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):
November 12, 1998
GABLES REALTY LIMITED PARTNERSHIP
(Exact name of Registrant as specified in its charter)
Delaware 000-22683 58-2077966
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
2859 Paces Ferry Road, Suite 1450
Atlanta, Georgia 30339
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
770-436-4600
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ITEM 5. OTHER EVENTS.
On November 12, 1998, Gables Realty Limited Partnership (the "Operating
Partnership"), the entity through which Gables Residential Trust (the
"Company"), a Maryland real estate investment trust (a "REIT"), conducts
substantially all of its business and owns (either directly or through
subsidiaries) substantially all of its assets, completed a private placement of
2,000,000 of its Series B Preferred Units (the "Series B Units") to an
institutional investor at a gross price of $25.00 per unit. The net proceeds of
approximately $48.7 million were used to repay amounts outstanding under the
Operating Partnership's unsecured credit facilities. Unless the context
otherwise requires, the term "Company" as used herein means Gables Residential
Trust and its subsidiaries, including the Operating Partnership.
Subject to the following sentence, holders of the Series B Units have the right
to exchange Series B Units for the Company's 8.625% Series B Cumulative
Redeemable Preferred Shares (the "Series B Shares") on a one-for-one basis. The
exchange right is exercisable in whole but not in part at the option of holders
of 51% of the Series B Units (i) at any time on or after November 15, 2008, (ii)
at any time if full quarterly distributions shall not have been made for six
quarters, whether or not consecutive, or (iii) upon the occurrence of certain
specified events related to the treatment of the Series B Units for federal
income tax purposes.
Distributions on the Series B Units are, and dividends on the Series B Shares
will be, cumulative from the date of original issuance and are, or will be,
payable quarterly on March 15, June 15, September 15 and December 15 of each
year, commencing December 15, 1998, at the rate of 8.625% per annum on the
$25.00 capital investment per unit or share. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the Series B Units are,
and the Series B Shares will be, entitled to a preferential distribution equal
to $25.00 per unit or share, plus an amount equal to all accumulated, accrued
and unpaid distributions or dividends. With respect to payment of dividends and
amounts upon liquidation, the Series B Shares will rank (i) senior to the
Company's Common Shares and the Company's 5.00% Series Z Cumulative Redeemable
Preferred Shares and (ii) on a parity with the Company's 8.30% Series A
Cumulative Redeemable Preferred Shares (the "Series A Shares").
The Series B Units are not redeemable prior to November 15, 2003, unless the
holders exercise their right to exchange Series B Units for Series B Shares, in
which case the Company, at its option, may redeem the Series B Units before the
exchange date. On and after November 15, 2003, the Company may redeem the Series
B Units or Series B Shares at its option, in whole or in part, at any time for
cash at a redemption price of $25.00 per unit or share, plus an amount equal to
all accumulated, accrued and unpaid distributions or dividends thereon to the
date of redemption. Neither the Series B Units nor the Series B Shares include
any mandatory redemption or sinking fund provisions.
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Neither the Series B Units nor the Series B Shares are convertible into or
exchangeable for any other securities of the Company, except that (i) Series B
Units may be exchanged for Series B Shares as described above and (ii) Series B
Shares may be exchanged automatically into Excess Shares in order to ensure that
the Company remains a qualified REIT for federal income tax purposes.
Additionally, ownership by a single holder of more than 9.8% of the Series B
Shares is restricted in an effort to ensure that the Company remains a qualified
REIT for federal income tax purposes.
Except as otherwise required by law, holders of the Series B Units have only the
following voting rights: so long as any Series B Units remain outstanding, the
Company may not, without the affirmative vote of the holders of at least
two-thirds of the Series B Units outstanding, (i) authorize or create any class
or series of Operating Partnership units ranking senior to the Series B Units or
(ii) amend the terms of the Series B Units so as to materially and adversely
affect any right, preference, privilege or voting power of the Series B Units or
holders thereof.
Holders of the Series B Shares will have the same voting rights with respect to
Series B Shares as holders of Series B Units have with respect to Series B
Units, as well as the following voting right: whenever dividends on any Series B
Shares shall be in arrears for six or more quarterly periods, whether or not
consecutive, the holders of the Series B Shares (voting separately as a class
with all other series of Preferred Shares upon which like voting rights have
been conferred and are exercisable, including the Series A Shares) will be
entitled to vote for the election of a total of two trustees of the Company
until all dividends accumulated on such Series B Shares have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of business acquired:
Not Applicable
(b) Pro forma financial information:
Not Applicable
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(c) Exhibits:
Exhibit No.
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4.1 Articles Supplementary to the Company's Amended and Restated
Declaration of Trust creating a series of preferred shares of
beneficial interest, par value $.01 per share, called the 8.625%
Series B Cumulative Redeemable Preferred Shares.
4.2 Fourth Amended and Restated Agreement of Limited Partnership of the
Operating Partnership.
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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.
Date: December 1, 1998 GABLES REALTY LIMITED PARTNERSHIP
By: Gables GP, Inc., its general partner
/s/ Marvin R. Banks, Jr.
--------------------------------------
By: Marvin R. Banks, Jr.
Chief Financial Officer
GABLES RESIDENTIAL TRUST
ARTICLES SUPPLEMENTARY
ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF A SERIES OF PREFERRED SHARES
Gables Residential Trust, a Maryland real estate investment trust (the "Trust"),
having its principal office in Atlanta, Georgia, hereby certifies to the State
Department of Assessments and Taxation of the State of Maryland that:
FIRST: Pursuant to the authority expressly vested in the Board of Trustees of
the Trust by Article IV of its Amended and Restated Declaration of Trust (which,
as hereafter restated or amended from time to time, are together with these
Articles Supplementary herein called the "Charter"), the Board of Trustees has,
by resolution, duly divided and classified 2,000,000 shares of the Preferred
Shares of the Trust into a series designated 8.625% Series B Cumulative
Redeemable Preferred Shares and has provided for the issuance of such series.
SECOND: Subject in all cases to the provisions of the Charter of the Trust,
including without limitation, Article V with respect to limitations on the
transfer and ownership of Shares, the following is a description of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of the 8.625% Series B Cumulative Redeemable Preferred Shares of the
Trust:
(1) DESIGNATION AND NUMBER. A series of Preferred Shares, designated the
"8.625% Series B Cumulative Redeemable Preferred Shares" (the "Series B
Preferred Shares"), is hereby established. The number of Series B Preferred
Shares hereby authorized shall be 2,000,000.
(2) RANK. The Series B Preferred Shares shall, with respect to dividend rights
and rights upon liquidation, dissolution or winding up of the Trust, rank
(a)senior to all classes or series of Common Shares of the Trust, and to
all equity securities issued by the Trust ranking junior to such Series B
Preferred Shares, including without limitation the Series Z preferred
Shares; (b)on a parity with all other equity securities issued by the Trust
the terms of which specifically provide that such equity securities rank on
a parity with the Series B Preferred Shares, including without limitation
the Series A Preferred Shares; and (c)junior to all equity securities
issued by the Trust the terms of which specifically provide that such
equity securities rank senior to the Series B Preferred Shares. The term
"equity securities" shall not include convertible debt securities.
(3) DIVIDENDS.
(a) Holders of the then outstanding Series B Preferred Shares shall be
entitled to receive, when and as declared by the Board of Trustees,
out of funds legally available for the payment of dividends,
cumulative preferential cash dividends at the rate of 8.625% of the
$25.00 liquidation preference per annum (equivalent to a fixed annual
amount of $2.15625 per share). Such dividends shall be cumulative from
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the first date on which any Series B Preferred Shares are issued and
shall be payable quarterly in arrears on or before March 15, June 15,
September 15 and December 15 of each year or, if not a business day,
the next succeeding business day (each, a "Dividend Payment Date").
The quarterly period between Dividend Payment Dates is referred to
herein as a "dividend period" and the dividend which shall accrue in
respect of any full dividend period shall be $0.5390625 regardless of
the actual number of days in such full dividend period. The first
dividend, which will be paid on December 15, 1998, will be for less
than a full quarter. Such dividend and any dividend payable on the
Series B Preferred Shares for any partial dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day
months. Dividends will be payable to holders of record as they appear
in the stock records of the Trust at the close of business on the
applicable record date, which shall be the first day of the calendar
month in which the applicable Dividend Payment Date falls or on such
other date designated by the Board of Trustees of the Trust as the
record date for the payment of dividends on the Series B Preferred
Shares that is not more than 30 nor less than 10 days prior to such
Dividend Payment Date (each, a "Dividend Record Date").
(b) No dividends on Series B Preferred Shares shall be declared by the
Board of Trustees of the Trust or paid or set apart for payment by the
Trust at such time as the terms and provisions of any agreement of the
Trust, including any agreement relating to its indebtedness, prohibits
such declaration, payment or setting apart for payment or provides
that such declaration, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.
(c) Notwithstanding the foregoing, dividends on the Series B Preferred
Shares shall accrue whether or not the terms and provisions set forth
in Section 3(b) hereof at any time prohibit the current payment of
dividends, whether or not the Trust has earnings, whether or not there
are funds legally available for the payment of such dividends and
whether or not such dividends are declared. Accrued but unpaid
dividends on the Series B Preferred Shares will accumulate as of the
Dividend Payment Date on which they first become payable.
(d) Except as provided in Section 3(e) below, no dividends will be
declared or paid or set apart for payment on any capital stock of the
Trust or any other series of Preferred Shares ranking, as to
dividends, on a parity with or junior to the Series B Preferred Shares
(other than a dividend in shares of the Trust's Common Shares or in
any other class of shares of beneficial interest ranking junior to the
Series B Preferred Shares as to dividends and upon liquidation) for
any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on
the Series B Preferred Shares for all past dividend periods and the
then current dividend period.
(e) When dividends are not paid in full (and a sum sufficient for such
full payment is not so set apart) upon the Series B Preferred Shares
and the shares of any other series of Preferred Shares ranking on a
parity as to dividends with the Series B Preferred Shares, all
dividends declared upon the Series B Preferred Shares and any other
series of Preferred Shares ranking on a parity as to dividends with
the Series B Preferred Shares shall be declared pro rata so that the
amount of dividends declared per share of Series B Preferred Shares
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and such other series of Preferred Shares shall in all cases bear to
each other the same ratio that accrued dividends per share on the
Series B Preferred Shares and such other series of Preferred Shares
(which shall not include any accrual in respect of unpaid dividends
for prior dividend periods if such Preferred Shares do not have a
cumulative dividend) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend
payment or payments on Series B Preferred Shares which may be in
arrears.
(f) Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series B Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for payment for all
past dividend periods and the then current dividend period, no
dividends (other than in Common Shares or other shares of beneficial
interest ranking junior to the Series B Preferred Shares as to
dividends and upon liquidation) shall be declared or paid or set aside
for payment, nor shall any other distribution be declared or made,
upon the Common Shares or any other shares of beneficial Interest of
the Trust ranking junior to or on a parity with the Series B Preferred
Shares as to dividends or upon liquidation, nor shall any Common
Shares, or any other shares of beneficial interest of the Trust
ranking junior to or on a parity with the Series B Preferred Shares as
to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any such shares) by
the Trust (except by conversion into or exchange for other shares of
beneficial interest of the Trust ranking junior to the Series B
Preferred Shares as to dividends and upon liquidation).
(g) Any dividend payment made on Series B Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due with
respect to such shares which remains payable. Holders of the Series B
Preferred Shares shall not be entitled to any dividend, whether
payable in cash, property or securities in excess of full cumulative
dividends on the Series B Preferred Shares as described above.
(4) LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Trust, the holders of Series B Preferred
Shares then outstanding are entitled to be paid out of the assets of
the Trust legally available for distribution to its stockholders a
liquidation preference of $25.00 per share, plus an amount equal to
any accrued and unpaid dividends to the date of payment, before any
distribution of assets is made to holders of Common Shares or any
other class or series of shares of beneficial interest of the Trust
that ranks junior to the Series B Preferred Shares as to liquidation
rights.
(b) In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Trust are
insufficient to pay the amount of the liquidating distributions on all
outstanding Series B Preferred Shares and the corresponding amounts
payable on all shares of other classes or series of shares of
beneficial interest of the Trust ranking on a parity with the Series B
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Preferred Shares in the distribution of assets, then the holders of
the Series B Preferred Shares and all other such classes or series of
shares of beneficial interest shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(c) After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Series B Preferred Shares will
have no right or claim to any of the remaining assets of the Trust.
(d) Written notice of any such liquidation, dissolution or winding up of
the Trust, stating the payment date or dates when, and the place or
places where, the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage pre-paid, not
less than 30 nor more than 60 days prior to the payment date stated
therein, to each record holder of the Series B Preferred Shares at the
respective addresses of such holders as the same shall appear on the
stock transfer records of the Trust.
(e) The consolidation or merger of the Trust with or into any other
corporation, trust or entity or of any other corporation with or into
the Trust, or the sale, lease or conveyance of all or substantially
all of the property or business of the Trust, shall not be deemed to
constitute a liquidation, dissolution or winding up of the Trust.
(5) REDEMPTION.
(a) RIGHT OF OPTIONAL REDEMPTION; APPLICATION OF "EXCESS SHARE" PROVISION.
The Series B Preferred Shares are not redeemable prior to November 15,
2003. However, in an effort to ensure that the Trust remains a
qualified real estate investment trust ("REIT") for federal income tax
purposes, in accordance with the Charter the Series B Preferred Shares
are, together with all other shares of beneficial interest of the
Trust, subject in all respects to the provisions of Article V of the
Charter. In addition, for so long as any Series B Preferred Shares are
outstanding, the definition of "Ownership Limit" in Article V shall be
read so that the following clause is appended to the end thereto: "and
provided, further, that so long as any Series B Preferred Shares are
outstanding, "Ownership Limit" shall also mean 9.8% of the outstanding
Series B Preferred Shares." Accordingly, pursuant to Sections 5.5.1
and 5.5.7 of the Charter, a purported Transfer (as defined in Article
V) of Series B Preferred Shares as a result of which any person would
Beneficially Own (as defined in Article V) more than 9.8% of the
outstanding Series B Preferred Shares will cause such excess to
automatically be exchanged for Excess Shares, and the Trust will have
the right to purchase such Excess Shares from the holder.
On and after November 15, 2003, the Trust, at its option and upon not
less than 30 nor more than 60 days' written notice, may redeem the
Series B Preferred Shares, in whole or in part, at any time or from
time to time, for cash at a redemption price of $25.00 per share, plus
all accrued and unpaid dividends thereon to the date fixed for
redemption (except as provided in Section 5(c) below), without
interest. If less than all of the outstanding Series B Preferred
Shares is to be redeemed, the Series B Preferred Shares to be redeemed
shall be selected pro rata (as nearly as may be practicable without
creating fractional shares) or by any other equitable method
determined by the Trust.
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(b) LIMITATIONS ON REDEMPTION.
(i) The redemption price of the Series B Preferred Shares (other than
the portion thereof consisting of accrued and unpaid dividends)
is payable solely out of the sale proceeds of other capital stock
of the Trust, which may include other series of Preferred Shares,
and from no other source. For purposes of the preceding sentence,
"capital stock" means any shares of beneficial interest of the
Trust (including Common Shares and Preferred Shares), or any
other interest, participation or other ownership interests
(however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or
options to purchase any of the foregoing.
(ii) Unless full cumulative dividends on all Series B Preferred Shares
shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart
for payment for all past dividend periods and the then current
dividend period, no Series B Preferred Shares shall be redeemed
unless all outstanding Series B Preferred Shares are
simultaneously redeemed, and the Trust shall not purchase or
otherwise acquire directly or indirectly any Series B Preferred
Shares (except by exchange for shares of beneficial interest of
the Trust ranking junior to the Series B Preferred Shares as to
dividends and upon liquidation); provided, however, that the
foregoing shall not prevent the purchase by the Trust of Excess
Shares in order to ensure that the Trust remains qualified as a
REIT for federal income tax purposes or the purchase or
acquisition of Series B Preferred Shares pursuant to a purchase
or exchange offer made on the same terms to holders of all
outstanding Series B Preferred Shares.
(c) PAYMENT OF DIVIDENDS IN CONNECTION WITH REDEMPTION. Immediately prior
to any redemption of Series B Preferred Shares, the Trust shall pay,
in cash, any accumulated and unpaid dividends through the redemption
date, unless a redemption date falls after a Dividend Record Date and
prior to the corresponding Dividend Payment Date, in which case each
holder of Series B Preferred Shares at the close of business on such
Dividend Record Date shall be entitled to the dividend payable on such
shares on the corresponding Dividend Payment Date notwithstanding the
redemption of such shares before such Dividend Payment Date. Except as
provided above, the Trust will make no payment or allowance for unpaid
dividends, whether or not in arrears, on Series B Preferred Shares
which are redeemed.
(d) PROCEDURES FOR REDEMPTION.
(i) Notice of redemption will be (A) given by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the
redemption date, and (B) mailed by the Trust, postage prepaid,
not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series
B Preferred Shares to be redeemed at their respective addresses
as they appear on the stock transfer records of the Trust. No
failure to give such notice or any defect thereto or in the
mailing thereof shall affect the validity of the proceedings for
the redemption of any shares of Series B Preferred Shares except
as to the holder to whom notice was defective or not given.
