<PAGE> 1
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 report (Date of earliest event reported): MAY 2, 2000
EQUITY OFFICE PROPERTIES TRUST
(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
MARYLAND 001-13115 36-4151656
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
TWO NORTH RIVERSIDE PLAZA, SUITE 2100, CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(312) 466-3300
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On May 2, 2000, the Executive Committee of the Board of Trustees of
Equity Office Properties Trust, as general partner of EOP Operating Limited
Partnership, approved the Eleventh Amendment to the Agreement of Limited
Partnership of EOP Partnership. The Eleventh Amendment amends Sections 7.4,
8.5.C, and 14.1.B of the partnership agreement of EOP Partnership. On May 2,
2000, the Executive Committee of the Board of Trustees of Equity Office also
approved the First Amended and Restated Agreement of Limited Partnership of EOP
Partnership, which , in general, integrates the partnership agreement of EOP
Partnership and the prior amendments thereto into one document and incorporates
certain changes in applicable federal income tax laws.
At the 2000 annual meeting of shareholders of Equity Office held on May
4, 2000, the shareholders approved amendments to Sections 8.2 and 8.4 of the
Declaration of Trust regarding voting requirements for business combinations and
approved an amendment to Article II, Section 9 of the bylaws of the Company
regarding voting by electronic voting. On May 4, 2000, the Board of the Company
also approved amendments to Article IV, Sections 8.1 through 8.5 and Article
VII, Sections 1, 2. and 5 of the bylaws of Equity Office, which clarify the
authority of Equity Office to use uncertificated securities and to correct
certain section references and related matters in the bylaws.
On May 10, 2000, Equity Office, EOP Partnership, Cornerstone Properties
Inc. and Cornerstone Properties Limited Partnership executed the First Amendment
to Agreement and Plan of Merger, which, among other things, clarifies certain
provisions of the Merger Agreement and provides for a special dividend $.03 per
share of Cornerstone common stock to be paid prior to the closing of the
Merger.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
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Exhibit
Number Description of Exhibit
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2.1 First Amendment to Agreement and Plan of Merger
3.1 Articles of Amendment to Declaration of Trust relating to amendments to Sections
8.2 and 8.4
3.2 Amendments to Article II, Section 9, Article IV, Sections 8.1 through 8.5 and
Article VII, Sections 1, 2 and 5 of the Equity Office Bylaws
3.3 Equity Office Bylaws (as amended through May 4, 2000)
</TABLE>
2
<PAGE> 3
<TABLE>
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10.1 Eleventh Amendment to Agreement of Limited Partnership of EOP Operating Limited
Partnership
10.2 First Amended and Restated Agreement of Limited Partnership of EOP Operating
Limited Partnership
</TABLE>
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY OFFICE PROPERTIES TRUST
By: /s/ Stanley M. Stevens
----------------------------------------
Stanley M. Stevens
Executive Vice President, Chief Legal Counsel
and Secretary
Date: May 11, 2000
4
<PAGE> 5
EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------- ---------------------- ----
<S> <C>
2.1 First Amendment to Agreement and Plan of Merger
3.1 Articles of Amendment to Declaration of Trust relating to amendments to Sections
8.2 and 8.4
3.2 Amendments to Article II, Section 9, Article IV, Sections 8.1 through 8.5 and
Article VII, Sections 1, 2 and 5 of the Equity Office Bylaws
3.3 Equity Office Bylaws (as amended through May 4, 2000)
10.1 Eleventh Amendment to Agreement of Limited Partnership of EOP Operating Limited
Partnership
10.2 First Amended and Restated Agreement of Limited Partnership of EOP Operating
Limited Partnership
</TABLE>
5
<PAGE> 1
EXHIBIT 2.1
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "First
Amendment") is entered into as of May 11, 2000 by and among EQUITY OFFICE
PROPERTIES TRUST, a Maryland real estate investment trust ("EOP"), EOP OPERATING
LIMITED PARTNERSHIP, a Delaware limited partnership ("EOP Partnership"),
CORNERSTONE PROPERTIES INC., a Nevada corporation ("Cornerstone"), and
CORNERSTONE PROPERTIES LIMITED PARTNERSHIP, a Delaware limited partnership
("Cornerstone Partnership"), for the purpose of amending the Agreement and Plan
of Merger, dated as of February 11, 2000, entered into by and among EOP, EOP
Partnership, Cornerstone, and Cornerstone Partnership (the "Merger Agreement").
All capitalized terms herein and not otherwise defined shall have the meanings
ascribed to them in the Merger Agreement.
WHEREAS, the parties hereto desire to amend certain provisions of the
Merger Agreement to clarify certain matters as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. SELECTION OF UNSATISFIED CONDITIONAL REDEMPTIONS BY LOT;
CLARIFICATION OF PRORATION PROVISIONS.
(a) Section 1.1(a)(v) of the Merger Agreement is amended by redesignating
such section as Section 1.1(a)(v)(A).
(b) Section 1.1(a)(v) of the Merger Agreement is amended further by
changing the phrase "the procedures set forth in Sections 1.11 and 1.12" to read
"the procedures set forth in Sections 1.1(a)(v)(B), 1.11 and 1.12".
(c) Section 1.1(a)(v) of the Merger Agreement is amended further by adding
the following new subparagraph (B):
(B) In the event that Section 1.12(b)(ii)(B) is applicable and Excess
Cash (as defined in Section 1.12(b)(ii)(B)) is allocated to the Conditional
Cash Elections (as defined in Section 1.12(b)(i)(B)), each conditional
Exercise made pursuant to Section 1.1(a)(v)(A) that, pursuant to Section
1.1(a)(v)(A), would not be not effective (before giving effect to the
procedures set forth in this subparagraph (B)) shall, together with all
other such conditional Exercises, be subject to being chosen by lot from
among other such conditional Exercises to receive a portion of the Excess
Cash. Any conditional Exercise that is chosen by lot shall be made
effective if sufficient remaining Excess Cash is available (after taking
into account all prior conditional Exercises chosen by lot) to pay to the
Redeeming Partner who submitted such conditional Exercise cash for each
share of Cornerstone Common Stock that must be converted into solely cash
in order for such conditional Exercise to be effective. Conditional
Exercises described in the first sentence of this subparagraph (B) shall be
subject to being chosen by lot until the amount of remaining Excess Cash
available is less than the amount of cash that would be required to allow
any of the remaining conditional Exercises to become effective pursuant to
the requirements of Section 1.1(a)(v)(A).
(d) Section 1.12(a) of the Merger Agreement is amended by adding the
following sentence at the end thereof:
Except as otherwise expressly provided pursuant to this Section 1.12,
each share of Cornerstone Common Stock for which a Cash Election is
received shall be converted into the right to receive $18.00 per share in
cash, without interest, and each share of Cornerstone Common Stock for
which a Share Election is received shall be converted into EOP Common
Shares in accordance with the Common Stock Exchange Ratio.
<PAGE> 2
(e) Section 1.12(b) of the Merger Agreement is amended by deleting the
indented language and substituting therefor the following subparagraphs (i) and
(ii):
(i) in the event that Non-conditional Cash Elections (defined to mean
all Cash Elections received other than Conditional Cash Elections as
defined in Section 1.12(b)(i)(B), below) are received for a number of
shares of Cornerstone Common Stock that is greater than 58,551,525 shares
of Cornerstone Common Stock, then:
(A) each share of Cornerstone Common Stock covered by a
Non-conditional Cash Election shall be converted into the right to
receive (1) an amount in cash, without interest, equal to the product of
(x) $18.00 and (y) a fraction (the "Cash Fraction") the numerator of
which shall be 58,551,525 and the denominator of which shall be the
aggregate number of shares of Cornerstone Common Stock covered by all
Non-conditional Cash Elections, and (2) a number of EOP Common Shares
equal to the product of (x) the Common Stock Exchange Ratio and (y) a
fraction equal to one minus the Cash Fraction; and
(B) each Conditional Cash Election (defined to mean any Cash
Election received with respect to Electing Cornerstone OP Units with
respect to which a conditional Exercise is made pursuant to Section
1.1(a)(v)(A)) shall be of no force and effect; and
(ii) in the event that Non-conditional Cash Elections are received for
a number of shares of Cornerstone Common Stock that is equal to or less
than 58,551,525 shares of Cornerstone Common Stock, then:
(A) each share of Cornerstone Common Stock covered by a
Non-conditional Cash Election shall be converted into the right to
receive an amount in cash, without interest, equal to $18.00; and
(B) an amount of cash equal to the product of (x) $18.00 and (y)
the excess, if any, of 58,551,525 over the number of shares of
Cornerstone Common Stock for which Non-conditional Cash Elections are
received (referred to as "Excess Cash") shall be allocated to the
Conditional Cash Elections as a group, to be applied as provided for in
Section 1.1(a)(v)(B).
SECTION 2. NOTICE PERIOD FOR FINAL DIVIDEND.
Section 1.15(d)(i) of the Merger Agreement is amended by deleting the
number "10" in the second sentence of Section 1.15(d)(i) and substituting the
number "20" therefor.
SECTION 3. FRACTIONAL EOP OP UNITS.
(a) Section 1.15(g) of the Merger Agreement is amended by adding "; No
Fractional EOP OP Units" after the word "Shares" in the caption.
(b) Section 1.15(g) of the Merger Agreement is amended by adding the
following new paragraph (iii):
(iii) No fractional EOP Partnership Units shall be issued pursuant to
this Agreement. In lieu of the issuance of any fractional EOP Partnership
Units pursuant to this Agreement, each holder of Cornerstone OP Units who
would receive, based on the exchange ratio specified in Section 1.10(a)(i),
a number of EOP OP Units that is not a whole number shall receive instead a
number of EOP OP Units that is equal to the whole number that is nearest to
the fractional number of EOP OP Units that otherwise would be paid to such
holder of Cornerstone OP Units based on the exchange ratio specified in
Section 1.10(a)(i).
(c) Section 1.15(i) of the Merger Agreement is amended by adding "," and
deleting the word "and" after the word "certificates" in the second clause and
adding "and fractional EOP Common Shares" after the word "procedure" in such
second clause.
2
<PAGE> 3
SECTION 4. AMENDMENT OF SECTION 5.10 TO PROVIDE FOR A SPECIAL DIVIDEND BY
CORNERSTONE OF $0.03 PER SHARE OF COMMON STOCK.
Section 5.10 is amended to add at the end thereof the following new
language:
Notwithstanding any of the foregoing or any provision of Section
1.15(d), in the event that EOP and Cornerstone do not declare their regular
dividend distributions for the second quarter of 2000 prior to the
Effective Time of the Merger, (i) Cornerstone shall declare and pay to the
holders of Cornerstone Common Stock a special dividend in the amount of
$0.03 per share, the record date for which shall be not later than the
close of business on the last day prior the Effective Time of the Merger
(the "Special Dividend"), and Cornerstone shall cause to be withheld from
the Special Dividend payable to Persons who are not "United States persons"
(as defined in Section 7701(a)(30) of the Code) $0.02 per share or such
higher amount as shall be sufficient so that Cornerstone shall be
considered to have complied fully with the withholding requirements
applicable to it under Treasury Regulations Section 1.1445-8 and Section
1445 of the Code with respect to all distributions paid by it during
calendar year 2000 (and to the extent such treatment is necessary, or
Cornerstone deems it to be desirable, to permit or facilitate
such withholding, Cornerstone shall treat the Special Dividend as a
"capital gain dividend" for purposes of Treasury Regulations Section
1.1445-8 and Section 1445 of the Code), and (ii) Cornerstone Partnership
shall make a distribution to the holders of the Cornerstone OP Units at a
time and in an amount sufficient to permit Cornerstone to pay the Special
Dividend as contemplated hereby. The Special Dividend shall be paid on or
prior to the last business day prior to the Closing Date. EOP shall not
make any distribution to the holders of the EOP Common Shares to correspond
to the Special Dividend to be paid to the holders of Cornerstone Common
Stock.
SECTION 5. INDEX OF DEFINED TERMS.
The Index of Defined Terms contained in the Merger Agreement is amended by
adding the following new entries:
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"Conditional Cash Election"......................... 1.12(b)(i)(B)"
"Excess Cash........................................ 1.12(b)(ii)(B)"
"Non-conditional Cash Election"..................... 1.12(b)(i)"
"Special Dividend".................................. 5.10"
</TABLE>
SECTION 6. CONSTRUCTION OF MERGER AGREEMENT.
The Merger Agreement shall be read together and shall have the same force
and effect as if the provisions of the Merger Agreement and this First Amendment
were contained in one document. Except as expressly amended by this First
Amendment, the Merger Agreement shall remain in full force and effect in
accordance with its terms.
SECTION 7. COUNTERPARTS.
This First Amendment may be executed in any number of counterparts and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
3
<PAGE> 4
IN WITNESS WHEREOF, EOP, EOP Partnership, Cornerstone and Cornerstone
Partnership have caused this First Amendment to be signed by their respective
officers (or general partners) thereunto duly authorized all as of the date
first written above.
EQUITY OFFICE PROPERTIES TRUST
By: /s/ STANLEY M. STEVENS
-----------------------------------
Name: Stanley M. Stevens
---------------------------------
Title: Executive Vice President
--------------------------------
EOP OPERATING LIMITED PARTNERSHIP
By: Equity Office Properties Trust,
its general partner
By: /s/ STANLEY M. STEVENS
-----------------------------------
Name: Stanley M. Stevens
---------------------------------
Title: Executive Vice President
CORNERSTONE PROPERTIES INC.
By: /s/ JOHN S. MOODY
-----------------------------------
Name: John S. Moody
---------------------------------
Title: President & CEO
--------------------------------
CORNERSTONE PROPERTIES LIMITED
PARTNERSHIP
By: Cornerstone Properties Inc., its
sole general partner
By: /s/ JOHN S. MOODY
-----------------------------------
Name: John S. Moody
---------------------------------
Title: President & CEO
--------------------------------
4
<PAGE> 1
Exhibit 3.1
ARTICLES OF AMENDMENT
OF
DECLARATION OF TRUST
OF
EQUITY OFFICE PROPERTIES TRUST
Equity Office Properties Trust, a Maryland real estate investment trust
(hereinafter called the "Trust"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Declaration of Trust of the Trust hereby is amended by
deleting existing Section 8.2 in its entirety and adding a new Section 8.2 to
read as follows:
" Section 8.2 Voting Rights. Subject to the provisions of any class or
series of Shares then outstanding, the shareholders shall be entitled to vote
only on the following matters: (a) election of Trustees as provided in Section
5.2 and the removal of Trustees as provided in Section 5.3; (b) amendment of the
Declaration of Trust as provided in Article X; (c) termination of the Trust as
provided in Section 11.2; (d) a Business Combination (as defined in Section
8.4), if a shareholder vote is required under Section 8.4; (e) such other
matters with respect to which the Board of Trustees has adopted a resolution
declaring that a proposed action is advisable and directing that the matter be
submitted to the shareholders for approval or ratification; and (f) such other
maters as may be properly brought before a meeting by a shareholder pursuant to
the Bylaws. Except with respect to the foregoing matters, no action taken by the
shareholders at any meeting shall in any way bind the Board of Trustees."
SECOND: The Declaration of Trust of the Trust hereby is further amended
by deleting existing Section 8.4 in its entirety and adding a new Section 8.4 to
read as follows:
" Section 8.4 Merger, Consolidation or Transfer of Assets. The Trust
may merge with or into another entity, may consolidate with one or more other
entities or may "transfer assets" of the Trust (individually, a "Business
Combination"). Subject to the terms of any class or series of Shares at the time
outstanding, if a shareholder vote is required under Title 8 to effect any such
merger, then such merger must be approved by shareholders by the affirmative
vote of not less than a majority of all votes entitled to be cast on the matter.
Subject to the terms of any class or series of Shares at the time outstanding,
any Business Combination other than a merger must be approved by shareholders by
the affirmative vote of not less than a majority of all votes entitled to be
cast on the matter. For purposes of this Section 8.4, the term "transfer assets"
means to sell, lease, exchange, or otherwise transfer all or substantially all
of the assets of the Trust, but shall not include (a) any sale, lease, exchange,
or other transfer of all or substantially all of the assets of the Trust in the
ordinary course of business actually conducted by it or as a distribution to its
shareholders, (b) the mortgage, pledge, or creation of any other security
interest in any or all of the assets of the Trust, whether or not in the
ordinary course of business or (c) the sale, lease, exchange, or other transfer
of all or substantially all of the assets of the Trust to one or more entities
if at least a majority of the equity interests of the entity or entities are
owned, directly or indirectly, by the Trust. Notwithstanding any other
provisions of this Declaration of
<PAGE> 2
Trust, the affirmative vote of shareholders holding at least a majority of all
votes entitled to be cast on the matter shall be required to amend this Section
8.4."
THIRD: The amendments to the Declaration of Trust of the Trust as set
forth above have been advised by the Board of Trustees and approved by the
shareholders of the Trust as required by law and the Declaration of Trust of the
Trust.
IN WITNESS WHEREOF, the Trust has caused these Articles of Amendment of
Declaration of Trust of Equity Office Properties Trust to be signed in its name
and on its behalf by its Executive Vice President, Chief Legal Counsel and
Secretary and witnessed by its Assistant Secretary on May 9, 2000.
WITNESS: EQUITY OFFICE PROPERTIES TRUST
By: /s/ Robin Mariella By: /s/ Stanley M. Stevens
------------------------ ------------------------
Robin Mariella Stanley M. Stevens
Assistant Secretary Executive Vice President, Chief
Legal Counsel and Secretary
THE UNDERSIGNED, Executive Vice President, Chief Legal Counsel
and Secretary of Equity Office Properties Trust, who executed on behalf of the
Trust Articles of Amendment of Declaration of Trust of which this Certificate is
made a part, hereby acknowledges in the name and on behalf of said Trust the
foregoing Articles of Declaration of Trust to be the act of said Trust and
hereby certifies that the matters and facts set forth herein with respect to the
authorization and approval thereof are true in all material respects under the
penalties of perjury.
/s/ Stanley M. Stevens
---------------------------
Stanley M. Stevens
Executive Vice President, Chief
Legal Counsel and Secretary
<PAGE> 1
Exhibit 3.2
AMENDMENTS TO ARTICLE II, SECTION 9, ARTICLE IV, SECTIONS 8.1
THROUGH 8.5 AND ARTICLE VII, SECTIONS 1, 2 AND 5 OF THE EQUITY OFFICE
BYLAWS
1. AMENDMENT OF ARTICLE II, SECTION 9
Article II, Section 9 of the Equity Office Bylaws is amended to read in
its entirety as set forth below:
"Section 9. PROXIES. A shareholder may cast the votes entitled to be
cast by the shares owned of record by him in person or by proxy as provided in
this section. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy. Unless otherwise agreed in
writing, the holder of record of shares which actually belong to another shall
issue a proxy to vote the shares to the actual owner on the owner's demand. A
shareholder may authorize another person to act as proxy for the shareholder. A
shareholder may sign a writing authorizing another person to act as proxy.
Signing may be accomplished by the shareholder or the shareholder's authorized
agent signing the writing or causing the shareholder's signature to be affixed
to the writing by any reasonable means, including facsimile signature. A
shareholder may authorize another person to act as proxy by transmitting, or
authorizing the transmission of, an authorization for the person to act as proxy
to the person authorized to act as proxy or any other person authorized to
receive the proxy authorization on behalf of the person authorized to act as the
proxy, including a proxy solicitation firm or proxy support service
organization. The authorization may be transmitted by a telegram, cablegram,
datagram, electronic mail, or any other electronic or telephonic means. A copy,
facsimile telecommunication, or other reliable reproduction of the writing or
transmission authorized under this subsection may be substituted for the
original writing or transmission for any purpose for which the original writing
or transmission could be used."
2. AMENDMENTS TO ARTICLE IV, SECTIONS 8.1 THROUGH 8.5
Article IV, Sections 8.1 through 8.5 of the Bylaws are renumbered as
Sections 8(a) through 8(e) and all internal cross-references to the former
Sections 8.1 through 8.5 are changed accordingly.
The phrase "or a Trust or estate" in the definition of "Related Person"
contained in Article IV, Section 8(e) is deleted and replaced with the phrase
"or a trust or estate."
<PAGE> 2
3. AMENDMENTS TO ARTICLE VII, SECTIONS 1, 2 AND 5
Article VII, Sections 1 and 2 are amended in their entirety to read as
set forth below:
"Section 1. CERTIFICATES; UNCERTIFICATED SHARES. Unless the Board of
Trustees of the Trust authorizes the issue of some or all of the shares of any
or all of its classes or series without certificates, each shareholder shall be
entitled to a certificate or certificates which shall represent and certify the
number of shares of each class of beneficial interest held by him in the Trust.
Each certificate shall be signed by the chief executive officer, the president
or a vice president and countersigned by the secretary or an assistant secretary
or the treasurer or an assistant treasurer and may be sealed with the seal, if
any, of the Trust. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Trust shall, from time
to time, issue several classes or series of shares, each class or series may
have its own number series. A certificate is valid and may be issued whether or
not an officer who signed it is still an officer when it is issued. Each
certificate representing shares which are restricted as to their transferability
or voting powers, which are preferred or limited as to their dividends or as to
their allocable portion of the assets of the Trust upon liquidation or which are
redeemable at the option of the Trust, shall have a statement of such
restriction, limitation, preference or redemption provision, or a summary
thereof, plainly stated on the certificate. In lieu of such statement or
summary, the Trust may set forth upon the face or back of the certificate a
statement that the Trust will furnish to any shareholder, upon request and
without charge, a full statement of such information. At the time of issue or
transfer of shares without certificates, the Trust shall send the shareholder a
written statement of the information required on certificates by Section 8-203
of Title 8 of the Corporations and Associations Article of the Annotated Code of
Maryland.
Section 2. TRANSFERS. Certificates shall be treated as negotiable and
title thereto and to the shares they represent shall be transferred by delivery
thereof duly endorsed or with proper evidence of transfer to the same extent as
those of a Maryland stock corporation. Upon surrender to the Trust or the
transfer agent of the Trust of a share certificate or uncertificated security
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Trust shall issue a new certificate or uncertificated
security to the person entitled thereto, cancel the old certificate and record
the transaction upon its books.
The Trust shall be entitled to treat the holder of record of any share
or shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of beneficial
interest of the Trust will be subject in all respects to the Declaration of
Trust and all of the terms and conditions contained therein."
The title of Article VII, Section 5 is deleted and replaced with "Share
Ledger."
<PAGE> 1
EQUITY OFFICE PROPERTIES TRUST
BYLAWS (as amended through May 4, 2000)
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of Equity Office
Properties Trust (the "Trust") shall be located at such place or places as the
Trustees may designate.
Section 2. ADDITIONAL OFFICES. The Trust may have additional offices
at such places as the Trustees may from time to time determine or the business
of the Trust may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. PLACE. All meetings of shareholders shall be held at the
principal office of the Trust or at such other place within the United States
as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the shareholders for
the election of Trustees and the transaction of any business within the powers
of the Trust shall be held during the month of May of each year, after the
delivery of the annual report referred to in Section 12 of this Article II, at
a convenient location and on proper notice, on a date and at the time set by
the Trustees, beginning with the year 1998. Failure to hold an annual meeting
does not invalidate the Trust's existence or affect any otherwise valid acts of
the Trust.
Section 3. SPECIAL MEETINGS. The chairman of the board or the
president or one-third of the Trustees may call special meetings of the
shareholders. Special meetings of shareholders shall also be called by the
secretary upon the written request of the holders of shares entitled to cast
not less than a majority of all the votes entitled to be cast at such meeting.
Such request shall state the purpose of such meeting and the matters proposed
to be acted on at such meeting. Within ten (10) days of the receipt of such a
request, the secretary shall inform such shareholders of the reasonably
estimated cost of preparing and mailing notice of the meeting (including all
proxy materials that may be required in connection therewith) and, upon payment
by such shareholders to the Trust of such costs, the secretary shall, within
thirty (30) days of such payment, or such longer period as may be necessitated
by compliance with any applicable statutory or regulatory requirements, give
notice to each shareholder entitled to notice of the meeting.
Unless requested by shareholders entitled to cast a majority of all
the votes entitled to be cast at such meeting, a special meeting need not be
called to consider any matter
<PAGE> 2
which is substantially the same as a matter voted on at any meeting of the
shareholders held during the preceding twelve months.
Section 4. NOTICE. Not less than ten nor more than 90 days before
each meeting of shareholders, the secretary shall give to each shareholder
entitled to vote at such meeting and to each shareholder not entitled to vote
who is entitled to notice of the meeting written or printed notice stating the
time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, the purpose for which the meeting is
called, either by mail or by presenting it to such shareholder personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the shareholder at his post office address as it appears on the records of
the Trust, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Trust may be
transacted at an annual meeting of shareholders without being specifically
designated in the notice, except such business as is required by any statute to
be stated in such notice. No business shall be transacted at a special meeting
of shareholders except as specifically designated in the notice.
Section 6. ORGANIZATION. At every meeting of the shareholders, the
Chairman of the Board, if there be one, shall conduct the meeting or, in the
case of vacancy in office or absence of the Chairman of the Board, one of the
following officers present shall conduct the meeting in the order stated: the
Vice Chairman of the Board, if there be one, the President, the Vice Presidents
in their order of rank and seniority, or a Chairman chosen by the shareholders
entitled to cast a majority of the votes which all shareholders present in
person or by proxy are entitled to cast, shall act as Chairman, and the
Secretary, or, in his absence, an assistant secretary, or in the absence of
both the Secretary and assistant secretaries, a person appointed by the
Chairman shall act as Secretary.
Section 7. QUORUM. At any meeting of shareholders, the presence in
person or by proxy of shareholders entitled to cast a majority of all the votes
entitled to be cast at such meeting shall constitute a quorum; but this section
shall not affect any requirement under any statute or the declaration of trust
("Declaration of Trust") for the vote necessary for the adoption of any
measure. If, however, such quorum shall not be present at any meeting of the
shareholders, the shareholders entitled to vote at such meeting, present in
person or by proxy, shall have the power to adjourn the meeting from time to
time to a date not more than 120 days after the original record date without
notice other than announcement at the meeting. At such adjourned meeting at
which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 8. VOTING. A plurality of all the votes cast at a meeting of
shareholders duly called and at which a quorum is present shall be sufficient
to elect a Trustee. Each share may be voted for as many individuals as there
are Trustees to be elected and for whose election the share is entitled to be
voted. A majority of the votes cast at a meeting of shareholders duly called
and at which a quorum is present shall be sufficient to approve any other
matter which may properly come before the meeting, unless more than a majority
of the votes cast is required herein or by statute or by the Declaration of
Trust.
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Unless otherwise provided in the Declaration of Trust, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
a vote at a meeting of shareholders.
Section 9. PROXIES. A shareholder may cast the votes entitled to be
cast by the shares owned of record by him either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the Secretary of the Trust before or at the time of
the meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
Section 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares of the Trust
registered in the name of a corporation, partnership, trust or other entity, if
entitled to be voted, may be voted by the president or a vice president, a
general partner or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who has been
appointed to vote such shares pursuant to a bylaw or a resolution of the
governing board of such corporation or other entity or agreement of the
partners of the partnership presents a certified copy of such bylaw, resolution
or agreement, in which case such person may vote such shares. Any trustee or
other fiduciary may vote shares registered in his name as such fiduciary,
either in person or by proxy.
Shares of the Trust directly or indirectly owned by it shall not be
voted at any meeting and shall not be counted in determining the total number
of outstanding shares entitled to be voted at any given time, unless they are
held by it in a fiduciary capacity, in which case they may be voted and shall
be counted in determining the total number of outstanding shares at any given
time.
The Trustees may adopt by resolution a procedure by which a
shareholder may certify in writing to the Trust that any shares registered in
the name of the shareholder are held for the account of a specified person
other than the shareholder. The resolution shall set forth the class of
shareholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date or
closing of the share transfer books, the time after the record date or closing
of the share transfer books within which the certification must be received by
the Trust; and any other provisions with respect to the procedure which the
Trustees consider necessary or desirable. on receipt of such certification,
the person specified in the certification shall be regarded as, for the
purposes set forth in the certification, the shareholder of record of the
specified shares in place of the shareholder who makes the certification.
Notwithstanding any other provision contained herein or in the
Declaration of Trust or these Bylaws, Title 3, Subtitle 7 of the Corporations
and Associations Article of the Annotated Code of Maryland (or any successor
statute) shall not apply to any acquisition by any person of shares of
beneficial interest of the Trust. This section may be repealed, in whole or in
part, at any time, whether before or after an acquisition of control shares
and, upon such repeal, may, to the extent provided by any successor bylaw,
apply to any prior or subsequent control share acquisition.
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Section 11. INSPECTORS. At any meeting of shareholders, the chairman
of the meeting may appoint one or more persons as inspectors for such meeting.
Such inspectors shall ascertain and report the number of shares represented at
the meeting based upon their determination of the validity and effect of
proxies, count all votes, report the results and perform such other acts as are
proper to conduct the election and voting with impartiality and fairness to all
the shareholders.
Each report of an inspector shall be in writing and signed by him or
by a majority of them if there is more than one inspector acting at such
meeting. If there is more than one inspector, the report of a majority shall
be the report of the inspectors. The report of the inspector or inspectors on
the number of shares represented at the meeting and the results of the voting
shall be prima facie evidence thereof.
Section 12. REPORTS TO SHAREHOLDERS. The Trustees shall submit to
the shareholders at or before the annual meeting of shareholders a report of
the business and operations of the Trust during such fiscal year, containing a
balance sheet and a statement of income and surplus of the Trust, accompanied
by the certification of an independent certified public accountant, and such
further information as the Trustees may determine is required pursuant to any
law or regulation to which the Trust is subject. Within the earlier of 20 days
after the annual meeting of shareholders or 120 days after the end of the
fiscal year of the Trust, the Trustees shall place the annual report on file at
the principal office of the Trust and with any governmental agencies as may be
required by law and as the Trustees may deem appropriate.
Section 13. NOMINATIONS AND PROPOSALS BY SHAREHOLDERS.
(a) Annual Meetings of Shareholders. (1) Nominations of
persons for election to the Board of Trustees and the proposal of business to
be considered by the shareholders may be made at an annual meeting of
shareholders (i) pursuant to the Trust's notice of meeting, (ii) by or at the
direction of the Trustees or (iii) by any shareholder of the Trust who was a
shareholder of record both at the time of giving of notice provided for in this
Section 13 (a) and at the time of the annual meeting, who is entitled to vote
at the meeting and who complied with the notice procedures set forth in this
Section 13(a).
(2) For nominations or other business to be
properly brought before an annual meeting by a shareholder pursuant to clause
(iii) of paragraph (a) (1) of this Section 13, the shareholder must have given
timely notice thereof in writing to the Secretary of the Trust and such other
business must otherwise be a proper matter for action by shareholders. To be
timely, a shareholder's notice shall be delivered to the Secretary at the
principal executive offices of the Trust not later than the close of business
on the 60th day nor earlier than the close of business on the 90th day prior to
the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced by
more than 30 days or delayed by more than 60 days from such anniversary date or
if the Trust has not previously held an annual meeting, notice by the
shareholder to be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not later than the
close of business on the later of the 60th day prior to such annual meeting or
the tenth day following the day on which public announcement of the date of
such meeting is first made
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by the Trust. In no event shall the public announcement of a postponement or
adjournment of an annual meeting to a later date or time commence a new time
period for the giving of a shareholder's notice as described above. Such
shareholder's notice shall set forth as to each person whom the shareholder
proposes to nominate for election or reelection as a Trustee all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of Trustees in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
Trustee if elected); (ii) as to any other business that the shareholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
shareholder and of the beneficial owner, if any, on whose behalf the proposal
is made; and (iii) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such shareholder, as they appear on the Trust's books, and of
such beneficial owner and (y) the number of each class of shares of the Trust
which are owned beneficially and of record by such shareholder and such
beneficial owner.
