) No Limited Partner may withdraw from the Partnership other than
as a result of a permitted Transfer (i.e., a Transfer consented to as
contemplated by clause (A) above or clause (D) below or a Transfer pursuant to
clause (C) below) of all of his Partnership Units pursuant to this Article VIII
or pursuant to a redemption or exchange of all of his Partnership Units pursuant
to Article IX. Upon the permitted Transfer or redemption of all of a Limited
Partner's Partnership Units, such Limited Partner shall cease to be a Limited
Partner.
(C) Upon the Involuntary Withdrawal of any Limited Partner (which
shall under no circumstance cause the dissolution of the Partnership), the
executor, administrator, trustee, guardian, receiver or conservator of such
Limited Partner's estate shall become a Substituted Limited Partner upon
compliance with the provisions of Section 8.5(A)(1)-(3).
(D) Subject to clause (E) below, a Limited Partner may Transfer,
with the Consent of the General Partner, all or a portion of his Partnership
Units to (a) a parent or parents, spouse, natural or adopted descendant or
descendants, spouse of such a descendant, or brother or sister, or a trust
created by such Limited Partner for the benefit of such Limited Partner and/or
any such person(s), of which trust such Limited Partner or any such person(s) is
a trustee, (b) a corporation controlled by a Person or Persons named in (a)
above, or (c) if the Limited Partner is an entity, its beneficial owners, and
the General Partner shall grant its Consent to any Transfer pursuant to this
Section 8.4(D) unless such Transfer, in the reasonable judgment of the General
Partner, would cause (or have the potential to cause) the General Partner to
fail to qualify for taxation as a REIT, in which case the General Partner shall
have the absolute right to refuse to permit such Transfer, and any purported
Transfer in violation of this Section 8.4(D) shall be null and void ab initio.
(E) No Transfer of Limited Partnership Units shall be made if such
Transfer would (i) in the opinion of Partnership counsel, cause the Partnership
to be terminated for federal income tax purposes or to be treated as an
association taxable as a corporation (rather than a partnership) for federal
income tax purposes; (ii) be effected through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Code Section 7704 and the Treasury Regulations thereunder, (iii) in
the opinion of Partnership counsel, violate the provisions of applicable
securities laws; (iv) violate the terms of (or result in a default or
acceleration under) any law, rule, regulation, agreement or commitment binding
on the Partnership; (v) cause the Partnership to become, with respect to any
employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e) of the Code); (vi) in the opinion of counsel to the Partnership,
cause any portion of the underlying assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.3-101; or (vii) result in a deemed distribution to any Partner
attributable to a failure to meet the requirements of Treasury Regulations
Section 1.752-2(d)(1), unless such Partner consents thereto.
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(F) Prior to the consummation of any Transfer under this Section
8.4, the transferor and/or the transferee shall deliver to the General Partner
such opinions, certificates and other documents as the General Partner shall
request in connection with such Transfer.
Section 8.5 Substituted Limited Partner.
(A) No transferee shall become a Substituted Limited Partner in
place of his assignor unless and until the following conditions have been
satisfied:
(1) The assignor and transferee file a Notice or other evidence
of Transfer and such other information reasonably required by the General
Partner, including, without limitation, names, addresses and telephone numbers
of the assignor and transferee;
(2) The transferee executes, adopts and acknowledges this
Agreement, or a counterpart hereto, and such other documents as may be
reasonably requested by the General Partner, including without limitation, all
documents necessary to comply with applicable tax and/or securities rules and
regulations;
(3) The assignor or transferee pays all costs and fees
incurred or charged by the Partnership to effect the Transfer and substitution;
and
(4) The assignor or transferee obtains the written Consent of
the General Partner, which may be given or withheld in its sole and absolute
discretion.
(B) If a transferee of a Limited Partner does not become a
Substituted Limited Partner pursuant to Section 8.5(A), such transferee shall be
an Assignee and shall not have any rights to require any information on account
of the Partnership's business, to inspect the Partnership's books or to vote or
otherwise take part in the affairs of the Partnership (such Partnership Units
being deemed to have been voted in the same proportion as all other Partnership
Units held by Limited Partners have been voted). Such Assignee shall be
entitled, however, to all the rights of an assignee of a limited partnership
interest under the Act. Any Assignee wishing to Transfer the Partnership Units
acquired shall be subject to the restrictions set forth in this Article VIII.
Section 8.6 Timing and Effect of Transfers. Unless the General Partner
agrees otherwise, Transfers under this Article VIII may only be made as of the
first day of a fiscal quarter of the Partnership. Upon any Transfer of a
Partnership Interest in accordance with this Article VIII or redemption of a
Partnership Interest in accordance with Article IX, the Partnership shall
allocate all items of Profit and Loss between the assignor Partner and the
transferee Partner in accordance with Section 5.2(F)(2) hereof. The assignor
Partner shall have the right to receive all distributions as to which the Record
Date precedes the date of Transfer and the transferee Partner shall have the
right to receive all distributions thereafter.
Section 8.7 Additional Limited Partners. Other than in accordance with
the transactions specified in the Contribution Agreements, after the initial
execution of this Agreement and the admission to the Partnership of the Initial
Limited Partners, any Person making a Capital Contribution to the Partnership in
accordance herewith shall be admitted as an Additional Limited Partner of the
Partnership only (i) with the Consent of the General Partner and (ii) upon
execution, adoption and acknowledgment of this Agreement, or a counterpart
hereto, and such other documents as may be reasonably requested by the General
Partner, including without limitation, the power of attorney required under
Section 12.3. Upon satisfaction of the foregoing requirements, such Person shall
be
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admitted as an Additional Limited Partner effective on the date upon which the
name of such Person is recorded on the books of the Partnership.
Section 8.8 Amendment of Agreement and Certificate. Upon any admission
of a Person as a Partner to the Partnership, the General Partner shall make any
necessary amendment to this Agreement to reflect such admission and, if required
by the Act, to cause to be filed an amendment to the Certificate.
ARTICLE IX - REDEMPTION
Section 9.1 Right of Redemption.
(A) Subject to any restriction on the General Partner, which
restriction may arise as a result of the REIT Charter, the laws governing the
General Partner or otherwise (a "Redemption Restriction"), beginning on the
Redemption Effective Date, during each Redemption Period each Redeeming Party
shall have the right to require the Partnership to redeem all or a portion of
the Partnership Units held by such Redeeming Party by providing the General
Partner with a Redemption Notice. A Limited Partner may invoke its rights under
this Article IX with respect to 100 Partnership Units or an integral multiple
thereof or all of the Partnership Units held by such Limited Partner. Upon the
General Partner's receipt of a Redemption Notice from a Redeeming Party, the
Partnership shall be obligated (subject to the existence of any Redemption
Restriction) to redeem the Partnership Units from such Redeeming Party (the
"Redemption Obligation").
(B) Upon receipt of a Redemption Notice from a Redeeming Party, the
General Partner shall either (i) cause the Partnership to redeem the Partnership
Units tendered in the Redemption Notice, (ii) assume the Redemption Obligation,
as set forth in Section 9.4, or (iii) provide written Notice to the Redeeming
Party of each applicable Redemption Restriction.
(C) On and after May 14, 2002 at any time or from time to time,
upon such notice as the General Partner may determine, the Partnership may cause
the Partnership to redeem all or such other number of Class B Units as the
General Partner may determine (any such redemption, a "Class B Redemption") at a
cash redemption price per Class B Unit equal to that portion of the Capital
Contribution of the Class B Limited Partner allocable to each such unit, plus
all accumulated and unpaid Priority Return Amounts to the date of Class B
Redemption (such price, the "Class B Redemption Price"). Upon any Class B
Redemption, an amount equal to the product of the Class B Redemption Price and
the number of Class B Units redeemed by the Partnership shall be distributed by
the Partnership to the Class B Limited Partner.