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(ii) In addition to any information required by law or by the
applicable rules of any exchange upon which Series B Preferred
Shares may be listed or admitted to trading, such notice shall
state: (A) the redemption date; (B) the redemption price; (C) the
number of shares of Series B Preferred Shares to be redeemed; (D)
the place or places where the Series B Preferred Shares are to be
surrendered for payment of the redemption price; and (E) that
dividends on the shares to be redeemed will cease to accrue on
such redemption date. If less than all of the Series B Preferred
Shares held by any holder are to be redeemed, the notice mailed
to such holder shall also specify the number of Series B
Preferred Shares held by such holder to be redeemed.
(iii)If notice of redemption of any Series B Preferred Shares has been
given and if the funds necessary for such redemption have been
set aside by the Trust in trust for the benefit of the holders of
any Series B Preferred Shares so called for redemption, then from
and after the redemption date dividends will cease to accrue on
such Series B Preferred Shares, such Series B Preferred Shares
shall no longer be deemed outstanding and all rights of the
holders of such shares will terminate, except the right to
receive the redemption price. Holders of Series B Preferred
Shares to be redeemed shall surrender such Series B Preferred
Shares at the place designated in such notice and, upon surrender
in accordance with said notice of the certificates for Series B
Preferred Shares so redeemed (properly endorsed or assigned for
transfer, if the Trust shall so require and the notice shall so
state), such Series B Preferred Shares shall be redeemed by the
Trust at the redemption price plus any accrued and unpaid
dividends payable upon such redemption. In case less than all the
Series B Preferred Shares represented by any such certificate are
redeemed, a new certificate or certificates shall be issued
representing the unredeemed Series B Preferred Shares without
cost to the holder thereof.
(iv) The deposit of funds with a bank or trust corporation for the
purpose of redeeming Series B Preferred Shares shall be
irrevocable except that:
(A) the Trust shall be entitled to receive from such bank or
trust corporation the interest or other earnings, if any,
earned on any money so deposited in trust, and the holders
of any shares redeemed shall have no claim to such interest
or other earnings; and
(B) any balance of monies so deposited by the Trust and
unclaimed by the holders of the Series B Preferred Shares
entitled thereto at the expiration of two years from the
applicable redemption dates shall be repaid, together with
any interest or other earnings thereon, to the Trust, and
after any such repayment, the holders of the shares entitled
to the funds so repaid to the Trust shall look only to the
Trust for payment without interest or other earnings.
(e) EXCESS SHARE PROVISIONS. The Series B Preferred Shares are subject to
the provisions of Article V of the Charter, including, without
limitation, the provision for the redemption of Excess Shares. In
addition to the redemption rights set forth in Article V of the
Charter, Excess Shares issued upon exchange of Series B Preferred
Shares pursuant to such Article may be redeemed, in whole or in part,
at any time when outstanding Series B Preferred Shares are being
redeemed, for cash at a redemption price of $25.00 per share, plus all
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accrued and unpaid dividends on the Series APreferred Shares, which
were exchanged for such Excess Shares, through the date of such
exchange, without interest. If the Trust elects to redeem Excess
Shares pursuant to the redemption right set forth in the preceding
sentence, such Excess Shares shall be redeemed in such proportion and
in accordance with such procedures as Series B Preferred Shares are
being redeemed.
(f) STATUS OF REDEEMED SHARES. Any Series B Preferred Shares that shall at
any time have been redeemed shall, after such redemption, have the
status of authorized but unissued Preferred Shares, without
designation as to series until such shares are thereafter designated
as part of a particular series by the Board of Trustees.
(6) VOTING RIGHTS.
(a) Holders of the Series B Preferred Shares will not have any voting
rights, except as set forth below or as otherwise from time to time
required by law.
(b) Whenever dividends on any Series B Preferred Shares shall be in
arrears for six or more quarterly periods (a "Preferred Dividend
Default"), the holders of such Series B Preferred Shares (voting
separately as a class with the holders of all other series of
Preferred Shares ranking on a parity with the Series B Preferred
Shares as to dividends or upon liquidation ("Parity Preferred") upon
which like voting rights have been conferred and are exercisable) will
be entitled to vote for the election of a total of two trustees of the
Trust (the "Preferred Share Trustees") at a special meeting called by
the holders of record of at least 20% of the Series B Preferred Shares
or the holders of any other series of Parity Preferred so in arrears
(unless such request is received less than 90 days before the date
fixed for the next annual or special meeting of shareholders) or at
the next annual meeting of shareholders, and at each subsequent annual
meeting until all dividends accumulated on such Series B Preferred
Shares for the past dividend periods and the dividend for the then
current dividend period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment.
(c) If and when all accumulated dividends and the dividend for the then
current dividend period on the Series B Preferred Shares shall have
been paid in full or set aside for payment in full, the holders of
Series B Preferred Shares shall be divested of the voting rights set
forth in Section 6(b) hereof (subject to revesting in the event of
each and every Preferred Dividend Default) and, if all accumulated
dividends and the dividend for the current dividend period have been
paid in full or set aside for payment in full on all other series of
Parity Preferred upon which like voting rights have been conferred and
are exercisable, the term of office of each Preferred Share Trustee so
elected shall terminate. Any Preferred Share Trustee may be removed at
any time with or without cause by the vote of, and shall not be
removed otherwise than by the vote of, the holders of record of a
majority of the outstanding Series B Preferred Shares when they have
the voting rights set forth in Section 6(b) (voting separately as a
class with all other series of Parity Preferred upon which like voting
rights have been conferred and are exercisable). So long as a
Preferred Dividend Default shall continue, any vacancy in the office
of a Preferred Share Trustee may be filled by written consent of the
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Preferred Share Trustee remaining in office, or if none remains in
office, by a vote of the holders of record of a majority of the
outstanding Series B Preferred Shares when they have the voting rights
set forth in Section 6(b) (voting separately as a class with all other
series of Parity Preferred upon which like voting rights have been
conferred and are exercisable). The Preferred Share Trustees shall
each be entitled to one vote per trustee on any matter.
(d) So long as any Series B Preferred Shares remain outstanding, the Trust
shall not, without the affirmative vote of the holders of at least
two-thirds of the Series B Preferred Shares outstanding at the time,
given in person or by proxy, either in writing or at a meeting (voting
separately as a class), (i) authorize or create, or increase the
authorized or issued amount of, any class or series of shares of
beneficial interest ranking senior to the Series B Preferred Shares
with respect to payment of dividends or the distribution of assets
upon liquidation, dissolution or winding up or reclassify any
authorized shares of beneficial interest of the Trust into any such
shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares
or (ii) amend, alter or repeal the provisions of the Charter, whether
by merger, consolidation or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of
the Series B Preferred Shares or the holders thereof; provided,
however, that with respect to the occurrence of any event set forth in
(ii) above, so long as the Series B Preferred Shares remain
outstanding with the terms thereof materially unchanged or, if the
Trust is not the surviving entity in such transaction, are exchanged
for a security of the surviving entity with terms that are materially
the same as the Series B Preferred Shares, the occurrence of any such
event shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers of the holders of the
Series B Preferred Shares and; provided, further, that (i) any
increase in the amount of the authorized Preferred Shares or the
creation or issuance of any other series of Preferred Shares, or any
increase in the amount of authorized shares of such series, in each
case ranking on a parity with or junior to the Series B Preferred
Shares with respect to payment of dividends or the distribution of
assets upon liquidation, dissolution or winding up, shall not be
deemed to materially and adversely affect such rights, preferences,
privileges or voting powers and (ii) any amendment to Article V of the
Charter relating to Excess Shares, the Ownership Limit or any other
matter described therein of any type or nature shall in no event be
deemed to materially and adversely affect such rights, preferences,
privileges or voting powers so long as after such amendment any single
holder may "beneficially own" (as defined in Article V prior to or
after such amendment) 9.8% of the outstanding Series B Preferred
Shares and 9.8% of any other class or series of shares of beneficial
interest without violating the Ownership Limit.
(e) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be
required to be effected, all outstanding Series B Preferred Shares
shall have been redeemed or called for redemption upon proper notice
and sufficient funds shall have been deposited in trust to effect such
redemption.
(7) CONVERSION. The Series B Preferred Shares are not convertible into or
exchangeable for any other property or securities of the Trust, except that the
Series B Preferred Shares will automatically be exchanged by the Trust for
Excess Shares, in accordance with Article V of the Charter in the same manner
<PAGE>
that Common Shares are exchanged for Excess Shares pursuant thereto, in order to
ensure that the Trust remains qualified as a REIT for federal income tax
purposes.
THIRD: These Articles Supplementary shall be effective at the time the State
Department of Assessments and Taxation of Maryland accepts these Articles
Supplementary for record.
<PAGE>
IN WITNESS WHEREOF, GABLES RESIDENTIAL TRUST has caused these presents to
be signed in its name and on its behalf by its Chairman and Chief Executive
Officer on November 12, 1998.
GABLES RESIDENTIAL TRUST
By: /s/ Marcus E. Bromley
-------------------------
Marcus E. Bromley
Trustee, Chairman of the Board and
Chief Executive Officer
THE UNDERSIGNED, as Trustee, Chairman of the Board and Chief Executive
Officer of Gables Residential Trust, who executed on behalf of the Trust the
Articles Supplementary of which this Certificate is made a part, hereby
acknowledges in the name and on behalf of said Trust the foregoing Articles
Supplementary to be the act of said Trust by resolution adopted by a majority of
the Trust's trustees 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/ Marcus E. Bromley
----------------------------
Marcus E. Bromley
Trustee, Chairman of the Board and
Chief Executive Officer
FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GABLES REALTY LIMITED PARTNERSHIP
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF GABLES
REALTY LIMITED PARTNERSHIP ("Agreement"), dated as of November 12, 1998, is
entered into by and among Gables GP, Inc. ("GGPI"), a Texas corporation, as the
General Partner and the Persons whose names are set forth on Exhibit A as
attached hereto, as the Limited Partners, together with any other Persons who
become Partners in the Partnership as provided herein.
WHEREAS, the partnership was organized on October 15, 1993 by Arbor Properties,
Inc., as general partner and Marcus E. Bromley as organizational limited
partner;
WHEREAS, by amendment dated January 19, 1994, Arbor Properties, Inc. withdrew
from the Partnership and GGPI was admitted as a successor general partner;
WHEREAS, by amendment dated January 26, 1994, the Limited Partners made certain
contributions to the capital of the Partnership;
WHEREAS, by amendment dated July 24, 1997, the General Partner, pursuant to and
in accordance with Section 4.2.A, caused the Partnership to issue additional
Partnership Interests (the "Series A Preferred Units") in connection with the
offering by Gables Trust of shares of its 8.30% Series A Cumulative Redeemable
Preferred Shares ("Gables Trust Series A Preferred Shares");
WHEREAS, by amendment dated June 18, 1998, the General Partner, pursuant to and
in accordance with Section 4.2.A, caused the Partnership to issue additional
Partnership Interests (the "Series Z Preferred Units") in connection with the
issuance by Gables Trust of shares of its 5.00% Series Z Cumulative Redeemable
Preferred Shares ("Gables Trust Series Z Preferred Shares");
WHEREAS, the General Partner is, pursuant to and in accordance with Section
4.2.A., causing the Partnership to issue additional Partnership Interests (the
"Series B Preferred Units") in connection with a capital contribution by Greene
Street 1998 Exchange Fund, L.P. (the "Series B Contributor") of $25.00 per
Series B Preferred Unit paid in cash; the rights and preferences of the Series B
Preferred Units, to the extent not set forth in this Agreement, are set forth in
Exhibit F hereto;
<PAGE>
2
WHEREAS, the Series B Preferred Units are exchangeable for shares of Gables
Trust's 8.625% Series B Cumulative Redeemable Preferred Shares ("Gables Trust
Series B Preferred Shares") in the circumstances and in accordance with the
procedure set forth in Exhibit F hereto;
NOW THEREFORE, in consideration of the mutual covenants herein contained, and
other valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in this Agreement.
"ACT" means the Delaware Revised Uniform Limited Partnership Act, as it may be
amended from time to time, and any successor to such statute.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the Partnership as a
Limited Partner pursuant to Section 4.2 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 taxable 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 taxable year.
"ADJUSTED PROPERTY" means any property the Carrying Value of which has been
adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is deemed
distributed by, and recontributed to, the Partnership for federal income tax
purposes upon a termination thereof pursuant to Section 708 of the Code, such
property shall thereafter constitute a Contributed Property until the Carrying
Value of such property is further adjusted pursuant to Exhibit B hereof.
<PAGE>
3
"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 of any
Person referred to in clauses (i), (ii), and (iii) above.
"AGREED VALUE" means (i) in the case of any Contributed Property set forth in
Exhibit D and as of the time of its contribution to the Partnership, the Agreed
Value of such property as set forth in Exhibit D; (ii) in the case of any
Contributed Property not set forth in Exhibit D and as of the time of its
contribution to the Partnership, the 704(c) Value of such property, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed, and (iii) in the case of any
property distributed to a Partner by the Partnership, the Partnership's Carrying
Value of such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the Regulations thereunder.
"AGREEMENT" means this 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, (i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may be) for such
period (without regard to adjustments resulting from allocations
described in Sections 1.A through 1.E of Exhibit C);
(b) Depreciation and all other noncash charges deducted in determining Net
Income or Net Loss for such period;
(c) the amount of any reduction in the reserves of the Partnership
referred to in clause (ii) (f) below (including, without limitation,
reductions resulting because the General Partner determines such
amounts are no longer necessary);
(d) the excess of proceeds from the sale, exchange, disposition, or
refinancing of Partnership property for such period over the gain
recognized from such sale, exchange, disposition, or refinancing
during such period (excluding Terminating Capital Transactions); and
<PAGE>
4
(e) all other cash received by the Partnership for such period that was
not included in determining Net Income or Net Loss for such period;
(ii) less the sum of:
(a) all principal debt payments made by the Partnership during such
period;
(b) capital expenditures made by the Partnership during such period;
(c) investments made by the Partnership during such period in any entity
(including loans made thereto) to the extent that such investments are
not otherwise described in clause (ii)(a) or (ii)(b);
(d) all other expenditures and payments not deducted in determining Net
Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss for such
period that was not received by the Partnership during such period;
(f) the amount of any increase in reserves during such period which the
General Partner determines to be necessary or appropriate in its sole
and absolute discretion; and
(g) the amount of any working capital accounts and other cash or similar
balances which the General Partner determines to be necessary or
appropriate, in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.
"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.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
close.
<PAGE>
5
"CAPITAL ACCOUNT" means the Capital Account maintained for a Partner pursuant to
Exhibit B hereof.
"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, 4.2, or 4.3 hereof.
"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 Property charged to the Partners' Capital
Accounts following the contribution of or adjustment with respect to such
Property, 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 hereof, and to reflect changes, additions 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 per Partnership Unit equal to the Value on
the Valuation Date of the REIT 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.
"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 hereof.
"CONTRIBUTED PROPERTY" means each property or other asset, in such form as may
be permitted by the Act, but excluding cash, contributed or deemed contributed
to the Partnership (including deemed contributions to the Partnership on
termination and reconstitution thereof pursuant to Section 708 of the Code).
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B hereof, such property shall no longer constitute a Contributed
Property for purposes of Exhibit B hereof, but shall be deemed an Adjusted
Property for such purposes.
"CONVERSION FACTOR" means 1.0, provided that in the event that the Gables Trust
(i) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or
makes a distribution to all holders of its outstanding REIT Share in REIT
<PAGE>
6
Shares; (ii) subdivides its outstanding REIT Shares; or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
assuming for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time, and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event.
"DECLARATION OF TRUST" means the Declaration of Trust of Gables Residential
Trust (formerly Gables Properties Trust) filed in the State of Maryland on
October 13, 1993, as amended or restated from time to time.
"DEPRECIATION" means, for each taxable 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.
"EFFECTIVE DATE" means the date of closing of the initial public offering of
REIT Shares pursuant to that certain purchase agreement among the Gables Trust,
the General Partner and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Dean
Witter Reynolds Inc. and The Robinson-Humphrey Company, Inc., as representatives
of the underwriters.
"GABLES TRUST" means Gables Residential Trust, a Maryland real estate investment
trust.
"GENERAL PARTNER" means Gables GP, Inc., in its capacity as the general partner
of the Partnership, or its successors as general partner of the Partnership.
"GENERAL PARTNER INTEREST" means a Partnership Interest held by the General
Partner that is a general partnership interest. A General Partner Interest may
be expressed as a number of Partnership Units.
"IRS" means the Internal Revenue Service, which administers the internal revenue
laws of the United States.
<PAGE>
7
"IMMEDIATE FAMILY" means, with respect to any natural Person, such natural
Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.
"INCAPACITY" or "INCAPACITATED" means, (i) as to any individual Partner, death,
total physical disability or entry by a court of competent jurisdiction
adjudicating him incompetent to manage his Person or his estate; (ii) as to any
corporation which is a Partner, the filing of a certificate of dissolution, or
its equivalent, for the corporation or the revocation of its charter; (iii) as
to any partnership which is a Partner, the dissolution and commencement of
winding up of the partnership; (iv) as to any estate which is a Partner, the
distribution by the fiduciary of the estate's entire interest in the
Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi) as
to any Partner, the bankruptcy of such Partner. For purposes of this definition,
bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner
commences a voluntary proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) which has been
stayed 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
(A) his status as the General Partner, or the sole shareholder of the General
Partner (i.e., the Gables Trust), or a director or officer of the Partnership,
the General Partner or the Gables Trust, or (B) his or its liabilities, pursuant
to a loan guarantee 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
assets subject to), and (ii) such other Persons (including Affiliates of the
General Partner or the Partnership) as the General Partner may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
"LIMITED PARTNER" means the Gables Trust and any other Person named as a Limited
Partner in Exhibit A attached hereto, as such Exhibit may be amended from time
to time, or any Substituted Limited Partner or Additional Limited Partner, in
such Person's capacity as a Limited Partner in the Partnership.