(3) Notwithstanding anything in the second
sentence of paragraph (a) (2) of this Section 13 to the contrary, in the event
that the number of Trustees to be elected to the Board of Trustees is increased
and there is no public announcement by the Trust naming all of the nominees for
Trustee or specifying the size of the increased Board of Trustees at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
shareholder's notice required by this Section 13(a) shall also be considered
timely, but only with respect to nominees for any new positions created by such
increase, if it shall be delivered to the secretary at the principal executive
offices of the Trust not later than the close of business on the tenth day
following the day on which such public announcement is first made by the Trust.
(b) Special Meetings of Shareholders. Only such business
shall be conducted at a special meeting of shareholders as shall have been
brought before the meeting pursuant to the Trust's notice of meeting.
Nominations of persons for election to the Board of Trustees may be made at a
special meeting of shareholders at which Trustees are to be elected (i)
pursuant to the Trusts notice of meeting (ii) by or at the direction of the
Board of Trustees or (iii) provided that the Board of Trustees has determined
that Trustees shall be elected at such special meeting, by any shareholder of
the Trust who was a shareholder of record both at the time of giving of notice
provided for in this Section 13(b) and at the time of the special meeting, who
is entitled to vote at the meeting and who complied with the notice procedures
set forth in this Section 13 (b). In the event the Trust calls a special
meeting of shareholders for the purpose of electing one or more Trustees to the
Board of Trustees, any such shareholder may nominate a person or persons (as
the case may be) for election to such position as specified in the Trust's
notice of meeting, if the shareholder's notice containing the information
required by paragraph (a) (2) of this Section 13 shall be delivered to the
Secretary at the principal executive offices of the Trust not earlier than the
close of business on the 90th day prior to such special meeting and not later
than the close of business on the later of the 60th day prior to such special
meeting or the tenth day following the day on which public announcement is
first made of the date of
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the special meeting and of the nominees proposed by the Trustees to be elected
at such meeting. In no event shall the public announcement of a postponement
or adjournment of a special meeting to a later date or time commence a new time
period for the giving of a shareholder's notice as described above.
(c) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 13 shall be eligible
to serve as Trustees and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 13. The chairman of the meeting shall
have the power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed, as the case may
be, in accordance with the procedures set forth in this Section 13 and, if any
proposed nomination or business is not in compliance with this Section 13, to
declare that such nomination or proposal shall be disregarded.
(2) For purposes of this Section 13, "public
announcement" shall mean disclosure in a press release reported by the Dow
Jones News Service, Associated Press or comparable news service or in a
document publicly filed by the Trust with the Securities and Exchange
Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 13, a shareholder shall also comply with all applicable requirements of
state law and of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Section 13. Nothing in this Section
13 shall be deemed to affect any rights of shareholders to request inclusion of
proposals in, nor any of the rights of the Trust to omit a proposal from, the
Trust's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 14. INFORMAL ACTION BY SHAREHOLDERS. Notwithstanding the
provisions of Section 13 of this Article II, any action required or permitted
to be taken at a meeting of shareholders may be taken without a meeting if a
consent in writing, setting forth such action, is signed by shareholders
entitled to cast a sufficient number of votes to approve the matter, as
required by statute, the Declaration of Trust of the Trust or these Bylaws, and
such consent is filed with the minutes of proceedings of the shareholders.
Section 15. VOTING BY BALLOT. Voting on any question or in any
election may be viva voce unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
ARTICLE III
TRUSTEES
Section 1. GENERAL POWERS; QUALIFICATIONS; TRUSTEES HOLDING OVER.
The business and affairs of the Trust shall be managed under the direction of
its Board of Trustees. A Trustee shall be an individual at least 21 years of
age who is not
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under legal disability. In case of failure to elect Trustees at an annual
meeting of the shareholders, the Trustees holding over shall continue to direct
the management of the business and affairs of the Trust until their successors
are elected and qualify.
Section 2. NUMBER. At any regular meeting or at any special meeting
called for that purpose, a majority of the entire Board of Trustees may
establish, increase or decrease the number of Trustees, subject to any
limitations on the number of Trustees set forth in the Declaration of Trust.
Except during the period when a vacancy exists, at least two-thirds of the
Trustees shall be persons who are not executive officers of the Trust or
persons affiliated with Samuel Zell or his affiliates ("Independent Trustees").
For purposes of this Section, the terms "executive officers" and "affiliated"
shall have the definitions set forth in Rule 405 under the Securities Act of
1933, as amended.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
Trustees shall be held immediately after and at the same place as the annual
meeting of shareholders, no notice other than this Bylaw being necessary. The
Trustees may provide, by resolution, the time and place, either within or
without the State of Maryland, for the holding of regular meetings of the
Trustees without other notice than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the Trustees may be
called by or at the request of the chairman of the board or the president or by
a majority of the Trustees then in office. The person or persons authorized to
call special meetings of the Trustees may fix any place, either within or
without the State of Maryland, as the place for holding any special meeting of
the Trustees called by them.
Section 5. NOTICE. Notice of any special meeting shall be given by
written notice delivered personally, telegraphed, facsimile-transmitted or
mailed to each Trustee at his business or residence address. Personally
delivered or telegraphed notices shall be given at least two days prior to the
meeting. Notice by mail shall be given at least five days prior to the meeting.
Telephone or facsimile-transmission notice shall be given at least 24 hours
prior to the meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail properly addressed, with postage thereon
prepaid. If given by telegram, such notice shall be deemed to be given when
the telegram is delivered to the telegraph company. Telephone notice shall be
deemed given when the Trustee is personally given such notice in a telephone
call to which he is a party. Facsimile-transmission notice shall be deemed
given upon completion of the transmission of the message to the number given to
the Trust by the Trustee and receipt of a completed answer-back indicating
receipt. Neither the business to be transacted at, nor the purpose of, any
annual, regular or special meeting of the Trustees need be stated in the
notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the Trustees shall constitute a
quorum for transaction of business at any meeting of the Trustees, provided
that, if less than a majority of such Trustees are present at said meeting, a
majority of the Trustees present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to the
Declaration of Trust or these Bylaws, the vote of a majority of a particular
group of Trustees is required for action, a quorum must also include a majority
of such group.
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The Trustees present at a meeting which has been duly called
and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Trustees to leave less than a quorum.
Section 7. VOTING. The action of the majority of the Trustees
present at a meeting at which a quorum is present shall be the action of the
Trustees, unless the concurrence of a greater proportion is required for such
action by applicable statute.
Section 8. TELEPHONE MEETINGS. Trustees may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation in a meeting by these means shall constitute presence in person
at the meeting.
Section 9. INFORMAL ACTION BY TRUSTEES. Any action required or
permitted to be taken at any meeting of the Trustees may be taken without a
meeting, if a consent in writing to such action is signed by each Trustee and
such written consent is filed with the minutes of proceedings of the Trustees.
Section 10. VACANCIES. If for any reason any or all of the Trustees
cease to be Trustees, such event shall not terminate the Trust or affect these
Bylaws or the powers of the remaining Trustees hereunder (even if fewer than
two Trustees remain). Any vacancy (including a vacancy created by an increase
in the number of Trustees) shall be filled, at any regular meeting or at any
special meeting called for that purpose, by a majority of the Trustees. Any
individual so elected as Trustee shall hold office until the next annual
meeting of shareholders.
Section 11. COMPENSATION; FINANCIAL ASSISTANCE.
(a) Compensation. Trustees shall not receive any stated
salary for their services as Trustees but, by resolution of the Trustees, may
receive fixed sums per year and/or per meeting and/or per visit to real
property owned or to be acquired by the Trust and for any service or activity
they performed or engaged in as Trustees. Such fixed sums may be paid either
in cash or in shares of the Trust. Trustees may be reimbursed for expenses of
attendance, if any, at each annual, regular or special meeting of the Trustees
or of any committee thereof; and for their expenses, if any, in connection with
each property visit and any other service or activity performed or engaged in
as Trustees; but nothing herein contained shall be construed to preclude any
Trustees from serving the Trust in any other capacity and receiving
compensation therefor.
(b) Financial Assistance to Trustees. The Trust may lend
money to, guarantee an obligation of or otherwise assist a Trustee or a trustee
or director of a direct or indirect subsidiary of the Trust; provided, however,
that such Trustee or other person is also an executive officer of the Trust or
of such subsidiary, or the loan, guarantee or other assistance is in connection
with the purchase of Shares. The loan, guarantee or other assistance may be
with or without interest, unsecured, or secured in any manner that the Board of
Trustees approves, including a pledge of shares.
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Section 12. REMOVAL OF TRUSTEES. The shareholders may, at any time,
remove any Trustee in the manner provided in the Declaration of Trust.
Section 13. LOSS OF DEPOSITS. No Trustee shall be liable for any
loss which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or shares
have been deposited.
Section 14. SURETY BONDS. Unless required by law, no Trustee shall
be obligated to give any bond or surety or other security for the performance
of any of his duties.
Section 15. RELIANCE. Each Trustee, officer, employee and agent of
the Trust shall, in the performance of his duties with respect to the Trust, be
fully justified and protected with regard to any act or failure to act in
reliance in good faith upon the books of account or other records of the Trust,
upon an opinion of counsel or upon reports made to the Trust by any of its
officers or employees or by the adviser, accountants, appraisers or other
experts or consultants selected by the Trustees or officers of the Trust,
regardless of whether such counsel or expert may also be a Trustee.
Section 16. INTERESTED TRUSTEE TRANSACTIONS. Section 2-419 of the
Maryland General Corporation Law (the "MGCL") shall be available for and apply
to any contract or other transaction between the Trust and any of its Trustees
or between the Trust and any other trust, corporation, firm or other entity in
which any of its Trustees is a trustee or director or has a material financial
interest.
Section 17. CERTAIN RIGHTS OF TRUSTEES, OFFICERS, EMPLOYEES AND
AGENTS. The Trustees shall have no responsibility to devote their full time to
the affairs of the Trust. Any Trustee or officer, employee or agent of the
Trust (other than a full-time officer, employee or agent of the Trust), in his
personal capacity or in a capacity as an affiliate, employee, or agent of any
other person, or otherwise, may have business interests and engage in business
activities similar or in addition to those of or relating to the Trust.)
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATION. The Trustees may
appoint from among its members an Audit Committee, a Compensation Committee and
other committees, each composed of at least three Trustees, to serve at the
pleasure of the Trustees. A majority of the Trustees on the Compensation
Committee and all of the Trustees on the Audit Committee shall be Independent
Trustees. In addition, the Trustees may from time to time appoint from among
its members a Pricing Committee composed of one or more Trustees to serve at
the pleasure of the Trustees.
Section 2. POWERS. The Trustees may delegate to committees appointed
under Section 1 of this Article any of the powers of the Trustees, except as
prohibited by law.
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Section 3. MEETINGS. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another Trustee to act in the place of such
absent member. Notice of committee meetings shall be given in the same manner
as notice for special meetings of the Board of Trustees.
One-third, but not less than two (except for one-member committees),
of the members of any committee shall be present in person at any meeting of
such committee in order to constitute a quorum for the transaction of business
at such meeting, and the act of a majority present shall be the act of such
committee. The Board of Trustees may designate a chairman of any committee,
and such chairman or any two members of any committee (except for one-member
committees) may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
such committee, the members thereof present at any meeting and not disqualified
from voting, whether or not they constitute a quorum, may unanimously appoint
another Trustee to act at the meeting in the place of such absent or
disqualified members.
Each committee shall keep minutes of its proceedings and shall report
the same to the Board of Trustees at the next succeeding meeting, and any
action by the committee shall be subject to revision and alteration by the
Board of Trustees, provided that no rights of third persons shall be affected
by any such revision or alteration.
Section 4. TELEPHONE MEETINGS. Members of a committee of the
Trustees may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting
can hear each other at the same time. Participation in a meeting by these
means shall constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Trustees may be
taken without a meeting, if a consent in writing to such action is signed by
each member of the committee and such written consent is filed with the minutes
of proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions hereof, the Board of
Trustees shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member or to dissolve any such committee.
Section 7. EXECUTIVE COMMITTEE. The Executive Committee shall be
composed of not less than three Trustees and, subject to the exceptions
hereafter described, established for the purpose of undertaking or authorizing,
on behalf of the Board, any and all actions which might be undertaken or
authorized by the Board itself; provided that, in the absence of further
resolution from the Board, the Executive Committee shall not be empowered (i)
to bind the Trust in respect to an acquisition or disposition or series of
acquisitions or dispositions which have not been approved by or reported to the
Board at a duly-called meeting of the Board and any one of which exceeds Fifty
Million Dollars ($50,000,000) individually or Seventy-Five Million Dollars
($75,000,000), when aggregated with all other such unreported or unapproved
acquisitions or dispositions; (ii) to approve
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any merger or other re-organization of the Trust; (iii) to make any
recommendation to the shareholders of the Trust; (iv) to elect any individual
to an office of executive vice-president or higher of the Trust; (v) to amend
the Bylaws of the Trust; (vi) to undertake any action which is within the
jurisdiction of any other committee of the Board; (vii) to authorize or fix the
terms of any shares of beneficial interest or other securities to be issued by
the Trust or any OP Units to be issued by the Operating Partnership unless (x)
the maximum number of securities of the Trust or OP Units of the Operating
Partnership is not greater than the quotient of $50,000,000 (in any one
transaction) or $75,000,000 (in a series of transactions which are unapproved
by or unreported to the Board), and in either case the Board has approved the
terms and conditions of the securities, divided by the fair market value (as
determined by the Executive Committee, whose determination shall be final and
binding) of a share, OP Units or other security or (y) the Board has given
general authorization for issuance of securities providing for or establishing
a method or procedure for determining the maximum number of such securities to
be issued by the Trust or the Operating Partnership;(viii) to enter into any
transaction in which any member of the Executive Committee has a financial
interest which is adverse to the Trust; or (ix) to borrow or enter into
agreements to borrow in excess of One Hundred Million Dollars ($100,000,000)
individually or in the aggregate, in loans which have not been reported to or
approved by the Board; and provided further that the Executive Committee is
expressly empowered, upon its determination that any such increase in purchase
price or decrease in sales price is required in order to close a given
transaction, to increase any purchase price or to decrease any sales price
previously approved by the Board by an amount not greater than the lesser of
(x) five percent (5%) of the purchase or sales price previously approved by the
Board or (y) Fifty Million Dollars ($50,000,000).
Section 8. SPECIAL CONFLICTS COMMITTEE.
(a) The Special Conflicts Committee shall be composed of
not less than three (3) members, all of whom shall be Independent Trustees.
The chair and other members of the Special Conflicts Committee shall be
appointed by the Board of Trustees, with the affirmative vote of at least a
majority of the Independent Trustees.
(b) The Special Conflicts Committee shall have the power
to consider and, in each case where the transaction obligates or is expected to
obligate the Trust in an amount not greater than Fifty Million Dollars
($50,000,000), to approve any transaction in which the Trust is or is proposed
to be a party and as to which any Trustee knows at the time of commitment that
any of the following persons either is or is entitled to be a party, whether
directly or indirectly, to the transaction or has a sufficiently material
beneficial interest that the interest might reasonably be expected to exert an
influence on the Trustee's judgment if he were called upon to vote on the
transaction: (a) any Trustee or any Related Person of any Trustee; (b) any
person (other than the Trust) of which the Trustee is the owner of more than 5%
of any class of equity securities or is a director, trustee, general partner,
agent or employee; (c) any person that controls one or more of the persons
specified in clause (b) or a person that is controlled by, or is under common
control with, one or more of the persons specified in clause (b); or (d) an
individual who is a general partner, principal or employer of the Trustee.
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(c) Any Trustee who knows of a transaction covered by
Section 8(b) shall immediately notify and provide all material information
about the transaction to the Special Conflicts Committee, which shall
thereafter promptly consider the transaction. The Board of Trustees, any
Trustee or any officer of the Trust may notify the Special Conflicts Committee
about any transaction that it has reason to believe is covered by Section 8(b)
and, upon request, such Trustee shall provide to the Special Conflicts
Committee all relevant information known or in the control of the referring
person. Upon receipt of notice pursuant to this paragraph, the Special
Conflicts Committee shall notify the Chairman of the Board and the Secretary of
the Trust in order that the Board of Trustees which, absent the Board's
determination that such notice was improper, shall take no further action with
respect to the transaction unless and until approved, ratified or recommended
to the Board by the Special Conflicts Committee. The Trust shall not enter
into such transaction without the approval, ratification or recommendation of
the Special Conflicts Committee acting by unanimous written consent or by the
affirmative vote of a majority of its members present and voting at any meeting
thereof (excluding any members disqualified pursuant to Section 8(d)). Nothing
in this Section 8 shall require approval of fees or other compensation to
Independent Trustees for their service as Trustees.
(d) Any member of the Special Conflicts Committee who is
a party to or who has an interest in the transaction of the type described in
Section 8(b) shall take no part in the deliberations of the Special Conflicts
Committee on the transaction.
(e) For purposes of this Section 8, the following terms
shall have the followings meanings:
"Affiliate" means a person or entity that directly or
indirectly controls, or is controlled by, or is under common
control with, a specified person or entity.
"Control", including the terms "controlling" or
"under common control with," means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a person, whether by ownership
of voting securities, by contract or otherwise. The
beneficial ownership of ten percent or more of securities
entitled to be voted generally in the election of directors
creates a presumption of control.
"Independent Trustee" shall mean a Trustee who is not
an officer, employee or agent of the Trust or an Affiliate of
the Trust. For these purposes, Equity Group Investments,
L.L.C. and its Affiliates shall be deemed to be Affiliates of
the Trust until such time, if any, as the Board shall
determine otherwise.
"Time of commitment" as to a transaction means the
time when the transaction is consummated or, if made pursuant
to contract, the time when the Trust becomes contractually
obligated so that its unilateral withdrawal from the
transaction would entail significant loss, liability or other
damage.
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"Related Person" of a Trustee means (a) the spouse
(or a parent or sibling thereof) of the Trustee, or a child,
grandchild, sibling, parent (or spouse of any thereof) of the
Trustee, or an individual sharing the same residence as the
Trustee, or a trust or estate of which a Trustee or an
individual specified in this definition is a substantial
beneficiary or (b) a trust, estate, incompetent, conservatee
or minor of which the Trustee is a fiduciary.
Section 9. AUDIT COMMITTEE. The Audit Committee shall be
composed of not less than three Trustees. The function of the Audit Committee
shall be (i) to review the professional services and independence of the
Trust's independent auditors, (ii) to ensure that the scope of the annual
external audit by the independent auditors of the Trust is sufficiently
comprehensive, (iii) to review, in consultation with the independent auditors
and the internal auditors, the plan and results of the annual external audit,
the adequacy of the Trust's internal control systems and the results of the
Trust's internal audits, (iv) to review, with management and the independent
auditors, the Trust's annual financial statements, financial reporting
practices and the results of each external audit and (v) to undertake
reasonably related activities to those set forth in clauses (i) through (iv) of
this Section. The Audit Committee shall also have the authority to consider
the qualification of the Trust's independent auditors, to make recommendations
to the Board as to their selection and to review and resolve disputes between
such independent auditors and management relating to the preparation of the
annual financial statements.
Section 10. COMPENSATION AND OPTION COMMITTEE. The Compensation and
Option Committee shall be composed of not less than three Trustees. The
Compensation and Option Committee shall be authorized to establish the
compensation and benefit arrangements for the officers and key employees of the
Trust and to establish general policy relating to compensation and benefit
arrangements of employees of the Trust. The Compensation and Option Committee
shall also administer the share plans and compensation programs of the Trust.
The Compensation and Option Committee shall discharge the duties of a
Compensation Committee under the Proxy Rules established by the Securities and
Exchange Commission.
The Compensation and Option Committee shall be authorized to establish
awards under and administer the Trust's Supplemental Retirement Savings Plan
and compensation programs of the Trust insofar as they relate to executive
officers of the Trust so that any such award or component that is intended to
qualify under Rule 16b-3 under the Exchange Act or that any share plan or
executive compensation program (or a component thereof) or other form of
compensation that is intended to qualify for an exception under such Section
162 (m) (or any successor provision) of the Code does qualify for such
exception. Composition of the Compensation and Option Committee shall satisfy
requirements set forth under Rule 16(b)(3) under the Exchange Act and Section
162(m) under the Internal Revenue Code.
Section 11. COMMITTEE ON TRUST GOVERNANCE. The Committee on Trust
Governance shall be composed of not less than three Trustees. The Committee on
Trust Governance shall be authorized to (i) study, and review with management,
the overall effectiveness of the organization of the Board of Trustees and the
conduct of its business,
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and make appropriate recommendations to the Trustees with regard thereto; (ii)
review the appropriateness and adequacy of information supplied to the Trustees
prior to and during Board of Trustee meetings of the Trustees; (iii) develop,
submit to the Trustees for their approval and thereafter monitor implementation
of Guidelines on Trust Governance Issues in respect to the operation of the
Board of Trustees and propose to the Trustees for their approval from time to
time such revisions therein as the Committee on Trust Governance deems to be
appropriate; (iv) develop and maintain criteria and procedures for the
identification and recruitment or retention of candidates for election or
reelection to serve as Trustees of the Trust, including consideration of the
performance of incumbent Trustees in determining whether to nominate them for
reelection; and (v) recommend to the Trustees, with the advice of the Chairman
and the President and Chief Executive Officer of the Trust, nominees for
election or reelection as Trustees. The Chairman of the Board as well as the
President and Chief Executive Officer shall be ex-officio members of the
Committee on Trust Governance.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Trust shall
include a president, a secretary and a treasurer and may include a chairman of
the board, a vice chairman of the board, a chief executive officer, a chief
operating officer, a chief financial officer, a chief legal counsel, one or
more vice presidents, one or more assistant secretaries and one or more
assistant treasurers. In addition, the Trustees may from time to time appoint
such other officers with such powers and duties as they shall deem necessary or
desirable. The officers of the Trust shall be elected annually by the Trustees
at the first meeting of the Trustees held after each annual meeting of
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as may be convenient. Each
officer shall hold office until his successor is elected and qualifies or until
his death, resignation or removal in the manner hereinafter provided. Any two
or more offices except president and vice president may be held by the same
person. In their discretion, the Trustees may leave unfilled any office except
that of president and secretary. Election of an officer or agent shall not of
itself create contract rights between the Trust and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Trust may be removed by the Trustees if in their judgment the best interests of
the Trust would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any officer of the
Trust may resign at any time by giving written notice of his resignation to the
Trustees, the chairman of the board, the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified
therein, immediately upon its receipt. The acceptance of a resignation shall
not be necessary to make it effective unless otherwise stated in the
resignation. Such resignation shall be without prejudice to the contract
rights, if any, of the Trust.
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Section 3. VACANCIES. A vacancy in any office may be filled by the
Trustees for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Trustees may designate a
chief executive officer from among the elected officers. The chief executive
officer shall have responsibility for implementation of the policies of the
Trust, as determined by the Trustees, and for the administration of the
business affairs of the Trust. In the absence of both the chairman and vice
chairman of the board, the chief executive officer shall preside over the
meetings of the Trustees and of the shareholders at which he shall be present.
Section 5. CHIEF OPERATING OFFICER. The Trustees may designate a
chief operating officer from among the elected officers. Said officer will
have the responsibilities and duties as set forth by the Trustees or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Trustees may designate a
chief financial officer from among the elected officers. Said officer will
have the responsibilities and duties as set forth by the Trustees or the chief
executive officer.
Section 7. CHIEF LEGAL COUNSEL. The Trustees may designate a chief
legal counsel from among the elected officers. Said officer will have the
responsibilities and duties as set forth by the trustees or the chief executive
officer.
Section 8. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The chairman of
the board shall preside over the meetings of the Trustees and of the
shareholders at which he shall be present and shall in general oversee all of
the business and affairs of the Trust. In the absence of the chairman of the
board, the vice chairman of the board shall preside at such meetings at which
he shall be present. The chairman and the vice chairman of the board may
execute any deed, mortgage, bond, contract or other instrument, except in cases
where the execution thereof shall be expressly delegated by the Trustees or by
these Bylaws to some other officer or agent of the Trust or shall be required
by law to be otherwise executed. The chairman of the board and the vice
chairman of the board shall perform such other duties as may be assigned to him
or them by the Trustees.
Section 9. PRESIDENT. In the absence of the chairman, the vice
chairman of the board and the chief executive officer, the president shall
preside over the meetings of the Trustees and of the shareholders at which he
shall be present. In the absence of a designation of a chief executive officer
by the Trustees, the president shall be the chief executive officer and shall
be ex officio a member of all committees that may, from time to time, be
constituted by the Trustees. The president may execute any deed, mortgage,
bond, contract or other instrument, except in cases where the execution thereof
shall be expressly delegated by the Trustees or by these Bylaws to some other
officer or agent of the Trust or shall be required by law to be otherwise
executed; and in general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the Trustees from time
to time.
Section 10. VICE PRESIDENTS. In the absence of the president or in
the event of a vacancy in such office, the vice president (or in the event
there be more than one vice president, the vice presidents in the order
designated at the time of their election or, in the
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absence of any designation, then in the order of their election) shall perform
the duties of the president and when so acting shall have all the powers of and
be subject to all the restrictions upon the president; and shall perform such
other duties as from time to time may be assigned to him by the president or by
the Trustees. The Trustees may designate one or more vice presidents as
executive vice president, senior vice president or as vice president for
particular areas of responsibility.
Section 11. SECRETARY. The secretary shall (a) keep the minutes of
the proceedings of the shareholders, the Trustees and committees of the
Trustees in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the trust records and of the seal of the
Trust; (d) keep a register of the post office address of each shareholder which
shall be furnished to the secretary by such shareholder; (e) have general
charge of the share transfer books of the Trust; and (f) in general perform
such other duties as from time to time may be assigned to him by the chief
executive officer, the president or by the Trustees.
Section 12. TREASURER. The treasurer shall have the custody of the
funds and securities of the Trust and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit
all moneys and other valuable effects in the name and to the credit of the
Trust in such depositories as may be designated by the Trustees.
He shall disburse the funds of the Trust as may be ordered by the
Trustees, taking proper vouchers for such disbursements, and shall render to
the president and Trustees, at the regular meetings of the Trustees or whenever
they may require it, an account of all his transactions as treasurer and of the
financial condition of the Trust.
If required by the Trustees, he shall give the Trust a bond in such
sum and with such surety or sureties as shall be satisfactory to the Trustees
for the faithful performance of the duties of his office and for the
restoration to the Trust, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, moneys and other property
of whatever kind in his possession or under his control belonging to the Trust.
Section 13. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the secretary or treasurer,
respectively, or by the president or the Trustees. The assistant treasurers
shall, if required by the Trustees, give bonds for the faithful performance of
their duties in such sums and with such surety or sureties as shall be
satisfactory to the Trustees.
Section 14. SALARIES. The salaries and other compensation of the
officers shall be fixed from time to time by the Trustees and no officer shall
be prevented from receiving such salary or other compensation by reason of the
fact that he is also a Trustee.
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ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Trustees may authorize any officer or
agent to enter into any contract or to execute and deliver any instrument in
the name of and on behalf of the Trust and such authority may be general or
confined to specific instances. Any agreement, deed, mortgage, lease or other
document executed by one or more of the Trustees or by an authorized person
shall be valid and binding upon the Trustees and upon the Trust when authorized
or ratified by action of the Trustees.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Trust shall be signed by such officer or agent of the Trust in such
manner as shall from time to time be determined by the Trustees.
Section 3. DEPOSITS. All funds of the Trust not otherwise employed
shall be deposited from time to time to the credit of the Trust in such banks,
trust companies or other depositories as the Trustees may designate.
ARTICLE VII
SHARES
Section 1. CERTIFICATES; UNCERTIFICATED SHARES. Unless the Board of
Trustees of the Trust authorizes the issue of some or all of the shares of any
or all of its classes or series without certificates, each shareholder shall be
entitled to a certificate or certificates which shall represent and certify the
number of shares of each class of beneficial interest held by him in the Trust.
Each certificate shall be signed by the chief executive officer, the president
or a vice president and countersigned by the secretary or an assistant
secretary or the treasurer or an assistant treasurer and may be sealed with the
seal, if any, of the Trust. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Trust shall, from time
to time, issue several classes or series of shares, each class or series may
have its own number series. A certificate is valid and may be issued whether
or not an officer who signed it is still an officer when it is issued. Each
certificate representing shares which are restricted as to their
transferability or voting powers, which are preferred or limited as to their
dividends or as to their allocable portion of the assets of the Trust upon
liquidation or which are redeemable at the option of the Trust, shall have a
statement of such restriction, limitation, preference or redemption provision,
or a summary thereof, plainly stated on the certificate. In lieu of such
statement or summary, the Trust may set forth upon the face or back of the
certificate a statement that the Trust will furnish to any shareholder, upon
request and without charge, a full statement of such information. At the time
of issue or transfer of shares without certificates, the Trust shall send the
shareholder a written statement of the information required on certificates by
Section 8-203 of Title 8 of the Corporations and Associations Article of the
Annotated Code of Maryland.
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Section 2. TRANSFERS. Certificates shall be treated as negotiable and
title thereto and to the shares they represent shall be transferred by delivery
thereof duly endorsed or with proper evidence of transfer to the same extent as
those of a Maryland stock corporation. Upon surrender to the Trust or the
transfer agent of the Trust of a share certificate or uncertificated security
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Trust shall issue a new certificate or
uncertificated security to the person entitled thereto, cancel the old
certificate and record the transaction upon its books.
The Trust shall be entitled to treat the holder of record of any share
or shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
Notwithstanding the foregoing, transfers of shares of beneficial
interest of the Trust will be subject in all respects to the Declaration of
Trust and all of the terms and conditions contained therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the
Trustees may direct a new certificate to be issued in place of any certificate
previously issued by the Trust alleged to have been lost, stolen or destroyed
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost, stolen or destroyed. When authorizing the issuance of
a new certificate, an officer designated by the Trustees may, in his discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or the owner's legal representative to
advertise the same in such manner as he shall require and/or to give bond, with
sufficient surety, to the Trust to indemnify it against any loss or claim which
may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The
Trustees may set, in advance, a record date for the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
determining shareholders entitled to receive payment of any dividend or the
allotment of any other rights, or in order to make a determination of
shareholders for any other proper purpose. Such date, in any case, shall not
be prior to the close of business on the day the record date is fixed and shall
be not more than 90 days and, in the case of a meeting of shareholders not less
than ten days, before the date on which the meeting or particular action
requiring such determination of shareholders of record is to be held or taken.
In lieu of fixing a record date, the Trustees may provide that the
share transfer books shall be closed for a stated period but not longer than 20
days. If the share transfer books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders,
such books shall be closed for at least ten days before the date of such
meeting.
If no record date is fixed and the share transfer books are not closed
for the determination of shareholders, (a) the record date for the
determination of shareholders
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entitled to notice of or to vote at a meeting of shareholders shall be at the
close of business on the day on which the notice of meeting is mailed or the
30th day before the meeting, whichever is the closer date to the meeting; and
(b) the record date for the determination of shareholders entitled to receive
payment of a dividend or an allotment of any other rights shall be the close of
business on the day on which the resolution of the Trustees, declaring the
dividend or allotment of rights, is adopted.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except when (i) the determination has
been made through the closing of the transfer books and the stated period of
closing has expired or (ii) the meeting is adjourned to a date more than 120
days after the record date fixed for the original meeting, in either of which
case a new record date shall be determined as set forth herein.