Section 9.2 Timing of Redemption. The Redemption Obligation (or the
obligation to provide Notice of an applicable Redemption Restriction, if one
exists) shall mature on the date which is seven (7) business days after the
receipt by the General Partner of a Redemption Notice from the Redeeming Party
(the "Redemption Date").
Section 9.3 Redemption Price. On or before the Redemption Date, the
Partnership (or the General Partner if it elects pursuant to Section 9.4) shall
deliver to the Redeeming Party, in the sole and absolute discretion of the
General Partner either (i) a Share Payment or (ii) a Cash Payment. In order to
enable the Partnership to effect a redemption by making a Share Payment pursuant
to this Section 9.3, the General Partner in its sole and absolute discretion may
issue to the Partnership the number of REIT Shares required to make such Share
Payment
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in exchange for the issuance to the General Partner of Partnership Units equal
in number to the quotient of the number of REIT Shares issued and Conversion
Factor.
Section 9.4 Assumption of Redemption Obligation. Upon receipt of a
Redemption Notice, the General Partner, in its sole and absolute discretion,
shall have the right to assume the Redemption Obligation of the Partnership. In
such case, the General Partner shall be substituted for the Partnership for all
purposes of this Article IX and, upon acquisition of the Partnership Units
tendered by the Redeeming Party pursuant to the Redemption Notice shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units. Such exchange transaction shall be treated for federal income tax
purposes by the Partnership, the General Partner and the Redeeming Party as a
sale by the Redeeming Party as seller to the General Partner as purchaser.
Section 9.5 Further Assurances; Certain Representations. Each party to
this Agreement agrees to execute any documents deemed reasonably necessary by
the General Partner to evidence the issuance of any Share Payment to a Redeeming
Party. Notwithstanding anything herein to the contrary, each holder of First
Highland Units agrees that, if the General Partner shall elect to satisfy a
Redemption Obligation with respect to First Highland Units by making a Share
Payment, such Redemption Obligation shall mature on the date which is seven (7)
business days after receipt by the Partnership and the General Partner of
documents similar to the "Investor Materials" submitted in connection with the
sale of the First Highland Properties to the Partnership and any other similar
documents reasonably required by, and in form reasonably satisfactory to, the
Partnership. Each Limited Partner, by executing this Agreement, shall be deemed
to have represented to the General Partner and the Partnership that (i) its
acquisition of its Partnership Interest on the date hereof is made as a
principal for its own account, for investment purposes only and not with a view
to the resale or distribution of such Partnership Interest and (ii) if it shall
receive REIT Shares pursuant to this Article IX other than pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
that its acquisition of such REIT Shares is made as a principal for its own
account, for investment purposes only and not with a view to the resale or
distribution of such REIT Shares and agrees that such REIT Shares may be bear a
legend to the effect that such REIT Shares have not been so registered and may
not be sold other than pursuant to such a registration statement or an exemption
from the registration requirements of such Act.
Section 9.6 Effect of Redemption. Upon the satisfaction of the
Redemption Obligation by the Partnership or the General Partner, as the case may
be, the Redeeming Party shall have no further right to receive any Partnership
distributions in respect of the Partnership Units so redeemed and shall be
deemed to have represented to the Partnership and the General Partner that the
Partnership Units tendered for redemption are not subject to any liens, claims
or encumbrances. Upon a Class B Redemption by the Partnership, the Class B
Limited Partner shall have no further right to receive any Partnership
distributions or allocations in respect of the Class B Units so redeemed.
Section 9.7 Registration Rights. In the event a Limited Partner
receives REIT Shares in connection with a redemption of Partnership Units
originally issued to Initial Limited Partners on June 30, 1994 pursuant to this
Article IX, such Limited Partner shall be entitled to have such REIT Shares
registered under the Securities Act of 1933, as amended, as provided in the
Registration Rights Agreement.
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ARTICLE X - DISSOLUTION AND LIQUIDATION
Section 10.1 Term and Dissolution. The Partnership commenced as of
November 23, 1993, and shall continue until December 31, 2092, at which time the
Partnership shall dissolve or until dissolution occurs prior to that date for
any one of the following reasons:
(A) An Involuntary Withdrawal or a voluntary withdrawal, even
though in violation of this Agreement, of the General Partner unless, within
ninety (90) days after such event of withdrawal all the remaining Partners agree
in writing to the continuation of the Partnership and to the appointment of a
Successor General Partner;
(B) Entry of a decree of judicial dissolution of the Partnership
under the Act; or
(C) The sale, exchange or other disposition of all or substantially
all of the Partnership Assets.
Section 10.2 Liquidation of Partnership Assets.
(A) Subject to Section 10.2(E), in the event of dissolution
pursuant to Section 10.1, the Partnership shall continue solely for purposes of
winding up the affairs of, achieving a final termination of, and satisfaction of
the creditors of, the Partnership. The General Partner (or, if there is no
General Partner remaining, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for oversight of the
winding up and dissolution of the Partnership. The Liquidator shall obtain a
full accounting of the assets and liabilities of the Partnership and such
Partnership Assets shall be liquidated (including, at the discretion of the
Liquidator, in exchange, in whole or in part, for REIT Shares) as promptly as
the Liquidator is able to do so without any undue loss in value, with the
proceeds therefrom applied and distributed in the following order:
(1) First, to the discharge of Partnership debts and
liabilities to creditors other than Partners;
(2) Second, to the discharge of Partnership debts and
liabilities to the Partners;
(3) Third, to the Class B Limited Partner in an amount equal
to any unpaid Priority Return Amounts;
(4) The balance, if any, to the Partners in accordance with
their positive Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods.
(B) In accordance with Section 10.2(A), the Liquidator shall
proceed without any unnecessary delay to sell and otherwise liquidate the
Partnership Assets; provided, however, that if the Liquidator shall determine
that an immediate sale of part or all of the Partnership Assets would cause
undue loss to the Partners, the Liquidator may defer the liquidation except (i)
to the extent provided by the Act or (ii) as may be necessary to satisfy the
debts and liabilities of the Partnership to Persons other than the Partners.
(C) If, in the sole and absolute discretion of the Liquidator,
there are Partnership Assets that the Liquidator will not be able to liquidate,
or if the liquidation of such assets would result in undue loss to the Partners,
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the Liquidator may distribute such Partnership Assets to the Partners in-kind,
in lieu of cash, as tenants-in-common in accordance with the provisions of
Section 10.2(A). The foregoing notwithstanding, such in-kind distributions shall
only be made if in the Liquidator's good faith judgment that is in the best
interest of the Partners.
(D) Upon the complete liquidation and distribution of the
Partnership Assets, the Partners shall cease to be Partners of the Partnership,
and the Liquidator shall execute, acknowledge and cause to be filed all
certificates and notices required by law to terminate the Partnership. Upon the
dissolution of the Partnership pursuant to Section 10.1, the Liquidator shall
cause to be prepared, and shall furnish to each Partner, a statement setting
forth the assets and liabilities of the Partnership. Promptly following the
complete liquidation and distribution of the Partnership Assets, the Liquidator
shall furnish to each Partner a statement showing the manner in which the
Partnership Assets were liquidated and distributed.