<PAGE>
8
"LIMITED PARTNER INTEREST" means a Partnership Interest of a Limited Partner in
the Partnership representing a fractional part of the Partnership Interests of
all Partners and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. A Limited Partner Interest may be expressed as a number of
Partnership Units, including Preferred Units.
"LIQUIDATING EVENT" has the meaning set forth in Section 13.1.
"LIQUIDATOR" has the meaning set forth in Section 13.2.
"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
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"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
federal income tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
"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
taxable year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations Section
1.752-1(a)(2).
"NOTICE OF REDEMPTION" means the Notice of Redemption substantially in the form
of Exhibit E to this Agreement.
"ORGANIZATIONAL LIMITED PARTNER" means Marcus E. Bromley.
<PAGE>
9
"OWNERSHIP INTEREST" means the stock and securities (including any evidence of
indebtedness) of the General Partner at any time owned or held by the Gables
Trust.
"PARTNER" means a General Partner or a Limited Partner, and "Partners" means the
General Partner and the Limited Partners collectively.
"PARTNER MINIMUM GAIN" means an amount, with respect to each Partner Nonrecourse
Debt, equal to the Partnership Minimum Gain that would result if such Partner
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Regulations Section
1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Partnership taxable year shall be
determined in accordance with the rules of Regulations Section 1.704-2(i)(2).
"PARTNERSHIP" means the limited partnership formed under the Act and pursuant to
the Prior Agreement, as amended and restated pursuant to this Agreement, and any
successor thereto.
"PARTNERSHIP INTEREST" means an ownership interest in the Partnership (i)
representing a Capital Contribution by either a Limited Partner or the General
Partner or (ii) issued in exchange for the provision of services to the
Partnership, and includes, in either case, any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units, including Preferred 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 a Partnership Minimum Gain, for a Partnership taxable
year shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"PARTNERSHIP RECORD DATE" means the record date established by the General
Partner for the distribution of Available Cash pursuant to Section 5.1 hereof,
which record date shall be the same as the record date established by the Gables
Trust for a distribution to its shareholders of some or all of its portion of
such distribution.
"PARTNERSHIP UNIT" means a fractional, undivided share of the Partnership
Interests of all Partners issued pursuant to Sections 4.1, 4.2 and 4.3. The
<PAGE>
10
number of Partnership Units outstanding and the Percentage Interest in the
Partnership represented by such Units are set forth in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The ownership of
Partnership Units shall be evidenced by such form of certificate for units as
the General Partner adopts from time to time unless the General Partner
determines that the Partnership Units shall be uncertificated securities.
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which shall be the
calendar year.
"PERCENTAGE INTEREST" means, as to a Partner, its interest in the Partnership as
determined by dividing the Partnership Units (other than Preferred Units) owned
by such Partner by the total number of Partnership Units (other than Preferred
Units) then outstanding and as specified in Exhibit A attached hereto, as such
Exhibit may be amended from time to time.
"PERSON" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.
"PREFERRED UNITS" means the Series A Preferred Units, the Series B Preferred
Units and the Series Z Preferred Units.
"PRIOR AGREEMENT" means the Agreement of Limited Partnership of Gables Realty
Limited Partnership, dated as of October 15, 1993 between Arbor Properties,
Inc., as the sole general partner, and the Organizational Limited Partner, as
the sole limited partner, as amended on January 19, 1994, which Prior Agreement
is amended and restated in its entirety by this Agreement as of the Effective
Date.
"RECAPTURE INCOME" means any gain recognized by the Partnership upon the
disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"REDEEMING PARTNER" has the meaning set forth in Section 8.6 hereof.
"REDEMPTION RIGHT" shall have the meaning set forth in Section 8.6 hereof.
"REGULATIONS" means the Income Tax Regulations promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the Code.
<PAGE>
11
"REIT SHARE" shall mean a common share of beneficial interest, par value $.01,
in the Gables Trust.
"REIT SHARES AMOUNT" shall mean a number of REIT Shares equal to the product of
the number of Partnership Units offered for redemption by a Redeeming Partner,
multiplied by the Conversion Factor, provided that in the event the Gables Trust
issues to all holders of REIT Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or purchase
REIT Shares, or any other securities or property (collectively, the "rights"),
then the REIT Shares Amount shall also include such rights that a holder of that
number of REIT Shares would be entitled to receive.
"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.
"704(C) VALUE" of any Contributed Property means the value of such property as
set forth in Exhibit D or if no value is set forth in Exhibit D, the fair market
value of such property or other consideration at the time of contribution as
determined by the General Partner using such reasonable method of valuation as
it may adopt; provided, however, that the 704(c) Value of any property deemed
contributed to the Partnership for federal income tax purposes upon termination
and reconstitution thereof pursuant to Section 708 of the Code shall be
determined in accordance with Exhibit B hereof. Subject to Exhibit B hereof, 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)
Values of Contributed Properties in a single or integrated transaction among the
separate properties on a basis proportional to their respective fair market
values.
"SERIES A LIQUIDATION PREFERENCE" shall have the meaning set forth in Section
13.2.
"SERIES A PREFERRED UNIT PRIORITY DISTRIBUTION" means the aggregate
distributions payable with respect to the Series A Preferred Units for a current
quarter or other distribution period (or portion thereof), as provided in the
Articles Supplementary to the Company's Declaration of Trust creating the Series
A Preferred Shares, plus the sum of all accumulated, accrued and unpaid
distributions for prior quarters or other distribution periods.
"SERIES A PREFERRED UNITS" means the Partnership Units issued to the Gables
Trust and the General Partner on July 24, 1997 in connection with the issuance
of 8.30% Series A Cumulative Redeemable Preferred Shares by the Gables Trust and
the contribution of the net proceeds therefrom to the Partnership, which
Partnership Units have the rights, preferences and privileges designated herein.
The number of Series A Preferred Units issued to the Gables Trust and the
General Partner is set forth on Exhibit A attached hereto.
<PAGE>
12
"SERIES B LIQUIDATION PREFERENCE" shall have the meaning set forth in Section
13.2.
"SERIES B PREFERRED UNITS" means the Partnership Units issued to Greene Street
1998 Exchange Fund, L.P. on November 12, 1998 in connection with its capital
contribution to the Partnership of $25.00 per Series B Preferred Unit, which
Partnership Units have the rights, preferences and privileges designated herein
and in Exhibit F hereto, which is hereby incorporated herein with the same force
and effect as if set forth herein in its entirety. The number of Series B
Preferred Units issued to Greene Street 1998 Exchange Fund, L.P. is set forth on
Exhibit A attached hereto.
"SERIES B PREFERRED UNITS PRIORITY DISTRIBUTION" means the aggregate
distributions payable with respect to the Series B Preferred Units for a current
quarter or other distribution period (or portion thereof), as provided in
Section 3.A of Exhibit F attached hereto, plus the sum of all accumulated,
accrued and unpaid distributions for prior quarters or other distribution
periods.
"SERIES Z PREFERRED UNITS" means the Partnership Units issued to the Gables
Trust and the General Partner on June 18, 1998 in connection with the issuance
of 5.00% Series Z Cumulative Redeemable Preferred Shares by the Gables Trust and
the contribution of the net proceeds therefrom to the Partnership, which
Partnership Units have the rights, preferences and privileges designated herein.
The number of Series Z Preferred Units issued to the Gables Trust and the
General Partner is set forth on Exhibit A attached hereto.
"SPECIFIED REDEMPTION DATE" means the tenth (10th) Business Day after receipt by
the General Partner of a Notice of Redemption; provided that no Specified
Redemption Date shall occur before one (1) year from January 26, 1994, provided
further that if the Gables Trust combines its outstanding REIT Shares, no
Specified Redemption Date shall occur after the record date of such combination
of REIT Shares and prior to the effective date of such combination.
"SUBSIDIARY" means, with respect to any Person, any corporation, partnership or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owed, 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.
"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition of all or
substantially all of the assets of the Partnership or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Partnership.
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13
"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 hereof) as of such date, over
(ii) the Carrying Value of such property (prior to any adjustment to be made
pursuant to Exhibit B hereof) 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 hereof) as of
such date, over (ii) the fair market value of such property (as determined under
Exhibit B hereof) 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 a REIT Share, the average of the daily market
price for the ten (10) consecutive trading days immediately preceding the
Valuation Date. The market price for each such trading day shall be: (i) if the
REIT Shares are listed or admitted to trading on any securities exchange or the
NASDAQ-National Market System, the closing price, regular way, on such day, or
if no such sale takes place on such day, the average of the closing bid and
asked prices on such day; (ii) if the REIT Shares are not listed or admitted to
trading on any securities exchange or the NASDAQ-National Market System, the
last reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the General Partner; or (iii) if the
REIT Shares are not listed or admitted to trading on any securities exchange or
the NASDAQ-National Market System and no such last reported sale price or
closing bid and asked prices are available, the average of the reported high bid
and low asked prices on such day, as reported by a reliable quotation source
designated by the General Partner, or if there shall be no bid and asked prices
on such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported; provided that if there are no
bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount includes rights that a holder of REIT 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.
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14
ARTICLE 2
ORGANIZATIONAL MATTERS
SECTION 2.1 ORGANIZATION AND CONTINUATION
The Partnership is a limited partnership organized by GGPI (as successor general
partner to Arbor Properties, Inc.) and the Organizational Limited Partner
pursuant to the provisions of the Act and upon the terms and conditions set
forth in the Prior Agreement. The Partners hereby continue the Partnership and
amend and restate the Prior Agreement in its entirety as of the Effective Date.
Immediately following the admission of one or more Limited Partners to the
Partnership on the Effective Date, the Organizational Limited Partner shall
withdraw from the Partnership and release and relinquish any and all rights,
interest, and claims he may have in and to the Partnership; provided, however,
that the Organizational Limited Partner shall be admitted as a Limited Partner
pursuant to the terms hereof, with all the rights and interests thereof. 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 shall be Gables Realty Limited Partnership. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "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
and the name and address of the registered agent for service of process on the
Partnership in the State of Delaware is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The
principal office of the Partnership shall be 2859 Paces Ferry Road, Overlook
III, Suite 1400, Atlanta, Georgia 30339, 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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15
SECTION 2.4 POWER OF ATTORNEY
A. Each Limited Partner and each Assignee hereby constitutes and appoints
the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in the
appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the
Certificate and all amendments or restatement thereof) that the
General Partner or the Liquidator deems appropriate or necessary to
form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the
limited Partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may or plans to
conduct business or own property; (b) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement in accordance
with its terms; (c) all conveyances and other instruments or documents
that the General Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article 11, 12 or
13 hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership
Interest; and
(2) execute, swear to, seal, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner
or any Liquidator, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of
this agreement or appropriate or necessary, in the sole discretion of
the General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
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16
B. The foregoing power of attorney is hereby declared to be irrevocable and
a power coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner and any
Liquidator to act as contemplated by this agreement in any filing or other
action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney, and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, 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 2.5 TERM
The term of the Partnership commenced on October 15, 1993, the date the
Certificate was filed in the office of the Secretary of State of Delaware in
accordance with the Act and shall continue until December 31, 2092, unless, the
Partnership is dissolved sooner pursuant to the provisions of Article 13 or as
otherwise provided by law.
ARTICLE 3
PURPOSE
SECTION 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the Partnership is
(i) to conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act, provided, however, that such business
shall be limited to and conducted in such a manner as to permit the Gables Trust
at all times to be classified as a REIT, unless the Gables Trust ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged in any of the foregoing, and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting the Gables Trust's right, in its sole discretion, to cease qualifying
as a REIT, the Partners acknowledge the Gables Trust's current status as a REIT
inures to the benefit of all of the Partners and not solely the General Partner.
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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, provided 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 Gables Trust to continue to qualify as a REIT, (ii) could
subject the Gables Trust to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over the Gables Trust or the
General Partner or either of their securities, unless such action (or inaction)
shall have been specifically consented to by the General Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
SECTION 4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
At the time of the execution of this agreement, the Partners shall make Capital
Contributions set forth in Exhibit A to this Agreement. At the request of the
General Partner, certain Capital Contributions may be made by way of transfers
to Gables-Tennessee Properties, a Tennessee general partnership that is 99%
owned by the Partnership (the "Tennessee Partnership"). 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 as amended to reflect such deemed
Capital Contributions. The Partners shall own Partnership Units in the amounts
set forth for such Partner in Exhibit A and shall have a Percentage Interest in
the Partnership as set forth Exhibit A, which Percentage Interest shall be
adjusted in Exhibit A from time to time by the General Partner to the extent
necessary to reflect accurately redemptions, Capital Contributions, the issuance
of additional Partnership Units (pursuant to any merger or otherwise), or
similar events having an effect on any Partner's Percentage Interest. The number
of Partnership Units held by the General Partner (equal to one percent (1%) of
all outstanding Partnership Units from time to time) shall be deemed to be the
General Partner Interest. Except as provided in Sections 4.2 and 10.5, the
Partners shall have no obligation to make any additional Capital Contributions
or loans to the Partnership.
SECTION 4.2 ISSUANCES OF ADDITIONAL PARTNERSHIP INTERESTS
A. The General Partner is hereby authorized to cause the Partnership from
time to time to issue to the Partners (including the General Partner) or other
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18
Persons additional Partnership Units or other Partnership Interests in one or
more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partner Interests, all as shall be determined by the General Partner in its sole
and absolute discretion subject to Delaware law, 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 additional Partnership Units or other Partnership Interests shall be issued
to the Gables Trust or the General Partner unless either (a)(1) the additional
Partnership Interests are issued in connection with an issuance of REIT Shares
or other shares by the Gables Trust, which shares have designations, preferences
and other rights such that the economic interests attributable to such shares
are substantially similar to the designations, preferences and other rights of
the additional Partnership Interests issued to the Gables Trust or the General
Partner in accordance with this Section 4.2.A, and (2) either (x) the Gables
Trust shall make a Capital Contribution to the Partnership in an amount equal to
the proceeds raised in connection with such issuance or (y) the Gables Trust
shall transfer to the General Partner, by loan or contribution, an amount equal
to the proceeds raised in connection with the issuance of such shares of the
Gables Trust and, in turn, the General Partner shall make a Capital Contribution
to the Partnership in an amount equal to the amount transferred to it by the
Gables Trust or (z) through a combination of (x) and (y) above a Capital
Contribution equal to the proceeds raised in connection with the issuance of
such shares is made to the Partnership, or (b) the additional Partnership
Interests are issued to all Partners in proportion to their respective
Percentage Interests.
B. After the initial public offering of REIT Shares, the Gables Trust shall
not issue any additional REIT Shares (other than REIT Shares issued pursuant to
Section 8.6), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares
(collectively "New Securities") other than to all holders of REIT Shares unless
(i) the General Partner shall cause the Partnership to issue to the Gables Trust
or 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 similar to those of the New Securities, and (ii) either (a) the
Gables Trust contributes to the Partnership the proceeds from the issuance of
such New Securities and from the exercise of rights contained in such New
Securities or (b) the Gables Trust transfers to the General Partner, by loan or
contribution, the proceeds from the issuance of such New Securities and from the
exercise of rights contained in such New Securities and the General Partner, in
turn, contributes the amount so transferred to it to the Partnership, or
(c) through a combination of (a) and (b) above a Capital Contribution equal to
the proceeds raised in connection with the issuance of such New Securities and
from the exercise of rights contained in such New Securities is made to the
Partnership. Without limiting the foregoing, the Gables Trust is expressly
authorized to issue New Securities for less than fair market value, and the
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19
General Partner is expressly authorized to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance is in the interests of the
General Partner and the Partnership (for example, and not by way of limitation,
the issuance of REIT Shares and corresponding Units pursuant to an employee
stock purchase plan providing for employee purchases of REIT Shares at a
discount from fair market value or employee stock options that have an exercise
price that is less than the fair market value of the REIT Shares, either at the
time of issuance or at the time of exercise), and (y) the Gables Trust
contributes all proceeds from such issuance and exercise to the Partnership or
transfers all proceeds from such issuance and exercise to the General Partner,
whether by loan or contribution, and the General Partner, in turn, contributes
the amount so transferred to it to the Partnership.
SECTION 4.3 CONTRIBUTION OF PROCEEDS OF ISSUANCE OF REIT SHARES
In connection with the initial public offering of REIT Shares by the Gables
Trust and any other issuance of REIT Shares or New Securities pursuant to
Section 4.2, the Gables Trust shall contribute to the Partnership any proceeds
(or a portion thereof) raised in connection with such issuance or shall transfer
to the General Partner any proceeds (or a portion thereof) raised in connection
with such issuance, by loan or capital contribution, and the General Partner
shall contribute the amount so transferred to it to the Partnership; provided
that if the proceeds actually received by the Gables Trust or the General
Partner are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the Gables Trust and the General Partner shall be deemed to
have made a Capital Contribution to the Partnership in the amount equal to the
sum of the net proceeds of such issuance plus the amount of such underwriter's
discount and other expenses paid by the Gables Trust or the General Partner.
SECTION 4.4 NO PREEMPTIVE RIGHTS
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.