Section 5. SHARE LEDGER. The Trust shall maintain at its principal
office or at the office of its counsel, accountants or transfer agent, an
original or duplicate share ledger containing the name and address of each
shareholder and the number of shares of each class held by such shareholder.
Section 6. FRACTIONAL SHARES; ISSUANCE OF UNITS. The Trustees may
issue fractional shares or provide for the issuance of scrip, all on such terms
and under such conditions as they may determine. Notwithstanding any other
provision of the Declaration of Trust or these Bylaws, the Trustees may issue
units consisting of different securities of the Trust. Any security issued in
a unit shall have the same characteristics as any identical securities issued
by the Trust, except that the Trustees may provide that for a specified period
securities of the Trust issued in such unit may be transferred on the books of
the Trust only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Trustees shall have the power, from time to time, to fix the
fiscal year of the Trust by a duly adopted resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other distributions upon the
shares of beneficial interest of the Trust may be authorized and declared by
the Trustees, subject to the provisions of law and the Declaration of Trust.
Dividends and other distributions may be paid in cash, property or shares of
the Trust, subject to the provisions of law and the Declaration of Trust.
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Section 2. CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any funds of the Trust available
for dividends or other distributions such sum or sums as the Trustees may from
time to time, in their absolute discretion, think proper as a reserve fund for
contingencies, for equalizing dividends or other distributions, for repairing
or maintaining any property of the Trust or for such other purpose as the
Trustees shall determine to be in the best interest of the Trust, and the
Trustees may modify or abolish any such reserve in the manner in which it was
created.
ARTICLE X
PROHIBITED INVESTMENTS AND ACTIVITIES;
INVESTMENT POLICIES
Notwithstanding anything to the contrary in the Declaration of Trust,
the Trust shall not enter into any transaction referred to in (i), (ii) or
(iii) below which it does not believe is in the best interests of the Trust,
and will not, without the approval of a majority of the disinterested Trustees,
(i) acquire from or sell to any Trustee, officer or employee of the Trust, any
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in which a Trustee, officer or employee of the Trust owns more than
a one percent interest or any affiliate of any of the foregoing, any of the
assets or other property of the Trust, except for the acquisition directly or
indirectly of certain properties or interest therein, directly or indirectly,
through entities in which it owns an interest in connection with the initial
public offering of shares by the Trust or pursuant to agreements entered into
in connection with such offering, which properties shall be described in the
prospectus relating to such initial public offering, (ii) make any loan to or
borrow from any of the foregoing persons or (iii) engage in any other
transaction with any of the foregoing persons. Each such transaction will be in
all respects on such terms as are, at the time of the transaction and under the
circumstances then prevailing, fair and reasonable to the Trust. Subject to
the foregoing and the provisions of the Declaration of Trust, the Board of
Trustees may from time to time adopt, amend, revise or terminate any policy or
policies with respect to investments by the Trust as it shall deem appropriate
in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Trustees may authorize the adoption of a seal
by the Trust. The seal shall have inscribed thereon the name of the Trust and
the year of its formation. The Trustees may authorize one or more duplicate
seals and provide for the custody thereof.
Section 2. AFFIXING SEAL. Whenever the Trust is permitted or
required to affix its seal to a document, it shall be sufficient to meet the
requirements of any law, rule or regulation relating to a seal to place the
word "(SEAL)" adjacent to the signature of the person authorized to execute the
document on behalf of the Trust.
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ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law in effect from time to
time, the Trust shall indemnify (a) any Trustee, officer or shareholder or any
former Trustee, officer or shareholder (including among the foregoing, for all
purposes of this Article XII and without limitation, any individual who, while
a Trustee, officer or shareholder and at the express request of the Trust,
serves or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer,
shareholder, partner or trustee of such corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise) who has been
successful, on the merits or otherwise, in the defense of a proceeding to which
he was made a party by reason of service in such capacity, against reasonable
expenses incurred by him in connection with the proceeding, (b) any Trustee or
officer or any former Trustee or officer against any claim or liability to
which he may become subject by reason of such status unless it is established
that (i) his act or omission was material to the matter giving rise to the
proceeding and was committed in bad faith or was the result of active and
deliberate dishonesty, (ii) he actually received an improper personal benefit
in money, property or services or (iii) in the case of a criminal proceeding,
he had reasonable cause to believe that his act or omission was unlawful and
(c) each shareholder or former shareholder against any claim or liability to
which he may become subject by reason of such status. In addition, the Trust
shall, without requiring a preliminary determination of the ultimate
entitlement to indemnification, pay or reimburse, in advance of final
disposition of a proceeding, reasonable expenses incurred by a Trustee, officer
or shareholder or former Trustee, officer or shareholder made a party to a
proceeding by reason such status, provided that, in the case of a Trustee or
officer, the Trust shall have received (i) a written affirmation by the Trustee
or officer of his good faith belief that he has met the applicable standard of
conduct necessary for indemnification by the Trust as authorized by these
Bylaws and (ii) a written undertaking by or on his behalf to repay the amount
paid or reimbursed by the Trust if it shall ultimately be determined that the
applicable standard of conduct was not met. The Trust may, with the approval
of its Trustees, provide such indemnification or payment or reimbursement of
expenses to any Trustee, officer or shareholder or any former Trustee, officer
or shareholder who served a predecessor of the Trust and to any employee or
agent of the Trust or a predecessor of the Trust. Neither the amendment nor
repeal of this Article, nor the adoption or amendment of any other provision of
the Declaration of Trust or these Bylaws inconsistent with this Article, shall
apply to or affect in any respect the applicability of this Article with
respect to any act or failure to act which occurred prior to such amendment,
repeal or adoption.
Any indemnification or payment or reimbursement of the expenses
permitted by these Bylaws shall be furnished in accordance with the procedures
provided for indemnification or payment or reimbursement of expenses, as the
case may be, under Section 2-418 of the MGCL for directors of Maryland
corporations. The Trust may provide to Trustees, officers and shareholders
such other and further indemnification or payment
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or reimbursement of expenses, as the case may be, to the fullest extent
permitted by the MGCL, as in effect from time to time, for directors of
Maryland corporations.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
Declaration of Trust or Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice, unless
specifically required by statute. The attendance of any person at any meeting
shall constitute a waiver of notice of such meeting, except where such person
attends a meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Trustees shall have the power to adopt, alter or repeal any
provision of these Bylaws and to make new Bylaws; provided, however, that
Article II, Section 2 of Article III and this Article XIV of these Bylaws shall
not be amended without the consent of shareholders by a vote of a majority of
the votes cast at a meeting of shareholders duly called and at which a quorum
is present.
ARTICLE XV
EXCLUSIVE POWER OF THE BOARD OF TRUSTEES TO AMEND THE BYLAWS
Except as provided in Article XIV, the Board of Trustees shall have
the exclusive power to adopt, alter or repeal any provision of these Bylaws and
to make new Bylaws.
ARTICLE XVI
MISCELLANEOUS
All references to the Declaration of Trust shall include any
amendments thereto.
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Index of Amendments to Bylaws
Pursuant to resolutions of the Board of Trustees dated May 15, 1998,
Article IV of the Bylaws was amended to add Sections 7-10.
Pursuant to resolutions of the Board of Trustees dated September 18,
1998, Article IV, Section 7 was amended and restated in its entirety.
Pursuant to resolutions of the Board of Trustees dated July 14, 1999,
Article IV of the Bylaws was amended to add Section 11.
Pursuant to resolutions of the Board of Trustees dated September 27,
1999, Article IV, Sections 8.2 (now Section 8(b)) and 8.3 (now section 8(c))
were amended and restated in their entirety.
Pursuant to resolutions of the Board of Trustees dated May 4, 2000,
the following sections of the Bylaws were amended: (a) Article IV, Section 8;
(b) Article IV, Section 8(e); (c) Article VII, Sections 1 and 2; and (d)
Article VII, Section 5.
/s/ STANLEY M. STEVENS
-----------------------------
Secretary
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ELEVENTH AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS ELEVENTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF EOP
OPERATING LIMITED PARTNERSHIP (this "Amendment"), dated as of May 1, 2000, is
entered into by EQUITY OFFICE PROPERTIES TRUST, a Maryland real estate
investment trust, as managing general partner (the "Managing General Partner")
of EOP Operating Limited Partnership (the "Partnership"), for itself and on
behalf of the Limited Partners of the Partnership.
WITNESSETH:
WHEREAS, the Managing General Partner and the Limited Partners have
entered into the Agreement of Limited Partnership of EOP Operating Limited
Partnership, dated as of July 3, 1997, as the same has been amended through the
date hereof (the "Agreement"); and
WHEREAS, the Managing General Partner, pursuant to the authority
granted to it under Sections 14.1.A and 14.1.B(4) of the Agreement, as
applicable, desires to amend Sections 7.4, 8.5.C and 14.1.B of the Agreement as
set forth herein, and the Managing General Partner, for itself and, to the
extent this action is taken pursuant to Section 14.1.A of the Agreement, as the
holder of a majority of the Percentage Interests of the Limited Partners, has
approved such amendment.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the Managing General Partner hereby amends the Agreement as
follows:
1. Amendment to Section 7.4 of Agreement. Section 7.4 of the
Agreement is hereby amended to add the following new Paragraph F:
F. Funding for Certain Capital Transactions. In
the event that the Managing General Partner shall undertake to acquire
(whether by merger, consolidation, purchase, or otherwise) the assets
or equity interests of another Person and such acquisition shall
require the payment of cash by the Managing General Partner (whether
to such Person or to any other selling party or parties in such
transaction
<PAGE> 2
or to one or more creditors, if any, of such Person or such selling
party or parties), (i) the Partnership shall advance to the Managing
General Partner the cash required to consummate such acquisition if,
and to the extent that, such cash is not to be obtained by the
Managing General Partner through an issuance of Shares described in
Section 4.2 or pursuant to a transaction described in Section 7.5.B,
(ii) the Managing General Partner shall immediately, upon consummation
of such acquisition, transfer to the Partnership (or cause to be
transferred to the Partnership), in full and complete satisfaction of
such advance and as required by Section 7.5, the assets or equity
interests of such Person acquired by the Managing General Partner in
such acquisition, and (iii) pursuant to and in accordance with Section
4.2 and Section 7.5.B, the Partnership shall issue to the Managing
General Partner Partnership Interests and/or rights, options, warrants
or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights that are substantially the
same as those of any additional Shares, other equity securities, New
Securities and/or Convertible Funding Debt, as the case may be, issued
by the Managing General Partner in connection with such acquisition
(whether issued directly to participants in the acquisition
transaction or to third parties in order to obtain cash to complete
the acquisition). In addition to, and without limiting the foregoing,
in the event that the Managing General Partner engages in a
transaction in which (x) the Managing General Partner (or a wholly
owned direct or indirect Subsidiary of the Managing General Partner)
merges with another entity (referred to as the "Parent Entity") that
is organized in the "UPREIT format" (i.e., where the Parent Entity
holds substantially all of its assets and conducts substantially all
of its operations through a partnership, limited liability company or
other entity (referred to as an "Operating Entity")) and the Managing
General Partner survives such merger, (y) such Operating Entity merges
with or is otherwise acquired by the Partnership in exchange in whole
or in part for Partnership Interests, and (z) the Managing General
Partner is required or elects to pay part of the consideration in
connection with such merger involving the Parent Entity in the form of
cash and part of the consideration in the form of Shares, the
Partnership shall distribute to the Managing General Partner with
respect to its existing Partnership Interest an amount of cash
sufficient to complete such transaction and the Managing General
Partner shall cause the Partnership to cancel a number of Partnership
Units (rounded to the nearest whole number) held by the Managing
General Partner equal to the product attained by multiplying the
number of additional Shares of the Managing General Partner that the
Managing General Partner would have issued to the Parent Entity or
2
<PAGE> 3
the owners of the Parent Entity in such transaction if the entire
consideration therefor were to have been paid in Shares by a fraction,
the numerator of which is one and the denominator of which is the
Conversion Factor.
2. Amendment to Section 8.5.C of Agreement. Section 8.5.C of the
Agreement is hereby amended to add the following proviso at the end of the
existing first sentence of Section 8.5.C:
; provided, however, that the Managing General Partner, in its sole
discretion, may shorten the required notice period of not less than
twenty (20) business days prior to the record date to determine the
shareholders eligible to vote upon a merger transaction (but not any
of the other transactions covered by this Section 8.5.C.) to a period
of not less than ten (10) calendar days (thereby continuing to afford
the holders of Units the opportunity to redeem Units under Section 8.6
on or prior to the record date for the shareholder vote on the merger
transaction) so long as (i) the General Partner Entity will be the
surviving entity in such merger transaction, (ii) immediately
following the merger transaction, Persons who held voting securities
of the General Partner Entity immediately prior to such merger
transaction will hold, solely by reason of the ownership of voting
securities of the General Partner Entity immediately prior to the
merger transaction, voting securities of the General Partner Entity
representing not less than fifty-one percent (51%) of the total
combined voting power of all outstanding voting securities of the
General Partner Entity after such merger, and (iii) in the event that
in connection with such merger transaction the Partnership will merge
with another entity, the Partnership will be the surviving entity in
such merger.
3. Amendment to Section 14.1.B of Agreement. Section 14.1.B of
the Agreement hereby is amended by deleting the last sentence of Section 14.1.B
in its entirety and by substituting therefor the following:
The Managing General Partner shall notify the Limited Partners when
any action under this Section 14.1.B is taken in the next regular
communication to the Limited Partners; provided, however, that no
notice need be given of any amendment of this Agreement to reflect the
admission, substitution, termination, or withdrawal of Partners in
accordance with this Agreement (whether or not effected through the
replacement of Exhibit A with an amended Exhibit A). For purposes of
the immediately preceding sentence, notwithstanding any other means by
which the Managing General Partner may provide any such notice to the
Limited Partners, such notice requirement shall be deemed to
3
<PAGE> 4
have been satisfied upon the filing with the Securities and Exchange
Commission by the Partnership of any amendment to this Agreement
permitted under this Section 14.1.B as an exhibit to (i) a
registration statement filed by the Partnership under the Securities
Act or (ii) any report or other document filed by the Partnership
under the Exchange Act.
4. Definitions; Full Force and Effect. All capitalized terms
used in this Amendment and not otherwise defined herein shall have the meanings
assigned to them in the Agreement. Except as modified herein, all terms and
conditions of the Agreement shall remain in full force and effect, which terms
and conditions the Managing General Partner, for itself and the Limited
Partners, hereby ratifies and affirms.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Amendment as of the date first set forth above.
EQUITY OFFICE PROPERTIES TRUST,
a Maryland real estate investment trust, as
Managing General Partner of EOP
Operating Limited Partnership and on
behalf of the Limited Partners thereof
By: /s/ STANLEY M. STEVENS
--------------------------------
Name: Stanley M. Stevens
Title: Executive Vice President
4
<PAGE> 1
-----------------------------------------
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
-----------------------------------------
Dated as of May 1, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I DEFINED TERMS................................................................................................1
ARTICLE II ORGANIZATIONAL MATTERS......................................................................................16
Section 2.1 Organization................................................................................16
Section 2.2 Name........................................................................................16
Section 2.3 Registered Office and Agent; Principal Office...............................................16
Section 2.4 Term........................................................................................17
ARTICLE III PURPOSE....................................................................................................17
Section 3.1 Purpose and Business........................................................................17
Section 3.2 Powers......................................................................................17
ARTICLE IV CAPITAL CONTRIBUTIONS AND ISSUANCES Of PARTNERSHIP INTERESTS................................................18
Section 4.1 Capital Contributions of the Partners.......................................................18
Section 4.2 Issuances of Partnership Interests..........................................................18
Section 4.3 No Preemptive Rights........................................................................20
Section 4.4 Other Contribution Provisions...............................................................20
Section 4.5 No Interest on Capital......................................................................20
Section 4.6 Separate Agreements.........................................................................20
ARTICLE V DISTRIBUTIONS................................................................................................21
Section 5.1 Requirement and Characterization of Distributions...........................................21
Section 5.2 Amounts Withheld............................................................................24
Section 5.3 Distributions Upon Liquidation..............................................................24
Section 5.4 Revisions to Reflect Issuance of Partnership Interests......................................24
ARTICLE VI ALLOCATIONS.................................................................................................24
Section 6.1 Allocations For Capital Account Purposes....................................................24
Section 6.2 Revisions to Allocations to Reflect Issuance of Partnership Interests.......................26
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS......................................................................27
Section 7.1 Management..................................................................................27
Section 7.2 Certificate of Limited Partnership..........................................................31
Section 7.3 Title to Partnership Assets.................................................................32
Section 7.4 Reimbursement of the General Partner........................................................32
Section 7.5 Outside Activities of the General Partner; Relationship of Shares to Partnership Units;
Funding Debt................................................................................33
Section 7.6 Transactions with Affiliates................................................................36
Section 7.7 Indemnification.............................................................................37
Section 7.8 Liability of the General Partner............................................................39
Section 7.9 Other Matters Concerning the General Partner................................................40
Section 7.10 Reliance by Third Parties...................................................................41
Section 7.11 Restrictions on General Partner's Authority.................................................42
Section 7.12 Loans by Third Parties......................................................................43
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS................................................................43
Section 8.1 Limitation of Liability.....................................................................43
Section 8.2 Management of Business......................................................................43
</TABLE>
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<TABLE>
<S> <C>
Section 8.3 Outside Activities of Limited Partners......................................................44
Section 8.4 Return of Capital...........................................................................44
Section 8.5 Rights of Limited Partners Relating to the Partnership......................................44
Section 8.6 Redemption Right............................................................................46
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS......................................................................49
Section 9.1 Records and Accounting......................................................................49
Section 9.2 Fiscal Year.................................................................................49
Section 9.3 Reports.....................................................................................49
ARTICLE X TAX MATTERS..................................................................................................50
Section 10.1 Preparation of Tax Returns..................................................................50
Section 10.2 Tax Elections...............................................................................50
Section 10.3 Tax Matters Partner.........................................................................50
Section 10.4 Organizational Expenses.....................................................................52
Section 10.5 Withholding.................................................................................52
ARTICLE XI TRANSFERS AND WITHDRAWALS...................................................................................53
Section 11.1 Transfer....................................................................................53
Section 11.2 Transfers of Partnership Interests of General Partner.......................................53
Section 11.3 Limited Partners' Rights to Transfer........................................................54
Section 11.4 Substituted Limited Partners................................................................56
Section 11.5 Assignees...................................................................................57
Section 11.6 General Provisions..........................................................................57
ARTICLE XII ADMISSION OF PARTNERS......................................................................................59
Section 12.1 Admission of a Successor General Partner....................................................59
Section 12.2 Admission of Additional Limited Partners....................................................60
Section 12.3 Amendment of Agreement and Certificate of Limited Partnership...............................60
ARTICLE XIII DISSOLUTION AND LIQUIDATION...............................................................................61
Section 13.1 Dissolution.................................................................................61
Section 13.2 Winding Up..................................................................................62
Section 13.3 Compliance with Timing Requirements of Regulations..........................................63
Section 13.4 Rights of Limited Partners..................................................................64
Section 13.5 Notice of Dissolution.......................................................................64
Section 13.6 Cancellation of Certificate of Limited Partnership..........................................64
Section 13.7 Reasonable Time for Winding Up..............................................................64
Section 13.8 Waiver of Partition.........................................................................64
Section 13.9 Liability of Liquidator.....................................................................64
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS...............................................................65
Section 14.1 Amendments..................................................................................65
Section 14.2 Meetings of the Partners....................................................................67
ARTICLE XV GENERAL PROVISIONS..........................................................................................67
Section 15.1 Addresses and Notice........................................................................67
Section 15.2 Titles and Captions.........................................................................68
Section 15.3 Pronouns and Plurals........................................................................68
Section 15.4 Further Action..............................................................................68
</TABLE>
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<TABLE>
<S> <C>
Section 15.5 Binding Effect..............................................................................68
Section 15.6 Creditors...................................................................................68
Section 15.7 Waiver......................................................................................68
Section 15.8 Counterparts................................................................................68
Section 15.9 Applicable Law..............................................................................69
Section 15.10 Invalidity of Provisions....................................................................69
Section 15.11 Power of Attorney...........................................................................69
Section 15.12 Entire Agreement............................................................................70
Section 15.13 No Rights as Shareholders...................................................................70
Section 15.14 Limitation to Preserve REIT Status..........................................................71
</TABLE>
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EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
SPECIAL ALLOCATION RULES
EXHIBIT D
NOTICE OF REDEMPTION
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
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<PAGE> 6
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
EOP OPERATING LIMITED PARTNERSHIP
THIS FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of May 1, 2000, is entered into by and among Equity Office
Properties Trust, a Maryland real estate investment trust, as the General
Partner, and the Persons whose names are set forth on Exhibit A hereto as
Limited Partners, together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, Equity Office Properties Trust, Zell/Merrill Lynch
Real Estate Opportunity Partners Limited Partnership II, an Illinois limited
Partnership, and certain other persons named therein entered into an Agreement
of Limited Partnership of EOP Operating Limited Partnership dated as of July 3,
1997, pursuant to which the Partnership was formed (the "Original Partnership
Agreement");
WHEREAS, the General Partner and the other Partners in the
Partnership have entered into eleven amendments to the Original Partnership
Agreement (the "Prior Amendments") and 20 addenda to the Original Partnership
Agreement effecting the admission of Additional Limited Partners to the
Partnership, the withdrawal of certain Partners from the Partnership, and, in
some cases, certain amendments to provisions of the Original Partnership
Agreement made in connection therewith (the "Prior Addenda"); and
WHEREAS, the General Partner and the Persons named on Exhibit
A hereto as Limited Partners desire to enter into this First Amended and
Restated Agreement of Limited Partnership to incorporate the Original
Partnership Agreement, the Prior Amendments, and the Addenda;
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby amend
and restate the Original Partnership Agreement in its entirety and agree to
continue the Partnership as a limited partnership under the Delaware Revised
Uniform Limited Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.
<PAGE> 7
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 hereof and who is
shown as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account
maintained for each Partner as of the end of each Partnership Year (i) increased
by any amounts which such Partner is obligated to restore pursuant to any
provision of this Agreement or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of
which has been adjusted pursuant to Exhibit B.
"Adjustment Date" has the meaning set forth in Section 4.2.B.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Protected Amount" means the aggregate balances of
the Protected Amounts, if any, of all Protected Partners, as determined on the
date in question.
"Agreed Value" means (i) in the case of any Contributed
Property, the 704(c) Value of such property as of the time of its contribution
to the Partnership, reduced by any liabilities either assumed by the Partnership
upon such contribution or to which such property is subject when contributed, as
the same is reflected in the books and records of the Partnership; and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
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<PAGE> 8
"Agreement" means this First Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Assignee" means a Person to whom one or more Partnership
Units have been transferred in a manner permitted under this Agreement, but who
has not become a Substituted Limited Partner, and who has the rights set forth
in Section 11.5.
"Available Cash" means, with respect to any period for which
such calculation is being made:
(a) all cash revenues and funds received by the Partnership
from whatever source (excluding the proceeds of any Capital Contribution) plus
the amount of any reduction (including, without limitation, a reduction
resulting because the General Partner determines such amounts are no longer
necessary) in reserves of the Partnership, which reserves are referred to in
clause (b)(iv) below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution):
(i) all interest, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made
thereto) to the extent that such investments are permitted under this Agreement
and are not otherwise described in clauses (b)(i) or (ii), and
(iv) the amount of any increase in reserves established
during such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not
include any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
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<PAGE> 9
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Chicago, Illinois are authorized or
required by law to close.
"Capital Account" means the Capital Account maintained for a
Partner pursuant to Exhibit B.
"Capital Contribution" means, with respect to any Partner, any
cash, cash equivalents or the Agreed Value of Contributed Property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Section 4.1 or 4.2.
"Carrying Value" means (i) with respect to a Contributed
Property or Adjusted Property, the 704(c) Value of such property reduced (but
not below zero) by all Depreciation with respect to such Contributed Property or
Adjusted Property, as the case may be, charged to the Partners' Capital Accounts
and (ii) with respect to any other Partnership property, the adjusted basis of
such property for federal income tax purposes, all as of the time of
determination. The Carrying Value of any property shall be adjusted from time to
time in accordance with Exhibit B, and to reflect changes, additions (including
capital improvements thereto) or other adjustments to the Carrying Value for
dispositions and acquisitions of Partnership properties, as deemed appropriate
by the General Partner.
"Cash Amount" means an amount of cash equal to the Value on
the Valuation Date of the Shares Amount.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Delaware Secretary of
State, as amended from time to time in accordance with the terms hereof and the
Act.
"Class A" has the meaning set forth in Section 5.1.C.
"Class A Share" has the meaning set forth in Section 5.1.C.
"Class A Unit" means any Partnership Unit that is not
specifically designated by the General Partner as being of another specified
class of Partnership Units.
"Class B" has the meaning set forth in Section 5.1.C.
"Class B Share" has the meaning set forth in Section 5.1.C.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action
by a Partner given in accordance with Section 14.2.
-4-
<PAGE> 10
"Consent of the Outside Limited Partners" means the Consent of
Limited Partners (excluding for this purpose any Limited Partnership Interests
held by the General Partner, any Person of which the General Partner owns or
controls more than fifty percent (50%) of the voting interests and any Person
directly or indirectly owning or controlling more than fifty percent (50%) of
the outstanding voting interests of the General Partner) holding Percentage
Interests that are greater than fifty percent (50%) of the aggregate Percentage
Interest of all Limited Partners who are not excluded for the purposes hereof.
"Consolidation" means (i) the transactions whereby the
Partnership acquired interests in certain office properties owned by the
Opportunity Partnerships and certain asset management and property management
businesses that provided services to those properties and to other office
properties, in exchange for Partnership Units, and (ii) the merger of the ZML
Investors, Inc., ZML Investors II, Inc., Zell/Merrill Lynch Real Estate
Opportunity Partners III Trust and Zell/Merrill Lynch Real Estate Opportunity
Partners IV Trust with and into Equity Office Properties Trust, all as described
in a Joint Proxy Statement/Offering Memorandum dated March 25, 1997.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership. Once the
Carrying Value of a Contributed Property is adjusted pursuant to Exhibit B, such
property shall no longer constitute a Contributed Property for purposes of
Exhibit B, but shall be deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0; provided that, if the General
Partner Entity (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding
Shares into a smaller number of Shares, the Conversion Factor shall be adjusted
by multiplying the Conversion Factor by a fraction, the numerator of which shall
be the number of Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time) and the denominator of which shall be the actual number of Shares
(determined without the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision or combination; and provided
further that if an entity shall cease to be the General Partner Entity (the
"Predecessor Entity") and another entity shall become the General Partner Entity
(the "Successor Entity"), the Conversion Factor shall be adjusted by multiplying
the Conversion Factor by a fraction, the numerator of which is the Value of one
Share of the Predecessor Entity, determined as of the date when the Successor
Entity becomes the General Partner Entity, and the denominator of which is the
Value of one Share of the Successor Entity, determined as of that same date.
(For purposes of the second proviso in the preceding sentence, if any
shareholders of the Predecessor Entity will receive consideration in connection
with the transaction in which the Successor Entity becomes the General Partner
Entity, the numerator in the fraction described above for determining the
adjustment to the Conversion Factor (that is, the Value of one Share of the
Predecessor Entity) shall be the sum of the greatest amount of cash and the fair
market value (as determined in good faith by the General Partner) of any
securities and other consideration that the holder of one Share in the
Predecessor Entity could have received in
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<PAGE> 11
such transaction (determined without regard to any provisions governing
fractional shares).) Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of the event retroactive to the
record date, if any, for the event giving rise thereto, it being intended that
(x) adjustments to the Conversion Factor are to be made to avoid unintended
dilution or anti-dilution as a result of transactions in which Shares are
issued, redeemed or exchanged without a corresponding issuance, redemption or
exchange of Partnership Units and (y) if a Specified Redemption Date shall fall
between the record date and the effective date of any event of the type
described above, that the Conversion Factor applicable to such redemption shall
be adjusted to take into account such event.
"Convertible Funding Debt" has the meaning set forth in
Section 7.5.F.
"Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person, (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof, and (iv)
obligations of such Person incurred in connection with entering into a lease
which, in accordance with generally accepted accounting principles, should be
capitalized.
"Declaration of Trust" means the Articles of Amendment and
Restatement of Declaration of Trust of Equity Office Properties Trust filed in
the State of Maryland on July 9, 1997, as amended or restated from time to time.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interest of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interest" means, as of any
date with respect to any class of Partnership Interests, (a) if the common
shares of beneficial interest (or other comparable equity interests) of the
General Partner Entity are Publicly Traded (i) the total number of shares of
beneficial interest (or other comparable equity interest) of the General Partner
Entity corresponding to such class of Partnership Interest (as provided for in
Section 4.2.B) issued and outstanding as of the close of business on such date
(excluding any treasury shares) multiplied by the Value of a share of such
beneficial interest (or other comparable equity interest) on such date divided
by (ii) the Percentage Interests of the General Partner, held directly or
indirectly through another entity, in such class of Partnership Interests on
such date, and (b) otherwise, the aggregate Value of such class of Partnership
Interests determined as set forth in the fourth and fifth sentences of the
definition of Value. For purposes of clause (a) of the preceding sentence,
"Value" means the average of the daily market price of such corresponding shares
of beneficial interest (or other comparable equity interests) of the General
Partner Entity for such number of consecutive trading days or the Business Day
immediately preceding the date with respect
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<PAGE> 12
to which Value must be determined (which number of days or the Business Day
shall be determined by the General Partner in its sole discretion), with the
market price for each such trading day being the closing price, regular way, on
such day, or if no such sale takes place on such day, the average of the closing
bid and asked prices on such day. Notwithstanding any of the foregoing, with
respect to any class or series of Partnership Interests that is entitled to a
preference as compared to the class of Partnership Interests corresponding to
common shares of beneficial interests (or other comparable equity interests) of
the General Partner Entity, "Value" means the stated liquidation preference or
value of such class or series of Partnership Interests provided in the
instrument establishing such class or series of Partnership Interests (unless
otherwise provided in such instrument).
"Depreciation" means, for each fiscal year, an amount equal to
the federal income tax depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year, except that if the
Carrying Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such year or other period, Depreciation shall
be an amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Distribution Period" has the meaning set forth in Section
5.1.C.
"Effective Date" means the date of the closing of the
Consolidation.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Partner" means either any (a) Limited Partner or (b)
holder of shares of beneficial interest in the General Partner that received
such Shares in the mergers of ZML Investors, Inc., ZML Investors II, Inc.,
Zell/Merrill Lynch Real Estate Opportunity Partners III Trust, and Zell/Merrill
Lynch Real Estate Opportunity Partners IV Trust into the General Partner, and
which Limited Partner or shareholder is either (i) an employee benefit plan
subject to Title I of ERISA or section 4975 of the Code, or (ii) a nominee for
or a trust established pursuant to such employee benefit plan, or (iii) which is
an entity whose underlying assets include assets of such employee benefit plan
by reason of such plan's investment in such entity.
"ERISA Plan" means an "employee benefit plan" as that term is
defined in 29 U.S.C. Section 1002(3), and which is not exempt from regulation
under ERISA by virtue of 29 U.S.C. Section 1003(b).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Value" shall have the meaning described in Section
7.09.E(iv).
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"Funding Debt" means the incurrence of any Debt by or on
behalf of the General Partner Entity for the purpose of providing funds to the
Partnership.
"General Partner" means Equity Office Properties Trust, a
Maryland real estate investment trust, or its successor, as general partner of
the Partnership.