(E) Notwithstanding the foregoing provisions of this Section 10.2,
in the event that the Partnership shall dissolve as a result of the expiration
of the term provided for herein or as a result of the occurrence of an event of
the type described in Section 10.1(B) or (C), then each Limited Partner shall be
deemed to have delivered a Redemption Notice on the date of such dissolution. In
connection with each such Redemption Notice, the General Partner shall have the
option of either (i) complying with the redemption procedures contained in
Article IX or (ii) at the request of any Limited Partner, delivering to such
Limited Partner, Partnership property approximately equal in value to the value
of such Limited Partner's Partnership Units upon the assumption by such Limited
Partner of such Limited Partner's proportionate share of the Partnership's
liabilities and payment by such Limited Partner (or the Partnership) of any
excess (or deficiency) of the value of the property so delivered over the value
of such Limited Partner's Partnership Units. In lieu of requiring such Limited
Partner to assume its proportionate share of Partnership liabilities, the
General Partner may deliver to such Limited Partner unencumbered Partnership
property approximately equal in value to the net value of such Limited Partner's
Partnership Units.
Section 10.3 Effect of Treasury Regulations.
(A) In the event the Partnership is "liquidated" within the meaning
of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be
made pursuant to this Article X to the General Partner, the Limited Partners and
the Class B Limited Partner who have positive Capital Accounts in compliance
with Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Contributor
Partner has a deficit balance in its Capital Account (after giving effect to all
contributions (without regard to this Section 10.3(A)), distributions and
allocations), each such Contributor Partner shall contribute to the capital of
the Partnership an amount equal to its respective deficit balance, such
obligation to be satisfied within ninety (90) days following the liquidation and
dissolution of the Partnership in accordance with the provisions of this Article
X hereof. Conversely, if any Partner other than a Contributor Partner has a
deficit balance in its Capital Account (after giving effect to all contributions
(without regard to this Section 10.3(A)), distributions and allocations), such
Partner shall have no obligation to make any contribution to the capital of the
Partnership. Any deficit restoration obligation pursuant to the provisions
hereof shall be for the benefit of creditors of the Partnership or any other
Person to whom any debts, liabilities, or obligations are owed by (or who
otherwise has any claim against) the Partnership or the general partner, in its
capacity as General Partner of the Partnership.
(B) In the event the Partnership is "liquidated" within the meaning
of Treasury Regulations Section 1.704-1(b)(2)(ii)(g) but there has been no
dissolution of the Partnership under Section 10.1 hereof, then the Partnership
Assets shall not be liquidated, the Partnership's liabilities shall not be paid
or discharged and the Partnership's affairs shall not be wound up. In the event
of such a liquidation there shall be deemed to have been a distribution of
Partnership Assets in kind to the Partners in accordance with their respective
Capital Accounts
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followed by a recontribution of the Partnership Assets by the Partners also in
accordance with their respective Capital Accounts.
Section 10.4 Time for Winding-Up. Anything in this Article X
notwithstanding, a reasonable time shall be allowed for the orderly winding-up
of the business and affairs of the Partnership and the liquidation of the
Partnership Assets in order to minimize any potential for losses as a result of
such process. During the period of winding-up, this Agreement shall remain in
full force and effect and shall govern the rights and relationships of the
Partners inter se.
ARTICLE XI - AMENDMENTS AND MEETINGS
Section 11.1 Amendment Procedure.
(A) Amendments to this Agreement may be proposed by the General
Partner. An amendment proposed at any time when the General Partner holds less
than 90% of all Partnership Units will be adopted and effective only if it
receives the Consent of the holders of a majority of the Partnership Units not
then held by the General Partner and an amendment proposed at any time when the
General Partner holds 90% or more of all Partnership Units may be made by the
General Partner without the Consent of any Limited Partner; provided, however,
no amendment shall be adopted if it would (i) convert a Limited Partner's
Interest in the Partnership into a general partner interest, (ii) increase the
liability of a Limited Partner under this Agreement, (iii) except as otherwise
permitted in this Agreement, alter the Partner's rights to distributions set
forth in Article V, or the allocations set forth in Article V, (iv) alter or
modify any aspect of the Partners' rights with respect to redemption of
Partnership Units, (v) cause the early termination of the Partnership (other
than pursuant to the terms hereof) or (vi) amend this Section 11.1(A), in each
case without the Consent of each Partner adversely affected thereby. In
connection with any proposed amendment of this Agreement requiring Consent, the
General Partner shall either call a meeting to solicit the vote of the Partners
or seek the written vote of the Partners to such amendment. In the case of a
request for a written vote, the General Partner shall be authorized to impose
such reasonable time limitations for response, but in no event less than ten
(10) days, with the failure to respond being deemed a vote consistent with the
vote of the General Partner.
(B) Notwithstanding the foregoing, amendments may be made to this
Agreement by the General Partner, without the Consent of any Limited Partner, to
(i) add to the representations, duties or obligations of the General Partner or
surrender any right or power granted to the General Partner herein; (ii) cure
any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein or make any other provisions with
respect to matters or questions arising hereunder which will not be inconsistent
with any other provision hereof; (iii) reflect the admission, substitution,
termination or withdrawal of Partners in accordance with this Agreement; or (iv)
satisfy any requirements, conditions or guidelines contained in any order,
directive, opinion, ruling or regulation of a federal or state agency or
contained in federal or state law. The General Partner shall reasonably promptly
notify the Limited Partners whenever it exercises its authority pursuant to this
Section 11.1(B).
(C) Within ten (10) days of the making of any proposal to amend
this Agreement, the General Partner shall give all Partners Notice of such
proposal (along with the text of the proposed amendment and a statement of its
purposes).
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Section 11.2 Meetings and Voting.
(A) Meetings of Partners may be called by the General Partner. The
General Partner shall give all Partners Notice of the purpose of such proposed
meeting not less than seven (7) days nor more than thirty (30) days prior to the
date of the meeting. Meetings shall be held at a reasonable time and place
selected by the General Partner. Whenever the vote or Consent of Partners is
permitted or required hereunder, such vote or Consent shall be requested by the
General Partner and may be given by the Partners in the same manner as set forth
for a vote with respect to an amendment to this Agreement in Section 11.1(A).
(B) Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action to be taken is signed by the Partners owning Percentage Interests
required to vote in favor of such action, which consent may be evidenced in one
or more instruments. Consents need not be solicited from any other Partner if
the written consent of a sufficient number of Partners has been obtained to take
the action for which such solicitation was required.
(C) Each Limited Partner may authorize any Person or Persons,
including without limitation the General Partner, to act for him by proxy on all
matters on which a Limited Partner may participate. Every proxy (i) must be
signed by the Limited Partner or his attorney-in-fact, (ii) shall expire eleven
(11) months from the date thereof unless the proxy provides otherwise and (iii)
shall be revocable at the discretion of the Limited Partner granting such proxy.
Section 11.3 Voting of LB Units.
On any matter on which the Limited Partners shall be entitled to
vote, consent or grant an approval or waiver, following the admissions of the LB
Partners to the Partnership as Additional Limited Partners and through the
Voting Termination Date, each holder of the LB Units shall be deemed (i) in
connection with any matter submitted to a vote, to have cast all votes
attributable to such holder's LB Units in the same manner as the votes
attributable to the Units held by the General Partner are cast on such matter,
and (ii) in connection with any consent, approval or waiver, to have taken the
same action as the General Partner shall have taken with respect to its Units in
connection therewith. If the General Partner shall not have the right to vote,
consent or grant an approval or waiver on a matter, each holder of LB Units
shall vote or act as directed by the General Partner.
ARTICLE XII - MISCELLANEOUS PROVISIONS
Section 12.1 Title to Property. All property owned by the Partnership,
whether real or personal, tangible or intangible, shall be deemed to be owned by
the Partnership as an entity, and no Partner, individually, shall have any
ownership of such property. The Partnership may hold any of its assets in its
own name or, in the name of its nominee, which nominee may be one or more
individuals, corporations, partnerships, trusts or other entities.