ARTICLE 5
DISTRIBUTIONS
SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
(a) The General Partner shall distribute at least quarterly an amount
equal to 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
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(i) first, to the General Partner and the Gables Trust (in
proportion to the number of Series A Preferred Units owned
by each) and the holders of the Series B Preferred Units (in
proportion to the number Series B Preferred Units owned by
each) an amount equal to the sum of the Series A Preferred
Unit Priority Distribution and the Series B Preferred Unit
Priority Distribution, provided however, in the event that
Available Cash is less than the aggregate amount
distributable to the holders of the Series A Preferred Units
and the Series B Preferred Units pursuant to the foregoing
provision of this Section 5.1(a)(i), distributions shall be
made to the holders of the Series A Preferred Units (as a
class) and the holders of the Series B Preferred Units (as a
class) pro rata, in the ratio which the Series A Preferred
Unit Priority Distribution bears to the Series B Preferred
Unit Priority Distribution, and within each such class, pro
rata, in proportion to the Series A Preferred Units or
Series B Preferred Units, as the case may be, held by each
such holder;
(ii) second, to the General Partner and the Gables Trust (in
proportion to the number of Series Z Preferred Units owned
by each) an amount that in the aggregate equals the
aggregate amount of the dividends declared and payable with
respect to the Gables Trust Series Z Preferred Shares for
such quarter or shorter period; and
(iii)third, to the Partners in accordance with their respective
Percentage Interests on such Partnership Record Date;
PROVIDED THAT in no event may a Partner receive a distribution of
Available Cash with respect to a Partnership Unit if such Partner is
entitled to receive a distribution out of such Available Cash with
respect to a REIT Share for which such Partnership Unit has been
redeemed or exchanged, and FURTHER PROVIDED that no distributions
shall be made pursuant to clause (iii) above unless all cumulative
dividends with respect to any outstanding Gables Trust Series A
Preferred Shares, Gables Trust Series B Preferred Shares and the
Gables Trust Series Z Preferred Shares for all past dividend periods
and the then current dividend period have been or contemporaneously
are (x) declared and paid in full or (y) declared and a sum sufficient
for the full payment thereof is set apart for such payment. The
General Partner shall take such reasonable efforts, as determined by
it in its sole and absolute discretion and consistent with the Gables
Trust's qualification as a REIT, to distribute Available Cash to the
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.
(b) Notwithstanding anything to the contrary above, the Partnership shall
cause to be distributed to the Gables Trust and the General Partner
(in proportion to the number of Series A Preferred Units and Series B
<PAGE>
21
Preferred Units owned by each) an amount that in the aggregate is
equal to the aggregate amount necessary to redeem any Gables Trust
Series A Preferred Shares and Gables Trust Series B Preferred Shares
which have been called for redemption by the Gables Trust, at such
time as is necessary to facilitate any such redemption and such
distribution will cause a redemption of a like number of Series A
Preferred Units or Series B Preferred Units, as the case may be.
(c) Notwithstanding anything to the contrary above in Section 5.1(a), (but
subject to the provisions of Section 5.1(b) in the event of a
redemption of both Series Z Preferred Shares and Series A Preferred
Shares or Series B Preferred Shares), the Partnership shall cause to
be distributed to the Gables Trust and the General Partner (in
proportion to the number of Series Z Preferred Units owned by each) an
amount equal to the aggregate amount necessary to redeem any Gables
Trust Series Z Preferred Shares which have been called for redemption
by the Gables Trust, at such time as is necessary to facilitate any
such redemption. Such distribution will cause a redemption of a like
number of Series Z Preferred Units.
(d) Notwithstanding anything to the contrary above in Section 5.1(a), (but
subject to the provisions of Section 5.1(b)), in the event of a
redemption of all or a portion of the Series B Preferred Units in
accordance with Section 5 of Exhibit F hereto, the Partnership shall
cause to be distributed to the holders of such Units (in proportion to
the number of Series B Preferred Units held by each) an amount equal
to the aggregate Series B Liquidation Preference (as defined in
Section 13.2) with respect to such Units which have been called for
redemption by the General Partner, at such time as is necessary to
facilitate any such redemption and in accordance with the provisions
of Section 8.6.G and Section 5 of Exhibit F.
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 hereof 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 and any other cash received or
reductions in reserves made after commencement of the liquidation of the
Partnership shall be distributed to the Partners in accordance with Section
13.2.
<PAGE>
22
ARTICLE 6
ALLOCATIONS
SECTION 6.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES
For purposes of maintaining the Capital Accounts and in determining the rights
of the Partners among themselves, the Partnership's items of income, gain, loss
and deduction (computed in accordance with Exhibit B hereof) shall be allocated
among the Partners in each taxable year (or portion thereof) as provided herein
below.
A. Subject to Section 6.2 and clause (iii) below, and after reduction for
the allocations described therein, Net Income shall be allocated
(i) first, to the Partners in the same ratio and reverse order as Net Loss
was allocated to such Partners pursuant to Section 6.1.B(ii), (iii),
(iv), (v), (vi) and (vii) for all fiscal years until the aggregate
amount of Net Losses previously allocated to the Partners pursuant to
such provisions of Section 6.1.B equal the aggregate amount of Net
Income allocated to such Partners pursuant to this clause (i) of
Section 6.1.A; and
(ii) thereafter, Net Income shall be allocated
(a) first to the holders of the Series B Preferred Units, other than
the Gables Trust and the General Partner, pro rata in proportion
to the number of Series B Preferred Units owned by each such
Partner, until the aggregate amount of income allocated to such
holders pursuant to this clause (a) for all fiscal periods equals
the aggregate amount distributed to such Partners pursuant to
clause (i) of Section 5.1(a) for all fiscal periods; and
(b) the remainder to the Partners in accordance with their respective
Percentage Interests.
(iii)Notwithstanding anything to the contrary in 6.1.A(i) and (ii) above,
except as provided below, items of gross income shall be allocated
(a) first to the General Partner and the Gables Trust, pro rata, in
proportion to the aggregate amount distributed to each such
Partner pursuant to Section 5.1(a)(i) with respect to which an
allocation of net income was not previously made pursuant to this
Section 6.1.A(iii)(a), until the aggregate amount of income
allocated pursuant to this clause (a) for all fiscal periods
equals the aggregate amount distributed to the General Partner
and the Gables Trust pursuant to clause (i) of Section 5.1(a) for
all fiscal periods, and
(b) second, subject to the provisions of Section 6.1.A(ii)(a) to the
General Partner and the Gables Trust, pro rata, in proportion to
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23
the number of Series Z Preferred Units owned by each, until the
aggregate amount of income allocated pursuant to this clause (b)
for all fiscal periods equals the aggregate amount distributed to
the General Partner and the Gables Trust pursuant to clause (ii)
of Section 5.1(a) for all fiscal periods.
B. After giving effect to the special allocations set forth in Section 1 of
Exhibit C attached hereto, Net Losses shall be allocated
(i) first, to the Partners in the same ratio and reverse order as Net
Income was allocated to such Partners pursuant to Section
6.1.A(ii)(b) for all fiscal years until the aggregate amount of
Net Income previously allocated to such Partners pursuant to
Section 6.1.A(ii)(b) equals the aggregate amount of Net Loss
allocated to such Partners pursuant to this Section 6.1.B(i);
(ii) second, to the Partners, pro rata, in proportion to their
Adjusted Capital Account balance until their Adjusted Capital
Account balance has been reduced to zero, provided however, for
purposes of this Section 6.1.B(ii) each Partner's Adjusted
Capital Account balance shall not include the portion of such
Capital Account attributable to Capital Contributions made by
such Partner, if any, with respect to the Series A Preferred
Units, Series B Preferred Units or the Series Z Preferred Units;
(iii)third, to the Partners who are holders of the Series Z Preferred
Units, pro rata, in proportion to the portion of their Adjusted
Capital Account balance attributable to the Series Z Preferred
Units, until the aggregate amount of Net Loss allocated to such
Partners pursuant to this Section 6.1.B(iii) has reduced such
portion of their Adjusted Capital Account balance to zero;
(iv) fourth, to the Partners who are holders of the Series A Preferred
Units or Series B Preferred Units pro rata, in proportion to the
portion of their Adjusted Capital Account balance attributable to
the Series A Preferred Units and Series B Preferred Units, until
the aggregate amount of Net Loss allocated to such Partners
pursuant to this Section 6.1.B(iv) has reduced such portion of
their Adjusted Capital Account balance to zero;
(v) fifth, to the General Partner until the General Partner's
negative Adjusted Capital Account balance is equal to the excess,
if any, of the aggregate recourse liabilities of the Partnership
over the aggregate amount of recourse Partnership debt with
respect to which any Limited Partner has agreed to reimburse the
Partnership pursuant to this Agreement or any binding written
agreement in connection with a contribution of property to the
Partnership or otherwise (with respect to each such Limited
Partner, the "Reimbursement Amount" and with respect to all such
Limited Partners, the "Aggregate Reimbursement Amount");
<PAGE>
24
(vi) sixth, to the Limited Partners who have agreed to reimburse the
Partnership with respect to any amount of recourse debt referred
to in (v) above, in proportion to each such Limited Partner's
Reimbursement Amount until the aggregate amount allocated
pursuant to this 6.1.B(vi) is equal to the Aggregate
Reimbursement Amount; and
(vii)thereafter, all Net Losses in excess of the limitations set
forth in this Section 6.1.B shall be allocated to the General
Partner.
C. For purposes of Regulations 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 among the Partners in accordance with their
respective interests in Partnership profits, as determined by the General
Partner in its reasonable discretion after taking into account all relevant
facts and circumstances.
D. 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 INCOME ALLOCATIONS ON LIQUIDATION
In the event Series A Preferred Units, Series Z Preferred Units or, to the
extent held by the Gables Trust or the General Partner, Series B Preferred Units
are liquidated pursuant to Section 13.2, then, notwithstanding anything to the
contrary in Section 6.1 above,
(i) gross income shall first be allocated to the holder of each such
Series A Preferred Unit or Series B Preferred Unit being liquidated,
as the case may be, pro rata, in an amount equal to (or in proportion
to, if less than) the difference, if any, between (a) (1) with respect
to any such Series B Preferred Units, the sum of the original capital
contribution of $25.00 per Series B Preferred Unit, plus accumulated,
accrued and unpaid distributions or (2) with respect to any such
Series A Preferred Units the aggregate Series A Liquidation Preference
and (b) the portion of such Partner's Adjusted Capital Account balance
attributable to such Series A Preferred Units or Series B Preferred
Units liquidated, and
(ii) thereafter gross income shall be allocated to the holder of each
Series Z Preferred Unit being liquidated in an amount equal to the
difference, if any, between (a) the aggregate liquidation preference
thereof and (b) the portion of such Partner's Adjusted Capital Account
balance attributable to such Series Z Preferred Units;
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provided however, in the event Series B Preferred Units not held by the Gables
Trust or General Partner are being liquidated or redeemed, then, subsequent to
the gross income allocation provided for in clause (i) above, net income shall
be allocated to such holders of the Series B Preferred Units first to reverse
prior losses allocated to such holders pursuant to Section 6.1.B(iv) (to the
extent not previously reversed by allocations pursuant to Section 6.1.A(i)) and
second, in the amount set forth in Section 6.1.A(ii)(a) (and any such
allocations shall be taken into account as if made pursuant to Sections
6.1(A)(i) or 6.1(A)(ii), as the case may be, for purposes of calculating
subsequent allocations pursuant to such sections), and thereafter gross income
shall be allocated as provided in clause (ii) above.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
SECTION 7.1 MANAGEMENT
A. Except as otherwise expressly provided in this Agreement, all management
powers over the business and affairs 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 7.3 hereof, shall have
full power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of money
(including, without limitation, making prepayments on loans and
borrowing money to permit the Partnership to make distributions to its
Partners in such amounts as will permit the Gables Trust (so long as
the Gables Trust qualifies as a REIT) to avoid the payment of any
federal income tax (including, for this purpose, any excise tax
pursuant to Section 4981 of the Code) and to make distributions to its
Partners such that the Gables Trust can distribute to its shareholders
amounts sufficient to permit the Gables Trust to maintain REIT
status), the assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidence of
indebtedness (including the securing of same by deed to secure debt,
mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it deems
necessary for the conduct of the activities of the Partnership;
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(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 assets of the Partnership (including
the exercise or grant of any conversion, option, privilege, or
subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other
combination of the Partnership with or into another entity (all of the
foregoing subject to any prior approval only to the extent required by
Section 7.3 hereof);
(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
Gables Trust, the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Subsidiaries of the Partnership
and/or the Gables Trust) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which it has
an equity investment, and the making of capital contributions to its
Subsidiaries;
(5) the management, operation, leasing, landscaping, repair, alteration,
demolition or improvement of any real property or improvements owed by
the Partnership or any Subsidiary of the Partnership;
(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 distribution of Partnership cash or other Partnership assets in
accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other assets of
the Partnership;
(9) the collection and receipt of revenues and income of the Partnership;
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(10) the establishment of one or more divisions of the Partnership, the
selection and dismissal of employees of the Partnership, any division
of the Partnership, or the General Partner (including, without
limitation, employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the Partnership, any
division of the Partnership, or the General Partner), and agents,
outside attorneys, accountants, consultants and contractors of the
General Partner or the Partnership or any division of the Partnership,
and the determination of their compensation and other terms of
employment or hiring;
(11) the maintenance of such insurance for the benefit of the Partnership
and the Partners as it deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it deems
desirable (including, without limitation, the acquisition of interests
in, and the contributions of property to, its Subsidiaries and any
other Person in which it has an equity investment from time to time);
(13) 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, arbitration or
other forms of dispute, resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute resolution, the
incurring of legal expense, and the indemnification of any Person
against liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with the Partnership's
direct or indirect investment in its Subsidiaries or any other Person
(including, without limitation, the contribution or loan of funds by
the Partnership to such Persons);
(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 asset or investment
held by the Partnership;
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28
(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, 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 an interest pursuant to contractual or other arrangements
with such Person; and
(19) the making, execution and delivery of any and all deeds, leases,
notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or agreement 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.
B. Each of the Limited Partners agrees that the General Partner is
authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provision of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation, to the fullest 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. At all times from and after January 26, 1994, 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.
D. At all times from and after January 26, 1994, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
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29
E. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner of any action taken by it; provided that, if the General Partner
decides to refinance (directly or indirectly) any outstanding indebtedness of
the Partnership, the General Partner shall use reasonable efforts to structure
such refinancing in a manner that minimizes any adverse tax consequences
therefrom to the Limited Partners, and provided further that, in deciding
whether or not to dispose of any property that represents more than one percent
of the Partnership's total assets, the General Partner shall consider in good
faith the income tax consequences of such disposition for both the General
Partner and the Limited Partners. The General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
an income tax liability incurred by such Limited Partner as a result of an
action (or inaction) by the General Partner pursuant to its authority under this
Agreement.
SECTION 7.2 CERTIFICATE OF LIMITED PARTNERSHIP
The General Partner has previously filed the Certificate with the Secretary of
State of Delaware as required by the Act. The General Partner shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, or the District of Columbia, in which the Partnership may elect to
do business or own property. 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, or the District of Columbia, in
which the Partnership may elect to do business or own property. Subject to the
terms of Section 8.5.A(4) hereof, 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.
SECTION 7.3 RESTRICTIONS ON GENERAL PARTNER AUTHORITY
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written Consent
of Limited Partners holding 75% or more of the Percentage Interests of the
Limited Partners (including Limited Partner Interests held by the Gables Trust
and the General Partner, but not including any interest on account of the
Preferred Units) (or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement).
B. Except as provided in Article 13 hereof, the General Partner may not
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, consolidation or other combination with any other
Person) without the Consent of Limited Partners holding 75% or more of the
Percentage Interests of the Limited Partners (including Limited Partnership
Interests held by the Gables Trust and the General Partner, but not including
any interest on account of the Preferred Units) .
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SECTION 7.4 REIMBURSEMENT OF THE GENERAL PARTNER
A. Except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions, payments,
and allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.
B. The 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 that it and/or the Gables Trust incurs relating to
the ownership and operation of, or for the benefit of, the Partnership; provided
that the amount of any such reimbursement shall be reduced by any interest
earned by the General Partner with respect to bank accounts or other instruments
or accounts held by it on behalf of the Partnership as permitted in Section
7.5.A. The Limited Partners acknowledge that, for purposes of this Section
7.4.B, all expenses of the General Partner and the Gables Trust are deemed
incurred for the benefit of the Partnership. Such reimbursements shall be in
addition to any reimbursement to the General Partner and/or the Gables Trust as
a result of indemnification pursuant to Section 7.7 hereof.
C. As set forth in Section 4.3, the Gables Trust and the General Partner
shall be treated as having made a Capital Contribution in the amount of all
expenses that the Gables Trust and the General Partner incur relating to the
organization and/or reorganization of the Partnership and the General Partner,
the initial public offering of REIT Shares by the Gables Trust, and any other
issuance of additional Partnership Interests or REIT Shares pursuant to Section
4.2 hereof.