"General Partner Entity" means the General Partner; provided,
however, that if (i) the common shares of beneficial interest (or other
comparable equity interests) of the General Partner are at any time not Publicly
Traded and (ii) the common shares of beneficial interest (or other comparable
equity interests) of an entity that owns, directly or indirectly, fifty percent
(50%) or more of the common shares of beneficial interest (or other comparable
equity interests) of the General Partner are Publicly Traded, the term "General
Partner Entity" shall refer to such entity whose common shares of beneficial
interest (or other comparable equity securities) are Publicly Traded. If both
requirements set forth in clauses (i) and (ii) above are not satisfied, then the
term "General Partner Entity" shall mean the General Partner.
"General Partnership Interest" means a Partnership Interest
held by the General Partner that is a general partnership interest. A General
Partnership Interest may be expressed as a number of Partnership Units.
"General Partner Payment" has the meaning set forth in Section
15.14 hereof.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person,
such natural Person's spouse, parents, descendants, nephews, nieces, brothers,
and sisters.
"Incapacity" or "Incapacitated" means, (i) as to any
individual who is a Partner, death, total physical disability or entry by a
court of competent jurisdiction adjudicating such Partner incompetent to manage
his or her Person or estate, (ii) as to any corporation which is a Partner, the
filing of a certificate of dissolution, or its equivalent, for the corporation
or the revocation of its charter, (iii) as to any partnership or limited
liability company which is a Partner, the dissolution and commencement of
winding up of the partnership or limited liability company, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership, (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For purposes
of this definition, bankruptcy of a Partner shall be deemed to have occurred
when (a) the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other similar
law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or
insolvent, or a final and nonappealable order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect has been entered against
the Partner, (c) the Partner executes and delivers a general assignment for the
benefit of the Partner's creditors, (d) the Partner files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the
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Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver of liquidator has not been
vacated or stayed within ninety (90) days of such appointment or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding
by reason of its status as (A) the General Partner, (B) a Limited Partner, or
(C) a trustee, director or officer of the Partnership, or the General Partner
and (ii) such other Persons (including Affiliates of the General Partner, a
Limited Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"Limited Partner" means any Person named as a Limited Partner
in Exhibit A, as such Exhibit may be amended from time to time, or any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partnership Interest may
be expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
"Liquidator" has the meaning set forth in Section 13.2.A.
"Net Income" means, for any taxable period, the excess, if
any, of the Partnership's items of income and gain for such taxable period over
the Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Income is subjected to the special allocation
rules in Exhibit C, Net Income or the resulting Net Loss, whichever the case may
be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any,
of the Partnership's items of loss and deduction for such taxable period over
the Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. If an item of income, gain, loss or deduction that has been included
in the initial computation of Net Loss is subjected to the special allocation
rules in Exhibit C, Net Loss or the resulting Net Income, whichever the case may
be, shall be recomputed without regard to such item.
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"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase Shares, excluding grants under any Share Option Plan, or (ii) any Debt
issued by the General Partner Entity that provides any of the rights described
in clause (i).
"Nonrecourse Built-in Gain" means, with respect to any
Contributed Properties or Adjusted Properties that are subject to a mortgage or
negative pledge securing a Nonrecourse Liability, the amount of any taxable gain
that would be allocated to the Partners pursuant to Section 2.B of Exhibit C if
such properties were disposed of in a taxable transaction in full satisfaction
of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).
"Notice of Redemption" means a Notice of Redemption
substantially in the form of Exhibit D.
"Opportunity Partnerships" means, Zell/Merrill Lynch Real
Estate Opportunity Partners Limited Partnership, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership II, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership III, and Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership IV.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i), and the amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Partnership Year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act upon the terms and conditions set forth in the Original Partnership
Agreement and continued pursuant to this Agreement, or any successor to such
limited partnership.
"Partnership Interest" means a Limited Partnership Interest or
a General Partnership Interest and includes any and all benefits to which the
holder of such a
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<PAGE> 16
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Partnership Interest may be expressed as a number of
Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner either (i) for the distribution of Available Cash pursuant
to Section 5.1 hereof, which record date shall be the same as the record date
established by the General Partner Entity for a distribution to its shareholders
of some or all of its portion of such distribution, or (ii) if applicable, for
determining the Partners entitled to vote on or consent to any proposed action
for which the consent or approval of the Partners is sought pursuant to Section
14.2 hereof.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units, Series A Preferred Units, Series B
Preferred Units, Series C Preferred Units, and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A, as such Exhibit may be
amended from time to time.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class
of Partnership Interests, its interest in such class, determined by dividing the
Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A, as
such exhibit may be amended from time to time, multiplied by the aggregate
Percentage Interest allocable to such class of Partnership Interests. If the
Partnership shall at any time have outstanding more than one class of
Partnership Interests, the Percentage Interest attributable to each class of
Partnership Interests shall be determined as set forth in Section 4.2.B.
"Person" means a natural person, partnership (whether general
or limited), trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or any representative capacity.
"Predecessor Entity" has the meaning set forth in the
definition of "Conversion Factor" herein.
"Protected Amount" means the amount specified on Exhibit E
with respect to any Protected Partner, as such Exhibit may be amended from time
to time.
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<PAGE> 17
"Protected Partner" means a Partner designated as a Protected
Partner on Exhibit E, as such Exhibit may be amended from time to time, which
Protected Partner is obligated to make certain contributions, not in excess of
such Protected Partner's Protected Amount, to the Partnership with respect to
any deficit balance in such Partner's Capital Account upon the occurrence of
certain events. A Protected Partner who is obligated to make any such
contribution only upon liquidation of the Partnership shall be designated on
Exhibit E as a Part I Protected Partner and a Protected Partner who is obligated
to make any such contribution to the Partnership either upon liquidation of the
Partnership or upon liquidation of such Protected Partner's Partnership Interest
shall be designated on Exhibit E as a Part II Protected Partner.
"Publicly Traded" means listed or admitted to trading on the
New York Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the NASDAQ National Market,
or any successor to any of the foregoing.
"Qualified REIT Subsidiary" means any Subsidiary of the
General Partner that is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act.
"Recapture Income" means any gain recognized by the
Partnership (computed without regard to any adjustment required by Section 734
or Section 743 of the Code) upon the disposition of any property or asset of the
Partnership, which gain is characterized either as ordinary income or as
"unrecaptured Section 1250 gain" (as defined in Section 1(h)(7) of the Code
because it represents the recapture of deductions previously taken with respect
to such property or asset.
"Recourse Liabilities" means the amount of liabilities owed by
the Partnership (other than Nonrecourse Liabilities and liabilities to which
Partner Nonrecourse Deductions are attributable in accordance with Section
1.704-(2)(i) of the Regulations).
"Redeeming Partner" has the meaning set forth in Section
8.6.A.
"Redemption Amount" means either the Cash Amount or the Shares
Amount, as determined by the General Partner, in its sole and absolute
discretion; provided that if the Shares are not Publicly Traded at the time a
Redeeming Partner exercises its Redemption Right, the Redemption Amount shall be
paid only in the form of the Cash Amount unless the Redeeming Partner, in its
sole and absolute discretion, consents to payment of the Redemption Amount in
the form of the Shares Amount. A Redeeming Partner shall have no right, without
the General Partner's consent, in its sole and absolute discretion, to receive
the Redemption Amount in the form of the Shares Amount.
"Redemption Right" has the meaning set forth in Section 8.6.A.
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"Regulations" means the Treasury Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856
of the Code.
"REIT Requirements" has the meaning set forth in Section
5.1.A.
"Residual Gain" or "Residual Loss" means any item of gain or
loss, as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Safe Harbor" has the meaning set forth in Section 11.6.F.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" means the 8.98% Series A
Cumulative Redeemable Preferred Shares of Equity Office Properties Trust issued
in connection with the merger of Beacon Properties Corporation into Equity
Office Properties Trust on December 19, 1997.
"Series A Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the 8.98%
Series A Cumulative Redeemable Preferred Units with the designations,
preferences and other rights set forth in Attachment A hereto.
"Series B Preferred Shares" means the 5.25% Series B
Convertible, Cumulative Preferred Shares of the Company, with the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption of shares
as described in the Articles Supplementary to the Declaration of Trust filed
with the State Department of Assessments and Taxation of Maryland on February
19, 1998, establishing the series of preferred shares, designated Series B
Preferred Shares.
"Series B Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the 5.25%
B Convertible, Cumulative Preferred Units, with the preferences, conversion and
other rights, voting powers, restrictions, limitations as to distributions,
qualification and terms and conditions of redemption of units set forth in
Attachment B hereto.
"Series C Preferred Shares" means the 8 5/8% Series C
Cumulative Redeemable Preferred Shares of Beneficial Interest of the Company
issued and sold in the underwritten public offering made pursuant to the
Company's effective shelf registration statement on Form S-3 (Reg. No.
333-58729), its prospectus dated July 22, 1998, and its related prospectus
supplement dated December 1, 1998.
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<PAGE> 19
"Series C Preferred Units" means the series of Partnership
Units representing units of Limited Partnership Interest designated as the 8
5/8% Series C Cumulative Redeemable Preferred Units, with the designations,
preferences and other rights set forth in Attachment C hereto.
"704(c) Value" of any Contributed Property means the fair
market value of such property at the time of contribution as determined by the
General Partner using such reasonable method of valuation as they may adopt;
provided, however, subject to Exhibit B, the General Partner shall, in its sole
and absolute discretion, use such method as it deems reasonable and appropriate
to allocate the aggregate of the 704(c) Value of Contributed Properties in a
single or integrated transaction among each separate property on a basis
proportional to its fair market values.
"Share" means a share of beneficial interest (or other
comparable equity interest) of the General Partner Entity. Shares may be issued
in one or more classes or series in accordance with the terms of the Declaration
of Trust (or, if the General Partner is not the General Partner Entity, the
organizational documents of the General Partner Entity). If there is more than
one class or series of Shares, the term "Shares" shall, as the context requires,
be deemed to refer to the class or series of Shares that correspond to the class
or series of Partnership Interests for which the reference to Shares is made.
When used with reference to Class A Units, the term "Shares" refers to common
shares of beneficial interest (or other comparable equity interest) of the
General Partner Entity.
"Shares Amount" means a number of Shares equal to the product
of the number of Partnership Units offered for redemption by a Redeeming Partner
times the Conversion Factor; provided that, if the General Partner Entity issues
to all holders of Shares rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the "rights"), then
the Shares Amount shall also include such rights that a holder of that number of
Shares would be entitled to receive.
"Share Option Plan" means any equity incentive plan of the
General Partner, the General Partner Entity, the Partnership and/or any
Affiliate of the Partnership.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, if the
Shares are not Publicly Traded, the Specified Redemption Date means the
thirtieth Business Day after receipt by the General Partner of a Notice of
Redemption.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, trust, partnership or joint venture, or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
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"Successor Entity" has the meaning set forth in the definition
of "Conversion Factor" herein.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
11.2.B.
"Unrealized Gain" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B) as of such date.
"Unrealized Loss" attributable to any item of Partnership
property means, as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B) as of such date.
"Valuation Date" means the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
first Business Day thereafter.
"Value" means, with respect to any outstanding Shares of the
General Partner Entity that are Publicly Traded, the average of the daily market
price for the ten consecutive trading days immediately preceding the date with
respect to which value must be determined. The market price for each such
trading day shall be the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices on
such day. If the outstanding Shares of the General Partner Entity are Publicly
Traded and the Shares Amount includes rights that a holder of Shares would be
entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. If the
Shares of the General Partner Entity are not Publicly Traded, the Value of the
Shares Amount per Partnership Unit offered for redemption (which will be the
Cash Amount per Partnership Unit offered for redemption payable pursuant to
Section 8.6.A) means the amount that a holder of one Partnership Unit would
receive if each of the assets of the Partnership were to be sold for its fair
market value on the Specified Redemption Date, the Partnership were to pay all
of its outstanding liabilities, and the remaining proceeds were to be
distributed to the Partners in accordance with the terms of this Agreement. Such
Value shall be determined by the General Partner, acting in good faith and based
upon a commercially reasonable estimate of the amount that would be realized by
the Partnership if each asset of the Partnership (and each asset of each
partnership, limited liability company, trust, joint venture or other entity in
which the Partnership owns a direct or indirect interest) were sold to an
unrelated purchaser in an arms' length transaction where neither the purchaser
nor the seller were under economic compulsion to enter into the transaction
(without regard to any discount in value as a result of the Partnership's
minority interest in any
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<PAGE> 21
property or any illiquidity of the Partnership's interest in any property). In
connection with determining the Deemed Value of the Partnership Interest for
purposes of determining the number of additional Partnership Units issuable upon
a Capital Contribution funded by an underwritten public offering or an arm's
length private placement of shares of beneficial interest (or other comparable
equity interest) of the General Partner, the Value of such shares shall be the
public offering or arm's length private placement price per share of such class
of beneficial interest (or other comparable equity interest) sold.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION
The Partnership is a limited partnership organized pursuant to
the provisions of the Act and upon the terms and conditions set forth in the
prior Agreement. The Partners hereby agree to continue the business of the
Partnership on the terms set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for all
purposes.
SECTION 2.2 NAME
The name of the Partnership is EOP Operating Limited
Partnership. The Partnership's business may be conducted under any other name or
names deemed advisable by the General Partner, including the name of any of the
General Partner or any Affiliate thereof. The words "Limited Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in the
Partnership's name where necessary for the purposes of complying with the laws
of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Limited Partners of such change in the next
regular communication to the Limited Partners.
SECTION 2.3 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE
The address of the registered office of the Partnership in the
State of Delaware shall be located at Corporation Trust Center, 1209 Orange
Street, Wilmington, County of New Castle, Delaware 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office shall be Corporation Trust Company. The principal office of
the Partnership shall be Two North Riverside Plaza, Suite 2100, Chicago,
Illinois 60606, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
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SECTION 2.4 TERM
The term of the Partnership commenced on November 1, 1996, and
shall continue until December 31, 2095, unless it is dissolved sooner pursuant
to the provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner Entity at all times to be classified as a REIT, unless the
General Partner Entity ceases to qualify or is not qualified as a REIT for any
reason or reasons not related to the business conducted by the Partnership, (ii)
to enter into any corporation, partnership, joint venture, trust, limited
liability company or other similar arrangement to engage in any of the foregoing
or the ownership of interests in any entity engaged, directly or indirectly, in
any of the foregoing and (iii) to do anything necessary or incidental to the
foregoing. In connection with the foregoing, the Partners acknowledge that the
status of the General Partner Entity as a REIT inures to the benefit of all the
Partners and not solely to the General Partner Entity or its Affiliates.
SECTION 3.2 POWERS
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or refrain from taking,
any action which, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of the General
Partner Entity to continue to qualify as a REIT, (ii) could subject the General
Partner Entity to any taxes under Section 857 or Section 4981 of the Code or
(iii) could violate any law or regulation of any governmental body or agency
having jurisdiction over either the General Partner or the General Partner
Entity or its securities, unless such action (or inaction) shall have been
specifically consented to by the General Partner in writing.
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ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
Prior to the execution of this Agreement, the Partners have
made the Capital Contributions as set forth in Exhibit A. The Partners own
Partnership Units in the amounts set forth in Exhibit A and have Percentage
Interests in the Partnership as set forth in Exhibit A, which number of
Partnership Units and Percentage Interest shall be adjusted in Exhibit A from
time to time by the General Partner to the extent necessary to reflect
accurately redemptions, Capital Contributions, the issuance of additional
Partnership Units or similar events having an effect on a Partner's Percentage
Interest occurring after the date hereof in accordance with the terms of this
Agreement. To the extent the Partnership acquires any property by the merger of
any other Person into the Partnership, Persons who receive Partnership Interests
in exchange for their interests in the Person merging into the Partnership shall
become Partners and shall be deemed to have made Capital Contributions as
provided in the applicable merger agreement and as set forth in Exhibit A. A
number of Partnership Units held by the General Partner equal to one percent
(1%) of the aggregate number of Partnership Units owned by the General Partner
shall be deemed to be the General Partner Partnership Units and shall be the
General Partnership Interest of the General Partner. All other Partnership Units
held by the General Partner shall be deemed to be Limited Partnership Interests
and shall be held by the General Partner in its capacity as a Limited Partner in
the Partnership. Except as provided in Sections 7.5, 10.5, and 13.3 hereof, the
Partners shall have no obligation to make any additional Capital Contributions
or provide any additional funding to the Partnership (whether in the form of
loans, repayments of loans or otherwise). Except as otherwise set forth in
Section 13.3 hereof, no Partner shall have any obligation to restore any deficit
that may exist in its Capital Account, either upon a liquidation of the
Partnership or otherwise.
SECTION 4.2 ISSUANCES OF PARTNERSHIP INTERESTS
A. General. The General Partner is hereby authorized to cause
the Partnership from time to time to issue to Partners (including the General
Partner and its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership) Partnership
Units or other Partnership Interests in one or more classes, or in one or more
series of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partnership Interests, all as shall
be determined, subject to applicable Delaware law, by the General Partner in its
sole and absolute discretion, including, without limitation, (i) the allocations
of items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests, (ii) the right of each such class or
series of Partnership Interests to share in Partnership distributions and (iii)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided that no such
Partnership Units or other Partnership Interests shall be issued to the General
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<PAGE> 24
Partner unless either (a) the Partnership Interests are issued in connection
with the grant, award or issuance of Shares or other equity interests in the
General Partner having designations, preferences and other rights such that the
economic interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other rights (except
voting rights) of the Partnership Interests issued to the General Partner in
accordance with this Section 4.2.A or (b) the additional Partnership Interests
are issued to all Partners holding Partnership Interests in the same class in
proportion to their respective Percentage Interests in such class. If the
Partnership issues Partnership Interests pursuant to this Section 4.2.A, the
General Partner shall make such revisions to this Agreement (including but not
limited to the revisions described in Section 5.4, Section 6.2 and Section 8.6)
as it deems necessary to reflect the issuance of such Partnership Interests.
B. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units and so long as the Partnership
shall have outstanding more than one class of Partnership Interests, the
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the amount of cash, if any, plus the Agreed Value of
Contributed Property, if any, contributed with respect to such additional
Partnership Units and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests for all outstanding classes (computed
as of the Business Day immediately preceding the date on which the additional
Capital Contributions are made (an "Adjustment Date")) plus (ii) the aggregate
amount of additional Capital Contributions contributed to the Partnership on
such Adjustment Date in respect of such additional Partnership Units. The
Percentage Interest of each other Partner holding Partnership Interests not
making a full pro rata Capital Contribution shall be adjusted to a fraction the
numerator of which is equal to the sum of (i) the Deemed Partnership Interest
Value of such Limited Partner (computed as of the Business Day immediately
preceding the Adjustment Date) plus (ii) the amount of additional Capital
Contributions (such amount being equal to the amount of cash, if any, plus the
Agreed Value of Contributed Property, if any, so contributed), if any, made by
such Partner to the Partnership in respect of such Partnership Interest as of
such Adjustment Date and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of all outstanding classes (computed
as of the Business Day immediately preceding such Adjustment Date) plus (ii) the
aggregate amount of the additional Capital Contributions contributed to the
Partnership on such Adjustment Date in respect of such additional Partnership
Interests. For purposes of calculating a Partner's Percentage Interest pursuant
to this Section 4.2.B, cash Capital Contributions by the General Partner will be
deemed to equal the cash contributed by the General Partner plus (a) in the case
of cash contributions funded by an offering of any equity interests in or other
securities of the General Partner, the offering costs attributable to the cash
contributed to the Partnership, and (b) in the case of Partnership Units issued
pursuant to Section 7.5.E, an amount equal to the difference between the Value
of the Shares sold pursuant to any Share Option Plan and the net proceeds of
such sale.
C. Classes of Partnership Units. Subject to Section 4.2.A
above and Section 4.2.D below, the Partnership shall have two classes of
Partnership Units entitled "Class A Units" and "Class B Units." Either Class A
Units or Class B Units, at the election
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of the General Partner, in its sole and absolute discretion, may be issued to
newly admitted Partners in exchange for the contribution by such Partners of
cash, real estate partnership interests, stock, notes or other assets or
consideration; provided that any Partnership Unit that is not specifically
designated by the General Partner as being of a particular class shall be deemed
to be a Class A Unit. Each Class B Unit shall be converted automatically into a
Class A Unit on the day immediately following the Partnership Record Date for
the Distribution Period (as defined in Section 5.1.C) in which such Class B Unit
was issued, without the requirement for any action by either the Partnership or
the Partner holding the Class B Unit.
D. Preferred Units Outstanding. Pursuant to Section 4.2.A, the
Partnership has heretofore established and issued Series A Preferred Units,
Series B Preferred Units, and Series C Preferred Units. The terms and conditions
of the Series A Preferred Units, the Series B Preferred Units, and the Series C
Preferred Units are set forth in Attachment A, Attachment B, and Attachment C,
respectively, attached hereto and made part hereof.
SECTION 4.3 NO PREEMPTIVE RIGHTS
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
SECTION 4.4 OTHER CONTRIBUTION PROVISIONS
If any Partner is admitted to the Partnership and is given a
Capital Account in exchange for services rendered to the Partnership, such
transaction shall be treated by the Partnership and the affected Partner as if
the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership.
SECTION 4.5 NO INTEREST ON CAPITAL
No Partner shall be entitled to interest on its Capital
Contributions or its Capital Account.
SECTION 4.6 SEPARATE AGREEMENTS
In connection with the issuance of Partnership Units to
certain Additional Limited Partners, the Partnership has entered into separate
agreements that set forth additional rights and obligations of such Additional
Limited Partners and additional terms and conditions of such Additional Limited
Partner's Partnership Interests. Such agreements are described in Attachments D,
E, F, G, and H attached hereto and made part hereof.
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ARTICLE V
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
A. General. The General Partner shall distribute at least
quarterly an amount equal to one hundred percent (100%) of Available Cash
generated by the Partnership during such quarter or shorter period to the
Partners who are Partners on the Partnership Record Date with respect to such
quarter or shorter period as provided in Sections 5.1.B, 5.1.C and 5.1.D.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a Share for which such Partnership Unit has been
redeemed or exchanged. Unless otherwise expressly provided for herein, in
Attachment A, Attachment B, and Attachment C hereto, with respect to Series A
Preferred Units, Series B Preferred Units, and Series C Preferred Units,
respectively, or in an agreement at the time a new class or series of
Partnership Interests is created in accordance with Article IV hereof, no
Partnership Interest shall be entitled to a distribution in preference to any
other Partnership Interest. The General Partner shall make such reasonable
efforts, as determined by it in its sole and absolute discretion and consistent
with the qualification of the General Partner Entity as a REIT, to distribute
Available Cash (a) to Limited Partners so as to preclude any such distribution
or portion thereof from being treated as part of a sale of property to the
Partnership by a Limited Partner under Section 707 of the Code or the
Regulations thereunder; provided, that, the General Partner and the Partnership
shall not have liability to a Limited Partner under any circumstances as a
result of any distribution to a Limited Partner being so treated, and (b) to the
General Partner in an amount sufficient to enable the General Partner Entity to
make distributions to its shareholders that will enable the General Partner
Entity to (1) satisfy the requirements for qualification as a REIT under the
Code and the Regulations (the "REIT Requirements"), and (2) avoid any federal
income or excise tax liability.
B. Method. (i) Each holder of Partnership Interests that is
entitled to any preference in distribution (including, without limitation, the
preferences in distribution set forth in Attachment A, Attachment B, and
Attachment C hereto with respect to Series A Preferred Units, Series B Preferred
Units and Series C Preferred Units, respectively) shall be entitled to a
distribution in accordance with the rights of any such class of Partnership
Interests (and, within such class, pro rata in proportion to the respective
Percentage Interests on such Partnership Record Date); and
(ii) To the extent there is Available Cash remaining after the
payment of any preference in distribution in accordance with the foregoing
clause (i), with respect to Partnership Interests that are not entitled to any
preference in distribution, pro rata to each such class in accordance with the
terms of such class (and, within each such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
C. Distributions When Class B Units Are Outstanding. If for
any quarter or shorter period with respect to which a distribution is to be made
(a "Distribution Period") Class B Units are outstanding on the Partnership
Record Date for such
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Distribution Period, the General Partner shall allocate the Available Cash with
respect to such Distribution Period available for distribution with respect to
the Class A Units and Class B Units collectively between the Partners who are
holders of Class A Units ("Class A") and the Partners who are holders of Class B
Units ("Class B") as follows:
(1) Class A shall receive that
portion of the Available Cash (the "Class A Share")
determined by multiplying the amount of Available
Cash by the following fraction:
A x Y
----------------------------
(A x Y)+(B x X)
(2) Class B shall receive that
portion of the Available Cash (the "Class B Share")
determined by multiplying the amount of Available
Cash by the following fraction:
B x X
----------------------------
(A x Y)+(B x X)
(3) For purposes of the foregoing
formulas, (i) "A" equals the number of Class A Units
outstanding on the Partnership Record Date for such
Distribution Period; (ii) "B" equals the number of
Class B Units outstanding on the Partnership Record
Date for such Distribution Period; (iii) "Y" equals
the number of days in the Distribution Period; and
(iv) "X" equals the number of days in the
Distribution Period for which the Class B Units were
issued and outstanding.
The Class A Share shall be distributed among Partners holding
Class A Units on the Partnership Record Date for the Distribution Period in
accordance with the number of Class A Units held by each Partner on such
Partnership Record Date; provided that in no event may a Partner receive a
distribution of Available Cash with respect to a Class A Unit if a Partner is
entitled to receive a distribution out of such Available Cash with respect to a
Share for which such Class A Unit has been redeemed or exchanged. The
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Class B Shares shall be distributed among the Partners holding Class B Units on
the Partnership Record Date for the Distribution Period in accordance with the
number of Class B Units held by each Partner on such Partnership Record Date. In
no event shall any Class B Units be entitled to receive any distribution of
Available Cash for any Distribution Period ending prior to the date on which
such Class B Units are issued.
D. Distributions When Class B Units Have Been Issued on
Different Dates. If Class B Units which have been issued on different dates are
outstanding on the Partnership Record Date for any Distribution Period, then the
Class B Units issued on each particular date shall be treated as a separate
series of Partnership Units for purposes of making the allocation of Available
Cash for such Distribution Period among the holders of Partnership Units (and
the formula for making such allocation, and the definitions of variables used
therein, shall be modified accordingly). Thus, for example, if two series of
Class B Units are outstanding on the Partnership Record Date for any
Distribution Period, the allocation formula for each series, "Series B1" and
"Series B2" would be as follows:
(1) Series B1 shall receive that
portion of the Available Cash determined by
multiplying the amount of Available Cash by the
following fraction:
B1 x X1
----------------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(2) Series B2 shall receive that
portion of the Available Cash determined by
multiplying the amount of Available Cash by the
following fraction:
B2 x X2
----------------------------------------
(A x Y)+(B1 x X1)+(B2 x X2)
(3) For purposes of the foregoing
formulas the definitions set forth in Section 5.1.C.3
remain the same except that (i) "B1" equals the
number of Partnership Units in Series B1 outstanding
on the Partnership Record Date for such Distribution
Period; (ii) "B2" equals the number of Partnership
Units
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in Series B2 outstanding on the Partnership Record
Date for such Distribution Period; (iii) "X1" equals
the number of days in the Distribution Period for
which the Partnership Units in Series B1 were issued
and outstanding; and (iv) "X2" equals the number of
days in the Distribution Period for which the
Partnership Units in Series B2 were issued and
outstanding.
E. Minimum Distributions if Shares Not Publicly Traded. In
addition (and without regard to the amount of Available Cash), if the Shares of
the General Partner Entity are not Publicly Traded, the General Partner shall
make cash distributions with respect to the Class A Units at least annually for
each taxable year of the Partnership beginning prior to the fifteenth (15th)
anniversary of the Effective Date in an aggregate amount with respect to each
such taxable year at least equal to 95% of the Partnership's taxable income for
such year allocable to the Class A Units, with such distributions to be made not
later than 60 days after the end of such year.
SECTION 5.2 AMOUNTS WITHHELD
All amounts withheld pursuant to the Code or any provisions of
any state or local tax law and Section 10.5 with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
SECTION 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall be
distributed to the Partners in accordance with Section 13.2.
SECTION 5.4 REVISIONS TO REFLECT ISSUANCE OF PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make such revisions to this Article V and Exhibit A as it
deems necessary to reflect the issuance of such additional Partnership Interests
without the requirements for any other consents or approvals.
ARTICLE VI
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in
determining the rights of the Partners among themselves, the Partnership's items
of income, gain, loss and
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deduction (computed in accordance with Exhibit B) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
A. Net Income. After giving effect to the special allocations
set forth in Section 1 of Exhibit C of the Partnership Agreement, Net Income
shall be allocated:
(1) first, to the General Partner to the extent that
cumulative Net Losses previously allocated the
General Partner pursuant to Section 6.1.B(5) exceed
cumulative Net Income previously allocated to the
General Partner pursuant to this clause (1);
(2) next, to each Protected Partner until the
cumulative Net Income allocated such Protected
Partner under this clause (2) equals the cumulative
Net Losses allocated such Protected Partner under
Section 6.1.B(4) (and, within the class of Protected
Partners, pro rata in proportion to their respective
percentages of the cumulative Net Losses allocated
all Protected Partners pursuant to Section 6.1.B(4)
hereof); and
(3) third, to the General Partner until the
cumulative Net Income allocated under this clause (3)
equals the cumulative Net Losses allocated the
General Partner under Section 6.1.B(3);
(4) fourth, to the holders of any Partnership
Interests that are entitled to any preference in
distribution in accordance with the rights of any
such class of Partnership Interests until each such
Partnership Interest has been allocated, on a
cumulative basis pursuant to this clause (4), Net
Income equal to the amount of distributions received
which are attributable to the preference of such
class of Partnership Interests (and, within such
class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period
for which such allocation is being made) and
(5) finally, with respect to Partnership Interests
that are not entitled to any preference in the
allocation of Net Income, pro rata to each such class
in accordance with the terms of such class (and,
within such class, pro rata in proportion to the
respective Percentage Interests as of the last day of
the period for which such allocation is being made).
B. Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, Net Losses shall be allocated -
(1) first, to the holders of any Partnership
Interests that are entitled to any preference in
distribution in accordance with the rights of any
such class of Partnership Interests to the extent
that any prior allocations of Net Income to such
class of Partnership Interests pursuant to Section
6.1.A(4) exceed, on a cumulative basis,
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distributions with respect to such Partnership
Interests pursuant to clause (i) of Section 5.1.B
(and, within such class, pro rata in proportion to
the respective Percentage Interests as of the last
day of the period for which such allocation is being
made);
(2) second, with respect to classes of Partnership
Interests that are not entitled to any preference in
distribution, pro rata to each such class in
accordance with the terms of such class (and, within
such class, pro rata in proportion to the respective
Percentage Interests as of the last day of the period
for which such allocation is being made); provided
that Net Losses shall not be allocated to any Limited
Partner pursuant to this Section 6.1.B to the extent
that such allocation would cause such Limited Partner
to have an Adjusted Capital Account Deficit (or
increase any existing Adjusted Capital Account
Deficit) at the end of such taxable year (or portion
thereof);
(3) third, to the General Partner in an amount equal
to the excess of (a) the amount of Recourse
Liabilities over (b) the Aggregate Protected Amount;
(4) fourth, to and among the Protected Partners, in
proportion to their respective Protected Amounts,
until such time as the Protected Partners have been
allocated cumulative Net Losses pursuant to this
clause (4) equal to the Aggregate Protected Amount;
and
(5) thereafter, to the General Partner.
C. Allocation of Nonrecourse Debt. For purposes of Regulation
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated by the
General Partner by taking into account facts and circumstances relating to each
Partner's respective interest in the profits of the Partnership. For this
purpose, the General Partner will have discretion in any fiscal year to allocate
such excess Nonrecourse Liabilities among the Partners in any manner permitted
under Code Section 752 and the Regulations thereunder.