Section 12.2 Other Activities of Limited Partners. Except as expressly
provided otherwise in this Agreement or in any other agreement entered into by a
Limited Partner or any Affiliate of a Limited Partner and the Partnership, the
General Partner or any Subsidiary of the Partnership or the General Partner, any
Limited Partner or any Affiliate of any Limited Partner may engage in, or
possess an interest in, other business ventures of every nature and description,
independently or with others, including, without limitation, real estate
business ventures, whether or not such other enterprises shall be in competition
with any activities of the Partnership, the
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General Partner or any Subsidiary of the Partnership or the General Partner; and
neither the Partnership, the General Partner, any such Subsidiary nor the other
Partners shall have any right by virtue of this Agreement in and to such
independent ventures or to the income or profits derived therefrom.
Section 12.3 Power of Attorney.
(A) Each Partner hereby irrevocably appoints and empowers the
General Partner (which term shall include the Liquidator, in the event of a
liquidation, for purposes of this Section 12.3) and each of their authorized
officers and attorneys-in-fact with full power of substitution as his true and
lawful agent and attorney-in-fact, with full power and authority in his name,
place and stead to:
(1) make, execute, acknowledge, publish and file in the
appropriate public offices (a) any duly approved amendments to the Certificate
pursuant to the Act and to the laws of any state in which such documents are
required to be filed; (b) any certificates, instruments or documents as may be
required by, or may be appropriate under, the laws of any state or other
jurisdiction in which the Partnership is doing or intends to do business; (c)
any other instrument which may be required to be filed by the Partnership under
the laws of any state or by any governmental agency, or which the General
Partner deems advisable to file; (d) any documents which may be required to
effect the continuation of the Partnership, the admission, withdrawal or
substitution of any Partner pursuant to Article VIII, dissolution and
termination of the Partnership pursuant to Article X, or the surrender of any
rights or the assumption of any additional responsibilities by the General
Partner; (e) any document which may be required to effect an amendment to this
Agreement to correct any mistake, omission or inconsistency, or to cure any
ambiguity herein, to the extent such amendment is permitted by Section 11.1(B);
and (f) all instruments (including this Agreement and amendments and
restatements hereof) relating to the determination of the rights, preferences
and privileges of any class or series of Partnership Units issued pursuant to
Section 4.2(B) of this Agreement; and
(2) sign, execute, swear to and acknowledge all voting ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole discretion of the General Partner, to make, evidence,
give, confirm or ratify any vote, consent, approval, agreement or other action
which is made or given by the Partners hereunder or is consistent with the terms
of this Agreement and appropriate or necessary, in the sole discretion of the
General Partner, to effectuate the terms or intent of this Agreement.
(B) Nothing herein contained shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article XI or
as may be otherwise expressly provided for in this Agreement.
(C) The foregoing grant of authority (i) is a special power of
attorney, coupled with an interest, and it shall survive the Involuntary
Withdrawal of any Partner and shall extend to such Partner's heirs, successors,
assigns and personal representatives; (ii) may be exercised by the General
Partner for each and every Partner acting as attorney-in-fact for each and every
Partner; and (iii) shall survive the Transfer by a Limited Partner of all or any
portion of its Interest and shall be fully binding upon such transferee; except
that the power of attorney shall survive such assignment with respect to the
assignor Limited Partner for the sole purpose of enabling the General Partner to
execute, acknowledge and file any instrument necessary to effect the admission
of the transferee as a Substitute Limited Partner. Each Partner hereby agrees to
be bound by any representations made by the General Partner, acting in good
faith pursuant to such power of attorney. Each Partner shall execute and deliver
to the General Partner, within fifteen (15) days after receipt of the General
Partner's request therefor, such further designations, powers of attorney and
other instruments as the General Partner deems necessary to effectuate this
Agreement and the purposes of the Partnership.
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(D) Each LB Partner hereby irrevocably appoints and empowers the
General Partner and the Liquidator, in the event of a liquidation, and each of
their authorized officers and attorneys-in-fact with full power of substitution,
as the true and lawful agent and attorney-in-fact of such LB Partner with full
power and authority in the name, place and stead of such LB Partner to take such
actions (including waivers under the Partnership Agreement) or refrain from
taking such action as the General Partner reasonably believes are necessary or
desirable to achieve the purposes of Section 11.3 of the Partnership Agreement.
Section 12.4 Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery, (i) if to a Limited Partner, at the most current address given by such
Limited Partner to the General Partner by means of a notice given in accordance
with the provisions of this Section 12.4, which address initially is the address
contained in the records of the General Partner, or (ii) if to the General
Partner, 150 North Wacker Drive, Suite 150, Chicago, Illinois 60606, Attn:
President.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if hand delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; or when receipt is acknowledged, if telecopied.
Section 12.5 Further Assurances. The parties agree to execute and
deliver all such documents, provide all such information and take or refrain
from taking any action as may be necessary or desirable to achieve the purposes
of this Agreement and the Partnership.
Section 12.6 Titles and Captions. All article or section titles or
captions in this Agreement are solely for convenience and shall not be deemed to
be part of this Agreement or otherwise define, limit or extend the scope or
intent of any provision hereof.
Section 12.7 Applicable Law. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
law of the State of Delaware, without regard to its principles of conflicts of
laws.
Section 12.8 Binding Agreement. This Agreement shall be binding upon
the parties hereto, their heirs, executors, personal representatives, successors
and assigns.
Section 12.9 Waiver of Partition. Each of the parties hereto
irrevocably waives during the term of the Partnership any right that it may have
to maintain any action for partition with respect to any property of the
Partnership.
Section 12.10 Counterparts and Effectiveness. This Agreement may be
executed in several counterparts, which shall be treated as originals for all
purposes, and all so executed shall constitute one agreement, binding on all of
the parties hereto, notwithstanding that all the parties are not signatory to
the original or the same counterpart. Any such counterpart shall be admissible
into evidence as an original hereof against each Person who executed it. The
execution of this Agreement and delivery thereof by facsimile shall be
sufficient for all purposes, and shall be binding upon any party who so
executes.
Section 12.11 Survival of Representations. All representations and
warranties herein shall survive the dissolution and final liquidation of the
Partnership.
<PAGE>
-38-
Section 12.12 Entire Agreement. This Agreement (and all Exhibits
hereto) contains the entire understanding among the parties hereto and
supersedes all prior written or oral agreements among them respecting the within
subject matter, unless otherwise provided herein. There are no representations,
agreements, arrangements or understandings, oral or written, among the Partners
hereto relating to the subject matter of this Agreement which are not fully
expressed herein and in said Exhibits.
<PAGE>
-39-
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the parties hereto as of the day and year first above written.
General Partner: FIRST INDUSTRIAL REALTY
TRUST, INC., as sole General
Partner of the Partnership
By: /s/ Michael J. Havala
-------------------------------
Michael J. Havala
FIRST INDUSTRIAL REALTY
TRUST, INC., as Class B Limited Partner
By: /s/ Michael J. Havala
-------------------------------
Michael J. Havala
<PAGE>
EXHIBIT 1A
First Highland Partners Number of Units
Farlow Road Associates Limited Partnership 2,751
Highland Associates Limited Partnership 69,039
Peter Murphy 56,184
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
Peter O'Connor 118,281
Partridge Road Associates Limited Partnership 2,751
Shadeland Associates Limited Partnership 42,975
Shadeland Corporation 4,442
Kevin Smith 13,571
Jonathan Stott 182,126
<PAGE>
Exhibit 1B
Schedule of Partners
General Partner Number of Units
First Industrial Realty Trust, Inc. 30,043,617
Limited Partners
Daniel R. Andrew, TR of the Daniel R.
Andrew Trust UA Dec 29 92 137,489
BK Columbus Venture 24,789
John E. de B Blockey, TR of the John E.