D. In the event that the General Partner or the Gables Trust shall elect to
purchase from the shareholders of the Gables Trust REIT Shares for the purpose
of delivering such REIT Shares to satisfy an obligation under any dividend
reinvestment program adopted by the Gables Trust, any employee stock purchase
plan adopted by the General Partner or the Gables Trust, or any similar
obligation or arrangement undertaken by the General Partner or the Gables Trust
in the future, the purchase price paid by the General Partner or the Gables
Trust for such REIT Shares and any other expenses incurred by the General
Partner or the Gables Trust in connection with such purchase shall be considered
expenses of the Partnership and shall be reimbursed to the General Partner or
the Gables Trust, as the case may be, subject to the condition that: (i) if such
REIT Shares subsequently are to be sold by the General Partner or the Gables
Trust, the General Partner shall pay to the Partnership any proceeds received by
the General Partner or the Gables Trust for such REIT Shares (provided that a
transfer of REIT Shares for Units pursuant to Section 8.6 would not be
considered a sale for such purposes); and (ii) if such REIT Shares are not
retransferred by the General Partner or the Gables Trust within 30 days after
the purchase thereof, the General Partner shall cause the Partnership to cancel
a number of Partnership Units held by the General Partner equal to the product
obtained by multiplying the Conversion Factor by the number of such REIT Shares.
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SECTION 7.5 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER AND THE GABLES TRUST
A. The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner or Limited Partner
and the management of the business of the Partnership, and such activities as
are incidental thereto, and the Gables Trust shall not directly or indirectly
enter into or conduct any business other than in connection with the ownership
of the stock of the General Partner, the ownership, acquisition or disposition
of Partnership Interests as a Limited Partner, making loans to the General
Partner, and such activities as are incidental thereto. The assets of the
General Partner shall be limited to Partnership Interests and the assets of the
Gables Trust shall be limited to the stock and debt obligations of the General
Partner and Partnership Interests. The General Partner shall not hold any assets
other than Partnership Interests as a General Partner or Limited Partner, and
other than such bank accounts or similar instruments or accounts as it deems
necessary to carry out its responsibilities contemplated under this Agreement
and its organizational documents. The General Partner and any Affiliates of the
General Partner may acquire Limited Partner Interests and shall be entitled to
exercise all rights of a Limited Partner relating to such Limited Partner
Interests. Notwithstanding the above, the General Partner may own an equity
interest in, and participate thereby in the business of, any affiliate or
subsidiary of Gables Trust, including, without limitation, the Tennessee
Partnership.
B. Except as provided in Section 7.4.D, in the event the Gables Trust
(and/or the General Partner) exercises its rights to purchase REIT Shares, then
the General Partner shall cause the Partnership to purchase from the Gables
Trust that number of Partnership Units equal to the product obtained by
multiplying the number of REIT Shares to be purchased by the Gables Trust
(and/or the General Partner) times the Conversion Factor on the same terms and
for the same aggregate price that the Gables Trust (and/or the General Partner)
purchased such REIT Shares. The General Partner shall then distribute such funds
to the Gables Trust.
C. The General Partner shall not issue at any time any capital stock
(whether voting or non-voting or common or preferred) or any evidence of
indebtedness except to the Gables Trust.
SECTION 7.6 CONTRACTS WITH AFFILIATES
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on terms and conditions
established in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit in favor of any
Subsidiary or any other Person.
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B. Except as provided in Section 7.5.A, the Partnership may transfer assets
to joint ventures, other partnerships, corporations or other business entities
in which it is or thereby becomes a participant upon such terms and subject to
such conditions consistent with this Agreement and applicable law as the General
Partner, in its sole and absolute discretion, believes are advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable and no less favorable to the Partnership
than would be obtained from an unaffiliated third party.
D. The General Partner, in its sole and absolute discretion and without the
approval of the Limited Partners, may propose and adopt on behalf of the
Partnership employee benefit plans, stock option plans, and similar plans funded
by the Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
E. The General Partner is expressly authorized to enter into, in the name
and on behalf of the Partnership, a right of first opportunity arrangement and
other conflict avoidance agreements with various Affiliates of the Partnership
and the General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.
SECTION 7.7 INDEMNIFICATION
A. The Partnership shall indemnify each Indemnitee 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 any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership, the General
Partner or the Gables Trust as set forth in this Agreement in which such
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (ii) 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 guaranty or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
<PAGE>
33
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 with respect to the subject
matter of such proceeding. The termination of any proceeding by conviction of an
Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee,
or an entry of an order of probation against an Indemnitee prior to judgment,
creates a rebuttable presumption that such Indemnitee acted in a manner contrary
to that specified in this Section 7.7.A. Any indemnification pursuant to this
Section 7.7 shall be made only out of the assets of the Partnership, and 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. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding may be paid or reimbursed by the Partnership in advance of the final
disposition of the proceeding upon receipt by the Partnership of (i) a written
affirmation by the Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 7.7.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. 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 Indemnities is indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons as the
General Partner shall determine, against any liability that may be asserted
against or expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.
E. For purposes of this Section 7.7, the Partnership shall be deemed to
have requested an Indemnitee to serve as fiduciary of an employee benefit plan
whenever the performance by it of its duties to the Partnership also imposes
duties on, or otherwise involves services by, it to the plan or participants or
beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect
to an employee benefit plan pursuant to applicable law shall constitute fines
within the meaning of Section 7.7; and actions taken or omitted by the
Indemnitee with respect to an employee benefit plan in the performance of its
duties for a purpose reasonably believed by it to be in the interest of the
participants and beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the Partnership.
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F. In no event may an Indemnitee subject any of the Partners to personal
liability by reason of the indemnification provisions set forth in this
Agreement.
G. An Indemnitee shall not be denied indemnification in whole or in part
under this Section 7.7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of this Agreement.
H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification, or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
SECTION 7.8 LIABILITY OF THE GENERAL PARTNER
A. Notwithstanding anything to the contrary set forth in this Agreement,
neither the General Partner nor the Gables Trust shall be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses sustained
or liabilities incurred as a result of errors in judgment or of any act or
omission if the General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General Partner is
acting on behalf of the Partnership, the Gables Trust, and the shareholders of
the Gables Trust collectively, 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 neither the General Partner nor the Gables Trust shall 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. Subject to its obligations and duties as General Partner set forth in
Section 7.1.A hereof, the General Partner may exercise any of the powers granted
to it by this Agreement and perform any of the duties imposed upon it hereunder
either directly or by or through its agents. Neither the General Partner nor the
Gables Trust shall be responsible for any misconduct or negligence on the part
of any such agent appointed by the General Partner in good faith.
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D. Any amendment, modification or repeal of this Section 7.8 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the 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.
SECTION 7.9 OTHER MATTERS CONCERNING THE GENERAL PARTNER
A. The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
B. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
C. The General Partner shall have the right, in respect of any of its
powers or obligations hereunder, to act through any of its duly authorized
officers and a duly appointed attorney or attorneys-in-fact. Each such attorney
shall, to the extent provided by the General Partner in the power of attorney,
have full power and authority to do and perform all and every act and duty which
is permitted or required to be done by the General Partner hereunder.
D. Notwithstanding any other provisions of this Agreement or 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 Gables Trust to continue to
qualify as a REIT or (ii) to avoid the Gables Trust incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.
SECTION 7.10 TITLE TO PARTNERSHIP ASSETS
Title to Partnership assets, whether real, personal or mixed and whether
tangible or intangible, shall be deemed to be owned by the Partnership as an
entity, and no Partner, 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
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36
and warrants that any Partnership assets for which legal title is held in the
name of the General Partner or any nominee or Affiliate of the General Partner
shall be held by the General Partner for the use and benefit of the Partnership
in accordance with the provisions of this Agreement; provided, however, that the
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
SECTION 7.11 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this Agreement, any Person dealing
with the Partnership shall be entitled to assume that the General Partner has
full power and authority, 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 and to enter into any contracts on behalf of the Partnership,
and take any and all actions on behalf of the Partnership and such Person shall
be entitled to deal with the General Partner as if 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
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.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
SECTION 8.1 LIMITATION OF LIABILITY
The Limited Partners shall have no liability under this Agreement except as
expressly provided in this Agreement, including Section 10.5 hereof, or under
the Act.
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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.
SECTION 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS
Subject to any agreements entered into pursuant to Section 7.6.E hereof and 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 the Gables Trust) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than the General Partner
and the Gables Trust) shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities that are in direct competition with
the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. None of
the Limited Partners (other than the General Partner and the Gables Trust) nor
any other Person shall have any rights by virtue of this Agreement or the
Partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner to the extent expressly provided
herein) and such Person shall have no obligation pursuant to this Agreement 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. Except to
the extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.
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SECTION 8.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP
A. In addition to other rights provided by this Agreement or by the Act,
and except as limited by Section 8.5.C hereof, 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 (including
such copying and administrative charges as the General Partner may establish
from time to time):
(1) to obtain a copy of the most recent annual and quarterly reports filed
with the Securities and Exchange Commission by the Gables Trust
pursuant to the Securities Exchange Act of 1934;
(2) to obtain a copy of the Partnership's federal, state and local income
tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known business,
residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of cash and a
description and statement of any other property or services
contributed by each Partner and which each Partner has agreed to
contribute in the future, and the date on which each became a Partner.
B. The Partnership shall notify each Limited Partner upon request of the
then current Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, for such period of time
as the General Partner determines in its sole and absolute discretion to be
reasonable, any information that (i) the General Partner 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 is business or (ii) the
Partnership is required by law or by agreements with an unaffiliated third party
to keep confidential.
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SECTION 8.6 REDEMPTION RIGHT
A. Subject to Sections 8.6.B and 8.6.C, on or after the date one (1) year
after the closing of the initial public offering of REIT Shares by the Gables
Trust, each Limited Partner, other than the General Partner, shall have the
right (the "Redemption Right") to require the Partnership to redeem on a
Specified Redemption Date all or a portion of the Partnership Units held by such
Limited Partner (other than Series B Preferred Units which such Units shall have
only those Redemption Rights set forth in Exhibit F, attached hereto) at a
redemption price equal to and in the form of the Cash Amount to be paid by the
Partnership. The 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"); provided, however, that the Partnership shall not be obligated to
satisfy such Redemption Right if the Gables Trust and/or the General Partner
elects to purchase the Partnership Units subject to the Notice of Redemption
pursuant to Section 8.6.B. A Limited Partner may not exercise the Redemption
Right for less than one thousand (1,000) Partnership Units or, if such Limited
Partner holds less than one thousand (1,000) Partnership Units, all of the
Partnership Units held by such Partner. The Redeeming Partner shall have no
right, with respect to any Partnership Units so redeemed, to receive any
distributions paid on or after the Specified Redemption Date. 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 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.
B. Notwithstanding the provisions of Section 8.6.A, a Limited Partner that
exercises the Redemption Right shall be deemed to have offered to sell the
Partnership Units described in the Notice of Redemption to the General Partner
and the Gables Trust, and either of the General Partner or the Gables Trust (or
both) may, in its sole and absolute discretion, elect to purchase directly and
acquire such Partnership Units by paying to the Redeeming Partner either the
Cash Amount or the REIT Shares Amount, as elected by the General Partner or the
Gables Trust (in its sole and absolute discretion), on the Specified Redemption
Date, whereupon the General Partner or the Gables Trust 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. If the General Partner and/or the Gables Trust shall elect to exercise
its right to purchase Partnership Units under this Section 8.6.B with respect to
a Notice of Redemption, they shall so notify the Redeeming Partner within five
Business Days after the receipt by the General Partner of such Notice of
Redemption. Unless the General Partner and/or the Gables Trust (in their sole
and absolute discretion) shall exercise its right to purchase Partnership Units
from the Redeeming Partner pursuant to this Section 8.6.B, neither the General
Partner nor the Gables Trust shall have any obligation to the Redeeming Partner
or the Partnership with respect to the Redeeming Partner's exercise of the
Redemption Right. In the event the General Partner or the Gables Trust shall
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exercise its right to purchase Partnership Units with respect to the exercise of
a Redemption Right in the manner described in the first sentence of this Section
8.6.B, the Partnership shall have no obligation to pay any amount to the
Redeeming Partner with respect to such Redeeming Partner's exercise of such
Redemption Right, and each of the Redeeming Partner, the Partnership, and the
General Partner or the Gables Trust, as the case may be, shall treat the
transaction between the General Partner or the Gables Trust, as the case may be,
and the Redeeming Partner for federal income tax purposes as a sale of the
Redeeming Partner's Partnership Units to the General Partner or the Gables
Trust, as the case may be. Each Redeeming Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of REIT Shares upon exercise of the Redemption Right.
C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A if the delivery of REIT Shares to such Partner on the Specified
Redemption Date by the General Partner or the Gables Trust pursuant to Section
8.6.B (regardless of whether or not the General Partner or the Gables Trust
would in fact exercise its rights under Section 8.6.B) would be prohibited under
the Declaration of Trust or would violate any federal or state securities laws.
D. In connection with a redemption by Gables Trust of any or all of the
Gables Trust Series A Preferred Shares, the General Partner shall have the right
to cause the Partnership to redeem all or a portion of the Series A Preferred
Units that the Gables Trust and/or the General Partner holds, and such
redemption proceeds shall be distributed to the Gables Trust and/or the General
Partner, as applicable, pursuant to the provisions of Section 5.1(b).
E. In connection with a redemption by Gables Trust of any or all of the
Gables Trust Series Z Preferred Shares, the General Partner shall have the right
to cause the Partnership to redeem all or a portion of the Series Z Preferred
Units that the Gables Trust and/or the General Partner holds, and such
redemption proceeds shall be distributed to the Gables Trust and/or the General
Partner, as applicable, pursuant to the provisions of Section 5.1(c).
F. In connection with a redemption by Gables Trust of any or all of the
Gables Trust Series B Preferred Shares that may at any time be issued and
outstanding (in accordance with the terms of the Series B Preferred Units), the
General Partner shall have the right to cause the Partnership to redeem all or a
portion of the Series B Preferred Units that Gables Trust and/or the General
Partner then holds, and such redemption proceeds shall be distributed to the
Gables Trust and/or the General Partner, as applicable, in an amount equal to
the portion of the Gables Trust's and the General Partner's Adjusted Capital
Account balance attributable to such units being redeemed, after adjusting such
Capital Accounts pursuant to the provisions of Section 13.2.
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G. In connection with a redemption by the Partnership of any or all of the
Series B Preferred Units that may at any time be issued and outstanding and not
held by Gables Trust (in accordance with the terms of the Series B Preferred
Units as set forth in Exhibit F hereto), the General Partner shall have the
right to cause the Partnership to distribute to the holders of the Series B
Preferred Units being redeemed an amount equal to the aggregate Series B
Liquidation Preference with respect to such Units as determined pursuant to
Section 13.2 hereof, without regard to the requirements of Section 13.2(A)(iv)
with respect to distributions to holders of Series A Preferred Units (or any
other then outstanding Units or Shares ranking on a parity thereto), to the
extent that at the time of such redemption the terms of the Series A Preferred
Units and Gables Trust Series A Preferred Shares (and of any other then
outstanding Units or Shares ranking on a parity thereto) permit a redemption of
the Series B Preferred Units only.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
SECTION 9.1 RECORDS AND ACCOUNTING
The General Partner shall keep or cause to be kept at the principal office of
the Partnership those records and documents required to be maintained by the Act
and other books and records deemed by the General Partner to be appropriate with
respect to the Partnership's business, including, without limitation, all books
and records necessary to provide to the Limited Partners any information, lists
and copies of documents required to be provided pursuant to Section 9.3 hereof.
Any records maintained by or on behalf of the Partnership in the regular course
of its business may be kept on, or be in the form 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, or such other
basis as the General Partner determines to be necessary or appropriate.
SECTION 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the calendar year.
SECTION 9.3 REPORTS
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner shall
cause to be mailed to each Limited Partner as of the close of the Partnership
Year, an annual report containing financial statements of the Partnership, or of
the General Partner or the Gables Trust if such statements are prepared solely
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42
on a consolidated basis with the General Partner or the Gables Trust, for such
Partnership Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
B. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, or of the General Partner or
the Gables Trust, if such statements are prepared solely on a consolidated basis
with the General Partner or the Gables Trust, and such other information as may
be required by applicable law or regulation, or as the General Partner
determines to be appropriate.
ARTICLE 10
TAX MATTERS
SECTION 10.1 PREPARATION OF TAX RETURNS
The General Partner shall arrange for the preparation and timely filing of all
returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within 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. 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. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) 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 the Assignees; provided,
however, that such information is provided to the Partnership by the Limited
Partners and the Assignees.
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B. The tax matters partner is authorized, but not required.
(1) to enter into any settlement with the IRS with respect to any
administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner
for income tax purposes (such administrative proceedings being
referred to as a "tax audit" and such judicial proceedings being
referred to as "judicial review"), and in the settlement
agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement
agreement shall not bind any Partner (i) who (within the time
prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231(a)(8) of the Code) or a member of a
"notice group" (as defined in Section 6223(b)(2) of the Code);
(2) in the event that a notice of a final administrative adjustment
at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is
mailed to the tax matters partner, to seek judicial review of
such final adjustment, including the filing of a petition for
readjustment with the Tax Court or the 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
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 account by a Partner for tax purposes, or an item
affected by such item; and
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44
(6) to take any other action on behalf of the Partners or 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 of this Agreement shall be fully applicable to the tax matters
partner in its capacity as such.
C. The tax matters partner shall receive no compensation for its services.
All third party costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting fees and expenses)
shall be borne by the Partnership. Nothing herein shall be construed to restrict
the Partnership from engaging an accounting firm to assist the tax matters
partner in discharging its duties hereunder, so long as the compensation paid by
the Partnership for such services is reasonable.