D. Recapture Income. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of gain
pursuant to Exhibit C, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
SECTION 6.2 REVISIONS TO ALLOCATIONS TO REFLECT ISSUANCE OF
PARTNERSHIP INTERESTS
If the Partnership issues Partnership Interests to the General
Partner or any Additional Limited Partner pursuant to Article IV hereof, the
General Partner shall make
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such revisions to this Article VI and Exhibit A as it deems necessary to reflect
the terms of the issuance of such Partnership Interests, including making
preferential allocations to classes of Partnership Interests that are entitled
thereto. Such revisions shall not require the consent or approval of any other
Partner.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
A. Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership.
The General Partner may not be removed by the Limited Partners with or without
cause. In addition to the powers now or hereafter granted a general partner of a
limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to Section 7.11, shall have full power and authority to do all things
deemed necessary or desirable by it to conduct the business of the Partnership,
to exercise all powers set forth in Section 3.2 and to effectuate the purposes
set forth in Section 3.1, including, without limitation:
(1) the making of any expenditures, the lending
or borrowing of money (including, without
limitation, making prepayments on loans and
borrowing money to permit the Partnership to
make distributions to its Partners in such
amounts as are required under Section 5.1.E
or will permit the General Partner Entity
(so long as the General Partner Entity
qualifies as REIT) to avoid the payment of
any federal income tax (including, for this
purpose, any excise tax pursuant to Section
4981 of the Code) and to make distributions
to its shareholders sufficient to permit the
General Partner Entity to maintain REIT
status), the assumption or guarantee of, or
other contracting for, indebtedness and
other liabilities, the issuance of evidences
of indebtedness (including the securing of
same by mortgage, deed of trust or other
lien or encumbrance on the Partnership's
assets) and the incurring of any obligations
the General Partner deems necessary for the
conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other
filings, or rendering of periodic or other
reports to governmental or other agencies
having jurisdiction over the business or
assets of the Partnership;
(3) the acquisition, disposition, mortgage,
pledge, encumbrance, hypothecation or
exchange of any or all of the assets of the
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Partnership (including the exercise or grant
of any conversion, option, privilege or
subscription right or other right available
in connection with any assets at any time
held by the Partnership) or the merger or
other combination of the Partnership with or
into another entity on such terms as the
General Partner deems proper;
(4) the use of the assets of the Partnership
(including, without limitation, cash on
hand) for any purpose consistent with the
terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct of the operations
of the General Partner, the Partnership or
any of the Partnership's Subsidiaries, the
lending of funds to other Persons
(including, without limitation, the General
Partner, its Subsidiaries and the
Partnership's Subsidiaries) and the
repayment of obligations of the Partnership
and its Subsidiaries and any other Person in
which the Partnership has an equity
investment and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing,
landscaping, repair, alteration, demolition
or improvement of any real property or
improvements owned by the Partnership or any
Subsidiary of the Partnership or any Person
in which the Partnership has made a direct
or indirect equity investment;
(6) the negotiation, execution, and performance
of any contracts, conveyances or other
instruments that the General Partner
considers useful or necessary to the conduct
of the Partnership's operations or the
implementation of the General Partner's
powers under this Agreement, including
contracting with contractors, developers,
consultants, accountants, legal counsel,
other professional advisors and other agents
and the payment of their expenses and
compensation out of the Partnership's
assets;
(7) the mortgage, pledge, encumbrance or
hypothecation of any assets of the
Partnership, and the use of the assets of
the Partnership (including, without
limitation, cash on hand) for any purpose
consistent with the terms of this Agreement
and on any terms it sees fit, including,
without limitation, the financing of the
conduct or the operations of the General
Partner or the Partnership, the lending of
funds to other Persons (including, without
limitation, any Subsidiaries of the
Partnership) and the repayment of
obligations of the Partnership, any of its
Subsidiaries and any other Person in which
it has an equity investment;
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<PAGE> 34
(8) the distribution of Partnership cash or
other Partnership assets in accordance with
this Agreement;
(9) the holding, managing, investing and
reinvesting of cash and other assets of the
Partnership;
(10) the collection and receipt of revenues and
income of the Partnership;
(11) the selection, designation of powers,
authority and duties and the dismissal of
employees of the Partnership (including,
without limitation, employees having titles
such as "president," "vice president,"
"secretary" and "treasurer") and agents,
outside attorneys, accountants, consultants
and contractors of the Partnership and the
determination of their compensation and
other terms of employment or hiring;
(12) the maintenance of such insurance for the
benefit of the Partnership and the Partners
as it deems necessary or appropriate;
(13) the formation of, or acquisition of an
interest (including non-voting interests in
entities controlled by Affiliates of the
Partnership or third parties) in, and the
contribution of property to, any further
limited or general partnerships, joint
ventures, limited liability companies or
other relationships that it deems desirable
(including, without limitation, the
acquisition of interests in, and the
contributions of funds or property to, or
making of loans to, its Subsidiaries and any
other Person in which it has an equity
investment from time to time, or the
incurrence of indebtedness on behalf of such
Persons or the guarantee of the obligations
of such Persons); provided that, as long as
the General Partner has determined to
continue to qualify as a REIT, the
Partnership may not engage in any such
formation, acquisition or contribution that
would cause the General Partner to fail to
qualify as a REIT;
(14) the control of any matters affecting the
rights and obligations of the Partnership,
including the settlement, compromise,
submission to arbitration or any other form
of dispute resolution or abandonment of any
claim, cause of action, liability, debt or
damages due or owing to or from the
Partnership, the commencement or defense of
suits, legal proceedings, administrative
proceedings, arbitrations or other forms of
dispute resolution, the representation of
the Partnership in all suits or legal
proceedings, administrative proceedings,
arbitrations or other forms of dispute
resolution, the incurring of legal expense
and the indemnification of any
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Person against liabilities and contingencies
to the extent permitted by law;
(15) the determination of the fair market value
of any Partnership property distributed in
kind, using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly,
through any attorney-in-fact acting under a
general or limited power of attorney, of any
right, including the right to vote,
appurtenant to any assets or investment held
by the Partnership;
(17) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of or in connection with any
Subsidiary of the Partnership or any other
Person in which the Partnership has a direct
or indirect interest, individually or
jointly with any such Subsidiary or other
Person;
(18) the exercise of any of the powers of the
General Partner enumerated in this Agreement
on behalf of any Person in which the
Partnership does not have any interest
pursuant to contractual or other
arrangements with such Person;
(19) the making, executing and delivering of any
and all deeds, leases, notes, deeds to
secure debt, mortgages, deeds of trust,
security agreements, conveyances, contracts,
guarantees, warranties, indemnities,
waivers, releases or other legal instruments
or agreements in writing necessary or
appropriate in the judgment of the General
Partner for the accomplishment of any of the
powers of the General Partner enumerated in
this Agreement; and
(20) the distribution of cash to acquire
Partnership Units held by a Limited Partner
in connection with a Limited Partner's
exercise of its Redemption Right under
Section 8.6; and
(21) the amendment and restatement of Exhibit A
to reflect accurately at all times the
Capital Contributions and Percentage
Interests of the Partners as the same are
adjusted from time to time to the extent
necessary to reflect redemptions, Capital
Contributions, the issuance of Partnership
Units, the admission of any Additional
Limited Partner or any Substituted Limited
Partner or otherwise, which amendment and
restatement, notwithstanding anything in
this Agreement to the contrary, shall not be
deemed an amendment of this Agreement, as
long as the matter or event
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being reflected in Exhibit A otherwise is
authorized by this Agreement.
B. No Approval by Limited Partners. Except as provided in
Section 7.11, each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement, the
Act or any applicable law, rule or regulation, to the full extent permitted
under the Act or other applicable law. The execution, delivery or performance by
the General Partner or the Partnership of any agreement authorized or permitted
under this Agreement shall not constitute a breach by the General Partner of any
duty that the General Partner may owe the Partnership or the Limited Partners or
any other Persons under this Agreement or of any duty stated or implied by law
or equity.
C. Insurance. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance on the properties of the Partnership and (ii)
liability insurance for the Indemnitees hereunder and (iii) such other insurance
as the General Partner, in its sole and absolute discretion, determines to be
necessary.
D. Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time, including upon liquidation of the Partnership under Section
13.
E. No Obligations to Consider Tax Consequences of Limited
Partners. In exercising their authority under this Agreement, the General
Partner may, but shall be under no obligation to, take into account the tax
consequences to any Partner (including the General Partner) of any action taken
(or not taken) by any of them. The General Partner and the Partnership shall not
have liability to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited Partner
in connection with such decisions, provided that the General Partner has acted
in good faith and pursuant to its authority under this Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with
the Secretary of State of Delaware. To the extent that such action is determined
by the General Partner to be reasonable and necessary or appropriate, the
General Partner shall file amendments to and restatements of the Certificate and
do all the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state, the District of Columbia or other
jurisdiction in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(4), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for
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the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, the District of
Columbia or other jurisdiction in which the Partnership may elect to do business
or own property.
SECTION 7.3 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed
and whether tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
regarding distributions, payments and allocations to which it may be entitled),
the General Partner shall not be compensated for its services as the general
partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the ownership and operation of, or for the
benefit of, the Partnership (including, without limitation, expenses related to
the operations of the General Partner and to the management and administration
of any Subsidiaries of the General Partner or the Partnership or Affiliates of
the Partnership, such as auditing expenses and filing fees); provided that the
amount of any such reimbursement shall be reduced by (i) any interest earned by
the General Partner with respect to bank accounts or other instruments or
accounts held by it on behalf of the Partnership as permitted in Section 7.5.A
(which interest is considered to belong to the Partnership and shall be paid
over to the Partnership to the extent not applied to reimburse the General
Partner for expenses hereunder); and (ii) any amount derived by the General
Partner from any investments permitted in Section 7.5.A. The General Partner
shall determine in good faith the amount of expenses incurred by it related to
the ownership and operation of, or for the benefit of, the Partnership. If
certain expenses are incurred for the benefit of the Partnership and other
entities (including the General Partner), such expenses will be allocated to the
Partnership and such other entities in such a manner as the General Partner in
its sole and absolute discretion deems fair and
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reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3.C and as a result of indemnification
pursuant to Section 7.7. All payments and reimbursements hereunder shall be
characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General Partner
shall also be reimbursed for all expenses it incurs relating to any issuance of
Partnership Interests, Shares, Debt of the Partnership or the General Partner or
rights, options, warrants or convertible or exchangeable securities pursuant to
Article IV (including, without limitation, all costs, expenses, damages and
other payments resulting from or arising in connection with litigation related
to any of the foregoing), all of which expenses are considered by the Partners
to constitute expenses of, and for the benefit of, the Partnership.
D. Purchases of Shares by the General Partner. If the General
Partner exercises its rights under the Declaration of Trust to purchase Shares
or otherwise elects to purchase from its shareholders Shares in connection with
a share repurchase or similar program or for the purpose of delivering such
Shares to satisfy an obligation under any dividend reinvestment or equity
purchase program adopted by the General Partner, any employee equity purchase
plan adopted by the General Partner or any similar obligation or arrangement
undertaken by the General Partner in the future, the purchase price paid by the
General Partner for those Shares and any other expenses incurred by the General
Partner in connection with such purchase shall be considered expenses of the
Partnership and shall be reimbursable to the General Partner, subject to the
conditions that: (i) if those Shares subsequently are to be sold by the General
Partner, the General Partner shall pay to the Partnership any proceeds received
by the General Partner for those Shares (provided that a transfer of Shares for
Partnership Units pursuant to Section 8.6 would not be considered a sale for
such purposes); and (ii) if such Shares are not retransferred by the General
Partner within thirty (30) days after the purchase thereof, the General Partner
shall cause the Partnership to cancel a number of Partnership Units (rounded to
the nearest whole Partnership Unit) held by the General Partner equal to the
product attained by multiplying the number of those Shares by a fraction, the
numerator of which is one and the denominator of which is the Conversion Factor.
E. Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment with respect to
capital within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners and shall not be
treated as a distribution for purposes of computing the Partners' Capital
Accounts.
F. Funding for Certain Capital Transactions. In the event that
the General Partner shall undertake to acquire (whether by merger,
consolidation, purchase, or otherwise) the assets or equity interests of another
Person and such acquisition shall require the payment of cash by the General
Partner (whether to such Person or to any other selling party or parties in such
transaction or to one or more creditors, if any, of such
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Person or such selling party or parties), (i) the Partnership shall advance to
the General Partner the cash required to consummate such acquisition if, and to
the extent that, such cash is not to be obtained by the General Partner through
an issuance of Shares described in Section 4.2 or pursuant to a transaction
described in Section 7.5.B, (ii) the General Partner shall immediately, upon
consummation of such acquisition, transfer to the Partnership (or cause to be
transferred to the Partnership), in full and complete satisfaction of such
advance and as required by Section 7.5, the assets or equity interests of such
Person acquired by the General Partner in such acquisition, and (iii) pursuant
to and in accordance with Section 4.2 and Section 7.5.B, the Partnership shall
issue to the General Partner Partnership Interests and/or rights, options,
warrants or convertible or exchangeable securities of the Partnership having
designations, preferences and other rights that are substantially the same as
those of any additional Shares, other equity securities, New Securities and/or
Convertible Funding Debt, as the case may be, issued by the General Partner in
connection with such acquisition (whether issued directly to participants in the
acquisition transaction or to third parties in order to obtain cash to complete
the acquisition). In addition to, and without limiting the foregoing, in the
event that the General Partner engages in a transaction in which (x) the General
Partner (or a wholly owned direct or indirect Subsidiary of the General Partner)
merges with another entity (referred to as the "Parent Entity") that is
organized in the "UPREIT format" (i.e., where the Parent Entity holds
substantially all of its assets and conducts substantially all of its operations
through a partnership, limited liability company or other entity (referred to as
an "Operating Entity")) and the General Partner survives such merger, (y) such
Operating Entity merges with or is otherwise acquired by the Partnership in
exchange in whole or in part for Partnership Interests, and (z) the General
Partner is required or elects to pay part of the consideration in connection
with such merger involving the Parent Entity in the form of cash and part of the
consideration in the form of Shares, the Partnership shall distribute to the
General Partner with respect to its existing Partnership Interest an amount of
cash sufficient to complete such transaction and the General Partner shall cause
the Partnership to cancel a number of Partnership Units (rounded to the nearest
whole number) held by the General Partner equal to the product attained by
multiplying the number of additional Shares of the General Partner that the
General Partner would have issued to the Parent Entity or the owners of the
Parent Entity in such transaction if the entire consideration therefor were to
have been paid in Shares by a fraction, the numerator of which is one and the
denominator of which is the Conversion Factor.
SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER; RELATIONSHIP OF
SHARES TO PARTNERSHIP UNITS; FUNDING DEBT
A. General. Without the Consent of the Outside Limited
Partners, the General Partner shall not, directly or indirectly, enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests as General Partner or Limited Partner
and the management of the business of the Partnership and such activities as are
incidental thereto. Without the Consent of the Outside Limited Partners, the
assets of the General Partner shall be limited to Partnership Interests and
permitted debt obligations of the Partnership (as contemplated by Section
7.5.F), so that Shares and Partnership Units are completely fungible except as
otherwise specifically provided herein; provided that the General Partner shall
be
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permitted to hold such bank accounts or similar instruments or accounts in its
name as it deems necessary to carry out its responsibilities and purposes as
contemplated under this Agreement and its organizational documents (provided
that accounts held on behalf of the Partnership to permit the General Partner to
carry out its responsibilities under this Agreement shall be considered to
belong to the Partnership and the interest earned thereon shall, subject to
Section 7.4.B, be applied for the benefit of the Partnership); and, provided
further that, the General Partner shall be permitted to acquire, directly or
through a Qualified REIT Subsidiary or limited liability company, up to a one
percent (1%) interest in any partnership or limited liability company at least
ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership. The General Partner and any of its Affiliates
may acquire Limited Partnership Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partnership Interests.
B. Repurchase of Shares. If the General Partner exercises its
rights under the Declaration of Trust to purchase Shares or otherwise elects to
purchase from its shareholders Shares in connection with a share repurchase or
similar program or for the purpose of delivering such shares to satisfy an
obligation under any dividend reinvestment or share purchase program adopted by
the General Partner, any employee share purchase plan adopted by the General
Partner or any similar obligation or arrangement undertaken by the General
Partner in the future, then the General Partner shall cause the Partnership to
purchase from the General Partner that number of Partnership Units of the
appropriate class equal to the product obtained by multiplying the number of
Shares purchased by the General Partner times a fraction, the numerator of which
is one and the denominator of which is the Conversion Factor, on the same terms
and for the same aggregate price that the General Partner purchased such Shares.
C. Forfeiture of Shares. If the Partnership or the General
Partner acquires Shares as a result of the forfeiture of such Shares under a
restricted or similar share plan, then the General Partner shall cause the
Partnership to cancel that number of Partnership Units equal to the number of
Shares so acquired, and, if the Partnership acquired such Shares, it shall
transfer such Shares to the General Partner for cancellation.
D. Issuances of Shares. After the Effective Date, the General
Partner shall not grant, award, or issue any additional Shares (other than
Shares issued pursuant to Section 8.6 hereof, pursuant to a dividend or
distribution (including any share split) of Shares to all of its shareholders),
or in connection with any acquisition permitted by Section 7.5.A hereof of up to
a one percent (1%) interest in any partnership or limited liability company at
least ninety-nine percent (99%) of the equity of which is owned, directly or
indirectly, by the Partnership), other equity securities of the General Partner,
New Securities or Convertible Funding Debt unless (i) the General Partner shall
cause, pursuant to Section 4.2.A hereof, the Partnership to issue to the General
Partner Partnership Interests or rights, options, warrants or convertible or
exchangeable securities of the Partnership having designations, preferences and
other rights, all such that the economic interests are substantially the same as
those of such additional Shares, other equity securities, New Securities or
Convertible Funding Debt, as the case may be, and (ii) the General Partner
transfers to the Partnership, as an additional Capital Contribution, the
proceeds from the grant, award, or issuance of such additional Shares,
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other equity securities, New Securities or Convertible Funding Debt, as the case
may be, or from the exercise of rights contained in such additional Shares,
other equity securities, New Securities or Convertible Funding Debt, as the case
may be. Without limiting the foregoing, the General Partner is expressly
authorized to issue additional Shares, other equity securities, New Securities
or Convertible Funding Debt, as the case may be, for less than fair market
value, and the General Partner is expressly authorized, pursuant to Section
4.2.A hereof, to cause the Partnership to issue to the General Partner
corresponding Partnership Interests, as long as (a) the General Partner
concludes in good faith that such issuance is in the interests of the General
Partner and the Partnership (for example, and not by way of limitation, the
issuance of Shares and corresponding Partnership Units pursuant to a share
purchase plan providing for purchases of Shares, either by employees or
shareholders, at a discount from fair market value or pursuant to employee share
options that have an exercise price that is less than the fair market value of
the Shares, either at the time of issuance or at the time of exercise) and (b)
the General Partner transfers all proceeds from any such issuance or exercise to
the Partnership as an additional Capital Contribution.
E. Share Option Plan. If at any time or from time to time, the
General Partner sells Shares pursuant to any Share Option Plan, the General
Partner shall transfer the net proceeds of the sale of such Shares to the
Partnership as an additional Capital Contribution in exchange for an amount of
additional Partnership Units equal to the number of Shares so sold divided by
the Conversion Factor.
F. Funding Debt. The General Partner may incur a Funding Debt,
including, without limitation, a Funding Debt that is convertible into Shares or
otherwise constitutes a class of New Securities ("Convertible Funding Debt"),
subject to the condition that the General Partner lend to the Partnership the
net proceeds of such Funding Debt; provided that Convertible Funding Debt shall
be issued pursuant to Section 7.5.D above; and, provided further that, the
General Partner shall not be obligated to lend the net proceeds of any Funding
Debt to the Partnership in a manner that would be inconsistent with the General
Partner's ability to remain qualified as a REIT. If the General Partner enters
into any Funding Debt, the loan to the Partnership shall be on comparable terms
and conditions, including interest rate, repayment schedule and costs and
expenses, as are applicable with respect to or incurred in connection with such
Funding Debt.
SECTION 7.6 TRANSACTIONS WITH AFFILIATES
A. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Partner or any Affiliate of the
Partnership that is not also a Subsidiary of the Partnership, except pursuant to
transactions that are on terms that are fair and reasonable and no less
favorable to the Partnership than would be obtained from an unaffiliated third
party.
B. Conflict Avoidance. The General Partner is expressly
authorized to enter into, in the name and on behalf of the Partnership, a right
of first opportunity arrangement and other conflict avoidance agreements with
various Affiliates of the
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Partnership and General Partner on such terms as the General Partner, in its
sole and absolute discretion, believes are advisable.
C. Benefit Plans Sponsored by the Partnership. The General
Partner in its sole and absolute discretion and without the approval of the
Limited Partners, may propose and adopt on behalf of the Partnership employee
benefit plans funded by the Partnership for the benefit of employees of the
General Partner, the Partnership, Subsidiaries of the Partnership or any
Affiliate of any of them.
SECTION 7.7 INDEMNIFICATION
A. General. The Partnership shall indemnify each Indemnitee to
the fullest extent provided by the Act from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including, without
limitation, attorneys fees and other legal fees and expenses), judgments, fines,
settlements and other amounts arising from or in connection with any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, incurred by the Indemnitee and relating to the Partnership or
the General Partner or the operation of, or the ownership of property by, the
Partnership or the General Partner as set forth in this Agreement in which any
such Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established by a final determination of a court of
competent jurisdiction that: (i) the act or omission of the Indemnitee was
material to the matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty, (ii) the
Indemnitee actually received an improper personal benefit in money, property or
services or (iii) in the case of any criminal proceeding, the Indemnitee had
reasonable cause to believe that the act or omission was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guarantee, contractual obligation for any
indebtedness or other obligation or otherwise, for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without limitation,
any indebtedness which the Partnership or any Subsidiary of the Partnership has
assumed or taken subject to), and the General Partner is hereby authorized and
empowered, on behalf of the Partnership, to enter into one or more indemnity
agreements consistent with the provisions of this Section 7.7 in favor of any
Indemnitee having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
or upon a plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7.A
with respect to the subject matter of such proceeding. Any indemnification
pursuant to this Section 7.7 shall be made only out of the assets of the
Partnership, and any insurance proceeds from the liability policy covering the
General Partner and any Indemnitee, and neither the General Partner nor any
Limited Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of
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the final disposition of any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative made or threatened
against an Indemnitee upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.A has been met and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
C. No Limitation of Rights. The indemnification provided by
this Section 7.7 shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain
insurance on behalf of the Indemnitees and such other Persons as the General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7,
(i) excise taxes assessed on an Indemnitee, of for which the Indemnitee is
otherwise found liable, with respect to an ERISA Plan pursuant to applicable law
shall constitute fines within the meaning of this Section 7.7, and (iii) actions
taken or omitted by the Indemnitee with respect to an ERISA Plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of such ERISA Plan shall be
deemed to be for a purpose which is not opposed to the best interests of the
Partnership.
F. No Personal Liability for Limited Partners. In no event may
an Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their employees, officers, directors, trustees,
heirs, successors, assigns and administrators and shall not be deemed to create
any rights for the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7, or any provision hereof, shall be prospective only
and shall not in any way affect the limitation on the Partnership's liability to
any Indemnitee under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or related
to matters occurring, in whole or in part, prior to such amendment, modification
or repeal, regardless of when such claims may arise or be asserted.
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I. Indemnification Payments Not Distributions. If and to the
extent any payments to the General Partner pursuant to this Section 7.7
constitute gross income to the General Partner (as opposed to the repayment of
advances made on behalf of the Partnership), such amounts shall constitute
guaranteed payments within the meaning of Section 707(c) of the Code, shall be
treated consistently therewith by the Partnership and all Partners, and shall
not be treated as distributions for purposes of computing the Partners' Capital
Accounts.
J. Exception to Indemnification. Notwithstanding anything to
the contrary in this Agreement, the General Partner shall not be entitled to
indemnification hereunder for any loss, claim, damage, liability or expense for
which the General Partner is obligated to indemnify the Partnership under any
other agreement between the General Partner and the Partnership.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. General. Notwithstanding anything to the contrary set forth
in this Agreement, the General Partner shall not be liable for monetary damages
to the Partnership, any Partners or any Assignees for losses sustained,
liabilities incurred or benefits not derived as a result of errors in judgment
or mistakes of fact or law or of any act or omission unless the General Partner
acted in bad faith and the act or omission was material to the matter giving
rise to the loss, liability or benefit not derived.
B. No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, that the General Partner
is under no obligation to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to Limited
Partners or Assignees) in deciding whether to cause the Partnership to take (or
decline to take) any actions, and that the General Partner shall not be liable
for monetary damages for losses sustained, liabilities incurred or benefits not
derived by Limited Partners in connection with such decisions, provided that the
General Partner has acted in good faith.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good faith.
D. Effect of Amendment. Notwithstanding any other provision
contained herein, any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the General Partner's liability to the Partnership and the
Limited Partners under this Section 7.8 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
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SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture or other paper or document believed by it in good faith
to be genuine and to have been signed or presented by the proper party or
parties.
B. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers and other consultants and advisers selected by it, and any act taken or
omitted to be taken in reliance upon the opinion of such Persons as to matters
which the General Partner reasonably believes to be within such Person's
professional or expert competence shall be conclusively presumed to have been
done or omitted in good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform all and every act and duty which is permitted or required to be done
by the General Partner hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner Entity. Notwithstanding any other provisions of this Agreement
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner Entity to qualify as a REIT or (ii) to allow the General Partner Entity
to avoid incurring any liability for taxes under Section 857 or 4981 of the
Code, is expressly authorized under this Agreement and is deemed approved by all
of the Limited Partners.
E. Actions to Maintain REOC Status. If and so long as the
Partnership Interests of "benefit plan investors" is "significant" (as such
terms, or terms succeeding thereto with the same objective, are used in 29
C.F.R. Section 2510.3-101(f) (such regulation or successor regulation being
known as the "Plan Assets Regulation")), or if necessary so that the underlying
assets of the General Partner will not be "plan assets" (as such term is defined
in the Plan Assets Regulations) of any ERISA Partner, then the General Partner
shall conduct the affairs of the Partnership in such manner so that the
Partnership shall qualify as a "real estate operating company" (REOC"), as that
term is used in the Plan Assets Regulations, and so that the assets of the
Partnership will not be plan assets of any ERISA Partner.
(i) If the General Partner, pursuant to this Section
7.09.E, intends to conduct the affairs of the Partnership as a REOC, the General
Partner shall deliver to each ERISA Partner an opinion of counsel reasonably
acceptable to each ERISA Partner and upon which such ERISA Partner may rely with
respect to the Partnership's REOC status
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as of the "initial valuation date" and, if requested in writing by an ERISA
Partner, as of each "annual valuation period" (as those terms, or terms
succeeding thereto with the same objective, are defined in the Plan Assets
Regulation). Such opinion of counsel shall state, (A) as to the opinion
respecting the "initial valuation date," that the Partnership shall qualify as a
REOC for the period beginning on such "initial valuation date" and ending on the
last day of the first "annual valuation period," and (B) as to each annual
opinion respecting each "annual valuation period," that the Partnership shall
qualify as a REOC for the 12-month period following the last day of such "annual
valuation period." Such opinion of counsel may rely upon, among other things, a
certificate of the General Partner as to the exercise of management rights with
respect to one or more investments (other than short-term investments pending
long-term commitment or distribution to investors) during the appropriate period
and as to a description of such investments, and also shall state whether the
Partnership has included in a certification to the opinion a statement to the
effect that on such "initial valuation date" or during such "annual valuation
period" at least 50 percent of Partnership assets (other than short-term
investments pending long-term commitment or distribution to investors), valued
at cost, were invested in real estate investments as described in the Plan
Assets Regulation.
(ii) If the opinion described in this subsection is not
provided in the affirmative, or if any ERISA Partner shall obtain and deliver to
the General Partner an opinion of counsel to such ERISA Partner (which opinion
shall be reasonably satisfactory to the General Partner) that there is a
reasonable probability that either the Partnership was not or will not be a REOC
for a period in which either (i) participation by benefit plan investors in the
Partnership is significant or (ii) REOC status is necessary so that the
underlying assets of the General Partner will not be plan assets and the General
Partner does not obtain an opinion to the contrary reasonably acceptable to each
such ERISA Partner within fifteen (15) days of its receipt of the opinion
delivered by the ERISA Partner (it being understood that the existence or
reaffirmation of the opinion delivered by the ERISA Partner to the General
Partner shall not constitute the sole basis of any ERISA Partner's determination
that the opinion delivered within fifteen days by the General Partner is not
reasonably satisfactory), then the General Partner is hereby authorized and
empowered to take such actions as it deems necessary and appropriate to
mitigate, prevent, or cure such adverse consequences as might result to an ERISA
Partner from the underlying assets of the Partnership being assets of an ERISA
Partner or the underlying assets of the General Partner being assets of any
ERISA Partner.
SECTION 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement,
any Person dealing with the Partnership shall be entitled to assume that the
General Partner has full power and authority, without consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any
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Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership, and (iii) such certificate, document or instrument
was duly executed and delivered in accordance with the terms and provisions of
this Agreement and is binding upon the Partnership.
SECTION 7.11 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY
A. Consent Required. The General Partner may not take any
action in contravention of an express prohibition or limitation of this
Agreement without the written Consent of (i) all Partners adversely affected or
(ii) such lower percentage of the Limited Partnership Interests as may be
specifically provided for under a provision of this Agreement or the Act.
B. Sale of All Assets of the Partnership. Except as provided
in Article XIII, the General Partner may not, directly or indirectly, cause the
Partnership to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Partnership's assets in a single transaction or a
series of related transactions (including by way of merger (including a
triangular merger), consolidation or other combination with any other Persons)
(i) if such merger, sale or other transaction is in connection with a
Termination Transaction permitted under Section 11.2.B hereof, without the
Consent of the Partners holding at least a majority of the then outstanding
Partnership Units (including any Partnership Units held by the General Partner),
or (ii) otherwise, without the Consent of the Outside Limited Partners.
C. Communications Act Investors. Unless otherwise approved in
writing by each affected Communications Act Investor (hereinafter defined), the
General Partner may not, directly or indirectly, cause the Partnership to invest
in any Property or otherwise take any action that (i) would result in the
Communications Act Investor being placed in a position whereby it would have or
be deemed to have the right to act for any third party in selecting or dealing
with any interexchange carrier (which, for purposes hereof, shall include
satellite telecommunication service) in providing long distance service between
local access and transport areas which originates in any State within the region
in which the affected Communications Act Investor (or the operating company
affiliate thereof) provides wireline telephone local exchange service, (but in
no event shall the foregoing be deemed to prohibit the Partnership from
contracting with a third party to perform such functions on a discretionary
basis as part of its property management duties where such activity is a
necessary adjunct to an investment and such activities, in the aggregate, are
not significant in relation to the Partnership's business activities taken as a
whole), or (ii) would cause a significant percentage of the Partnership's gross
income from any Property to be attributable to either the provision or resale of
long distance service
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between local access and transport areas which originates in any State within
the region in which the affected Communications Act Investor (or the operating
company affiliate thereof) provides wireline telephone local exchange service,
or the manufacture of telecommunications, customer premises or related
equipment. In addition, the Partnership will not engage in any
telecommunications activities other than those that may be ancillary to the
ownership or operation of its investments or make an investment in a cable
television system that would violate the cable-telephone cross-ownership
restriction in the Communications Act of 1934, as amended, with regard to the
local exchange service area of a Communications Act Investor (or the operating
company affiliate thereof). Notwithstanding the foregoing, the Partnership is
not precluded from engaging in any telecommunications business or cable business
unless such business is found to place the Communications Act Investor in
violation of law. The General Partner shall have a period of 120 days following
a finding by a court or regulatory body that such a violation exists to use its
reasonable best efforts to prevent or eliminate such violation, including, but
not limited to, correction of the condition giving rise to the violation,
amendment to this Agreement or sale of the relevant property or the interest of
the Communications Act Investor therein. A "Communications Act Investor" is a
Partner or shareholder of the General Partner that has notified the General
Partner that it is subject to the Communications Act of 1934, as amended.