De B Blockey Trust 8,187
Michael W. Brennan 7,587
Henry D. Bullock & Terri D. Bullock &
Shawn Stevenson TR of the Bullock Childrens
Education Trust UA Dec 20 94
FBO Benjamin Dure Bullock 770
Henry D. Bullock & Terri D. Bullock &
Shawn Stevenson TR of the Bullock childrens
Education Trust UA Dec 20 94
FBO Christine Laurel Bullock 770
Edward Burger 9,261
Henry D. Bullock & Terri D. Bullock TR
of the Henry D. & Terri D. Bullock
Trust UA Aug 28 92 12,551
Michael G. Damone, TR of the Michael G.
Damone Trust UA Nov 4 69 144,296
Robert L. Denton 6,286
<PAGE>
General Partner Number of Units
Henry E. Dietz Trust UA Jan 16 81 36,476
W. Allen Doane TR of the W. Allen
Doane Trust UA May 31, 91 4,416
Timothy Donohue 2,000
Farlow Road Associates Limited Partnership 2,751
Thelma C. Gretzinger Trust 450
Clay Hamlin & Lynn Hamlin JT TEN WROS 15,159
Highland Associates Limited Partnership 69,039
Robert W. Holman, Jr. 150,134
Steven B. Hoyt 250,000
Federick K. Ito 3,880
Michael W. Jenkins 3,831
Peter Kepic 9,261
Paul T. Lambert 39,737
Lambert Investment Corporation 13,606
LGR Investment Fund Ltd 22,556
Duane Lund 13,617
Eileen Millar 2,880
<PAGE>
General Partner Number of Units
Linda Miller 2,000
Peter Murphy 56,184
Anthony Muscatello 81,654
North Star Associates Limited Partnership 19,333
Arden O'Connor 63,845
Peter O'Connor 66,181
Shidler Equities LP 254,541
Eduardo Paneque 2,000
Partridge Road Associates Limited Partnership 2,751
James C. Reynolds 38,697
Shadeland Associates Limited Partnership 42,976
Shadeland Corporation 4,442
Jay H. Shidler 65,118
Jay H. Shidler & Wallette A. Shidler
TEN ENT 1,223
Michael B. Slade 2.829
Kevin Smith 13,571
<PAGE>
General Partner Number of Units
Robert Stein 56,778
S. Larry Stein 56,778
Jonathan Stott 130,026
Michael T. Tomasz 23,868
Mark S. Whiting 25,206
Holman/Shidler Investment Corporation 22,079
Joseph Dresner 149,531
The Milton Dresner Revocable Trust
dated October 22, 1976 149,531
The Jack Freidman Revocable Living Trust
dated March 23, 1978 26,005
Jernie Holdings Corp. 180,499
Fourbur Family Co., L.P. 50,478
Fourbur Co., L.L.C. 27,987
Jerome Lazarus 18,653
Constance Lazarus 417,961
Susan Burman 523,155
Judith Draizin 331,742
<PAGE>
General Partner Number of Units
Jan Burman 18,653
Danielle Draizin 6,538
Heather Draizin 6,538
Jason Draizin 13,078
Charles T. Andrews 754
Perry C. Caplan 1,388
Charles S. Cook and
Shelby H. Cook, tenants in the entirety 634
George L. Cramer, Jr. 2,262
Darwin B. Dosch 1,388
Charles F. Downs 1,508
Fitz & Smith Partnership 3,410
Dennis G. Goodwin and
Jeannie L. Goodwin, tenants in the entirety 6,166
Internal Investment Company 3,016
Thomas J. Johnson, Jr. and
Sandra L. Johnson, tenants in the entirety 2,142
Nourhan Kailian 2,183
Craig R. Martin 754
<PAGE>
General Partner Number of Units
Joseph Musti 1,508
Dean A. Nachtigall 10,076
Jack F. Ream 1,071
Glenn C. & Linda A. Rexroth 2,142
Andre G. Richard 1,508
Edwad C. Roberts and
Rebecca S. Roberts, tenants in the entirety 8,308
W.F.O. Rosenmiller 634
Edward Jon Sarama 634
David W. Smith, and
Doris L. Smith, tenants in the entirety 754
Gary L. Smith and
Joyce A. Smith, tenants in the entirety 1,508
SRS PARTNERSHIP 2,142
Barry L. Tracey 2,142
<PAGE>
Exhibit 1C
LB Partners
Jernie Holdings Corp., a New York corporation
Fourbur Family Co., L.P., a New York limited partnership
Fourbur Co., L.L.C., a New York limited liability company
Jerome Lazarus
Constance Lazarus
Susan Burman
Judith Draizin
Jan Burman
Judith Draizin as custodian
under the NYUGMA until
the age of 21 for Danielle Draizin
Judith Draizin as custodian
under the NYUGMA until
the age of 21 for Heather Draizin
Judity Draizin as custodian
under the NYUGMA until
the age of 21 for Jason Draizin
<PAGE>
Exhibit 1D
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Additional Transferee
Limited Partners Partner Protected
Additional Limited Partners Protected Amount Transferee Partner Amount
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Lazarus Burman Associates 100,000 Jerome Lazarus 100,000
Jan Burman 0
- -------------------------------------------------------------------------------------------------------------------------
2. Jan Burman Management 200,000 Jerome Lazarus 100,000
Company Jan Burman 100,000
- -------------------------------------------------------------------------------------------------------------------------
3. Jerry Lazarus Management 2,500,000 Jerome Lazarus 1,260,394
Co. Jan Burman 1,239,606
- -------------------------------------------------------------------------------------------------------------------------
4. Connie Lazarus 600,000 Jerome Lazarus 305,792
Management Company Jan Burman 294,208
- -------------------------------------------------------------------------------------------------------------------------
5. Red Ground Co. 4,000,000 Jerome Lazarus 2,307,610
Jan Burman 1,692,390
- -------------------------------------------------------------------------------------------------------------------------
6. Surrey Company 6,700,000 Jerome Lazarus 3,350,000
Jan Burman 3,350,000
- -------------------------------------------------------------------------------------------------------------------------
7. Jernie Investors Co. 900,000 Constance Lazqarus 720,000
Susan Burman 180,000
Judity Draizin 0
Jernie Holdings Corp. 0
- -------------------------------------------------------------------------------------------------------------------------
8. 109 Industrial Co., LLC 4,300,000 Jerome Lazarus 4,228,630
Jan Burman 71,370
- -------------------------------------------------------------------------------------------------------------------------
9. LB Management Co. 5,600,000 Jerome Lazarus 5,507,043
Jan Burman 92,94?
- -------------------------------------------------------------------------------------------------------------------------
10. JOHJ Co. 1,200,000 Judith Draizin 1,200,000
- -------------------------------------------------------------------------------------------------------------------------
11. Laz-Bur co 900,000 Constance Lazarus 449,990
Susan Burman 450,010
- -------------------------------------------------------------------------------------------------------------------------
Total 27,000,000 27,000,000
- -------------------------------------------========================= =========================
</TABLE>
EXHIBIT 1D
- ---------------------------------------------------------------------------
Total by Transferee Partner Protected Amount
- ---------------------------------------------------------------------------
1. Jan Burman (6,300,000)
2. Jerome Lazarus (17,000,000)
3. Constance Lazarus (3,600,000)
4. Jernie Holdings Corp. (100,000)
- ---------------------------------------------------------------------------
Total (27,000,000)
- ------------------------------------------------===========================
<PAGE>
FIRST INDUSTRIAL, L.P.