SECTION 10.4 ORGANIZATIONAL EXPENSES
The Partnership shall elect to deduct expenses, if any, incurred by it in
organizing the Partnership ratably over a 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 Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
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,
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45
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. In the event that 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. Without limitation, in such event the General
Partner shall have the right to receive distributions that would otherwise be
distributable to such defaulting Limited Partner until such time as such loan,
together with all interest thereon, has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) 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, or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue 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 in order to perfect or enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
SECTION 11.1 TRANSFER
A. The term "transfer," when used in this Article 11 with respect to 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 Partner Interest to
another Person or by which a Limited Partner purports to assign all or any part
of its Limited Partner 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 11 does not include any redemption of Partnership Interests by the
Partnership from a Limited Partner or any acquisition of Partnership Units from
a Limited Partner by the General Partner or the Gables Trust pursuant to Section
8.6.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article 11.
Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
SECTION 11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST OR THE GABLES
TRUST'S INTEREST IN THE GENERAL PARTNER
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A. The General Partner may not transfer any of its General Partner Interest
or Limited Partnership Interests or withdraw as General Partner except as
provided in Section 11.2.B or in connection with a transaction described in
Section 11.2.C. The Gables Trust shall not transfer any of its Limited Partner
Interest or Ownership Interest except in connection with a transaction described
in Section 11.2.B or 11.2.C.
B. The General Partner and the Gables Trust may transfer Limited Partner
Interests held by them either to the Partnership in accordance with Section
7.5.B hereof or to a purported holder of REIT Shares in accordance with the
provisions of Article V of the Declaration of Trust.
C. Except as otherwise provided in Section 11.2.D., neither the General
Partner nor the Gables Trust shall engage in any merger, consolidation or other
combination with or into another Person or sale of all or substantially all of
its assets, or effect any reclassification, or recapitalization or change of
outstanding REIT 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") ("Transaction"), unless (i) the Transaction
also includes a merger of the Partnership or sale of substantially all of the
assets of the Partnership which has been approved by the requisite Consent of
the Partners pursuant to Section 7.3 and as a result of which all Limited
Partners will receive for each Partnership Unit (other than Series A Preferred
Units, Series Z Preferred Units and, to the extent held by the Gables Trust or
the General Partner, Series B Preferred Units, which will be treated in a manner
intended to protect the economic rights of holders of the Gables Trust Series A
Preferred Shares, Gables Trust Series Z Preferred Shares and Gables Trust Series
B Preferred Shares, respectively, and other than Series B Preferred Units not
held by the Gables Trust or the General Partner, which will receive an amount of
cash equal to the portion of the Adjusted Capital Account balance of the holder
thereof attributable to such Series B Preferred Units after giving effect to the
allocation provisions of Section 6.2) an amount of cash, securities, or other
property equal to the product of the Conversion Factor and the greatest amount
of cash, securities or other property paid to a holder of one REIT Share in
consideration of one REIT Share at any time during the period from and after the
date on which the Transaction is consummated, provided that if, in connection
with the Transaction, a purchase, tender or exchange offer shall have been made
to and accepted by the holders of more than fifty percent (50%) of the
outstanding REIT Shares, each holder of Partnership Units shall receive the
greatest amount of cash, securities, or other property which such holder would
have received had it exercised the Redemption Right and received REIT Shares in
exchange for its Partnership Units immediately prior to the expiration of such
purchase, tender or exchange offer and had thereupon accepted such purchase,
tender or exchange offer, and provided further that the foregoing amounts
required to be received by holders of Partnership Units may be reduced by such
amount as is necessary to account for the fact that the General Partner holds an
interest in the Tennessee Partnership; and (ii) no more than forty-nine percent
(49%) of the equity securities of the acquiring Person in such transaction shall
be owned, after consummation of such Transaction, by the General Partner or
Persons who are Affiliates of the Partnership or the General Partner immediately
prior to the date on which the Transaction is consummated.
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D. Notwithstanding Section 11.2.C, either the General Partner or the Gables
Trust may merge with another entity if immediately after such merger
substantially all of the assets of the surviving entity, other than Partnership
Units held by the General Partner (whether such Partnership Units constitute the
General Partnership Interest or a Limited Partnership Interest) or by the Gables
Trust, are contributed to the Partnership as a Capital Contribution in exchange
for Partnership Units with a fair market value, as reasonably determined by the
General Partner, equal to the 704(c) Value of the assets so contributed.
SECTION 11.3 LIMITED PARTNERS' RIGHTS TO TRANSFER
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, and 11.4,
a Limited 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 economic rights as a Limited Partner.
B. If a Limited Partner is subject to Incapacity, the executor,
administrator, trustee, committee, guardian, conservator or receiver of such
Limited Partner's estate shall have all the rights of a Limited Partner, but not
more rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate and such power as the Incapacitated Limited
Partner possessed to transfer all or any part of his or its interest in the
Partnership. The Incapacity of a Limited Partner, in and of itself, shall not
dissolve or terminate the Partnership.
C. The General Partner may prohibit any transfer by a Limited Partner of
its Partnership Units if, in the opinion of legal counsel to the Partnership,
such transfer would require filing of a registration statement under the
Securities Act of 1933 or would otherwise violate any federal or state
securities laws or regulations applicable to the Partnership or the Partnership
Unit.
D. No transfer by a Limited Partner of its Partnership Units 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, or (ii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" with the meaning of Section 7704 of the Code.
E. No 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, without the consent of the General Partner,
in its sole and absolute discretion, provided that as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Cash 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.
<PAGE>
48
SECTION 11.4 SUBSTITUTED LIMITED PARTNERS
A. No Limited Partner shall have the right to substitute a transferee as a
Limited Partner in his 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.
B. A transferee who has been admitted as a Substituted Limited Partner in
accordance with this Article 11 shall have all the rights and powers and be
subject to all the restrictions and liabilities of a Limited Partner under this
Agreement.
C. Upon the admission of a Substituted Limited Partner, the General Partner
shall amend Exhibit A to reflect the name, address, number of Partnership Units,
and Percentage Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and interest of the predecessor of such
Substituted Limited Partner.
SECTION 11.5 ASSIGNEES
If the General Partner, in its sole and absolute discretion, does not consent to
the admission of any permitted transferee under Section 11.3 as a Substituted
Limited Partner, as described in Section 11.4, such transferee shall be
considered an Assignee for purposes of this Agreement. An Assignee shall be
deemed to have had assigned to it, and shall be entitled to receive
distributions from the Partnership and the share of Net Income, Net Losses,
Recapture Income, and any other items, gain, loss deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee,
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).
In the event any such transferee desires to make a further assignment of any
such Partnership Units, such transferee shall be subject to all the provisions
of this Article 11 to the same extent and in the same manner as any Limited
Partner desiring to make an assignment of Partnership Units.
SECTION 11.6 GENERAL PROVISIONS
A. No Limited Partner may withdraw from the Partnership other than as a
result of a permitted transfer of all of such Limited Partner's Partnership
Units in accordance with this Article 11 or pursuant to redemption of all of its
Partnership Units under Section 8.6.
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49
B. Any Limited Partner who shall transfer all of its Partnership Units in a
transfer permitted pursuant to this Article 11 shall cease to be a Limited
Partner upon the admission of all Assignees of such Partnership Units as
Substitute Limited Partners. Similarly, any Limited Partner who shall transfer
all of its Partnership Units pursuant to a redemption of all of its Partnership
Units under Section 8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the first day
of a fiscal quarter of the Partnership, unless the General Partner otherwise
agrees.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section
8.6, or any day other than the first day of a Partnership Year, then Net Income,
Net Losses, each item thereof and all other items attributable to such interest
for such Partnership Year shall be divided and allocated between the transferor
Partner and the transferee Partner by taking into account their varying
interests during the Partnerships year in accordance with Section 706(d) of the
Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or assignment occurs shall be allocated to the transferee Partner, and
none of such items for the calendar month in which a redemption occurs shall be
allocated to the Redeeming Partner. All distributions of Available Cash
attributable to such Partnership Unit with respect to which the Partnership
Record Date is before the date of such transfer, assignment, or redemption shall
be made to the transferor Partner or the 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.
ARTICLE 12
ADMISSION OF PARTNERS
SECTION 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER
A successor to all of the General Partner Interest pursuant to Section 11.2
hereof who is proposed to be admitted as a successor General Partner shall be
admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership year
shall be allocated between the transferring General Partner and such successor
as provided in Section 11.6.D hereof.
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50
SECTION 12.2 ADMISSION OF ADDITIONAL LIMITED PARTNERS
A. After the admission to the Partnership of the initial Limited Partners
on January 26, 1994, a Person who makes a Capital Contribution to the
Partnership in accordance with this Agreement shall be admitted to the
Partnership as an Additional Limited Partner only upon furnishing to the General
Partner (i) evidence of acceptance in form satisfactory to the General Partner
of all of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 2.4 hereof and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner in order to effect such Person's admission as an Additional
Limited Partner.
B. Notwithstanding anything to the contrary in this Section 12.2, no Person
shall be admitted as an Additional Limited Partner without the consent of the
General Partner, which consent may be given or withheld in the General Partner's
sole and absolute discretion. The admission of any Person as an Additional
Limited Partner shall become effective on the date upon which the name of such
Person is recorded on the books and records of the Partnership, following the
consent of the General Partner to such admission.
C. If any Additional Limited Partner is admitted to the Partnership on any
day other than the first day of a Partnership Year, then Net Income, Net Losses,
each item thereof and all other items 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. Solely for purposes of
making such allocations, each of such item for the calendar month in which an
admission of any Additional Limited Partner occurs shall be allocated among all
the Partners and Assigns 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 of 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 2.4 hereof.
<PAGE>
51
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
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"):
A. the expiration of its terms as provided in Section 2.5 hereof.
B. 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 such
event of withdrawal a majority in interest of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;
C. from and after January 26, 1994 through December 31, 2053, an election
to dissolve the Partnership made by the General Partner with the Consent of
Partners holding 75% or more of the Percentage Interests of the Limited Partners
(including Limited Partner Interests held by the General Partner and the Gables
Trust);
D. on or after January 1, 2054 an election to dissolve the Partnership made
by the General Partner, in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership pursuant to
the provisions of the Act;
F. the sale of all or substantially all of the assets and properties of the
Partnership; or
G. a final and non-appealable judgment is entered by a court of competent
jurisdiction ruling that the General Partner is bankrupt or insolvent, or a
final and non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless prior
to the entry of such order or judgment all of the remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
substitute General Partner.
<PAGE>
52
SECTION 13.2 WINDING UP
A. Upon the occurrence of a Liquidating Event, the Partnership shall
continue solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Partners.
No Partner shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Partnership's business and affairs.
The General Partner or, in the event there is no remaining General Partner, any
Person elected by a majority in interest of the Limited Partners (the General
Partner or such other Person being referred to herein as the "Liquidator"),
shall be responsible for overseeing the winding up and dissolution of the
Partnership and shall take full account of the Partnership's liabilities and
property and the Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
(which may, to the extent determined by the General Partner, include shares of
stock in the General Partner) shall be applied and distributed in the following
order:
(i) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than the Partners;
(ii) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to the General Partner and the Gables
Trust;
(iii)Third, to the payment and discharge of all of the Partnership's
debts and liabilities to the other Partners;
(iv) Fourth, to the Partners holding Series A Preferred Units and
Series B Preferred Units, each as a class, with respect to each
such class, pro rata, in the ratio which the Series A Liquidation
Preference bears to the Series B Liquidation Preference (each as
defined below) and within each such class, pro rata, in
proportion to the ratio in which each such Partner holds Series A
Preferred Units or Series B Preferred Units, as the case may be.
The Series A Liquidation Preference shall mean an aggregate
amount equal to the aggregate liquidation preference with respect
to the Gables Trust Series A Preferred Shares plus any accrued
but unpaid dividends with respect to such shares (the "Series A
Liquidation Preference") and the Series B Liquidation Preference
shall mean an aggregate amount equal to the sum of the portion of
each such Series B Preferred Unitholder's remaining Adjusted
Capital Account balance attributable thereto, after giving effect
to the allocation provisions of Section 6.2, if applicable (the
"Series B Liquidation Preference");
(v) Fifth, to the Partners holding Series Z Preferred Units, pro
rata, in the ratio in which they hold such Units in an amount
equal to the liquidation preference with respect to the Gables
Trust Series Z Preferred Shares plus any accrued but unpaid
dividends with respect to such shares; and
<PAGE>
53
(vi) The balance, if any, to the General Partner and Limited Partners
in accordance with their remaining Adjusted Capital Account
balances, 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 13.
B. Notwithstanding the provisions of Section 13.2.A hereof which require
liquidation of the assets of the Partnership, but subject to the order of
priorities set forth therein, if prior to or upon dissolution of the Partnership
the Liquidator determines that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A hereof, undivided interests in
such Partnership assets as the Liquidator deems not suitable for liquidation.
Any such distributions in kind shall be made only if, in the good faith judgment
of the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) distributed to a trust established for the benefit of the General
Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership,
and paying any contingent or unforeseen liabilities or
obligations of the Partnership or the General Partner arising out
of or in connection with the Partnership. The assets of any such
trust shall be distributed to the General Partner and Limited
Partners from time to time, in the reasonable discretion of the
Liquidator, 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
<PAGE>
54
(2) withheld or escrowed to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, provided that such withheld or escrowed amounts
shall be distributed to the General Partner and Limited Partners
in the manner and order of priority set forth in Section 13.2.A
as soon as practicable.
SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
In the event the Partnership is "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this
Article 13 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 the
General Partner has a deficit balance in his 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 contribute to the capital of the Partnership the amount necessary to
restore such deficit balance to zero in compliance with Treasury Regulations
Section 1.704-1(b)(2)(ii)(b)(3). If any Limited Partner enters into an agreement
with the General Partner to contribute to the capital of the Partnership all or
a portion of any deficit balance in its Capital Account at such time as its
interest in the Partnership is "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) or otherwise, such agreement shall be incorporated
herein for all purposes of this Agreement.
SECTION 13.4 DEEMED DISTRIBUTION AND RECONTRIBUTION
Notwithstanding any other provision of this Article 13, in the event the
Partnership is considered liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, for federal income tax purposes and for purposes of maintaining Capital
Accounts pursuant to Exhibit B hereto, the Partnership shall be deemed to have
distributed the property in kind to the General Partner and Limited Partners,
who shall be deemed to have assumed and taken such property subject to all
Partnership liabilities, all in accordance with their respective Capital
Accounts. Immediately thereafter, the General Partner and Limited Partners shall
be deemed to have recontributed the Partnership property in kind to the
Partnership, which shall be deemed to have assumed and taken such property
subject to all such liabilities.
SECTION 13.5 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 provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
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55
SECTION 13.6 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event occurs that would, but for
the 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.
SECTION 13.7 TERMINATION OF PARTNERSHIP AND CANCELLATION OF CERTIFICATE OF
LIMITED PARTNERSHIP
Upon the completion of the liquidation of the Partnership cash and property as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, 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 13.8 REASONABLE TIME FOR WINDING-UP
A reasonable time shall be allowed for the orderly winding-up of the business
and affairs of the Partnership and the liquidation of its assets pursuant to
Section 13.2 hereof, in order to minimize any losses otherwise attendant upon
such winding-up, and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
SECTION 13.9 WAIVER OF PARTITION
Each Partner hereby waives any right to partition of the Partnership property.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
SECTION 14.1 AMENDMENTS
A. Amendments to this Agreement may be proposed by the General Partner or
by any Limited Partners holding twenty percent (20%) or more of the Partnership
Interests (not including any interest on account of the Preferred Units).
Following such proposal, 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
<PAGE>
56
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 7.3.A, 7.3.B, 13.1.C, 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 Partner Interests held by the General Partner and the Gables Trust, but
not including any interest on account of the Preferred Units).
B. Notwithstanding Section 14.1.A, 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;
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 4.2.A hereof;
(4) to reflect a change that is of an inconsequential nature and does
not adversely affect the Limited Partners in any material
respect, or to cure any ambiguity, correct or supplement any
provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters
arising under this Agreement that will not be inconsistent with
law or with the provisions of this Agreement; and
(5) to satisfy any requirements, conditions, or guidelines contained
in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, this Agreement shall
not be amended without the Consent of each Partner adversely affected if such
amendment would (i) convert a Limited Partner's interest in the Partnership into
a general partner interest, (ii) modify the limited liability of a Limited
Partner in a manner adverse to such Limited Partner, (iii) alter rights of the
<PAGE>
57
Partner to receive distributions pursuant to Article 5 or Article 13, or the
allocations specified in Article 6 (except as permitted pursuant to Section 4.2
and Section 14.1.B(3) hereof), (iv) alter or modify the Redemption Right and
REIT Shares Amount as set forth in Sections 8.6 and 11.2.B, and the related
definitions, in a manner adverse to such Partner, (v) cause the termination of
the Partnership prior to the time set forth in Sections 2.5 or 13.1, or (vi)
amend this Section 14.1.C. Further, no amendment may alter the restrictions on
the General Partner's authority set forth in Section 7.3 without the Consent
specified in that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the General
Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2 without the
Consent of 75% of the Percentage Interests of the Limited Partners, excluding
Limited Partners Interests held by the General Partner and all interests on
account of the Preferred Units.
SECTION 14.2 MEETINGS OF THE PARTNERS
A. Meetings of the Partners may be called by the General Partner and shall
be called upon the receipt by the General Partner of a written request by
Limited Partners holding twenty percent (20%) or more of the Partnership
Interests (not including any interest on account of the Preferred Units). 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 the Partners
is permitted or required under this Agreement, such vote or Consent may be given
at a meeting of the Partners or may be given in accordance with the procedure
prescribed in Section 14.1.A hereof. 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. 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 75% 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 75% of the Percentage Interests of the Partners
(or such other percentage as is expressly required by this Agreement). Such
consent shall be filed with the General Partner. An action so taken shall be
deemed to have been taken at a meeting held on the effective date so certified.