SECTION 7.12 LOANS BY THIRD PARTIES
The Partnership may incur Debt, or enter into similar credit,
guarantee, financing or refinancing arrangements for any purpose (including,
without limitation, in connection with any acquisition of property) with any
Person upon such terms as the General Partner determines appropriate.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section
10.5, or under the Act.
SECTION 8.2 MANAGEMENT OF BUSINESS
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates, or any officer, director, employee, partner,
agent or trustee of the General Partner, the Partnership or any of their
Affiliates, in their capacity as such) shall take part in the operation,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, partner, agent or trustee of the General Partner, the
Partnership or any of their Affiliates, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.
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SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to Section 7.5 hereof, and subject to any agreements
entered into pursuant to Section 7.6.C hereof and to any other agreements
entered into by a Limited Partner or its Affiliates with the Partnership or a
Subsidiary, any Limited Partner (other than the General Partner) and any
officer, director, employee, agent, trustee, Affiliate or shareholder of any
Limited Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities in direct or indirect competition
with the Partnership. Neither the Partnership nor any Partners shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. None of the Limited Partners (other than the General
Partner) or any other Person shall have any rights by virtue of this Agreement
or the partnership relationship established hereby in any business ventures of
any other Person (other than the General Partner to the extent expressly
provided herein), and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.
SECTION 8.4 RETURN OF CAPITAL
Except pursuant to the right of redemption set forth in
Section 8.6, no Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. No
Limited Partner or Assignee shall have priority over any other Limited Partner
or Assignee either as to the return of Capital Contributions (except as
permitted by Section 4.2.A) or, except to the extent provided by Exhibit C or as
permitted by Sections 4.2.A, 5.1.B(i), 6.1.A(ii) and 6.1.B(i), or otherwise
expressly provided in this Agreement, as to profits, losses, distributions or
credits.
SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.D, each Limited
Partner shall have the right, for a purpose reasonably related to such Limited
Partner's interest as a limited partner in the Partnership, upon written demand
with a statement of the purpose of such demand and at such Limited Partner's own
expense:
(1) to obtain a copy of the most recent annual
and quarterly reports filed with the
Securities and Exchange Commission by either
the General Partner Entity or the
Partnership pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's
federal, state and local income tax returns
for each Partnership Year;
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(3) to obtain a current list of the name and
last known business, residence or mailing
address of each Partner;
(4) to obtain a copy of this Agreement and the
Certificate and all amendments thereto,
together with executed copies of all powers
of attorney pursuant to which this
Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information
regarding the amount of cash and a
description and statement of any other
property or services contributed by each
Partner and which each Partner has agreed to
contribute in the future, and the date on
which each became a Partner.
B. Notice of Conversion Factor. The Partnership shall notify
each Limited Partner upon request of the then current Conversion Factor and any
changes that have been made thereto.
C. Notice of Extraordinary Transaction of the General Partner
Entity. The General Partner Entity shall not make any extraordinary
distributions of cash or property to its shareholders or effect a merger
(including, without limitation, a triangular merger), a sale of all or
substantially all of its assets or any other similar extraordinary transaction
without notifying the Limited Partners of its intention to make such
distribution or effect such merger, sale or other extraordinary transaction at
least twenty (20) Business Days prior to the record date to determine
shareholders eligible to receive such distribution or to vote upon the approval
of such merger, sale or other extraordinary transaction (or, if no such record
date is applicable, at least twenty (20) business days before consummation of
such merger, sale or other extraordinary transaction); provided, however, that
the General Partner, in its sole discretion, may shorten the required notice
period of not less than twenty (20) business days prior to the record date to
determine the shareholders eligible to vote upon a merger transaction (but not
any of the other transactions covered by this Section 8.5.C.) by up to ten (10)
business days (thereby continuing to afford the holders of Units the opportunity
to redeem Units under Section 8.6 on or prior to the record date for the
shareholder vote on the merger transaction) so long as (i) the General Partner
Entity will be the surviving entity in such merger transaction, (ii) immediately
following the merger transaction, Persons who held voting securities of the
General Partner Entity immediately prior to such merger transaction will hold,
solely by reason of the ownership of voting securities of the General Partner
Entity immediately prior to the merger transaction, voting securities of the
General Partner Entity representing not less than fifty one percent (51%) of the
total combined voting power of all outstanding voting securities of the General
Partner Entity after such merger, and (iii) in the event that in connection with
such merger transaction the Partnership will merge with another entity, the
Partnership will be the surviving entity in such merger. This provision for such
notice shall not be deemed (i) to permit any transaction that otherwise is
prohibited by this Agreement or requires a Consent of the Partners or (ii) to
require a Consent of the Limited Partners to a transaction that does not
otherwise require Consent under this Agreement. Each Limited Partner agrees, as
a condition to the receipt of the
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notice pursuant hereto, to keep confidential the information set forth therein
until such time as the General Partner Entity has made public disclosure thereof
and to use such information during such period of confidentiality solely for
purposes of determining whether to exercise the Redemption Right; provided,
however, that a Limited Partner may disclose such information to its attorney,
accountant and/or financial advisor for purposes of obtaining advice with
respect to such exercise so long as such attorney, accountant and/or financial
advisor agrees to receive and hold such information subject to this
confidentiality requirement; provided, however, that the General Partner, in
its sole discretion, may shorten the required notice period of not less than
twenty (20) business days prior to the record date to determine the shareholders
eligible to vote upon a merger transaction (but not any of the other
transactions covered by this Section 8.5.C.) to a period of not less than ten
(10) calendar days (thereby continuing to afford the holders of Units the
opportunity to redeem Units under Section 8.6 on or prior to the record date for
the shareholder vote on the merger transaction) so long as (i) the General
Partner Entity will be the surviving entity in such merger transaction, (ii)
immediately following the merger transaction, Persons who held voting securities
of the General Partner Entity immediately prior to such merger transaction will
hold, solely by reason of the ownership of voting securities of the General
Partner Entity immediately prior to the merger transaction, voting securities of
the General Partner Entity representing not less than fifty-one percent (51%) of
the total combined voting power of all outstanding voting securities of the
General Partner Entity after such merger, and (iii) in the event that in
connection with such merger transaction the Partnership will merge with another
entity, the Partnership will be the surviving entity in such merger.
D. Confidentiality. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the Limited
Partners, for such period of time as the General Partner determine in its sole
and absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business or (ii) the Partnership is required by law or by agreements with
unaffiliated third parties to keep confidential.
SECTION 8.6 REDEMPTION RIGHT
A. General. (i) Subject to Section 8.6.C, at any time on or
after the first anniversary date of the issuance of a Partnership Unit to a
Limited Partner pursuant to Article IV hereof (which one-year period shall
commence upon the issuance of such Partnership Unit regardless of whether such
Partnership Unit is designated upon issuance as a Class A Unit, a Class B Unit
or otherwise and shall include the period of time from the date such Partnership
Unit is issued to such Limited Partner as other than a Class A Unit until the
date such Partnership Unit is converted automatically to a Class A Unit pursuant
to Section 4.2.C hereof), or on or after such date prior to the expiration of
such one-year period as the General Partner, in its sole and absolute
discretion, designates with respect to any or all Class A Units then
outstanding, the holder of a Partnership Unit (if other than the General Partner
or the General Partner Entity or any Subsidiary of either the General Partner or
the General Partner Entity) shall have the right (the "Redemption Right") to
require the Partnership to redeem such Partnership Unit, with such redemption
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to occur on the Specified Redemption Date and at a redemption price equal to and
in the form of the Cash Amount to be paid by the Partnership. Any such
Redemption Right shall be exercised pursuant to a Notice of Redemption delivered
to the Partnership (with a copy to the General Partner) by the Limited Partner
who is exercising the Redemption Right (the "Redeeming Partner"). A Limited
Partner may exercise the Redemption Right from time to time, without limitation
as to frequency, with respect to part or all of the Units that it owns, as
selected by the Limited Partner, provided that a Limited Partner may not
exercise the Redemption Right for less than one thousand (1,000) Partnership
Units unless such Redeeming Partner then holds less than one thousand (1,000)
Partnership Units, in which event such Redeeming Partner must exercise the
Redemption Right for all of the Partnership Units held by such Redeeming
Partner.
(ii) The Redeeming Partner shall have no right with
respect to any Partnership Units so redeemed to receive any distributions paid
after the Specified Redemption Date with respect to such Partnership Units.
(iii) The Assignee of any Limited Partner may exercise
the rights of such Limited Partner pursuant to this Section 8.6, and such
Limited Partner shall be deemed to have assigned such rights to such Assignee
and shall be bound by the exercise of such rights by such Limited Partner's
Assignee. In connection with any exercise of such rights by such Assignee on
behalf of such Limited Partner, the Cash Amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.
(iv) If the General Partner Entity provides notice to
the Limited Partners, pursuant to Section 8.5.C hereof, the Redemption Right
shall be exercisable, without regard to whether the Partnership Units have been
outstanding for any specified period, during the period commencing on the date
on which the General Partner Entity provides such notice and ending on the
record date to determine shareholders eligible to receive such distribution or
to vote upon the approval of such merger, sale or other extraordinary
transaction (or, if no such record date is applicable, at least twenty (20)
business days before the consummation of such merger, sale or other
extraordinary transaction). If this subparagraph (iv) applies, the Specified
Redemption Date is the date on which the Partnership and the General Partner
receive notice of exercise of the Redemption Right, rather than ten (10)
Business Days after receipt of the notice of redemption.
B. General Partner Assumption of Right. (i) If a Limited
Partner has delivered a Notice of Redemption, the General Partner may, in its
sole and absolute discretion (subject to the limitations on ownership and
transfer of Shares set forth in the Declaration of Trust), elect to assume
directly and satisfy a Redemption Right by paying to the Redeeming Partner
either the Cash Amount or the Shares Amount, as the General Partner determines
in its sole and absolute discretion (provided that payment of the Redemption
Amount in the form of Shares shall be in Shares registered for resale under
Section 12 of the Exchange Act and listed for trading on the exchange or
national market on which the Shares are Publicly Traded and, provided further
that, if the Shares are not Publicly Traded at the time a Redeeming Partner
exercises its Redemption Right, the Redemption Amount shall be paid only in the
form of the Cash Amount unless the Redeeming Partner, in its sole and absolute
discretion, consents to payment of the
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Redemption Amount in the form of the Shares Amount), on the Specified Redemption
Date, whereupon the General Partner shall acquire the Partnership Units offered
for redemption by the Redeeming Partner and shall be treated for all purposes of
this Agreement as the owner of such Partnership Units. Unless the General
Partner, in its sole and absolute discretion, shall exercise its right to assume
directly and satisfy the Redemption Right, the General Partner shall not have
any obligation to the Redeeming Partner or to the Partnership with respect to
the Redeeming Partner's exercise of the Redemption Right. If the General Partner
shall exercise its right to satisfy the Redemption Right in the manner described
in the first sentence of this Section 8.6B and shall fully perform its
obligations in connection therewith, the Partnership shall have no right or
obligation to pay any amount to the Redeeming Partner with respect to such
Redeeming Partner's exercise of the Redemption Right, and each of the Redeeming
Partner, the Partnership and the General Partner shall, for federal income tax
purposes, treat the transaction between the General Partner and the Redeeming
Partner as a sale of the Redeeming Partner's Partnership Units to the General
Partner. Nothing contained in this Section 8.6.B shall imply any right of the
General Partner to require any Limited Partner to exercise the Redemption Right
afforded to such Limited Partner pursuant to Section 8.6.A.
(ii) If the General Partner determines to pay the
Redeeming Partner the Redemption Amount in the form of Shares, the total number
of Shares to be paid to the Redeeming Partner in exchange for the Redeeming
Partner's Partnership Units shall be the applicable Shares Amount. If this
amount is not a whole number of Shares, the Redeeming Partner shall be paid (i)
that number of Shares which equals the nearest whole number less than such
amount plus (ii) an amount of cash which the General Partner determines, in its
reasonable discretion, to represent the fair value of the remaining fractional
Share which would otherwise be payable to the Redeeming Partner.
(iii) Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of Shares upon exercise of the Redemption Right.
C. Exceptions to Exercise of Redemption Right. Notwithstanding
the provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if (but only as long as)
the delivery of Shares to such Partner on the Specified Redemption Date (i)
would be prohibited under the Declaration of Trust or (ii) would be prohibited
under applicable federal or state securities laws or regulations (in each case
regardless of whether the General Partner would in fact assume and satisfy the
Redemption Right).
D. No Liens on Partnership Units Delivered for Redemption.
Each Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered for redemption shall be delivered to the Partnership
or the General Partner, as the case may be, free and clear of all liens; and,
notwithstanding anything contained herein to the contrary, neither the General
Partner nor the Partnership shall be under any obligation to acquire Partnership
Units which are or may be subject to any liens. Each Limited Partner further
agrees that, if any state or local property transfer tax is payable as a result
of the transfer of its Partnership Units to the Partnership or the General
Partner, such Limited Partner shall assume and pay such transfer tax.
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E. Additional Partnership Interests. If the Partnership issues
Partnership Interests to any Additional Limited Partner pursuant to Article IV,
the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such Partnership Interests
(including setting forth any restrictions on the exercise of the Redemption
Right with respect to such Partnership Interests).
ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including, without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. Annual Reports. As soon as practicable, but in no event
later than the date on which the General Partner Entity mails its annual report
to its shareholders, the General Partner Entity shall cause to be mailed to each
Limited Partner an annual report, as of the close of the most recently ended
Partnership Year, containing financial statements of the Partnership, or of the
General Partner Entity if such statements are prepared solely on a consolidated
basis with the Partnership, for such Partnership Year, presented in accordance
with generally accepted accounting principles, such statements to be audited by
a nationally recognized firm of independent public accountants selected by the
General Partner Entity.
B. Quarterly Reports. If and to the extent that the General
Partner Entity mails quarterly reports to its shareholders, as soon as
practicable, but in no event later than the date on such reports are mailed, the
General Partner Entity shall cause to be mailed to each Limited Partner a report
containing unaudited financial statements, as of the last day of such calendar
quarter, of the Partnership, or of the General Partner Entity if such statements
are prepared solely on a consolidated basis with the Partnership,
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and such other information as may be required by applicable law or regulation,
or as the General Partner determines to be appropriate.
ARTICLE X
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and
timely filing of all returns of Partnership income, gains, deductions, losses
and other items required of the Partnership for federal and state income tax
purposes and shall use all reasonable efforts to furnish, within ninety (90)
days of the close of each taxable year, the tax information reasonably required
by Limited Partners for federal and state income tax reporting purposes.
SECTION 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code; provided, however, that the General
Partner shall make the election under Section 754 of the Code in accordance with
applicable regulations thereunder. The General Partner shall have the right to
seek to revoke any such election (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination in its
sole and absolute discretion that such revocation is in the best interests of
the Partners.
SECTION 10.3 TAX MATTERS PARTNER
A. General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners.
B. Powers. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with
respect to any administrative or judicial
proceedings for the adjustment of Partnership
items required to be taken into account by a
Partner for income tax purposes (such
administrative proceedings being referred to as a
"tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the
settlement agreement the tax matters partner may
expressly state that such agreement shall
bind all Partners, except that such
settlement agreement shall not bind any
Partner (i) who
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(within the time prescribed pursuant to the
Code and Regulations) files a statement with
the IRS providing that the tax matters
partner shall not have the authority to
enter into a settlement agreement on behalf
of such Partner or (ii) who is a "notice
partner" (as defined in Section 6231(a)(8)
of the Code) or a member of a "notice group"
(as defined in Section 6223(b)(2) of the
Code);
(2) if a notice of a final administrative
adjustment at the Partnership level of any
item required to be taken into account by a
Partner for tax purposes (a "final
adjustment") is mailed to the tax matters
partner, to seek judicial review of such
final adjustment, including the filing of a
petition for readjustment with the Tax Court
or the filing of a complaint for refund with
the United States Claims Court or the
District Court of the United States for the
district in which the Partnership's
principal place of business is located;
(3) to intervene in any action brought by any
other Partner for judicial review of a final
adjustment;
(4) to file a request for an administrative
adjustment with the IRS at any time and, if
any part of such request is not allowed by
the IRS, to file an appropriate pleading
(petition or complaint) for judicial review
with respect to such request;
(5) to enter into an agreement with the IRS to
extend the period for assessing any tax
which is attributable to any item required
to be taken into account by a Partner for
tax purposes, or an item affected by such
item; and
(6) to take any other action on behalf of the
Partners of the Partnership in connection
with any tax audit or judicial review
proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing its duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
and/or law firm to assist the tax matters
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partner in discharging its duties hereunder, so long as the compensation paid by
the Partnership for such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any,
incurred by it in organizing the Partnership ratably over a sixty (60) month
period as provided in Section 709 of the Code.
SECTION 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. If a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 10.5 when due, the
General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount to such defaulting Limited
Partner and shall succeed to all rights and remedies of the Partnership as
against such defaulting Limited Partner (including, without limitation, the
right to receive distributions). Any amounts payable by a Limited Partner
hereunder shall bear interest at the base rate on corporate loans at large
United States money center commercial banks, as published from time to time in
the Wall Street Journal, plus four (4) percentage points (but not higher than
the maximum lawful rate under the laws of the State of Illinois) from the date
such amount is due (i.e., fifteen (15) days after demand) until such amount is
paid in full. Each Limited Partner shall take such actions as the Partnership or
the General Partner shall request to perfect or enforce the security interest
created hereunder.
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ARTICLE XI
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. Definition. The term "transfer," when used in this Article
XI with respect to a Partnership Interest or a Partnership Unit, shall be deemed
to refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner or acquisition of Partnership Units from a Limited Partner by the
General Partner pursuant to Section 8.6 or otherwise. No part of the interest of
a Limited Partner shall be subject to the claims of any creditor, any spouse for
alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered except as may be specifically provided for
in this Agreement.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article XI. Any transfer or purported transfer of a Partnership Interest
not made in accordance with this Article XI shall be null and void.
SECTION 11.2 TRANSFERS OF PARTNERSHIP INTERESTS OF GENERAL PARTNER
A. Except for transfers of Partnership Units to the
Partnership as provided in Section 7.5 or Section 8.6, the General Partner may
not transfer any of its Partnership Interest (including both its General
Partnership Interest and its Limited Partnership Interest) except in connection
with a transaction described in Section 11.2.B or as otherwise expressly
permitted under this Agreement, nor shall the General Partner withdraw as the
General Partner except in connection with a transaction described in Section
11.2.B.
B. The General Partner shall not engage in any merger
(including a triangular merger), consolidation or other combination with or into
another person, sale of all or substantially all of its assets or any
reclassification, recapitalization or change of outstanding Shares (other than a
change in par value, or from par value to no par value, or as a result of a
subdivision or combination as described in the definition of "Conversion
Factor") ("Termination Transaction"), unless the Termination Transaction has
been approved by the Consent of the Partners holding at least a majority of the
then outstanding Partnership Units (including any Partnership Units held by the
General Partner) and in connection with which all Limited Partners either will
receive, or will have the right to elect to receive, for each Partnership Unit
an amount of cash, securities, or other property equal to the product of the
Conversion Factor multiplied by the greatest amount of cash, securities or other
property paid to a holder of Shares corresponding to such Partnership Unit in
consideration of one such Share at any time during the period
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from and after the date on which the Termination Transaction is consummated;
provided that if, in connection with the Termination Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by the holders of
more than fifty percent (50%) of the outstanding Shares, each holder of
Partnership Units shall receive, or shall have the right to elect to receive
without any right of Consent set forth above in this subsection B, the greatest
amount of cash, securities, or other property which such holder would have
received had it exercised the Redemption Right and received Shares in exchange
for its Partnership Units immediately prior to the expiration of such purchase,
tender or exchange offer and had thereupon accepted such purchase, tender or
exchange offer.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. General. Subject to the provisions of Sections 11.3.C,
11.3.D, 11.3.E, 11.4 and 11.6, a Limited Partner (other than the General
Partner) may transfer with or without the consent of the General Partner, all or
any portion of its Partnership Interest, or any of such Limited Partner's rights
as a Limited Partner, provided that prior written notice of such proposed
transfer is delivered to the General Partner. Notwithstanding the foregoing, any
Limited Partner may, at any time, without the consent of the General Partner,
(i) transfer all or any portion of its Partnership Interest to the General
Partner, (ii) transfer all or any portion of its Partnership Interest to an
Affiliate, another original Limited Partner or to an Immediate Family member,
subject to the provisions of Section 11.6, (iii) transfer all or any portion of
its Partnership Interest to a trust for the benefit of a charitable beneficiary
or to a charitable foundation, subject to the provisions of Section 11.6, and
(iv) subject to the provisions of Section 11.6, pledge (a "Pledge") all or any
portion of its Partnership Interest to a lending institution, which is not an
Affiliate of such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, and transfer such pledged Partnership
Interest to such lending institution in connection with the exercise of remedies
under such loan or extension or credit. Each Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i) - (iv) of the proviso of
the preceding sentence) shall have the right to transfer all or any portion of
its Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions (in addition to the right of
each such Limited Partner or Assignee to continue to make any such transfer
permitted by clauses (i) - (iv) of such proviso without satisfying either of the
following conditions):
(a) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The
transferring Partner shall give written notice of the
proposed transfer to the General Partner, which notice
shall state (i) the identity of the proposed
transferee, and (ii) the amount and type of
consideration proposed to be received for the
transferred Partnership Units. The General Partner
shall have ten (10) days upon which to give the
transferring Partner notice of its election to acquire
the Partnership Units on the proposed terms. If it so
elects, it shall purchase the Partnership Units on such
terms within ten (10) days after giving notice of such
election. If it does not so elect, the transferring
Partner may transfer such Partnership Units to a third
party, on
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economic terms no more favorable to the transferee than
the proposed terms, subject to the other conditions of
this Section 11.3.
(b) QUALIFIED TRANSFEREE. Any transfer of a Partnership
Interest shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted
hereunder (excluding Pledges of a Partnership Interest, but including any
transfer of the pledged Partnership Interest, whether to the secured party or
otherwise, pursuant to the secured party's exercise of its remedies under such
Pledge or the related loan or extension of credit) that the transferee assumes
by operation of law or express agreement all of the obligations of the
transferor Limited Partner under this Agreement with respect to such transferred
Partnership Interest and no such transfer (other than pursuant to a statutory
merger or consolidation wherein all obligations and liabilities of the
transferor Partner are assumed by a successor corporation by operation of law)
shall relieve the transferor Partner of its obligations under this Agreement
without the approval of the General Partner, in its reasonable discretion.
Notwithstanding the foregoing, any transferee of any transferred Partnership
Interest shall be subject to any and all ownership limitations contained in the
Declaration of Trust. Any transferee, whether or not admitted as a Substituted
Limited Partner, shall take subject to the obligations of the transferor
hereunder. Unless admitted as a Substitute Limited Partner, no transferee,
whether by a voluntary transfer, by operation of law or otherwise, shall have
rights hereunder, other than the rights of an Assignee as provided in Section
11.5.
B. Incapacitated Limited Partners. If a Limited Partner is
subject to Incapacity, the executor, administrator, trustee, committee,
guardian, conservator or receiver of such Limited Partner's estate shall have
all the rights of a Limited Partner, but not more rights than those enjoyed by
other Limited Partners for the purpose of settling or managing the estate and
such power as the Incapacitated Limited Partner possessed to transfer all or any
part of its interest in the Partnership. The Incapacity of a Limited Partner, in
and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner
may prohibit any transfer of Partnership Units by a Limited Partner unless it
receives a written opinion of legal counsel (which opinion and counsel shall be
reasonably satisfactory to the Partnership) to such Limited Partner that such
transfer would not require filing of a registration statement under the
Securities Act or would not otherwise violate any federal, or state securities
laws or regulations applicable to the Partnership or the Partnership Unit or, at
the option of the Partnership, an opinion of legal counsel to the Partnership to
the same effect.
D. No Transfers Affecting Tax Status of Partnership. No
transfer of Partnership Units by a Limited Partner (including a redemption or
exchange pursuant to Section 8.6) may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes or would result in a termination of the
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Partnership for federal income tax purposes (except as a result of the
redemption or exchange for Shares of all Partnership Units held by all Limited
Partners other than the General Partner or the General Partner Entity or any
Subsidiary of the General Partner or the General Partner Entity or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2), (ii) in
the opinion of legal counsel for the Partnership, it would adversely affect the
ability of the General Partner Entity to continue to qualify as a REIT or would
subject the General Partner Entity to any additional taxes under Section 857 or
Section 4981 of the Code or (iii) such transfer is effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code (provided
that this clause (iii) shall not be the basis for limiting or restricting in any
manner the exercise of the Redemption Right under Section 8.6 unless, and only
to the extent that, outside tax counsel provides to the General Partner an
opinion to the effect that, in the absence of such limitation or restriction,
there is a significant risk that the Partnership will be treated as a "publicly
traded partnership" and, by reason thereof, taxable as a corporation).
E. No Transfers to Holders of Nonrecourse Liabilities. No
Pledge or transfer of any Partnership Units may be made to a lender to the
Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability unless (i) the General Partner is provided
notice thereof and (ii) the lender enters into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. Consent of General Partner. No Limited Partner shall have
the right to substitute a transferee as a Limited Partner in its place. The
General Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as
a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner. The General Partner hereby grants its consent to
the admission as a Substituted Limited Partner to any bona fide financial
institution that loans money or otherwise extends credit to a holder of Units
and thereafter becomes the owner of such Units pursuant to the exercise by such
financial institution of its rights under a Pledge of such Units granted in
connection with such loan or extension of credit.
B. Rights of Substituted Limited Partner. A transferee who has
been admitted as a Substituted Limited Partner in accordance with this Article
XI shall have all the rights and powers and be subject to all the restrictions
and liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including,
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without limitation, the provisions of Section 15.11) and such other documents or
instruments as may be required to effect the admission.
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, Capital Account, number of Partnership Units, and Percentage Interest
of such Substituted Limited Partner and to eliminate or adjust, if necessary,
the name, address, Capital Account and Percentage Interest and interest of the
predecessor of such Substituted Limited Partner.
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee under Section 11.3
as a Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain, loss and Recapture
Income attributable to the Partnership Units assigned to such transferee, and
shall have the rights granted to the Limited Partners under Section 8.6, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to vote such Partnership Units
in any matter presented to the Limited Partners for a vote (such Partnership
Units being deemed to have been voted on such matter in the same proportion as
all other Partnership Units held by Limited Partners are voted). If any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.
SECTION 11.6 GENERAL PROVISIONS
A. Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted transfer of
all of such Limited Partner's Partnership Units in accordance with this Article
XI or pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited
Partner who shall transfer all of its Partnership Units in a transfer permitted
pursuant to this Article XI or pursuant to redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI
may only be made upon three business days prior notice, unless the General
Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred
during any quarterly segment of the Partnership's fiscal year in compliance with
the provisions of this Article XI or redeemed or transferred pursuant to Section
8.6, Net Income, Net Losses,
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each item thereof and all other items attributable to such interest for such
fiscal year shall be divided and allocated between the transferor Partner and
the transferee Partner by taking into account their varying interests during the
fiscal year in accordance with Section 706(d) of the Code, using the interim
closing of the books method (unless the General Partner, in its sole and
absolute discretion, elects to adopt a daily, weekly, or a monthly proration
period, in which event Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such fiscal year shall be prorated based
upon the applicable method selected by the General Partner). Solely for purposes
of making such allocations, each of such items for the calendar month in which
the transfer or redemption occurs shall be allocated to the Person who is a
Partner as of midnight on the last day of said month. All distributions of
Available Cash attributable to any Partnership Unit with respect to which the
Partnership Record Date is before the date of such transfer, assignment or
redemption shall be made to the transferor Partner or the Redeeming Partner, as
the case may be, and, in the case of a transfer or assignment other than a
redemption, all distributions of Available Cash thereafter attributable to such
Partnership Unit shall be made to the transferee Partner.
E. Additional Restrictions. In addition to any other
restrictions on transfer herein contained, including without limitation the
provisions of this Article XI, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including pursuant to Section 8.6) be made
without the express consent of the General Partner, in its sole and absolute
discretion, (i) to any person or entity who lacks the legal right, power or
capacity to own a Partnership Interest; (ii) in violation of applicable law;
(iii) of any component portion of a Partnership Interest, such as the Capital
Account, or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of legal counsel to
the Partnership such transfer would cause a termination of the Partnership for
federal or state income tax purposes (except as a result of the redemption or
exchange for Shares of all Partnership Units held by all Limited Partners or
pursuant to a transaction expressly permitted under Section 7.11.B or Section
11.2); (v) if in the opinion of counsel to the Partnership, such transfer would
cause the Partnership to cease to be classified as a partnership for federal
income tax purposes (except as a result of the redemption or exchange for Shares
of all Partnership Units held by all Limited Partners or pursuant to a
transaction expressly permitted under Section 7.11.B or Section 11.2); (vi) if
such transfer would cause the Partnership Interests of "benefit plan investors"
to become "significant," as those terms are used in Section 7.9.E., or would
cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.1-101; (viii) if such transfer requires the registration of such
Partnership Interest pursuant to any applicable federal or state securities
laws; (ix) if such transfer is effectuated through an "established securities
market" or a "secondary market" (or the substantial equivalent thereof) within
the meaning of Section 7704 of the Code or such transfer causes the Partnership
to become a "publicly traded partnership," as such term is defined in Section
469(k)(2) or Section 7704(b) of the Code (provided that this clause (ix) shall
not be the basis for limiting or restricting in any manner the exercise of the
Redemption Right under Section 8.6 unless, and only to the extent that, outside
tax
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counsel provides to the General Partner an opinion to the effect that, in the
absence of such limitation or restriction, there is a significant risk that the
Partnership will be treated as a "publicly traded partnership" and, by reason
thereof, taxable as a corporation); (x) if such transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended; (xi) such transfer
could adversely affect the ability of the General Partner Entity to remain
qualified as a REIT; or (xii) if in the opinion of legal counsel for the
transferring Partner (which opinion and counsel shall be reasonably satisfactory
to the Partnership) or legal counsel for the Partnership, such transfer would
adversely affect the ability of the General Partner Entity to qualify as a REIT
or subject the General Partner Entity to any taxes under Section 857 or Section
4981 of the Code.
F. Avoidance of "Publicly Traded Partnership" Status. The
General Partner shall monitor the transfers of interests in the Partnership to
determine (i) if such interests are being traded on an "established securities
market" or a "secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code and (ii) whether additional transfers of
interests would result in the Partnership being unable to qualify for at least
one of the "safe harbors" set forth in Regulations Section 1.7704-1 (or such
other guidance subsequently published by the IRS setting forth safe harbors
under which interests will not be treated as "readily tradable on a secondary
market (or the substantial equivalent thereof)" within the meaning of Section
7704 of the Code) (the "Safe Harbors"). The General Partner shall take all steps
reasonably necessary or appropriate to prevent any trading of interests or any
recognition by the Partnership of transfers made on such markets and, except as
otherwise provided herein, to insure that at least one of the Safe Harbors is
met; provided, however, that the foregoing shall not authorize the General
Partner to limit or restrict in any manner the right of any holder of a
Partnership Unit to exercise the Redemption Right in accordance with the terms
of Section 8.6 unless, and only to the extent that, outside tax counsel provides
to the General Partner an opinion to the effect that, in the absence of such
limitation or restriction, there is a significant risk that the Partnership will
be treated as a "publicly traded partnership" and, by reason thereof, taxable as
a corporation.