EXHIBIT 2
TO
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
Form of Redemption Notice
<PAGE>
Exhibit 2
Redemption Notice
The undersigned hereby irrevocably (i) elects to exercise its
redemption rights contained in Section 9.1(A) of the Second Amended and Restated
Limited Partnership Agreement of First Industrial, L.P. (the "Partnership
Agreement") with respect to an aggregate of _____ Partnership Units (as defined
in the Partnership Agreement), (ii) surrenders such Partnership Units and all
right, title and interest therein and (iii) directs that the REIT shares (as
defined in the Partnership Agreement), or applicable cash amount if so
determined by the General Partner (as defined in the Partnership Agreement) in
accordance with the Partnership Agreement, deliverable upon redemption of such
Partnership Units be delivered to the address specified below.
Dated: _______________________
Name of Limited Partner: ____________________
Social Security or
Federal Employer ID Number: ____________________
------------------------------------------
(Signature of Limited Partner)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State)(Zip Code)
Signature Guaranteed by:
------------------------------------------
<PAGE>
FIRST INDUSTRIAL, L.P.
EXHIBIT 3
TO
THIRD AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
Form of Registration Rights Agreement
<PAGE>
Exhibit 3
REGISTRATION RIGHTS AGREEMENT
Dated as of June __, 1994
of
First Industrial Realty Trust, Inc.
for the benefit of
HOLDERS OF LIMITED PARTNERSHIP UNITS
of
First Industrial, L.P.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of June , 1994, by First Industrial Realty Trust, Inc. (the "Company")
for the benefit of the persons who own limited partnership units ("Units") of
First Industrial, L.P. (the "Partnership") on the date hereof and their
successors, assigns and transferees (herein referred to collectively as the
"Holders" and individually as a "Holder").
WHEREAS, on the date hereof each Holder is or will become the owner of
Units in the Partnership in connection with the contribution (the
"Contributions") of certain real properties and other assets to the Partnership;
WHEREAS, on the date hereof the Company is consummating an initial public
offering of its common stock and is becoming the sole general partner of the
Partnership;
WHEREAS, in connection with the foregoing, the Company has agreed, subject
to the terms, conditions and limitations set forth in the limited partnership
agreement of the Partnership (the "Partnership Agreement"), to provide the
Holders with certain registration rights.
NOW, THEREFORE, the Company for the benefit of the Holders agrees as
follows:
Section 1. Definitions.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.
Holder or Holders: As set forth in the preamble.
Majority Holders: At any time, Holders of Registrable Securities and Units
then redeemable for Registrable Securities who, if all such Units were so
redeemed, would then hold a majority of the Registrable Securities.
NASD: The National Association of Securities Dealers, Inc.
Person: Any individual, partnership, corporation, trust or other entity.
Prospectus: A prospectus included in the Shelf Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the Shelf
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.
Registrable Securities: The Shares, excluding (i) Shares for which the
Shelf Registration Statement shall have become effective under the Securities
Act and which have been disposed of under the Shelf Registration Statement, (ii)
Shares sold or otherwise distributed pursuant to Rule 144 under the Securities
Act and (iii) Shares as to which registration under the Securities Act is not
required to permit the sale thereof to the public.
Registration Expenses: shall mean any and all expenses incident to
performance of or compliance with this Agreement, including, without limitation:
(i) all SEC, stock exchange or NASD registration and filing fees, (ii) all fees
and expenses incurred in connection with compliance with state securities or
blue sky laws
<PAGE>
-33-
(including reasonable fees and disbursements of counsel in connection with blue
sky qualification of any of the Registrable Securities and the preparation of a
Blue Sky Memorandum) and compliance with the rules of the NASD, (iii) all
expenses of any Persons in preparing or assisting in preparing, word processing,
printing and distributing the Shelf Registration Statement, any Prospectus,
certificates and other documents relating to the performance of and compliance
with this Agreement, (iv) all fees and expenses incurred in connection with the
listing, if any, of any of the Registrable Securities on any securities exchange
or exchanges pursuant to Section 3(1) hereof, and (v) the fees and disbursements
of counsel for the Company and of the independent public accountants of the
Company, including the expenses of any special audits or "cold comfort" letters,
if any, required by or incident to such performance and compliance. Registration
Expenses shall specifically exclude underwriting discounts and commissions,
brokerage or dealer fees, the fees and disbursements of counsel, accountants or
other representatives of a selling Holder, and transfer taxes, if any, relating
to the sale or disposition of Registrable Securities by a selling Holder, all of
which shall be borne by such Holder in all cases.
Registration Notice: As set forth in Section 3(b) hereof.
Sale Period: The 45-day period immediately following the filing with the
SEC by the Company of an annual report of the Company on Form 10-K or a
quarterly report of the Company on Form 10-Q or such other period as the Company
may determine.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from time to time.
Shares: The shares of common stock, $.01 par value, of the Company issued
to Holders of Units upon redemption or exchange of their Units.
Shelf Registration: A registration required to be effected pursuant to
Section 2 hereof.
Shelf Registration Statement: shall mean a "shelf" registration statement
of the Company and any other entity required to be a registrant with respect to
such shelf registration statement pursuant to the requirements of the Securities
Act which covers all of the Registrable Securities on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all materials incorporated by
reference therein.
Units: Limited partnership interests in the Partnership issued to the
Holders in connection with the Contributions.
Section 2. Shelf Registration Under the Securities Act.
(a) Filing of Shelf Registration Statement. Within 13 months following the
date hereof, the Company shall cause to be filed a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities in
accordance with the terms hereof and will use its reasonable best efforts to
cause such Shelf Registration Statement to be declared effective by the SEC as
soon as reasonably practicable. The Company agrees to use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective under
the Securities Act until such time as the aggregate number of Units and
Registrable Securities outstanding is less than 5% of the aggregate number of
Units outstanding on the date hereof (after giving effect to the Contributions)
and, subject to Section 3(b) and Section 3(i), further agrees to supplement or
amend the Shelf Registration Statement, if and as
<PAGE>
-34-
required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement or
by the Securities Act or by any other rules and regulations thereunder for Shelf
Registration. Each Holder who sells Shares as part of the Shelf Registration
shall be deemed to have agreed to all of the terms and conditions of this
Agreement and to have agreed to perform any an all obligations of a Holder
hereunder.
(b) Expenses. The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a). Each Holder shall pay all
underwriting discounts and commissions, brokerage or dealer fees, the fees and
disbursements of counsel, accountants or other representatives of such Holder
and transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Shelf Registration Statement or Rule 144
under the Securities Act.
(c) Inclusion in Shelf Registration Statement. Not later than 30 days prior
to filing the Shelf Registration Statement with the SEC, the Company shall
notify each Holder of its intention to make such filing and request advice from
each Holder as to whether such Holder desires to have Registrable Securities
held by it or which it is entitled to receive not later than the last day of the
first Sale Period occurring in whole or in part after the date of such notice
included in the Shelf Registration Statement at such time. Any Holder who does
not provide the information reasonably requested by the Company in connection
with the Shelf Registration Statement as promptly as practicable after receipt
of such notice, but in no event later than 20 days thereafter, shall not be
entitled to have its Registrable Securities included in the Shelf Registration
Statement at the time it becomes effective, but shall have the right thereafter
to deliver to the Company a Sale Notice as contemplated by Section 3(b).
Section 3. Registration Procedures.
In connection with the obligations of the Company with respect to the Shelf
Registration Statement pursuant to Section 2 hereof, the Company shall:
(a) prepare and file with the SEC, within the time period set forth in
Section 2(a) hereof, a Shelf Registration Statement, which Shelf Registration
Statement (i) shall be available for the sale of the Registrable Securities in
accordance with the intended method or methods of distribution by the selling
Holders thereof and (ii) shall comply as to form in all material respects with
the requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith.