C. Each Limited Partner may authorize any Person or Persons to act for 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 his
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 or written notice
such revocation from the Limited Partner executing such proxy.
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58
D. Each meeting of the Partners shall be conducted by the General Partner
or such other Person as the General Partner may appoint pursuant to such rules
for the conduct of the meeting as the General Partner or such other Person deems
appropriate. Without limitation, meetings of Partners may be conducted in the
same manner as meetings of the shareholders of the Gables Trust and may be held
at the same time, and as part of, meetings of the shareholders of the Gables
Trust.
E. The Series A Preferred Units do not have any voting rights with respect
to the Partnership, except that any action which would alter the economic rights
or preferences of the Series A Preferred Units in a manner which, if done with
respect to the Gables Trust Series A Preferred Shares would require a separate
class vote of such shares, shall only be taken if such separate class of shares
approves of such action by a vote taken in accordance with applicable law.
F. The Series Z Preferred Units do not have any voting rights with respect
to the Partnership, except that any action which would alter the economic rights
or preferences of the Series Z Preferred Units in a manner which, if done with
respect to the Gables Trust Series Z Preferred Shares would require a separate
class vote of such shares, shall only be taken if such separate class of shares
approves of such action by a vote taken in accordance with applicable law.
G. The Series B Preferred Units do not have any voting rights with respect
to the Partnership other than as set forth in Exhibit F and except that any
action which would alter the economic rights or preferences of the Series B
Preferred Units in a manner which, if done with respect to the Gables Trust
Series B Preferred Shares would require a separate class vote of such shares
shall only be taken if such separate class of shares approves of such action by
a vote taken in accordance with applicable law.
ARTICLE 15
GENERAL PROVISIONS
SECTION 15.1 ADDRESSES AND NOTICE
Any notice, demand, request or report required or permitted to be given or made
to a Partner or Assignee under this Agreement shall be in writing and shall be
deemed given or made when delivered in person or when sent by first class United
States mail or by other means of written communication to the Partner or
Assignee at the address set forth in Exhibit A or such other address of which
the Partner shall notify the General Partner in writing.
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SECTION 15.2 TITLES AND CAPTIONS
All article or section titles or captions in this Agreement are for convenience
only. They shall not be deemed part of this Agreement and in no way define,
limit, extend or describe the scope or intent of any provisions hereof. Except
as specifically provided otherwise, references to "Articles" and "Sections" are
to Articles and Sections of this Agreement.
SECTION 15.3 PRONOUNS AND PLURALS
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
SECTION 15.4 FURTHER ACTION
The parties shall execute and deliver all documents, provide all information and
take or refrain from taking action as may be necessary or appropriate to achieve
the purposes of this Agreement.
SECTION 15.5 BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
SECTION 15.6 CREDITORS
Other than as expressly set forth herein with respect to the Indemnitees, none
of the provisions of this Agreement shall be for the benefit of, or shall be
enforceable by, any creditor of the Partnership.
SECTION 15.7 WAIVER
No failure by any party to insist upon the strict performance of any covenant,
duty, agreement or condition of this Agreement or to exercise any right or
remedy consequent upon a breach thereof shall constitute waiver of any such
breach or any other covenant, duty, agreement or condition.
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60
SECTION 15.8 COUNTERPARTS
This Agreement may be executed in counterparts, all of which together shall
constitute one agreement binding on all the parties hereto, notwithstanding that
all such parties are not signatories to the original or the same counterpart.
Each party shall become bound by this Agreement immediately upon affixing its
signature hereto.
SECTION 15.9 APPLICABLE LAW
This Agreement shall be construed 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 ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any other prior written or oral understandings or agreements among
them with respect thereto.
SECTION 15.12 GUARANTY BY THE GABLES TRUST
The Gables Trust unconditionally and irrevocably guarantees to the Limited
Partners the performance by the General Partner of the General Partner's
obligations under this agreement. This guarantee is exclusively for the benefit
of the Limited Partners and shall not extend to the benefit any creditor of the
Partnership.
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61
IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amended
and Restated Agreement of Limited Partnership as of the date first written
above.
GENERAL PARTNER:
Gables GP, Inc.
By: /s/ Marvin R. Banks, Jr.
----------------------------------
Marvin R. Banks, Jr.
Chief Financial Officer
THE LIMITED PARTNERS AS SET FORTH ON EXHIBIT A HERETO:
By: Gables GP, Inc., as attorney-in-fact pursuant
to the power of attorney set forth in Section
2.4 hereof
By: /s/ Marvin R. Banks, Jr.
----------------------------------
Marvin R. Banks, Jr.
Chief Financial Officer
<PAGE>
1
EXHIBIT A
PARTNERS CONTRIBUTIONS AND PARTNERSHIP INTERESTS
[MAINTAINED IN COMPANY'S FILES]
<PAGE>
1
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 1.704-1(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.A of
the Agreement and Exhibit C hereof, 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.B of the Agreement and Exhibit C hereof.
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 1.704(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)(1)(B) or 705(a)(2)(B) of the Code are not
includable gross income or are neither currently deductible nor
capitalized for federal income tax purposes.
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(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 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 specifically allocated under Section 2 of Exhibit C
hereof shall not be taken into account.
C. A transferee (including an 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 Value 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 1.704-1(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.
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(3) In accordance with Regulations Section 1.704-1(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.
(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 13 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 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 this Agreement (including this Exhibit B and other
Exhibits to this 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 (i) 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 or (ii) the manner in
which items are allocated among the Partners for federal income tax purposes in
order to comply with such Regulations or to comply with Section 704(c) of the
Code, the General Partner may make such modification without regard to
Article 14 of the Agreement, provided that it is not likely to have a material
effect on the amounts distributable to any Person pursuant to Article 13 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 1.704-1(b)(2)(iv)(q),
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b). In addition, the General Partner may adopt and employ such methods
and procedures for (i) the maintenance of book and tax capital accounts,
(ii) the determination and allocation of adjustments under Sections 704(c), 734
and 743 of the Code, (iii) the determination of Net Income, Net Loss, taxable
income, taxable loss and items thereof under this Agreement and pursuant to the
Code, (iv) the adoption of reasonable conventions and methods for the valuation
of assets and the determination of tax basis, (v) the allocation of asset value
and tax basis, and (vi) conventions for the determination of cost recovery,
depreciation and amortization deductions, as it determines in its sole
discretion are necessary or appropriate to execute the provisions of this
Agreement and to comply with federal and state tax laws.
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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 his Capital Contribution or
his Capital Account or to receive any distribution from the Partnership, except
as provided in Articles 4, 5, 7 and 13 of the Agreement.
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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 taxable 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 shall be interpreted consistently therewith.
Solely for purposes of this Section 1.A, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of Partner Minimum Gain during such Partnership taxable 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 taxable year,
each Partner who has a share of the Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.702-2(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 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 the
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 taxable year, other than allocations
pursuant to Section 1.A hereof.
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C. QUALIFIED INCOME OFFSET. In the event any Partner unexpectedly receives
any adjustments, allocations or distributions described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6),
and after giving effect to the allocations required under Sections 1.A and 1.B
hereof, such Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain (consisting of a pro rate portion of each item of
Partnership income, including gross income and gain for the Partnership taxable
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.
D. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Partnership
taxable 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 to the
numerically closest ratio for such Partnership taxable year which would satisfy
such requirements.
E. PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions for
any Partnership taxable 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 Section 1.704-2(i).
F. 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 1.704-1(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 with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section of the
Regulations.
G. CURATIVE ALLOCATIONS. The allocations set forth in Section 1.A through F
of this Exhibit C (the "Regulatory Allocations") are intended to comply with
certain requirements of the Regulations under section 704(b) of the Code. The
Regulatory Allocations may not be consistent with the manner in which the
Partners intend to divide Partnership distributions. Accordingly, the General
Partner is hereby authorized to divide other allocations of income, gain,
deduction and loss among the Partners so as to prevent the Regulatory
Allocations from distorting the manner in which Partnership distributions will
be divided among the Partners. In general, the Partners anticipate that this
will be accomplished by specially allocating other items of income, gain, loss
and deduction among the Partners so that the net amount of the Regulatory
Allocations and such special allocations to each person is zero. However, the
General Partner will have discretion to accomplish this result in any reasonable
manner; provided, however, that no allocation pursuant to this Section 1.G shall
cause the Partnership to fail to comply with the requirements of Regulations
sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).
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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 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
and the Regulations thereunder to take into account the
variation between the 704(c) Value of such property and its
adjusted basis at the time of contribution; 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
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code and the Regulations thereunder to take into
account the Unrealized Gain or Unrealized Loss
attributable to such property and the allocations
thereof pursuant to Exhibit B, and
(2) 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.
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(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 the Exhibit C.
C. To the extent that the Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit the Partnership to utilize alternative methods
to eliminate the disparities between the Carrying Value of property and its
adjusted basis, the General Partner shall have the authority to elect the method
to be used by the Partnership and such election shall be binding on all
Partners. It is anticipated that the General Partner will elect the "traditional
method" under Section 704(c) of the Code with respect to property contributed as
of January 26, 1994.
3. NO WITHDRAWAL
No Partner shall be entitled to withdraw any part of his Capital Contribution or
his Capital Account or to receive any distribution from the Partnership, except
as provided in Articles 4, 5, 8 and 13 of the Agreement.
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EXHIBIT D
VALUE OF CONTRIBUTED PROPERTY
Underlying Property 704(c) Value Agreed Value
[Intentionally Left Blank]
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EXHIBIT E
NOTICE OF REDEMPTION
The undersigned Limited Partner hereby irrevocably (i) redeems __________
Limited Partnership Units in Gables Limited Partnership in accordance with the
terms of the Amended and Restated Agreement of Limited Partnership of Gables
Limited Partnership and the Redemption Right referred to therein, (ii)
surrenders such Limited Partnership Units and all right, title and interest
therein, and (iii) directs that the Cash Amount of REIT Shares Amount (as
determined by the General Partner) deliverable upon exercise of the Redemption
Right be delivered to the address specified below, and if REIT Shares are to be
delivered, such REIT 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
Limited Partnership Units, free and clear of the rights or interests of any
other person or entity, (b) has the full right, power, and authority to redeem
and surrender such Limited Partnership Units as provided herein, and (c) has
obtained the consent or approval of all person or entities, if any, having the
right to consent or approve such redemption and surrender.
Dated:_________________________
Name of Limited Partner:____________________________________
Please Print
____________________________________
(Signature of Limited Partner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________
If REIT Shares are to be issued, issue to:
Name:_________________________________
Please insert social security or identifying number:__________________
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EXHIBIT F
ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF SERIES B PREFERRED UNITS
(1) DESIGNATION AND NUMBER. A series of Preferred Units, designated the "Series
B Preferred Units" (the "Series B Preferred Units"), is hereby established. The
number of Series B Preferred Units hereby authorized shall be 2,000,000. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned thereto in the Agreement.
(2) RANK. The Series B Preferred Units shall, with respect to distribution
rights and rights upon liquidation, dissolution or winding up of the
Partnership, rank (a) senior to all equity securities issued by the Partnership
ranking junior to such Series B Preferred Units, including without limitation
the Series Z Preferred Units; (b) on a parity with all other equity securities
issued by the Partnership the terms of which specifically provide that such
equity securities rank on a parity with the Series B Preferred Units, including
without limitation the Series A Preferred Units; and (c) junior to all equity
securities issued by the Partnership the terms of which specifically provide
that such equity securities rank senior to the Series B Preferred Units. The
term "equity securities" shall not include convertible debt securities.
(3) DISTRIBUTIONS.
(a) Holders of the then outstanding Series B Preferred Units shall be
entitled to receive out of Available Cash, when as and if declared by the
Partnership acting through the General Partner, cumulative preferential cash
distributions at the rate of 8.625% of the original capital contribution of
$25.00 per Series B Preferred Unit per annum (equivalent to a fixed annual
amount of $2.15625 per unit) (the "Series B Preference Return"). Such
distributions shall be cumulative from the first date on which any Series B
Preferred Units are issued and shall be payable (i) quarterly in arrears on or
before March 15, June 15, September 15 and December 15 of each year and (ii) in
the event of an exchange of Series B Preferred Units into shares of Gables
Trust's 8.625% Series B Cumulative Redeemable Preferred Shares ("Gables Trust
Series B Preferred Shares") on the exchange date (each, a "Distribution Payment
Date"). If a Distribution Payment Date is not a Business Day, then payment of
the distribution to be made on such date will be made on the next succeeding day
that is a Business Day (and without interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the originally designated
Distribution Payment Date. The quarterly period between Distribution Payment
Dates is referred to herein as a "distribution period" and the distribution
which shall accrue in respect of any full distribution period shall be
$0.5390625 regardless of the actual number of days in such full distribution
period. The first distribution, which will be paid on December 15, 1998, will be
for less than a full quarter. Such distribution and any distribution payable on
the Series B Preferred Units for any partial distribution period will be
prorated and computed on the basis of a 360-day year consisting of twelve 30-day
months. Distributions will be payable to holders of record as they appear in the
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records of the Partnership at the close of business on the applicable record
date, which shall be the first day of the calendar month in which the applicable
Distribution Payment Date falls or on such other date designated by the Board of
Trustees of Gables Trust as the record date for the payment of dividends with
respect to the Series A Preferred Shares that is not more than 30 nor less than
10 days prior to such Distribution Payment Date (each, a "Distribution Record
Date").
(b) No distributions on Series B Preferred Units shall be paid or set apart
for payment by the Partnership at such time as the terms and provisions of any
agreement of the Partnership, including any debt instrument or other agreement
relating to its indebtedness, prohibits such payment or setting apart for
payment or provides that such payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if such payment shall be
restricted or prohibited by law.
(c) Notwithstanding the foregoing, distributions on the Series B Preferred
Units shall accrue whether or not the terms and provisions set forth in Section
3(b) hereof at any time prohibit the current payment of distributions, whether
or not the Partnership has earnings and whether or not there are funds legally
available for the payment of such distributions. Accrued but unpaid
distributions on the Series B Preferred Units will accumulate as of the
Distribution Payment Date on which they first become payable.
(d) Except as provided in Section 3(e) below, no distributions will be paid
or set apart for payment on any equity securities of the Partnership ranking, as
to distributions, on a parity with or junior to the Series B Preferred Units
(other than a distribution in equity securities of the Partnership ranking
junior to the Series B Preferred Units as to distributions and upon liquidation)
for any period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on the Series B Preferred Units
for all past distribution periods and the then current distribution period.
(e) When distributions are not paid in full (and a sum sufficient for such
full payment is not so set apart) upon the Series B Preferred Units and the
units of any other series of Preferred Units ranking on a parity as to
distributions with the Series B Preferred Units, all distributions declared upon
the Series B Preferred Units and any other series of Preferred Units ranking on
a parity as to distributions with the Series B Preferred Units shall be declared
pro rata so that the amount of distributions declared per unit of Series B
Preferred Units and such other series of Preferred Units shall in all cases bear
to each other the same ratio that accrued distributions per unit on the Series B
Preferred Units and such other series of Preferred Units (which shall not
include any accrual in respect of unpaid distributions for prior distribution
periods if such Preferred Units do not have a cumulative distribution) bear to
each other. No interest, or sum of money in lieu of interest, shall be payable
in respect of any distribution payment or payments on Series B Preferred Units
which may be in arrears.
(f) Except as provided in the immediately preceding paragraph, unless full
cumulative distributions on the Series B Preferred Units have been or
contemporaneously are paid or a sum sufficient for the payment thereof is set
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apart for payment for all past distribution periods and the then current
distribution period, no distributions (other than in equity securities ranking
junior to the Series B Preferred Units as to distributions and upon liquidation)
shall be declared or paid or set aside for payment, nor shall any other
distribution be declared or made, upon any equity securities of the Partnership
ranking junior to or on a parity with the Series B Preferred Units as to
distributions or upon liquidation, nor shall any equity securities of the
Partnership ranking junior to or on a parity with the Series B Preferred Units
as to distributions or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any such equity securities) by the
Partnership (except by conversion into or exchange for other equity securities
of the Partnership ranking junior to the Series B Preferred Units as to
distributions and upon liquidation).
(g) Notwithstanding anything to the contrary set forth herein,
distributions on equity securities of the Partnership held by Gables Trust
ranking junior to or on a parity with the Series B Preferred Units may be made,
without preserving the priority of distributions described in Sections 3(d),
3(e) and 3(f) hereof, but only to the extent such distributions are required to
preserve the real estate investment trust status of Gables Trust.
(h) Any distribution payment made on Series B Preferred Units shall first
be credited against the earliest accrued but unpaid distribution due with
respect to such units which remains payable. Holders of the Series B Preferred
Units shall not be entitled to any distribution, whether payable in cash,
property or securities in excess of full cumulative distributions on the Series
B Preferred Units as described above.
(4) LIQUIDATION PREFERENCE.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Partnership, distributions on the Series B Preferred
Units shall be made in accordance with Section 13.2 of the Partnership
Agreement.
(b) In the event that, upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Partnership are
insufficient to pay the amount of the liquidating distributions on all
outstanding Series B Preferred Units and the corresponding amounts payable on
all equity securities of the Partnership ranking on a parity with the Series B
Preferred Units in the distribution of assets, then the holders of the Series B
Preferred Units and all other such equity securities shall share ratably in any
such distribution of assets in proportion to the full liquidating distributions
to which they would otherwise be respectively entitled.