ARTICLE XII
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF A SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner's General
Partnership Interest pursuant to Section 11.2 who is proposed to be admitted as
a successor General Partner shall be admitted to the Partnership as the General
Partner, effective upon such transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In such case, the admission
shall be subject to such successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.
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SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. General. No Person shall be admitted as an Additional
Limited Partner without the consent of the General Partner, which consent shall
be given or withheld in the General Partner's sole and absolute discretion. A
Person who makes a Capital Contribution to the Partnership in accordance with
this Agreement, including without limitation, under Section 4.1.C, or who
exercises an option to receive Partnership Units shall be admitted to the
Partnership as an Additional Limited Partner only with the consent of the
General Partner and only upon furnishing to the General Partner (i) evidence of
acceptance in form satisfactory to the General Partner of all of the terms and
conditions of this Agreement, including, without limitation, the power of
attorney granted in Section 15.11 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner to effect such
Person's admission as an Additional Limited Partner. The admission of any Person
as an Additional Limited Partner shall become effective on the date upon which
the name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
B. Allocations to Additional Limited Partners. If any
Additional Limited Partner is admitted to the Partnership on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items allocable among Partners and Assignees for such
Partnership Year shall be allocated among such Additional Limited Partner and
all other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Section 706(d) of the Code, using
the interim closing of the books method (unless the General Partner, in its sole
and absolute discretion, elects to adopt a daily, weekly or monthly proration
method, in which event Net Income, Net Losses, and each item thereof would be
prorated based upon the applicable period selected by the General Partner).
Solely for purposes of making such allocations, each of such items for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all the Partners and Assignees including such
Additional Limited Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited Partner,
and all distributions of Available Cash thereafter shall be made to all the
Partners and Assignees including such Additional Limited Partner.
SECTION 12.3 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP
For the admission to the Partnership of any Partner, the
General Partner shall take all steps necessary and appropriate under the Act to
amend the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 15.11 hereof.
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ARTICLE XIII
DISSOLUTION AND LIQUIDATION
SECTION 13.1 DISSOLUTION
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events"):
(i) the expiration of its term as provided in Section
2.4 hereof;
(ii) an event of withdrawal of the General Partner,
as defined in the Act (other than an event of bankruptcy), unless within ninety
(90) days after the withdrawal a "majority in interest" (as defined below) of
the remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;
(iii) through December 31, 2046, an election to
dissolve the Partnership made by the General Partner with the consent of Limited
Partners who hold ninety percent (90%) of the outstanding Units held by Limited
Partners (including Units held by the General Partner);
(iv) an election to dissolve the Partnership made by
the General Partner, in its sole and absolute discretion after December 31,
2046;
(v) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(vi) the sale of all or substantially all of the
assets and properties of the Partnership for cash or for marketable securities;
or
(vii) a final and non-appealable judgment is entered
by a court of competent jurisdiction ruling that the General Partner is bankrupt
or insolvent, or a final and non-appealable order for relief is entered by a
court with appropriate jurisdiction against the General Partner, in each case
under any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or at the time of the entry of such order or judgment a
"majority in interest" (as defined below) of the remaining Partners Consent in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.
As used herein, a "majority in interest" shall refer to
Partners (excluding the General Partner) who hold more than fifty percent (50%)
of the outstanding Percentage Interests not held by the General Partner.
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SECTION 13.2 WINDING UP
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, if there is no
remaining General Partner, any Person elected by a majority in interest of the
Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include equity or other securities of the General Partner or any other
entity) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all
of the Partnership's debts and liabilities
to creditors other than the Partners;
(2) Second, to the payment and discharge of all
of the Partnership's debts and liabilities
to the General Partner;
(3) Third, to the payment and discharge of all
of the Partnership's debts and liabilities
to the Limited Partners;
(4) Fourth, to the holders of Partnership
Interests that are entitled to any
preference in distribution upon liquidation
in accordance with the rights of any such
class or series of Partnership Interests,
including without limitation, Series A
Preferred Units, Series B Preferred Units,
and Series C Preferred Units (and, within
each such class or series, to each holder
thereof pro rata based on the proportion of
the total number of outstanding units of
such class or series represented by such
holder's units of such series or class); and
(5) The balance, if any, to the Partners in
accordance with their Capital Accounts,
after giving effect to all contributions,
distributions, and allocations for all
periods.
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of
Section 13.2.A which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as
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creditors) or distribute to the Partners, in lieu of cash, as tenants in common
and in accordance with the provisions of Section 13.2.A, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
If the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made under this
Article XIII to the General Partner and Limited Partners who have positive
Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2).
If any Partner has a deficit balance in its Capital Account (after giving effect
to all contributions, distributions and allocations for all taxable years,
including the year during which such liquidation occurs), such Partner shall
have no obligation to make any contribution to the capital of the Partnership
with respect to such deficit, and such deficit shall not be considered a debt
owed to the Partnership or to any other Person for any purpose whatsoever;
provided that a Protected Partner shall be obligated to make a contribution to
the Partnership with respect to such deficit balance in such Protected Partner's
Capital Account upon a liquidation of the Partnership to the extent of such
Protected Partner's Protected Amount; and provided further that the foregoing
shall not apply with respect to any other Partner to the extent, but only to
such extent, that such Partner has agreed in writing to undertake an express
obligation to restore all or any portion of a deficit that may exist in its
Capital Account upon a liquidation of the Partnership (including, without
limitations, those Partners who have undertaken "deficit restoration
obligations" as defined in Exhibit E). In the discretion of the General Partner,
a pro rata portion of the distributions that would otherwise be made to the
General Partner and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership (in which case the assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement); or (B) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld amounts shall be distributed to the General Partner and Limited
Partners as soon as practicable.
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SECTION 13.4 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Partnership. Except as otherwise expressly
provided in this Agreement, no Limited Partner shall have priority over any
other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
SECTION 13.5 NOTICE OF DISSOLUTION
If a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners pursuant
to Section 13.1, result in a dissolution of the Partnership, the General Partner
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Partners and to all other parties with whom the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
SECTION 13.6 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
SECTION 13.7 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly winding up
of the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, to minimize any losses otherwise attendant upon such
winding-up, and the provisions of this Agreement shall remain in effect among
the Partners during the period of liquidation.
SECTION 13.8 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the
Partnership property.
SECTION 13.9 LIABILITY OF LIQUIDATOR
The Liquidator shall be indemnified and held harmless by the
Partnership in the same manner and to the same degree as an Indemnitee may be
indemnified pursuant to Section 7.7.
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ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. General. Amendments to this Agreement may be proposed by
the General Partner or by any Limited Partners holding twenty-five percent (25%)
or more of the Partnership Interests. Following such proposal (except an
amendment pursuant to Section 14.1.B), the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
written vote of the Partners on the proposed amendment or shall call a meeting
to vote thereon and to transact any other business that it may deem appropriate.
For purposes of obtaining a written vote, the General Partner may require a
response within a reasonable specified time, but not less than fifteen (15)
days, and failure to respond in such time period shall constitute a vote which
is consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A or 14.1.C, the General Partner shall have the
power, without the consent of the Limited Partners, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General
Partner or surrender any right or power
granted to the General Partner or any
Affiliate of the General Partner for the
benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of Partners in
accordance with this Agreement (which may be
effected through the replacement of Exhibit
A with an amended Exhibit A);
(3) to set forth the designations, rights,
powers, duties, and preferences of the
holders of any additional Partnership
Interests issued pursuant to Article IV;
(4) to reflect a change that does not adversely
affect the Limited Partners in any material
respect, or to cure any ambiguity, correct
or supplement any provision in this
Agreement not inconsistent with law or with
other provisions of this Agreement, or make
other changes with respect to matters
arising under this Agreement that will not
be inconsistent with law or with the
provisions of this Agreement; and
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(5) to satisfy any requirements, conditions, or
guidelines contained in any order,
directive, opinion, ruling or regulation of
a federal, state or local agency or
contained in federal, state or local law.
The General Partner shall notify the Limited Partners when any
action under this Section 14.1.B is taken in the next regular communication to
the Limited Partners; provided, however, that no notice need be given of any
amendment of this Agreement to reflect the admission, substitution, termination,
or withdrawal of Partners in accordance with this Agreement (whether or not
effected through the replacement of Exhibit A with an amended Exhibit A). For
purposes of the immediately preceding sentence, notwithstanding any other means
by which the General Partner may provide any such notice to the Limited
Partners, such notice requirement shall be deemed to have been satisfied upon
the filing with the Securities and Exchange Commission by the Partnership of any
amendment to this Agreement permitted under this Section 14.1.B as an exhibit to
(i) a registration statement filed by the Partnership under the Securities Act
or (ii) any report or other document filed by the Partnership under the Exchange
Act.
C. Amendments Requiring Limited Partner Approval (Excluding
the General Partner). Notwithstanding Section 14.1.A, without the Consent of the
Outside Limited Partners, the General Partner shall not amend Section 4.2.A,
Section 5.1.E, Section 7.1.A (second sentence only), Section 7.5, Section 7.6,
Section 7.8, Section 7.11.B, Section 11.2, Section 13.1 (other than Section
13.1(iii) which can be amended only with a Consent of 90% of the Partnership
Units (including Partnership Units held by the General Partner)), the last
sentence of Section 11.4.A (provided that no such amendment shall in any event
adversely affect the rights of any lender who made a loan or who extended credit
and received in connection therewith a Pledge of Units prior to the date such
amendment is adopted unless, and only to the extent such lender consents
thereto), this Section 14.1.C or Section 14.2.
D. Other Amendments Requiring Certain Limited Partner
Approval. Notwithstanding anything in this Section 14.1 to the contrary, this
Agreement shall not be amended with respect to any Partner adversely affected
without the Consent of such Partner, or any Assignee who is a bona fide
financial institution that loans money or otherwise extends credit to a holder
of Units, adversely affected if such amendment would (i) convert a Limited
Partner's interest in the Partnership into a general partner's interest, (ii)
modify the limited liability of a Limited Partner, (iii) amend Section 7.11.A,
(iv) amend Article V or Article VI (except as permitted pursuant to Sections
4.2, 5.1.E, 5.4, 6.2 and 14.1(B)(3)), (v) amend Section 8.6 or any defined terms
set forth in Article I that relate to the Redemption Right (except as permitted
in Section 8.6.E), or (vi) amend Sections 11.3 or 11.5, or any additional
restrictions from Section 11.6.E or amend Sections 14.1.B(4) or 14.1.D. This
Section 14.1.D does not require unanimous consent of all Partners adversely
affected unless the amendment is to be effective against all Partners adversely
affected.
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SECTION 14.2 MEETINGS OF THE PARTNERS
A. General. Meetings of the Partners may be called by the
General Partner and shall be called upon the receipt by the General Partner of a
written request by Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A. Except as otherwise
expressly provided in this Agreement, the Consent of holders of a majority of
the Percentage Interests held by Limited Partners (including Limited Partnership
Interests held by the General Partner) shall control.
B. Actions Without a Meeting. Any action required or permitted
to be taken at a meeting of the Partners may be taken without a meeting if a
written consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Limited Partner executing it,
such revocation to be effective upon the Partnership's receipt of written notice
thereof.
D. Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General Partner may
appoint pursuant to such rules for the conduct of the meeting as the General
Partner or such other Person deem appropriate.
ARTICLE XV
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by first class United States mail or by other means of written communication to
the Partner or Assignee at the address
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<PAGE> 73
set forth in Exhibit A or such other address as the Partners shall notify the
General Partner in writing.
SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles"
"Sections" and "Exhibits" are to Articles, Sections and Exhibits of this
Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide
all information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their heirs, executors, administrators, successors,
legal representatives and permitted assigns.
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with regard to any
Indemnitee, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such
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<PAGE> 74
parties are not signatories to the original or the same counterpart. Each party
shall become bound by this Agreement immediately upon affixing its signature
hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
SECTION 15.10 INVALIDITY OF PROVISIONS
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
SECTION 15.11 POWER OF ATTORNEY
A. General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
(1) execute, swear to, acknowledge, deliver,
file and record in the appropriate public
offices (a) all certificates, documents and
other instruments (including, without
limitation, this Agreement and the
Certificate and all amendments or
restatements thereof) that the General
Partner or any Liquidator deems appropriate
or necessary to form, qualify or continue
the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the limited partners
have limited liability) in the State of
Delaware and in all other jurisdictions in
which the Partnership may conduct business
or own property, (b) all instruments that
the General Partner or any Liquidator deem
appropriate or necessary to reflect any
amendment, change, modification or
restatement of this Agreement in accordance
with its terms, (c) all conveyances and
other instruments or documents that the
General Partner or any Liquidator deems
appropriate or necessary to reflect the
dissolution and liquidation of the
Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation, (d) all
instruments relating to the admission,
withdrawal, removal or substitution of any
Partner pursuant to, or other events
described in, Article XI, XII or XIII hereof
or the Capital Contribution of any Partner
and (e) all certificates, documents
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and other instruments relating to the
determination of the rights, preferences and
privileges of Partnership Interests; and
(2) execute, swear to, acknowledge and file all
ballots, consents, approvals, waivers,
certificates and other instruments
appropriate or necessary, in the sole and
absolute discretion of the General Partner
or any Liquidator, to make, evidence, give,
confirm or ratify any vote, consent,
approval, agreement or other action which is
made or given by the Partners hereunder or
is consistent with the terms of this
Agreement or appropriate or necessary, in
the sole discretion of the General Partner
or any Liquidator, to effectuate the terms
or intent of this Agreement.
Nothing contained in this Section 15.11 shall be construed as
authorizing the General Partner or any Liquidator to amend this Agreement except
in accordance with Article XIV hereof or as may be otherwise expressly provided
for in this Agreement.
B. Irrevocable Nature. The foregoing power of attorney is
hereby declared to be irrevocable and a power coupled with an interest, in
recognition of the fact that each of the Partners will be relying upon the power
of the General Partner or any Liquidator to act as contemplated by this
Agreement in any filing or other action by it on behalf of the Partnership, and
it shall survive and not be affected by the subsequent Incapacity of any Limited
Partner or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Units and shall extend to such Limited
Partner's or Assignee's heirs, successors, assigns and personal representatives.
Each such Limited Partner or Assignee hereby agrees to be bound by any
representation made by the General Partner or any Liquidator, acting in good
faith pursuant to such power of attorney; and each such Limited Partner or
Assignee hereby waives any and all defenses which may be available to contest,
negate or disaffirm the action of the General Partner or any Liquidator, taken
in good faith under such power of attorney. Each Limited Partner or Assignee
shall execute and deliver to the General Partner or the Liquidator, within
fifteen (15) days after receipt of the General Partner's or Liquidator's request
therefor, such further designation, powers of attorney and other instruments as
the General Partner or the Liquidator, as the case may be, deems necessary to
effectuate this Agreement and the purposes of the Partnership.
SECTION 15.12 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement
among the Partners with respect to the subject matter hereof and supersedes any
prior written oral understandings or agreements among them with respect thereto.
SECTION 15.13 NO RIGHTS AS SHAREHOLDERS
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Partnership Units any rights whatsoever as
shareholders of the General
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<PAGE> 76
Partner, including, without limitation, any right to receive dividends or other
distributions made to shareholders of the General Partner or to vote or to
consent or receive notice as shareholders in respect to any meeting of
shareholders for the election of trustees of the General Partner or any other
matter.
SECTION 15.14 LIMITATION TO PRESERVE REIT STATUS
To the extent that any amount paid or credited to the General
Partner or any of its officers, trustees, employees or agents pursuant to
Section 7.4 or Section 7.7 would constitute gross income to the General Partner
for purposes of Section 856(c)(2) or 856(c)(3) of the Code (a "General Partner
Payment") then, notwithstanding any other provision of this Agreement, the
amount of such General Partner Payment for any fiscal year shall not exceed the
lesser of:
(i) an amount equal to the excess, if any, of (a)
4.20% of the General Partner's total gross income (but not including the amount
of any General Partner Payments) for the fiscal year which is described in
subsections (A) though (H) of Section 856(c)(2) of the Code over (b) the amount
of gross income (within the meaning of Section 856(c)(2) of the Code) derived by
the General Partner from sources other than those described in subsections (A)
through (H) of Section 856(c)(2) of the Code (but not including the amount of
any General Partner Payments); or
(ii) an amount equal to the excess, if any of (a) 25%
of the General Partner's total gross income (but not including the amount of any
General Partner Payments) for the fiscal year which is described in subsections
(A) through (I) of Section 856(c)(3) of the Code over (b) the amount of gross
income (within the meaning of Section 856(c)(3) of the Code) derived by the
General Partner from sources other than those described in subsections (A)
through (I) of Section 856(c)(3) of the Code (but not including the amount of
any General Partner Payments); provided, however, that General Partner Payments
in excess of the amounts set forth in subparagraphs (i) and (ii) above may be
made if the General Partner, as a condition precedent, obtains an opinion of tax
counsel that the receipt of such excess amounts would not adversely affect the
General Partner's ability to qualify as a REIT. To the extent General Partner
Payments may not be made in a year due to the foregoing limitations, such
General Partner Payments shall carry over and be treated as arising in the
following year, provided, however, that such amounts shall not carry over for
more than five years, and if not paid within such five year period, shall
expire; provided further, that (i) as General Partner Payments are made, such
payments shall be applied first to carry over amounts outstanding, if any, and
(ii) with respect to carry over amounts for more than one Partnership Year, such
payments shall be applied to the earliest Partnership Year first.
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<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ STANLEY M. STEVENS
---------------------------------
Name: Stanley M. Stevens
--------------------------------------
Title: Executive Vice President,
Chief Legal Counsel and Secretary
-------------------------------------
LIMITED PARTNERS:
By: Equity Office Properties Trust,
as Attorney-in-Fact for the Limited
Partners
By: /s/ STANLEY M. STEVENS
----------------------------------
Name: Stanley M. Stevens
--------------------------------
Title: Executive Vice President,
Chief Legal Counsel and
Secretary
-------------------------------
For purposes of Section 8.6 hereof:
EQUITY OFFICE PROPERTIES TRUST
By: /s/ STANLEY M. STEVENS
---------------------------------
Name: Stanley M. Stevens
--------------------------------------
Title: Executive Vice President,
Chief Legal Counsel and Secretary
-------------------------------------
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<PAGE> 78
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
CLASS A AND CLASS B UNITS
-------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
- --------------------------- UNITS ACCOUNT INTEREST (4)
------------- ------------- -------------
GENERAL PARTNER:
- ---------------
<S> <C> <C> <C>
Equity Office Properties Trust
Two North Riverside Plaza
Suite 2200
Chicago, Illinois 60606
LIMITED PARTNERS:
- ----------------
TOTAL CLASS A AND CLASS B UNITS 100.00000%
==========
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
SERIES A PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
- --------------------------- UNITS ACCOUNT INTEREST (4)
------------- ------------- -------------
<S> <C> <C> <C>
TOTAL SERIES A PREFERRED UNITS 100.00000%
<CAPTION>
SERIES B PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
- --------------------------- UNITS ACCOUNT INTEREST (4)
------------- ------------- -------------
<S> <C> <C> <C>
TOTAL SERIES B PREFERRED UNITS 100.00000%
<CAPTION>
SERIES C PREFERRED UNITS
------------------------
INITIAL
NAME AND ADDRESS OF PARTNER PARTNERSHIP CAPITAL PERCENTAGE
- --------------------------- UNITS ACCOUNT INTEREST (4)
------------- ------------- -------------
<S> <C> <C> <C>
TOTAL SERIES C PREFERRED UNITS 100.00000%
</TABLE>
NOTES:
(1) 194 Class A Units were cancelled to provide cash for fractional share
amounts in connection with the merger of Beacon Properties Corporation into
Equity Office Properties Trust on December 19, 1997.
A-2
<PAGE> 80
(2) Beacon Partner
(3) Class B Units.
(4) For purposes of this calculation, the Class A Units and Class B Units are
treated as one class. Of the aggregate Partnership Interests currently
outstanding, the percentage of each class and series are as follows:
Class A and B Units (collectively) %
Series A Preferred Units %
Series B Preferred Units %
Series C Preferred Units %
100.00%
(5) Acquired in connection with acquisition of Palo Alto.
A-3
<PAGE> 81
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1 of the Agreement and Exhibit C thereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1 of the Agreement and
Exhibit C thereof.
B. For purposes of computing the amount of any item of income,
gain, deduction or loss to be reflected in the Partners' Capital Accounts,
unless otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of
income, gain, loss and deduction shall be made
without regard to any election under Section 754 of
the Code which may be made by the Partnership,
provided that the amounts of any adjustments to the
adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of
the distribution of property by the Partnership to a
Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital
Accounts) shall be reflected in the Capital Accounts
of the Partners in the manner and subject to the
limitations prescribed in Regulations Section
l.704-1(b)(2)(iv)(m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact
that items described in Sections 705(a)(l)(B) or
705(a)(2)(B) of the Code are not includible in gross
income or are neither currently deductible nor
capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be
determined as if the adjusted basis of such property
as of such date of disposition were equal in amount
to
<PAGE> 82
the Partnership's Carrying Value with respect to such
property as of such date.
(4) 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.
(5) In the event the Carrying Value of any Partnership
Asset is adjusted pursuant to Section 1.D hereof, the
amount of any such adjustment shall be taken into
account as gain or loss from the disposition of such
asset.
(6) Any items specially allocated under Section 2 of
Exhibit C to the Agreement hereof shall not be taken
into account.
C. A transferee (including any Assignee) of a Partnership Unit
shall succeed to a pro rata portion of the Capital Account of the transferor.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section
1.D(2), the Carrying Values of all Partnership assets
shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to
such Partnership property, as of the times of the
adjustments provided in Section 1.D(2) hereof, as if
such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property
and allocated pursuant to Section 6.1 of the
Agreement.
(2) Such adjustments shall be made as of the following
times: (a) immediately prior to the acquisition of an
additional interest in the Partnership by any new or
existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior
to the distribution by the Partnership to a Partner
of more than a de minimis amount of property as
consideration for an interest in the Partnership; and
(c) immediately prior to the liquidation of the
Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided, however, that
adjustments pursuant to clauses (a) and (b) above
shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership.
(3) In accordance with Regulations Section 1.704-
l(b)(2)(iv)(e), the Carrying Value of Partnership
assets distributed in kind shall be adjusted upward
or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership
property, as of the time any such asset is
distributed.
B-2
<PAGE> 83
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount
and fair market value of all Partnership assets
(including cash or cash equivalents) shall be
determined by the General Partner using such
reasonable method of valuation as it may adopt, or in
the case of a liquidating distribution pursuant to
Article XIII of the Agreement, shall be determined
and allocated by the Liquidator using such reasonable
methods of valuation as it may adopt. The General
Partner, or the Liquidator, as the case may be, shall
allocate such aggregate fair market value among the
assets of the Partnership in such manner as it
determines in its sole and absolute discretion to
arrive at a fair market value for individual
properties.
E. The provisions of the Agreement (including this Exhibit B and
the other Exhibits to the Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
B-3
<PAGE> 84
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this
Exhibit C, the following special allocations shall be made in the following
order:
A. Minimum Gain Chargeback. Notwithstanding the
provisions of Section 6.1 of the Agreement or any other provisions of this
Exhibit C, if there is a net decrease in Partnership Minimum Gain during any
Partnership Year, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Partner's share of the net decrease in Partnership Minimum Gain,
as determined under Regulations Section 1.704-2(g). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Regulations Section 1.704-2(f)(6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any
other provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5), shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i)(4). This Section
1.B is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.B, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of the Agreement or this Exhibit with respect to such Partnership Year,
other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulations Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of
<PAGE> 85
Partnership income and gain (consisting of a pro rata portion of each item of
Partnership income, including gross income and gain for the Partnership Year)
shall be specifically allocated to such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, its Adjusted
Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 1.C is intended to constitute
a "qualified income offset" under Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.
D. Gross Income Allocation. In the event that any
Partner has an Adjusted Capital Account Deficit at the end of any Partnership
Year (after taking into account allocations to be made under the preceding
paragraphs hereof with respect to such Partnership Year), each such Partner
shall be specially allocated items of Partnership income and gain (consisting of
a pro rata portion of each item of Partnership income, including gross income
and gain for the Partnership Year) in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, its Adjusted Capital
Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for
any Partnership Year shall be allocated to the Partners in accordance with their
respective Percentage Interests. If the General Partner determines in its good
faith discretion that the Partnership's Nonrecourse Deductions must be allocated
in a different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Partnership Year shall be specially allocated to
the Partner who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable
in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant to
Section 734(b) or 743(b) of the Code is required, pursuant to Regulations
Section 1.704-l(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall be treated
as an item of gain (if the adjustment increases the basis of the asset) or loss
(if the adjustment decreases such basis), and such item of gain or loss shall be
specially allocated to the Partners in a manner consistent Exhibit E-1 with the
manner in which their Capital Accounts are required to be adjusted pursuant to
such Section of the Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for
federal income tax purposes, each item of income, gain, loss and deduction shall
be allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or
C-2
<PAGE> 86
deduction is allocated pursuant to Section 6.1 of the Agreement and Section 1 of
this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities
attributable to a Contributed Property or Adjusted Property, items of income,
gain, loss, and deduction shall be allocated for federal income tax purposes
among the Partners as follows:
(1) (a) In the case of a Contributed
Property, such items attributable thereto
shall be allocated among the Partners
consistent with the principles of Section
704(c) of the Code to take into account the
variation between the 704(c) Value of such
property and its adjusted basis at the time
of contribution (taking into account Section
2.C of this Exhibit C); and
(b) any item of Residual Gain or
Residual Loss attributable to a Contributed
Property shall be allocated among the
Partners in the same manner as its
correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted
Property, such items shall
(i) first, be allocated among
the Partners in a manner consistent with the
principles of Section 704(c) of the Code to
take into account the Unrealized Gain or
Unrealized Loss attributable to such
property and the allocations thereof
pursuant to Exhibit B;
(ii) second, in the event such
property was originally a Contributed
Property, be allocated among the Partners in
a manner consistent with Section 2.B(1) of
this Exhibit C; and
(b) any item of Residual Gain or
Residual Loss attributable to an Adjusted
Property shall be allocated among the
Partners in the same manner its correlative
item of "book" gain or loss is allocated
pursuant to Section 6.1 of the Agreement and
Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and
deduction shall be allocated among the
Partners the same manner as their
correlative item of "book" gain or loss is
allocated pursuant to Section 6.1 of the
Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to
Section 704(c) of the Code permit a Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall, subject to the following, have the
authority to elect the method to be used by the Partnership and such election
shall be binding on all Partners; provided that, to the extent that the General
Partner has agreed to use a particular method with respect to a
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<PAGE> 87
Contributed Property, the General Partner shall be bound by such agreement
(including, without limitation, the agreements set forth in Exhibit E hereto)
pursuant to the terms thereof. With respect to the Contributed Property
transferred to the Partnership in connection with the Consolidation and the
BRE/Worldwide L.L.C. purchase, the Partnership shall elect to use the
"traditional method" set forth in Treasury Regulation Section 1.704-3(b).
C-4
<PAGE> 88
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________
Partnership Units in EOP Operating Limited Partnership in accordance with the
terms of the Agreement of Limited Partnership of EOP Operating Limited
Partnership, as amended, and the Redemption Right referred to therein, (ii)
surrenders such Partnership Units and all right, title and interest therein and
(iii) directs that the Cash Amount or Shares Amount (as determined by the
General Partner) deliverable upon exercise of the Redemption Right be delivered
to the address specified below, and if Shares are to be delivered, such Shares
be registered or placed in the name(s) and at the address(es) specified below.
The undersigned hereby represents, warrants, and certifies that the undersigned
(a) has marketable and unencumbered title to such Partnership Units, free and
clear of the rights of or interests of any other person or entity, (b) has the
full right, power and authority to redeem and surrender such Partnership Units
as provided herein and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consult or approve such redemption and
surrender.
<TABLE>
<S> <C>
Dated: Name of Limited Partner:
------------------ ------------------
-----------------------------
(Signature of Limited Partner)
-----------------------------
(Street Address)
-----------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-----------------------------
IF SHARES ARE TO BE ISSUED, ISSUE TO:
Name:
-----------------------------------------
Social Security or tax identification number:
---------------------------
</TABLE>
<PAGE> 89
EXHIBIT E
PROTECTED PARTNERS AND PROTECTED AMOUNTS
PART I PROTECTED PARTNERS PROTECTED AMOUNT
PART II PROTECTED PARTNERS
(1) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the First Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-1.
(2) Protected Amount is the Deficit Obligation or Indemnity Obligation, as
applicable, as provided in the Second Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-2.
(3) Protected Amount is the DRO Amount or any applicable Partner Contribution
Amount, as defined in the Third Prior Amendment to the Original Partnership
Agreement, as set forth in Exhibit E-3.
(4) Protected Amount is the Deficit Obligation as defined in the Prior
Addendum, dated April 21, 1998, to the Original Partnership Agreement, as
set forth in Exhibit E-4.
(5) Protected Amount is as defined in the Tenth Prior Amendment to the Original
Partnership Agreement, as set forth in Exhibit E-5.
<PAGE> 90
EXHIBIT E-1
(CAP AGREEMENT)
BACKGROUND
On September 2, 1997, pursuant to a closing under that certain
Agreement for Contribution of Real Estate and Related Property dated as of
August 1, 1997, by and among the Partnership, the General Partner, Columbus
America Properties, L.L.C. ("CAP"), and certain members of CAP (the
"Contribution Agreement"), CAP received 1,690,000 Class A Units, subject to
adjustment as provided in the Contribution Agreement, (referred to as the "CAP
Units"), in exchange for the office properties known as Texaco Center, LL&E
Tower and 601 Tchoupitoulas Garage (collectively, the "CAP Properties"). In
connection with the issuance of the CAP Units, the First Prior Amendment to the
Original Partnership Agreement was executed, which set forth specific agreements
regarding certain additional rights and obligations of CAP and which was later
amended by the Sixth Prior Amendment to the Original Partnership Agreement. Such
specific agreements are described below.
All capitalized terms used in this Exhibit E-1 and not
otherwise defined have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Notwithstanding any other provision in the Agreement
to the contrary and in addition to (and not in lieu thereof) any and all other
rights of CAP under the Agreement:
(i) The holders of the CAP Units shall have the
right at any time and from time to time, to exchange all or any number of such
CAP Units at the request of such holder for Shares in the form required in
Section 8.6.B(i) of the Agreement, but subject in all respects to the terms of a
certain Registration Rights Agreement dated as of September 2, 1997, by and
among the General Partner, CAP and the other signatories thereto; and
(ii) CAP shall have the right, exercisable upon
written notice to Partnership at any time and from time to time before the
earlier to occur of (a) September 3, 2000, or (b) the date that CAP shall have
either transferred or converted all of its CAP Units into Shares, to require the
Partnership or the General Partner to acquire all, or any portion or portions,
of the CAP Units at $29.00 per CAP Unit. The price for such CAP Units shall be
paid by the Partnership or the General Partner in immediately available funds
not less than five (5) days after receipt of such notice from CAP. The CAP Units
shall be conveyed to the Partnership or the General Partner, as applicable, free
and clear of all liens and encumbrances, other than those liens and
encumbrances, if any, in favor of General Partner or Partnership. At the closing
of the acquisition of the CAP Units by the Partnership or the General Partner,
the parties shall execute instruments of assignment and conveyance in the form
attached to the First Prior Amendment at "Exhibit B" and an amendment to the
Agreement evidencing the assignment of the CAP Units to the
<PAGE> 91
Partnership, or the General Partner, as applicable, and the withdrawal of CAP as
a Limited Partner of the Partnership.