(b) subject to the last three sentences of this Section 3(b) and to Section
3(i) hereof, (i) prepare and file with the SEC such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the applicable
period; (ii) cause each Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 or any
similar rule that may be adopted under the Securities Act; (iii) respond
promptly to any comments received from the SEC with respect to the Shelf
Registration Statement, or any amendment, post-effective amendment or supplement
relating thereto; and (iv) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Shelf Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the selling Holders thereof. Notwithstanding anything
to the contrary contained herein, the Company shall not be required to take any
of the actions described in clauses (i), (ii) or (iii) above with respect to
each particular Holder of Registrable Securities unless and until the Company
has received either a written notice (a "Registration Notice") from a Holder
that such Holder intends to make offers or sales under the Shelf Registration
Statement as specified in such Registration Notice or a written response from
such Holder of the type contemplated by Section 2(c); provided, however, that
the Company shall have 7 business days to prepare and file any such amendment or
supplement after receipt of a Registration Notice.
<PAGE>
-35-
Once a Holder has delivered such a written response or a Registration Notice to
the Company, such Holder shall promptly provide to the Company such information
as the Company reasonably requests in order to identify such Holder and the
method of distribution in a post-effective amendment to the Shelf Registration
Statement or a supplement to a Prospectus. Offers or sales under the Shelf
Registration Statement may be made only during a Sale Period. Such Holder also
shall notify the Company in writing upon completion of such offer or sale or at
such time as such Holder no longer intends to make offers or sales under the
Shelf Registration Statement.
(c) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, as many copies of each
applicable Prospectus, including each preliminary Prospectus, and any amendment
or supplement thereto and such other documents as such Holder may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; the Company consents to the use of such Prospectus,
including each preliminary Prospectus, by each such Holder of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by such Prospectus or the preliminary Prospectus.
(d) use its reasonable best efforts to register or qualify the Registrable
Securities by the time the Shelf Registration Statement is declared effective by
the SEC under all applicable state securities or "blue sky" laws of such
jurisdictions as any Holder of Registrable Securities covered by the Shelf
Registration Statement shall reasonably request in writing, keep each such
registration or qualification effective during the period the Shelf Registration
Statement is required to be kept effective or during the period offers or sales
are being made by a Holder that has delivered a Registration Notice to the
Company, whichever is shorter, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Holder; provided, however, that the Company shall not be required (i) to
qualify generally to do business in any jurisdiction or to register as a broker
or dealer in such jurisdiction where it would not be required so to qualify or
register but for this Section 3(d), (ii) to subject itself to taxation in any
such jurisdiction or (iii) to submit to the general service of process in any
such jurisdiction.
(e) notify each Holder when the Shelf Registration Statement has become
effective and notify each Holder of Registrable Securities that has delivered a
Registration Notice to the Company promptly and, if requested by such Holder,
confirm such advice in writing (i) when any post-effective amendments and
supplements to the Shelf Registration Statement become effective, (ii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iii) if the Company receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose and (iv) of the happening of any event during the
period the Shelf Registration Statement is effective as a result of which the
Shelf Registration Statement or a related Prospectus contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading.
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Shelf Registration Statement at the earliest
possible moment.
(g) furnish to each Holder of Registrable Securities that has delivered a
Registration Notice to the Company, without charge, at least one conformed copy
of the Shelf Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto, unless
requested).
<PAGE>
-36-
(h) cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any Securities Act legend; and
enable certificates for such Registrable Securities to be issued for such
numbers of shares and registered in such names as the selling Holders may
reasonably request at least two business days prior to any sale of Registrable
Securities.
(i) subject to the last three sentences of Section 3(b) hereof, upon the
occurrence of any event contemplated by Section 3(e)(iv) hereof, use its
reasonable best efforts promptly to prepare and file a supplement or prepare,
file and obtain effectiveness of a post-effective amendment to the Shelf
Registration Statement or a related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(j) make available for inspection by representatives of the Holders of the
Registrable Securities and any counsel or accountant retained by such Holders,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, counsel or accountant in connection with the Shelf Registration
Statement; provided, however, that such records, documents or information which
the Company determines in good faith to be confidential, and notifies such
representatives, counsel or accountants in writing that such records, documents
or information are confidential, shall not be disclosed by the representatives,
counsel or accountants unless (i) the disclosure of such records, documents or
information is necessary to avoid or correct a material misstatement or omission
in the Shelf Registration Statement, (ii) the release of such records, documents
or information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) such records, documents or information have been
generally made available to the public otherwise than in violation of this
Agreement.
(k) a reasonable time prior to the filing of any Prospectus, any amendment
to the Shelf Registration Statement or amendment or supplement to a Prospectus,
provide copies of such document (not including any documents incorporated by
reference therein unless requested) to the Holders of Registrable Securities
that have provided a Registration Notice to the Company.
(l) use its reasonable best efforts to cause all Registrable Securities to
be listed on any securities exchange on which similar securities issued by the
Company are then listed.
(m) obtain a CUSIP number for all Registrable Securities, not later than
the effective date of the Shelf Registration Statement.
(n) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering at least 12
months which shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
(o) use its reasonable best efforts to cause the Registrable Securities
covered by the Shelf Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company to enable Holders that have delivered
Registration Notices to the Company to consummate the disposition of such
Registrable Securities.
<PAGE>
-37-
The Company may require each Holder of Registrable Securities to furnish to
the Company in writing such information regarding the proposed distribution by
such Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing.
In connection with and as a condition to the Company's obligations with
respect to the Shelf Registration Statement pursuant to Section 2 hereof and
this Section 3, each Holder agrees that (i) it will not offer or sell its
Registrable Securities under the Shelf Registration Statement until (A) it has
either (1) provided a Registration Notice pursuant to Section 3(b) hereof or (2)
had Registrable Securities included in the Shelf Registration Statement at the
time it became effective pursuant to Section 2(c) hereof and (B) it has received
copies of the supplemented or amended Prospectus contemplated by Section 3(b)
hereof and receives notice that any post-effective amendment has become
effective; (ii) upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 3(b)(iv) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to the
Shelf Registration Statement until such Holder receives copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof and
receives notice that any post-effective amendment has become effective, and, if
so directed by the Company, such Holder will deliver to the Company (at the
expense of the Company) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
registrable Securities current at the time of receipt of such notice; and (iii)
all offers and sales under the Shelf Registration Statement shall be completed
within forty-five (45) days after the first date on which offers or sales can be
made pursuant to clause (i) above, and upon expiration of such forty-five (45)
day period the Holder will not offer or sell its Registrable Securities under
the Shelf Registration Statement until it has again complied with the provisions
of clauses (i)(A)(1) and (B) above, except that if the applicable Registration
Notice was delivered to the Company at a time which was not part of a Sale
Period, such forty-five (45) day period shall be the next succeeding Sale
Period.
Section 4. Restrictions on Public Sale by Holders of Registrable
Securities.
Each Holder agrees with the Company that:
(a) If the Company determines in its good faith judgment, after
consultation with counsel, that the filing of the Shelf Registration Statement
under Section 2 hereof or the use of any Prospectus would require the disclosure
of important information which the Company has a bona fide business purpose for
preserving as confidential or the disclosure of which would impede the Company's
ability to consummate a significant transaction, upon written notice of such
determination by the Company, the rights of the Holders to offer, sell or
distribute any Registrable Securities pursuant to the Shelf Registration
Statement or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement (including any action contemplated by Section 3 hereof)
will be suspended until the date upon which the Company notifies the Holders in
writing that suspension of such rights for the grounds set forth in this Section
4(a) is no longer necessary.