(c) After payment of the full amount of the liquidating distributions to
which they are entitled, the holders of Series B Preferred Units will have no
right or claim to any of the remaining assets of the Partnership.
(d) Written notice of any such liquidation, dissolution or winding up of
the Partnership, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall
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be given by first class mail, postage pre-paid, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series B Preferred Units at the respective addresses of such holders as the same
shall appear on the records of the Partnership.
(e) The consolidation or merger of the Partnership with or into any other
corporation, trust or entity or of any other corporation with or into the
Partnership, or the sale, lease or conveyance of all or substantially all of the
property or business of the Partnership, shall not be deemed to constitute a
liquidation, dissolution or winding up of the Partnership.
(5) REDEMPTION.
(a) The Series B Preferred Units are not redeemable prior to November 15,
2003. On and after November 15, 2003, the Partnership, at its option and upon
not less than 30 nor more than 60 days' written notice, may redeem the Series B
Preferred Units, in whole or in part, at any time or from time to time, at a
redemption price, payable in cash, equal to the Capital Account balance of the
holder of Series B Preferred Units (the "Redemption Price"); provided, however,
that no redemption pursuant to this Section 5 will be permitted if the
Redemption Price does not equal or exceed the original capital contribution of
such holder of $25.00 per Series B Preferred Unit, plus the cumulative Series B
Preference Return to the redemption date (including accumulated, accrued, unpaid
distributions for prior distribution periods) to the extent not previously
distributed (except as provided in Section 5(c) below), without interest. If
less than all of the outstanding Series B Preferred Units is to be redeemed, the
Series B Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series B Preferred Units that the total number of Series B Preferred
Units held by such holder represents) of the aggregate number of Series B
Preferred Units being redeemed (as nearly as may be practicable without creating
fractional units).
(b) LIMITATIONS ON REDEMPTION.
(i) The redemption price of the Series B Preferred Units (other than
the portion thereof consisting of accrued and unpaid
distributions) is payable solely out of the sale proceeds of
capital stock of Gables Trust, which will be contributed by
Gables Trust to the Partnership as an additional capital
contribution, or out of the sale proceeds of equity securities of
the Partnership, which may include other series of Preferred
Units, and from no other source. For purposes of the preceding
sentence, capital stock means any shares of beneficial interest
of Gables Trust (including Common Shares and Preferred Shares, as
defined in the Declaration of Trust), or any other interest,
participation or other ownership interests (however designated)
and any rights (other than debt securities convertible into or
exchangeable for equity securities) or options to purchase any of
the foregoing.
(ii) Unless full cumulative distributions on all Series B Preferred
Units shall have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set
apart for payment for all past distribution periods and the then
current distribution period, no Series B Preferred Units shall be
redeemed unless all outstanding Series B Preferred Units are
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simultaneously redeemed, and the Partnership shall not purchase
or otherwise acquire directly or indirectly any Series B
Preferred Units (except by exchange for units of the Partnership
ranking junior to the Series B Preferred Units as to
distributions and upon liquidation); provided, however, that the
foregoing shall not prevent the purchase or acquisition of Series
B Preferred Units pursuant to a purchase or exchange offer made
on the same terms to holders of all outstanding Series B
Preferred Units.
(c) PAYMENT OF DISTRIBUTIONS IN CONNECTION WITH REDEMPTION. Immediately
prior to any redemption of Series B Preferred Units, the Partnership shall pay,
in cash, any accumulated and unpaid distributions through the redemption date,
unless a redemption date falls after a Distribution Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of Series B
Preferred Units at the close of business on such Distribution Record Date shall
be entitled to the distribution payable on such units on the corresponding
Distribution Payment Date notwithstanding the redemption of such units before
such Distribution Payment Date. Except as provided above, the Partnership will
make no payment or allowance for unpaid distributions, whether or not in
arrears, on Series B Preferred Units which are redeemed.
(d) PROCEDURES FOR REDEMPTION.
(i) Notice of redemption will be (A) given by publication in a
newspaper of general circulation in the City of New York, such
publication to be made once a week for two successive weeks
commencing not less than 30 nor more than 60 days prior to the
redemption date, and (B) mailed by the Partnership, postage
prepaid, not less than 30 nor more than 60 days prior to the
redemption date, addressed to the respective holders of record of
the Series B Preferred Units to be redeemed at their respective
addresses as they appear on the stock transfer records of the
Partnership. No failure to give such notice or any defect thereto
or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series B Preferred Units
except as to the holder to whom notice was defective or not
given.
(ii) In addition to any information required by law or by the
applicable rules of any exchange upon which Series B Preferred
Units may be listed or admitted to trading, such notice shall
state: (A) the redemption date; (B) the redemption price; (C) the
number of Series B Preferred Units to be redeemed; (D) the place
or places where the Series B Preferred Units are to be
surrendered for payment of the redemption price; and (E) that
distributions on the units to be redeemed will cease to accrue on
such redemption date. If less than all of the Series B Preferred
Units held by any holder are to be redeemed, the notice mailed to
such holder shall also specify the number of Series B Preferred
Units held by such holder to be redeemed.
(iii)If notice of redemption of any Series B Preferred Units has been
given and if the funds necessary for such redemption have been
set aside by the Partnership in trust for the benefit of the
holders of any Series B Preferred Units so called for redemption,
then from and after the redemption date distributions will cease
to accrue on such Series B Preferred Units, such Series B
Preferred Units shall no longer be deemed outstanding and all
rights of the holders of such units will terminate, except the
right to receive the redemption price. Such Series B Preferred
Units shall be redeemed by the Partnership at the redemption
price plus any accrued and unpaid distributions payable upon such
redemption.
<PAGE>
6
(iv) The deposit of funds with a bank or trust corporation for the
purpose of redeeming Series B Preferred Units shall be
irrevocable except that:
(A) the Partnership shall be entitled to receive from such
bank or trust corporation the interest or other
earnings, if any, earned on any money so deposited in
trust, and the holders of any units redeemed shall have
no claim to such interest or other earnings; and
(B) any balance of monies so deposited by the Partnership
and unclaimed by the holders of the Series B Preferred
Units entitled thereto at the expiration of two years
from the applicable redemption dates shall be repaid,
together with any interest or other earnings thereon,
to the Partnership, and after any such repayment, the
holders of the units entitled to the funds so repaid to
the Partnership shall look only to the Partnership for
payment without interest or other earnings.
(6) VOTING RIGHTS.
(a) Holders of the Series B Preferred Units will not have any voting
rights, except as set forth below or as otherwise from time to time required by
law.
(b) So long as any Series B Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of at least
two-thirds of the Series B Preferred Units outstanding at the time, given in
person or by proxy, either in writing or at a meeting (voting separately as a
class), (i) authorize or create, or increase the authorized or issued amount of,
any class or series of units of the Partnership ranking senior to the Series B
Preferred Units with respect to payment of distributions or the distribution of
assets upon liquidation, dissolution or winding up or reclassify any authorized
units of the Partnership into any such units, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
such units or (ii) amend, alter or repeal the provisions of the Agreement,
whether by merger, consolidation or otherwise, so as to materially and adversely
affect any right, preference, privilege or voting power of the Series B
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (ii) above, so long as the Series B
Preferred Units remain outstanding with the terms thereof materially unchanged
or, if the Partnership is not the surviving entity in such transaction, are
exchanged for a security of the surviving entity with terms that are materially
the same as the Series B Preferred Units, the occurrence of any such event shall
not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers of the holders of the Series B Preferred Units and;
provided, further, that any increase in the amount of the authorized Preferred
Units or the creation or issuance of any other series of Preferred Units, or any
increase in the amount of authorized units of such series, in each case ranking
on a parity with or junior to the Series B Preferred Units with respect to
payment of distributions or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
<PAGE>
7
(c) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required to
be effected, all outstanding Series B Preferred Units shall have been redeemed
or called for redemption upon proper notice and sufficient funds shall have been
deposited in trust to effect such redemption.
(7) CERTAIN TRANSFER PROVISIONS
If Contributor concludes based on results or projected results that there exists
(in the reasonable judgment of Contributor) an imminent and substantial risk
that the Contributor's interest in the Partnership represents or will represent
more than 19.5% of the total profits or capital interests in the Partnership for
a taxable year (the "19.5% Limit") (determined in accordance with Treasury
Regulations Section 1.731-2(e)(4)), then Contributor shall, subject to the above
limitations, be permitted to transfer so much of its Series B Preferred Units to
a Person or Persons satisfactory to the General Partner as may be appropriate to
alleviate the risk of not satisfying the 19.5% Limit.
(8) EXCHANGE RIGHTS
(a) The Series B Preferred Units will be exchangeable in whole but not in
part unless expressly otherwise provided herein at any time on or after November
15, 2008, at the option of the holders of 51% of all outstanding Series B
Preferred Units, for authorized but previously unissued Gables Trust Series B
Preferred Shares at an exchange rate of one Gables Trust Series B Preferred
Share from the General Partner, Gables Trust, the Partnership, or any
combination of them for one Series B Preferred Unit, subject to adjustment as
described below, provided that the Series B Preferred Units will become
exchangeable at any time, in whole but not in part unless expressly otherwise
provided herein, at the option of the holders of 51% of all outstanding Series B
Preferred Units for Gables Trust Series B Preferred Shares (x) if at any time
full distributions shall not have been timely made on any Series B Preferred
Unit with respect to six (6) prior quarterly distribution periods, whether or
not consecutive, provided, however, that a distribution in respect of Series B
Preferred Units shall be considered timely made if made within two (2) Business
Days after the applicable Series B Distribution Payment Date, or (y) upon
receipt by a holder or holders of Series B Preferred Units of (A) notice from
the General Partner that the General Partner has taken the position that the
Partnership is, or upon the consummation of an identified event in the immediate
future will be, a "Publicly Traded Partnership" (a "PTP") within the meaning of
Section 7704 of the Code and (B) an opinion rendered by independent counsel
familiar with such matters addressed to a holder or holders of Series B
Preferred Units, that the Partnership is or likely is, or upon the occurrence of
a defined event in the immediate future will be or likely will be, a PTP. In
addition, the Series B Preferred Units may be exchanged for Gables Trust Series
B Preferred Shares, in whole but not in part at the option of the holders of 51%
of all outstanding Series B Preferred Units after November 15, 2001 and prior to
November 15, 2008 if such holders of Series B Preferred Units deliver to the
General Partner either (A) a private letter ruling addressed to such holder of
Series B Preferred Units or (B) an opinion of independent counsel based on the
enactment of temporary or final Treasury Regulations or the publication of a
Revenue Ruling, in either case to the effect that such exchange of the Series B
Preferred Units at such earlier time would not cause the Series B Preferred
Units to be considered "stock and securities" within the meaning of Section
<PAGE>
8
351(e) of the Code for purposes of determining whether the holder of such Series
B Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date. Furthermore, the Series B
Preferred Units, if Contributor so determines, may be exchanged in whole but not
in part (regardless of whether held by Contributor) for Gables Trust Series B
Preferred Shares if Contributor concludes based on results or projected results
that there exists (in the reasonable judgment of Contributor) an imminent and
substantial risk that the Contributor's interest in the Partnership represents
or will exceed the 19.5% Limit.
(b) Notwithstanding anything to the contrary set forth in Section 8(a), if
an Exchange Notice (as defined herein) has been delivered as provided below,
then the General Partner, Gables Trust, the Partnership, or any combination of
them may, at their option, within ten (10) Business Days after receipt of the
Exchange Notice, elect to cause the Partnership to redeem all or a portion of
the outstanding Series B Preferred Units for cash in an amount equal to the
Capital Account balance of the holders of Series B Preferred Units and all
accumulated, accrued and unpaid distributions thereon to the date of redemption.
If the foregoing election is to redeem fewer than all of the outstanding Series
B Preferred Units, the number of Series B Preferred Units held by each holder to
be redeemed shall equal such holder's pro rata share (based on the percentage of
the aggregate number of outstanding Series B Preferred Units that the total
number of Series B Preferred Units held by such holder represents) of the
aggregate number of Series B Preferred Units being redeemed.
(c) In the event an exchange of any Series B Preferred Units pursuant to
Section 8(a) would violate the provisions on ownership limitation of the Gables
Trust set forth in Article 5 of the Declaration of Trust, each holder of Series
B Preferred Units shall be entitled to exchange, pursuant to the provisions of
Section 8(d), a number of Series B Preferred Units which would comply with the
provisions on such ownership limitation of the Gables Trust ("Allowable Units")
and any Series B Preferred Units not so exchanged (the "Excess Units") shall be
redeemed by the Partnership for cash in an amount equal to the Capital Account
balance of the holders of Series B Preferred Units and all accumulated, accrued
and unpaid distributions thereon to the date of redemption attributable to such
Excess Units; provided, however, that the Partnership shall have no obligation
to redeem Excess Units for cash at such time as the terms and provisions of any
agreement of the Partnership, including any debt instrument or other agreement
relating to its indebtedness, prohibits such redemption or provides that such
redemption would constitute a breach thereof or a default thereunder, or if such
redemption shall be restricted or prohibited by law; and provided, further, that
the Partnership shall have no obligation to redeem Excess Units for cash as
provided above and the holder shall continue to retain Excess Units after the
exchange of Allowable Units for Gables Trust Series B Preferred Shares if the
requested exchange of Series B Preferred Units and related issuance of Gables
Trust Series B Preferred Shares to such holder (whether the Contributor or a
transferee, successor or assign of Contributor) would cause Gables Trust to fail
to satisfy the requirements of Section 856(a)(6) of the Code.
(d) Any exchange of Series B Preferred Units for Gables Trust Series B
Preferred shares shall be exercised pursuant to a notice of exchange (the
"Exchange Notice") delivered to the General Partner and Gables Trust by the
<PAGE>
9
holders of at least 51% of the outstanding Series B Preferred Units (or by
Contributor in the case of an exchange pursuant to the last sentence of
Section 8(a) hereof) by (a) fax and (b) certified mail postage prepaid. The
General Partner, Gables Trust and the Partnership, or any combination of them
may effect any exchange of Series B Preferred Units, or cause the Partnership to
redeem any portion of the Series B Preferred Units for cash pursuant to Section
8(b) or redeem Excess Units pursuant to Section 8(c), by delivering to each
holder of record of Series B Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (i) if the General Partner elects to
cause the Partnership to acquire any of the Series B Preferred Units then
outstanding, (1) certificates representing the Preferred Shares being issued in
exchange for the Series B Preferred Units of such holder being exchanged and (2)
a written notice stating (A) the redemption date, which may be the date of such
written notice or any other date which is not later than sixty (60) days
following the receipt of the Exchange Notice, (B) the redemption price, and
(C) that distributions on the Series B Preferred Units will cease to accrue on
such redemption date, or (ii) if the General Partner elects to cause the
Partnership to redeem all of the Series B Preferred Units then outstanding in
exchange for cash, a Redemption Notice. Series B Preferred Units shall be deemed
canceled (and any corresponding Partnership Interest represented thereby deemed
terminated) simultaneously with the delivery of shares of Gables Trust Series B
Preferred Shares (with respect to Series B Preferred Units exchanged) or
simultaneously with the redemption date (with respect to Series B Preferred
Units redeemed). Notwithstanding anything to the contrary contained herein, any
and all Series B Preferred Units to be exchanged for Gables Trust Series B
Preferred Stock pursuant to this Section 8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, the Gables Trust may
require the holders of Series B Preferred Units to make such representations as
may be reasonably necessary for the Gables Trust to establish that the issuance
of Gables Trust Series B Preferred Shares pursuant to the exchange shall not be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws. Any Gables Trust Series B Preferred Shares issued
pursuant to this Section 8 shall be delivered as shares which are duly
authorized, validly issued, fully paid and nonassessable, free of any pledge,
lien, encumbrance or restriction other than those provided in the Declaration of
Trust, the Securities Act and relevant state securities or blue sky laws. The
certificates representing the Gables Trust Series B Preferred Shares issued upon
exchange of the Series B Preferred Units shall contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL
FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER.
<PAGE>
10
(e) In the event of an exchange of Series B Preferred Units for Gables
Trust Series B Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series B Preferred Units tendered
for exchange shall (i) accrue on the Gables Trust Series B Preferred Shares into
which such Series B Preferred Units are exchanged, and (ii) continue to accrue
on such Series B Preferred Units, which shall remain outstanding following such
exchange, with the General Partner, Gables Trust, or the Partnership as
applicable as the holder of such Series B Preferred Units.
(f) Fractional Gables Trust Series B Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner, Gables Trust, or the
Partnership, as applicable will pay a cash adjustment based upon the fair market
value of the Gables Trust Series B Preferred Shares on the day prior to the
exchange date as determined in good faith by the Board of Directors of the
Gables Trust.
(g) In case the Gables Trust shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of Gables Trust's capital
stock or sale of all or substantially all of Gables Trust's assets), in each
case as a result of which the Gables Trust Series B Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series B
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Gables Trust Series B Preferred Shares or fraction
thereof into which one Series B Preferred Unit was exchangeable immediately
prior to such transaction. Gables Trust may not become a party to any such
transaction unless the terms thereof are consistent with the foregoing.
(h) Except as provided above, the holders of the Series B Preferred Units
shall not have any rights to convert such Series B Preferred Units into any
other securities of, or interest in, the Partnership.
(9) NO SINKING FUND. No sinking fund shall be established for the retirement or
redemption of Series B Preferred Units.