2. Notwithstanding any other provision of the First
Prior Amendment (as amended by the Sixth Prior Amendment) or the Agreement to
the contrary, upon liquidation of the Partnership, CAP shall be required to
contribute to the Partnership the deficit balance in its Capital Account
computed in accordance with Section 1.752-2(b)(1) and (2) of the Regulations,
provided, however, that such contribution obligation shall not exceed
$84,350,000 (the "Deficit Obligation"). CAP specifically waives any right of
contribution or subrogation with respect to such Deficit Obligation and neither
the General Partner nor any other Partner or other Person shall be required to
reimburse CAP for such contribution. Irrespective of the balance in the Capital
Account of CAP, CAP agrees to indemnify the Partnership and the General Partner
to the extent that the recourse obligations of the Partnership exceed the assets
of the Partnership available to satisfy such recourse obligations. This
indemnity obligation is intended to protect and hold the Partnership and the
General Partner harmless for such recourse obligations without regard to
obligations imposed on the General Partner under applicable state law or other
contract provisions. This indemnity obligation shall be limited to $84,350,000
(the "Indemnity Obligation"). CAP hereby specifically waives any right of
contribution from or subrogation against the General Partner or any other
Partner and neither the Partnership nor any other Partner shall be required to
contribute to or otherwise reimburse CAP with respect to such indemnity. Upon
payment of such indemnity, CAP's Capital Account shall be credited with such
payment only to the extent of any deficit in such Capital Account. Amounts paid
to the Partnership pursuant to the Deficit Obligation or the Indemnity
Obligation shall be used to satisfy the recourse obligations of the Partnership.
CAP's Deficit Obligation and Indemnity Obligation shall not in
the aggregate exceed $84,350,000 (subject to reduction as provided herein). In
addition, the Deficit Obligation and the Indemnity Obligation shall be forever
reduced to $6,350,000 immediately upon the first placing, after acquisition of
the CAP Properties by the Partnership, of a non-recourse third party mortgage on
the CAP Properties securing a third party non-recourse loan to the Partnership
in an amount not less than $78,000,000.
Upon the sale, redemption, conversion or other disposition of
the CAP Units, the Deficit Obligation and the Indemnity Obligation of CAP under
this provision shall terminate proportionately with the number of CAP Units
sold, redeemed, converted or otherwise disposed of; provided, however, that a
transferee of CAP may, in its sole discretion, assume the Deficit Obligation
and/or the Indemnity Obligation of CAP and, in such event, the Deficit
Obligation and the Indemnity Obligation shall be the obligations solely of such
transferee (but CAP's obligation shall in all events be proportionately
terminated as of the date of any such disposition of its interest in the
Partnership). Nothing in this paragraph 2 shall in any way affect the sale,
exchange, or conversion rights of CAP under the Agreement or under the First and
Sixth Prior Amendments.
E-1 - 2
<PAGE> 92
EXHIBIT E-2
(1120 AGREEMENT)
BACKGROUND
On October 16, 1997, pursuant to a closing under that certain
Contribution Agreement dated September 4, 1997, as amended, by and between the
Partnership and 1120 20th Street Associates ("1120") (the "Contribution
Agreement"), 1120 received 1,645,885 Class A Units, subject to adjustment as
provided in the Contribution Agreement, (referred to as the "1120 Units") in
exchange for the office property known as One Lafayette Centre, 1120 20th
Street, N.W., Washington, D.C. (the "1120 Property"). In connection with the
issuance of the 1120 Units, the Second Prior Amendment to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of 1120, was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-2 and not
otherwise defined herein have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the
contrary, upon liquidation of the Partnership, 1120 shall be required to
contribute to the Partnership the deficit balance in its Capital Account
computed in accordance with Sections 1.752-2(b)(1) and (2) of the Regulations;
provided, however, that such contribution obligation shall not exceed
$14,000,000 (the "Deficit Obligation"). 1120 specifically waives any right of
contribution or subrogation with respect to such Deficit Obligation and neither
the General Partner nor any other Partner or other Person shall be required to
reimburse 1120 for such contribution. Irrespective of the balance in the Capital
Account of 1120, 1120 agrees to indemnify the Partnership and the General
Partner to the extent that the recourse obligations of the Partnership exceed
the assets of the Partnership available to satisfy such recourse obligations.
This indemnity obligation is intended to protect and hold the Partnership and
the General Partner harmless for such recourse obligations without regard to
obligations imposed on the General Partner under applicable state law or other
contract provisions. This indemnity obligation shall be limited to $14,000,000
(the "Indemnity Obligation"). 1120 specifically waives any right of contribution
from or subrogation against the General Partner or any other Partner and neither
the Partnership nor any other Partner shall be required to contribute to or
otherwise reimburse 1120 with respect to such indemnity. Upon payment of such
indemnity, 1120's Capital Amount shall be credited with such payment only to the
extent of any deficit in such Capital Account. Amounts paid to the Partnership
pursuant to the Deficit Obligation or the Indemnity Obligation shall be used to
satisfy the recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of
the 1120 Units, the Deficit Obligation and the Indemnity Obligation of 1120
under this provision shall terminate; provided, however, a transferee of 1120
may, in its sole discretion, assume the Deficit Obligation and/or the Indemnity
Obligation of 1120 and, in such event, the Deficit
<PAGE> 93
Obligation and the Indemnity Obligation shall be the obligation solely of such
transferee (but 1120's obligation shall in all events be terminated as of the
date of any disposition of its interest in the Partnership). Nothing herein
shall in any way effect the sale, exchange or conversion rights of 1120 under
the Agreement or under the Second Prior Amendment.
E-2 - 2
<PAGE> 94
EXHIBIT E-3
(WRIGHT RUNSTAD AGREEMENT)
BACKGROUND
On December 16, 1997, (i) pursuant to a closing under that
certain Contribution Agreement dated December 16, 1997, by and between the
Partnership, WRAM (as defined below), WRH (as defined below) and certain other
parties (the "Contribution Agreement") (a) Wright Runstad Asset Management L.P.,
a Washington limited partnership ("WRAM"), received 446,890 Class B Units in
exchange for certain partnership interests ("Titleholder Interests") in Wright
Runstad Properties L.P., a Delaware limited partnership (the "Titleholder") and
(b) Wright Runstad Holdings L.P., a Washington limited partnership ("WRH"),
received 2,168,810 Class B Units in exchange for certain Titleholder Interests;
and (ii) pursuant to a closing under that certain Investment Agreement dated
December 16, 1997, by and among the Partnership, Wright Runstad Associates
Limited Partnership, a Washington limited partnership, ("WRALP"), H. Jon Runstad
("Runstad"), Douglas E. Norberg ("Norberg"), John F. Nordby ("Nordby"), and
certain other parties (the "Investment Agreement"), Runstad, Norberg, and Nordby
received, in the aggregate, 137,427 Class B Units in exchange for certain
limited partnership interests in WRALP ("WRALP Interests"). WRAM and WRH are
collectively referred to herein as the "Contributors." Runstad, Norberg, Nordby
are collectively referred to herein as the "Principals." The Class B Units
issued as described above are referred to herein as the WRP Units. Certain
property owned by the Titleholder as described in the Contribution Agreement is
referred to herein as the "WRP Property." In connection with the issuance of the
WRP Units, the Third Prior Amendment to the Original Partnership Agreement,
which set forth specific agreements regarding certain additional rights and
obligations of the Contributors and the Principals, was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-3 and not
otherwise defined shall have the meanings assigned to them in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision
of this Agreement or of the Third Prior Amendment, each Contributor shall have
the right to assign all or any portion of its WRP Units, together with any and
all other rights of such Contributor pursuant to the Third Prior Amendment and
the Agreement, to one or more of the constituent partners or shareholders,
members, partners, or beneficiaries of constituent partners of such Contributor
on December 16, 1997, without the need for the consent of the General Partner or
any Limited Partner and without being subject to the right of first refusal set
forth in Section 11.3.A(a) of the Agreement, but in each case subject to the
restrictions and conditions set forth in Sections 11.3.C, 11.3.D, 11.3.E, 11.6.E
and 11.6.F of the Agreement. Upon the delivery of written notice of such an
assignment to the General Partner, each assignee of WRP Units pursuant to the
immediately preceding sentence shall be admitted to the Partnership as a
Substituted Limited Partner owning the WRP Units so assigned and having all of
the rights of a Limited Partner under the
<PAGE> 95
Agreement and the Third Prior Amendment, subject only to such assignee executing
and delivering to the Partnership an acceptance of all of the terms and
conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the WRP
Units issued to a Contributor pursuant to the Contribution Agreement that is
admitted as a Substituted Limited Partner in accordance with this Section 1 or
Article XI of the Agreement, for so long as such Person owns any such WRP Units,
is referred to herein as a "Contributor Limited Partner." Upon satisfaction of
the condition described in the second sentence of this Section 1, the General
Partner shall amend Exhibit A to the Agreement in the manner described in
Section 11.4.C of the Agreement. For purposes of Section 8.6 of the Agreement,
each Contributor Limited Partner which is a permitted assignee of a Contributor
shall be entitled to exercise its right to require the Partnership to redeem all
or any portion of the WRP Units assigned to it by such Contributor at any time.
2. Adjustments to Carrying Values.
(a) Upon the admission of the Contributors and
the Principals to the Partnership and upon the distribution by the
Partnership of the Cash Amount to either Contributor or to any
Principal or any Contributor Limited Partner pursuant to the exercise
of the Redemption Right with respect to the WRP Units held by such
Contributor, Principal or Contributor Limited Partner, the Carrying
Values of the Assets of the Partnership shall be adjusted in accordance
with the procedures described in Section 1.D of Exhibit B to the
Agreement; provided, however, that in order to minimize the
administrative burden associated with the adjustments required by this
Section 2(a) in connection with the distribution of the Cash Amount to
a Contributor, a Principal or a Contributor Limited Partner, the
Partnership shall make the adjustments to the Carrying Values of the
Partnership's Assets (and the resulting adjustments to the Capital
Accounts of the Partners) only upon the happening of the most material
event during the calendar year that is described in Section 1.D(2) of
Exhibit B to the Agreement (the "Annual Adjustment"); and provided,
further, that upon the distribution of the Cash Amount to a
Contributor, a Principal or a Contributor Limited Partner or, at the
option of the General Partner, upon the occurrence of any other event
described in Section 1.D(2) of Exhibit B to the Agreement, that occurs
during any year other than as of the date of the Annual Adjustment, the
Partnership shall, at the time of such distribution, make adjustments
to the Carrying Values of the Partnership's Assets in accordance with
the procedures described in Section 1.D of Exhibit B to the Agreement
for purposes of adjusting the Capital Account of such Contributor, such
Principal or such Contributor Limited Partner who has exercised his
Redemption Right or such other affected Partner, but no such
adjustments shall be necessary at such time with respect to the Capital
Account balances of Partners who remain Partners through the date of
the Annual Adjustment or are otherwise not directly affected by any
such other event.
(b) Any determination of the fair market value
of Partnership assets pursuant to Section 1.D of Exhibit B to the
Agreement (for purposes of calculating Unrealized Gain or Unrealized
Loss), with respect to adjusting the
E-3 - 2
<PAGE> 96
Carrying Values of Partnership assets in connection with the exercise
of Redemption Rights by a Contributor, any Principal or any Contributor
Limited Partner shall be made by assuming that the aggregate fair
market value of all Partnership assets is equal to the aggregate Cash
Amount that would be distributed by the Partnership if all Partnership
Units held by all Partners (including the General Partner) were
redeemed in exchange for the Cash Amount with respect to each such
Partnership Unit at such time, provided, however, such valuation
methodology shall not be utilized for purposes of determining the fair
market value of the Partnership's assets with respect to any such
exercise of Redemption Rights in contemplation of an assignment by or
reorganization of the Partnership for the benefit of creditors and any
liquidation of the Partnership related thereto or following the filing
by (or in contemplation of a filing) by the Partnership of a case under
Title 11 of the U.S. Code.
3. Allocations. Notwithstanding the provisions of
Section 2.C of Exhibit C to the Agreement, for purposes of allocating items of
income, gain, loss and deduction with respect to the WRP Property in the manner
required by Section 704(c) of the Code, the Partnership shall employ, and shall
cause any entity controlled by the Partnership which holds title to any of the
WRP Property to employ, the "traditional method" as set forth in Regulation
Section 1.704-3(b).
4. Obligation to Restore Deficit Capital Account.
(a) For purposes of this Section 4, the
following terms shall have the meanings set forth below:
(i) "DRO Amount" means (A) with respect
to WRAM, $10,873,678, (B) with respect to WRH, $63,014,285 and
(C) with respect to each Scheduled Assignee, the amount set
forth opposite such Scheduled Assignee's name on Schedule 1
hereto.
(ii) "Partner Contribution Agreement"
means one or more agreements in favor of that certain
partnership or those certain partnerships that are partners in
WRH, which were executed concurrently with the Third Prior
Amendment and have been assigned by such partnerships to WRH,
pursuant to which a Second-Tier Partner has agreed to make
certain capital contributions to WRH on the terms and subject
to the conditions set forth in such Partner Contribution
Agreement.
(iii) "Partner Contribution Amount"
means, with respect to each Second-Tier Partner, the amount
set forth opposite such Second-Tier Partner's name on Schedule
1 hereto, which amount is the amount of capital contributions
agreed to be made by such Second-Tier Partner pursuant to the
Partner Contribution Agreement to which he is a party.
(iv) "Scheduled Assignee" means each
permitted assignee of any of the WRP Units of either WRAM or
WRH listed on
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<PAGE> 97
Schedule 1 hereto and the successors and assigns of such
Scheduled Assignee.
(v) "Second-Tier Partners" means those
persons listed on Schedule 1 to the Third Prior Amendment who
are partners in certain general partnerships that are partners
in WRH and who have executed and delivered one or more Partner
Contribution Agreements.
(b) Notwithstanding any other provisions of the
Agreement, upon liquidation of the Partnership or upon the liquidation
of the Partnership Interest of a Contributor or a Scheduled Assignee,
each Contributor or Scheduled Assignee whose interest is being
liquidated shall contribute to the Partnership, in accordance with
Section 1.704-1(b)(2)(ii)(b)(2) of the Regulations, the deficit
balance, if any, in its Capital Account, calculated after the
allocation for such year of all items of Net Income, Net Losses, Gross
Income and Unrealized Gain or Unrealized Loss allocated in accordance
with Section 1.D of Exhibit B to the Agreement; provided, however, that
in no event shall such contribution obligation for any Contributor or
Scheduled Assignee exceed such Contributor's or Scheduled Assignee's
DRO Amount. In addition, WRH assigned and conveyed to the Partnership,
effective upon distribution of the WRP Units by WRH, all of WRH's
rights under each Partner Contribution Agreement provided by a
Second-Tier Partner; provided that in no event shall the contribution
obligation pursuant to such Partner Contribution Agreement exceed such
Second-Tier Partner's Partner Contribution Amount. The obligation
pursuant to this Section 4(b) shall be for the benefit of the
Partnership, the General Partner, the 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 the general partner of the
Partnership and shall be enforceable by such parties. Each Contributor
and Scheduled Assignee unconditionally and irrevocably waives any
subrogation, reimbursement or similar rights to which it might
otherwise be entitled as the result of its performance with respect to
the obligation created pursuant to Section 4(b), whether such rights
arise with respect to the Partnership, another Partner, or a third
party; provided, however, that the General Partner shall in all events
be entitled to enforce the contribution obligation of a Contributor or
Scheduled Assignee undertaken pursuant to Section 4(b).
(c) Notwithstanding the foregoing, in the event
that the General Partner, pursuant to Section 8.6.B of the Agreement,
elects to assume directly and satisfy a Redemption Right exercised by a
Contributor or a Scheduled Assignee (a "Tendering Limited Partner"),
the General Partner shall assume the obligation of the Tendering
Limited Partner pursuant to Section 4(b) above with respect to the WRP
Units transferred to the General Partner by such Tendering Limited
Partner; provided, however, that if the adjustment to the Carrying
Values of Partnership Assets and the related adjustments to the Capital
Accounts of the Partners pursuant to Section 2 hereof and Section 1.D
of Exhibit B to the Agreement that would have been undertaken pursuant
to Section 2 hereof had the Partnership satisfied the Redemption Right
exercised by such Tendering Limited Partner would have resulted in the
Capital Account of the Tendering Limited
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<PAGE> 98
Partner having a zero or positive balance, then, with respect to such
WRP Units acquired from the Tendering Limited Partner, the General
Partner shall have no obligation pursuant to Section 4(b) hereof with
respect to a liquidation of the Partnership or a liquidation of the
Partnership Interest reflected by such WRP Units that occurs more than
twelve months following the acquisition of such WRP Units by the
General Partner.
(d) In the event that the liquidation of the
Partnership Interest of a Tendering Limited Partner, other than in
connection with the liquidation of the Partnership, would trigger an
obligation pursuant to Section 4(b) hereof to contribute an amount to
the Partnership, then the Net Income of the Partnership for the portion
of such year ending on the Specified Redemption Date with respect to
such Tendering Limited Partner shall be specially allocated to such
Tendering Limited Partner in the amount necessary to eliminate the
deficit balance in its Capital Account remaining after all other
adjustments for such year (including any adjustments made pursuant to
Section 1.D of Exhibit B to the Agreement).
5. Maintenance of Recourse Debt. The Partnership shall
maintain unsecured liabilities as to which the creditor has recourse to the
General Partner, including any such unsecured recourse liabilities (as to which
the creditor has recourse to the General Partner in its capacity as General
Partner) of any other entity that is allocable to the Partnership, in an
aggregate amount not less than the amount necessary such that: (a) prior to the
distribution by WRAM and WRH of WRP Units issued to them pursuant to the
Contribution Agreement, the amount of Partnership recourse liabilities allocated
to each of WRAM and WRH shall be not less than its DRO Amount; and (b) following
the distribution by WRAM and WRH of WRP Units issued to them pursuant to the
Contribution Agreement, the amount of Partnership recourse liabilities allocated
directly or indirectly to all Scheduled Assignees and Second-Tier Partners shall
be not less than the sum of their respective DRO Amounts and Partner
Contribution Amounts. In making such determination, the Partnership shall take
into account any and all allocations of Partnership recourse liabilities to
other Partners by reason of any guarantees, indemnities, restoration obligations
or other, similar arrangements with respect to any such Partners, and the
liability by reason of any such Partner's status as a general partner of the
Partnership.
6. Amendments. Notwithstanding any provision in the
Agreement to the contrary, the provisions hereof and of the Third Prior
Amendment may be waived or amended or otherwise modified with the prior written
consent of holders of more than fifty percent (50%) of the WRP Units at the time
outstanding and without the consent of any other Limited Partner.
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<PAGE> 99
EXHIBIT E-4
(GALBREATH AGREEMENT)
BACKGROUND
On April 21, 1998, Galbreath-Denver Limited Partnership, an
Ohio limited partnership ("Galbreath") and 1560 Broadway Partnership, a Colorado
general partnership ("Broadway") (collectively the "Additional Limited
Partners") each was issued 1,684 Class B Units (referred to as the "Galbreath
and Broadway Units"). In connection with the issuance of the Galbreath and
Broadway Units, a Prior Addendum dated as of April 21, 1998, to the Original
Partnership Agreement, which set forth specific agreements regarding certain
additional rights and obligations of the Additional Limited Partners, was
executed. Such specific agreements are described below.
All capitalized terms used in this Exhibit E-4 and not
otherwise defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
Notwithstanding any other provision of the Agreement to the
contrary, upon liquidation of the Partnership, each of the Additional Partners
shall be required to contribute to the Partnership the deficit balance in such
party's Capital Account computed in accordance with Sections 1.752-2(b)(1) and
(2) of the Regulations; provided, however, that such contribution obligation
shall not exceed the amount by which the recourse obligations of the Partnership
exceed the assets of the Partnership available to satisfy such recourse
obligations and shall not exceed $4,154,000 with respect to Galbreath and the
lesser of the deficit balance in Broadway's Capital Account in "owner" at the
date of "closing" reduced by any income allocated to Broadway after the date of
Closing or $10,500,000 with respect to Broadway (collectively, the "Deficit
Obligation"). Each of the Additional Limited Partners specifically waives any
right of contribution or subrogation with respect to such Deficit Obligation and
neither the General Partner nor any other Partner or other Person shall be
required to reimburse the Additional Limited Partners for such contributions.
Upon payment of such Deficit Obligation, each Additional Limited Partner's
Capital Account shall be credited with such payment. Amounts paid to the
Partnership pursuant to the Deficit Obligation shall be used to satisfy the
recourse obligations of the Partnership.
Upon the sale, redemption, conversion or other disposition of
the Galbreath and Broadway Units received by any Additional Limited Partner, the
Deficit Obligation of such Additional Limited Partner shall be reduced in an
amount equal to the percentage of the Galbreath and Broadway Units owned by such
Additional Limited Partner which were sold, redeemed, converted or otherwise
disposed of by such Additional Limited Partner, and upon the sale, redemption,
conversion or other disposition of all the Galbreath and Broadway Units received
by any Additional Limited Partner, the Deficit Obligation shall be terminated
with respect to such Additional Limited Partner. Nothing in this Exhibit E-4
<PAGE> 100
shall in any way effect the sale, exchange or conversion rights of the
Additional Limited Partners under the Agreement or this Exhibit E-4.
In the case of Galbreath only, certain partners of Galbreath
shall execute and deliver to the Partnership, and the Partnership shall accept,
a Guarantee in the form agreed to by such Galbreath partners and the
Partnership.
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<PAGE> 101
EXHIBIT E-5
(PALO ALTO SQUARE AGREEMENT)
BACKGROUND
Pursuant to a closing under that certain Contribution
Agreement dated September 28, 1999, by and between Palo Alto Square Limited
Partnership, an Illinois limited partnership, ("Contributor") and the General
Partner (the "Contribution Agreement"), Contributor was issued 1,012,623 Class B
Units (referred to as the "Contributor Units") in exchange for certain real
property interests described in the Contribution Agreement (the "Property").
Contributor has assigned the Contributor Units to the Equity Holders (as defined
below). In connection with the issuance of Contributor Units, the Tenth Prior
Amendment to the Original Partnership Agreement, which set forth specific
agreements regarding certain additional rights and obligations of the
Contributor and its constituent partners as set forth on Schedule 1 to such
Tenth Prior Amendment (the "Equity Holders"), was executed. Such specific
agreements are described below.
All capitalized terms used in this Exhibit E-5 and not
otherwise defined shall have the meanings assigned in the Agreement.
SPECIFIC AGREEMENTS
1. Right to Assign. Notwithstanding any other provision
of this Exhibit E-5 or of the Agreement, the Equity Holders shall have the right
to assign all or any portion of their Contributor Units, together with any and
all other rights of the Equity Holders pursuant to this Exhibit E-5 or the
Agreement, to one or more of the constituent partners or shareholders, members,
partners or beneficiaries of constituent partners of the Equity Holders as of
October 1, 1999, whether direct or indirect, without the need for the consent of
the General Partner or Limited Partners and without being subject to the right
of first refusal set forth in Section 11.3.A(a) of the Agreement, but in each
case subject to the restrictions and conditions set forth in Sections 11.3.C,
11.3.D, 11.3.E, 11.6.E and 11.6.F of the Agreement. Upon the delivery of written
notice of such an assignment to the General Partner, each assignee of
Contributor Units pursuant to the immediately preceding sentence shall be
admitted to the Partnership as a Substituted Limited Partner owning the
Contributor Units so assigned and having all of the rights of a Limited Partner
under the Agreement and this Exhibit E-5, subject only to such assignee
executing and delivering to the Partnership an acceptance of all of the terms
and conditions of the Agreement and such other documents or instruments as the
General Partner may reasonably require to effect such admission, in accordance
with Section 11.4.B of the Agreement. Each permitted assignee of any of the
Contributor Units, issued to the Contributor pursuant to the Contribution
Agreement and subsequently transferred to the Equity Holders, that is admitted
as a Substituted Limited Partner in accordance with this Section 1 or Article XI
of the Agreement, for so long as such Person owns any such Contributor Units, is
referred to in this Exhibit E-5 as an "Indirect Equity Holder." Upon
satisfaction of the condition described in the second sentence of this Section
1, the General Partner shall amend Exhibit A to the Agreement in the manner
described in Section 11.4.C of the Agreement. For purposes of Section 8.6 of the
Agreement, each Equity Holder and
<PAGE> 102
Indirect Equity Holder shall be entitled to exercise its right to require the
Partnership to redeem all or any portion of the Contributor Units assigned to it
by an Equity Holder at any time on or after October 1, 1999.
2. Adjustments to Carrying Values. (a) The Carrying
Values of the Assets of the Partnership shall be adjusted in accordance with the
procedures described in Section 1.D of Exhibit B to the Agreement; provided,
however, that in order to minimize the administrative burden associated with the
adjustments required by this Section 2(a) in connection with the distribution of
the Cash Amount to an Equity Holder or an Indirect Equity Holder, the
Partnership shall make the adjustments to the Carrying Values of the
Partnership's assets (and the resulting adjustments to the Capital Accounts of
the Partners) only upon the happening of the most material event during the
calendar year that is described in Section 1.D(2) of Exhibit B to the Agreement
(the "Annual Adjustment") and; provided further that upon the distribution of
the Cash Amount to an Equity Holder or an Indirect Equity Holder or, at the
option of the General Partner, upon the occurrence of any other event described
in Section 1.D(2) of Exhibit B to the Agreement, that occurs during any year
other than as of the date of the Annual Adjustment, the Partnership shall, at
the time of such distribution, make adjustments to the Carrying Values of the
Partnership's assets in accordance with the procedures described in Section 1.D
of Exhibit B to the Agreement for purposes of adjusting the Capital Account of
an Equity Holder, or such Indirect Equity Holder who has exercised his
Redemption Right or such other affected Partner, but no such adjustments shall
be necessary at such time with respect to the Capital Account balances of
Partners who remain Partners through the date of the Annual Adjustment or are
otherwise not directly affected by any such other event.
(b) Any determination of the fair market value
of Partnership assets pursuant to Section 1.D of Exhibit B to the Agreement (for
purposes of calculating Unrealized Gain or, Unrealized Loss), with respect to
adjusting the Carrying Values of Partnership assets in connection with the
exercise of Redemption Rights by an Equity Holder or any Indirect Equity Holder
shall be made by assuming that the aggregate fair market value of all
Partnership assets is equal to the aggregate Cash Amount that would be
distributed by the Partnership if all Partnership Units held by all Partners
(including the General Partner) were redeemed in exchange for the Cash Amount
with respect to each such Partnership Unit at such time, provided, however, such
valuation methodology shall not be utilized for purposes of determining the fair
market value of the Partnership's assets with respect to any such exercise of
Redemption Rights in contemplation of an assignment by or reorganization of the
Partnership for the benefit of creditors and any liquidation of the Partnership
related thereto or following the filing by (or in contemplation of a filing) by
the Partnership of a case under Title 11 of the U.S. Code.
3. Allocations. Notwithstanding the provisions of
Section 2.C of Exhibit C to the Agreement, for purposes of allocating, items of
income, gain, loss and deduction with respect to the Property in the manner
required by Section 704(c) of the Code, the Partnership shall employ, and shall
cause any entity controlled by the Partnership which holds title to any of the
Property to employ the "traditional method" as set forth in Regulation Section
1.704-3(b).
E-5 - 2
<PAGE> 103
4. Obligation to Restore Deficit Capital Accounts. (a)
For purposes of this Section 4, the following terms shall have the meanings set
forth below:
(i) "Protected Amount" means, with
respect to any Protected Partner, an amount equal to
(i) the taxable gain, if any, that would be realized
by such Protected Partner if such Partner were to
dispose of its Partnership Interests for no
consideration other than the release or deemed
release of liabilities of the Partnership assumed by
or otherwise allocable to such Partner under Code
Section 752, as such hypothetical gain is determined
from time to time, less (ii) such Partner's share of
"qualified nonrecourse financing" as defined in Code
Section 465(b)(6) and the Regulations thereunder, as
such share is determined from time to time in
accordance with Regulations Section 1.752-3(a). The
Protected Amount allocable to any Protected Partner
may be modified from time to time by an amendment to
the Agreement or by execution of a written instrument
by and between such Protected Partner and the General
Partner, acting on behalf of the Partnership and
without the prior written consent of any other
Partner (whether or not Protected Partners).
(ii) "Protected Partner(s)" means that
or those Limited Partner(s) designated as Protected
Partner(s) on Exhibit A attached to the Tenth Prior
Amendment, as such designation may be modified from
time to time by the General Partner, whether by
express amendment to the Agreement or by execution of
a written instrument by and between any Protected
Partner(s) and the General Partner, acting on behalf
of the Partnership and without the prior consent of
other Limited Partners (whether or not Protected
Partners). For purposes hereof, any successor,
assignee, or transferee of Partnership Interests from
a Protected Partner, which successor, assignee or
transferee determines its basis in such Units by
reference to the basis of the predecessor, assignor
or transferor Protected Partner, shall be considered
a Protected Partner.
(b) Notwithstanding any provision of the Partnership
Agreement to the contrary (including, without limitation, the second sentence of
Section 13.3 of the Partnership Agreement), upon liquidation of the Partnership
or upon the liquidation of the Partnership Interest of a Protected Partner, such
Protected Partner whose interest is being liquidated shall contribute to the
Partnership in accordance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), the deficit balance, if any, in its Capital Account,
calculated after the allocation for such year of all items of Net Income, Net
Losses, Gross Income and Unrealized Gain or Unrealized Loss allocated in
accordance with Section 6.1 of the Agreement, Section 1.D of Exhibit B to the
Agreement, provided, however, that in no event shall such contribution
obligation for any Protected Partner exceed such Protected Partner's Protected
Amount. The obligation created pursuant to this Section 4(b) shall be for the
benefit of the Partnership, the General Partner, the 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
E-5 - 3
<PAGE> 104
general partner of the Partnership and shall be enforceable by such parties.
Each Protected Partner unconditionally and irrevocably waives any subrogation,
reimbursement or similar rights to which it might otherwise be entitled as the
result of its performance with respect to the obligation pursuant to this
Section 4(b), whether such rights arise with respect to the Partnership, another
Partner of the Partnership or a third party; provided, however, that the General
Partner shall in all events be entitled to enforce the contribution obligation
of a Protected Partner undertaken pursuant to Section 4(b). Notwithstanding
anything herein to the contrary, the obligation of a Protected Partner to
contribute amounts pursuant to this paragraph shall continue in full force and
effect in accordance with the terms hereof until one year following the transfer
or other disposition by such Protected Partner of its Partnership Interests
unless the Partnership and such Protected Partner agree otherwise. Unless
expressly agreed by the Partnership and the affected holders of Contributor
Units to the contrary in this or any other agreement, no holder of Contributor
Units who is not a Protected Partner shall have any obligation to contribute
amounts to the Partnership.
5. Amendments. Notwithstanding any provision in the
Agreement to the contrary, the provisions of the Tenth Prior Amendment may be
waived or amended or otherwise modified with the prior written consent of
holders (being either the Equity Holders and/or the Indirect Equity Holders) of
more than seventy-five percent (75%) of the Contributor Units at the time
outstanding and without the consent of any other Limited Partner.
E-5 - 4