(b) In the case of the registration of any underwritten equity offering
proposed by the Company (other than any registration by the Company on Form S-8,
or a successor or substantially similar form, of (i) an employee stock option,
stock purchase or compensation plan or of securities issued or issuable pursuant
to any such plan or (ii) a dividend reinvestment plan), each Holder agrees, if
requested in writing by the managing underwriter or underwriters administering
such offering, not to effect any offer, sale or distribution of Registrable
Securities (or any option or right to acquire Registrable Securities) during the
period commencing on the 10th day prior to the expected effective date (which
date shall be stated in such notice) of the registration statement covering such
underwritten primary equity offering and ending on the date specified by such
managing underwriter in such
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written request to such Holder, which date shall not be later than six months
after such expected date of effectiveness.
(c) In the event that any Holder uses a Prospectus in connection with the
offering and sale of Registrable Securities covered by such Prospectus, such
Holder will use only the latest version of such Prospectus provided to it by the
Company.
Section 5. Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Holder and its officers and directors and each person, if
any, who controls any Holder within the meaning of Section 15 of the Securities
Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Shelf
Registration Statement (or any amendment thereto) or any Prospectus,
including all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding by
any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including reasonable fees and disbursements of counsel), reasonably
incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under clause (i) or (ii)
above;
provided, however, that the indemnity provided pursuant to this Section 5(a)
does not apply to any Holder with respect to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Holder expressly for
use in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus.
(b) Indemnification by Holders. Each Holder severally agrees to indemnify
and hold harmless the Company and the other selling Holders, and each of their
respective directors and officers (including each director and officer of the
Company who signed the Shelf Registration Statement), and each person, if any,
who controls the Company or any other selling Holder within the meaning of
Section 15 of the Securities Act, to the same extent as the indemnity contained
in Section 5(a) hereof (except that any settlement described in Section 5(a)(2)
shall be effected with the written consent of such Holder), but only insofar as
such loss, liability, claim, damage or expense arises out of or is based upon
any untrue statement or omission, or alleged untrue statement or omission, made
in the Shelf Registration Statement (or any amendment thereto) or any Prospectus
in reliance upon and in conformity with written information furnished to the
Company by such selling Holder expressly for use in the Shelf
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Registration Statement (or any amendment thereto) or such Prospectus. In no
event shall the liability of any Holder under this Section 5(b) be greater in
amount than the dollar amount of the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Each indemnified party shall give reasonably prompt notice to each
indemnifying party of any action or proceeding commenced against it in respect
of which indemnity may be sought hereunder, but failure so to notify an
indemnifying party (i) shall not relieve it from any liability which it may have
under the indemnity agreement provided in Section 5(a) or (b) unless and to the
extent it did not otherwise learn of such action and the lack of notice by the
indemnified party results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) shall not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided under Section 5(a) or (b). If the
indemnifying party so elects within a reasonable time after receipt of such
notice, the indemnifying party may assume the defense of such action or
proceeding at such indemnifying party's own expense with counsel chosen by the
indemnifying party; provided, however, that, if such indemnified party or
parties reasonably determine that a conflict of interest exists where it is
advisable for such indemnified party or parties to be represented by separate
counsel or that, upon advice of counsel, there may be legal defenses available
to them which are different from or in addition to those available to the
indemnifying party, then the indemnifying party shall not be entitled to assume
such defense and the indemnified party or parties in the aggregate shall be
entitled to one separate counsel at the indemnifying party's expense. If an
indemnifying party is not so entitled to assume the defense of such action or
does not assume such defense, after having received the notice referred to in
the first sentence of this Section 5(c), the indemnifying party or parties will
pay the reasonable fees and expenses of counsel for the indemnified party or
parties. In such event however, no indemnifying party will be liable for any
settlement effected without the written consent of such indemnifying party. If
an indemnifying party is entitled to assume, and assumes, the defense of such
action or proceeding in accordance with this paragraph, such indemnifying party
shall not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section 5 is
for any reason held to be unenforceable although applicable in accordance with
its terms, the Company and the selling Holders shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnity agreement incurred by the Company and the selling Holders, in
such proportion as is appropriate to reflect the relative fault of and benefits
to the Company on the one hand and the selling Holders on the other (in such
proportions that the selling Holders are severally, not jointly, responsible for
the balance), in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations. The relative benefits to the indemnifying
party and indemnified parties shall be determined by reference to, among other
things, the total proceeds received by the indemnifying party and indemnified
parties in connection with the offering to which such losses, liabilities,
claims, damages, or expenses relate. The relative fault of the indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether the action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or the indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action.
The Company and the Holders agree that it would not be just or equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no selling Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such selling Holder were offered to
the public exceeds
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the amount of any damages which such selling Holder is otherwise required to pay
by reason of such untrue statement or omission.
Notwithstanding the foregoing, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 5(d), each Person, if
any, who controls a Holder within the meaning of Section 15 of the Securities
Act and directors and officers of a Holder shall have the same rights to
contribution as such Holder, and each director of the Company, each officer of
the Company who signed the Shelf Registration Statement and each Person, if any,
who controls the Company within the meaning of Section 15 of the Securities Act
shall have the same rights to contribution as the Company.
Section 6. Rule 144 Sales.
(a) The Company covenants that it will file the reports required to be
filed by the Company under the Securities Act and the Exchange Act, so as to
enable any Holder to sell Registrable Securities pursuant to Rule 144 under the
Securities Act.
(b) In connection with any sale, transfer or other disposition by any
Holder of any Registrable Securities pursuant to Rule 144 under the Securities
Act, the Company shall cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold and not bearing any Securities Act legend, and enable certificates for
such Registrable Securities to be for such number of shares and registered in
such names as the selling Holders may reasonably request at least two business
days prior to any sale of Registrable Securities.
Section 7. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Company and Holders constituting Majority
Holders; provided, however, that no amendment, modification or supplement or
waiver or consent to the departure with respect to the provisions of Sections 2,
3, 4, 5, 6 or 7(a) hereof or the definition of Registrable Securities or which
would impair the rights of any Holder under such provisions, shall be effective
as against any Holder of Registrable Securities or Units redeemable for
Registrable Securities unless consented to in writing by such Holder of
Registrable Securities or Units. Notice of any amendment, modification or
supplement to this Agreement adopted in accordance with this Section 7(a) shall
be provided by Company to each Holder of Registrable Securities or Units
redeemable for Registrable Securities at least thirty (30) days prior to the
effective date of such amendment, modification or supplement.
(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, registered first-class
mail, telex, telecopier or any courier guaranteeing overnight delivery, (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 7(b),
which address initially is, with respect to each Holder, the address set forth
in the Partnership Agreement, or (ii) if to the Company, at 150 N. Wacker Drive,
Suite 150, Chicago, Illinois 60606, Attention: President.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid,
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if mailed; when answered back, if telexed; when receipt is acknowledged, if
telecopied; or at the time delivered if delivered by an air courier guaranteeing
overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
Company and the Holders, including without limitation and without the need for
an express assignment, subsequent Holders. If any successor, assignee or
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be entitled to receive the
benefits hereof and shall be conclusively deemed to have agreed to be bound by
all of the terms and provisions hereof.
(d) Headings. The headings in this Agreement are for the convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW PROVISIONS THEREOF.
(f) Specific Performance. The Company and the Holders acknowledge that
there would be no adequate remedy at law if any party fails to perform any of
its obligations hereunder, and accordingly agree that the Company and each
Holder, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
another under this Agreement in accordance with the terms and conditions of this
Agreement in any court of the United States or any State thereof having
jurisdiction.
(g) Entire Agreement. This Agreement is intended by the Company as a final
expression of its agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the Company in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings of the Company with respect to such subject matter.
IN WITNESS WHEREOF, the Company has executed this Agreement as of the date
first written above.
FIRST INDUSTRIAL REALTY TRUST, INC.
By:
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Name:
Title:
