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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: November 12, 1998
(Date of earliest event reported)
AMB PROPERTY CORPORATION
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(exact name of registrant as specified in its charter)
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<S> <C> <C>
MARYLAND COMMISSION FILE: 94-3281941
(State or other jurisdiction 001-13545 (I.R.S. Employer
of incorporation or Identification No.)
organization)
</TABLE>
505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(Address of Principal executive offices, including zip code)
(415) 394-9000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 12, 1998, AMB Property, L.P., a Delaware limited partnership
(the "Operating Partnership"), and a subsidiary of AMB Property Corporation, a
Maryland corporation (the "Company") and the Operating Partnership's general
partner, completed the private placement of 1,300,000 units of 8.625% Series B
Cumulative Redeemable Preferred Units (the "Series B Preferred Units"),
representing limited partnership interests in the Operating Partnership, to an
institutional investor for an aggregate cash contribution to the Operating
Partnership of $65.0 million. On November 24, 1998, AMB Property II, L.P., a
Delaware limited partnership (the "Subsidiary Operating Partnership") and a
partnership in which the Operating Partnership is the sole 99% limited partner,
completed the private placement of 2,200,000 units of 8.75% Series C Cumulative
Redeemable Preferred Units (the "Series C Preferred Units"), representing
limited partnership interests in the Subsidiary Operating Partnership, to two
institutional investors for an aggregate cash contribution to the Subsidiary
Operating Partnership of $110.0 million. The Company used the combined net
proceeds of approximately $169.8 million from both the Series B Preferred Unit
and Series C Preferred Unit offerings to repay amounts outstanding under the
Operating Partnership's unsecured credit facility and for general corporate
purposes.
SERIES B PREFERRED UNITS
General. Each Series B Preferred Unit will be entitled to receive
cumulative preferential distributions from November 12, 1998 payable on or
before the 15th of January, April, July and October of each year, commencing
January 15, 1999, at a rate of 8.625% per annum in preference to any payment
made on any other class or series of partnership interest of the Operating
Partnership, other than any class or series of partnership interest expressly
designated as ranking on parity with or senior to the Series B Preferred Units.
Ranking. The Series B Preferred Units will rank on parity with the
Operating Partnership's 8.5% Series A Cumulative Redeemable Preferred Units and
all other classes or series of preferred partnership units designated as ranking
on a parity with the Series B Preferred Units with respect to distributions and
rights upon liquidation, dissolution, or winding-up (collectively, the "Series B
Parity Preferred Units"), senior to all classes or series of preferred
partnership units designated as ranking junior to the Series B Preferred Units
and junior to all other classes or series of preferred partnership units
designated as ranking senior to the Series B Preferred Units.
Limited Consent Rights. For so long as any Series B Preferred Units
remain outstanding, the Operating Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series B Preferred Units, (i)
authorize, create or increase the authorized or issued amount of any class or
series of partnership interests ranking senior to the Series B Preferred Units
or reclassify any partnership interests of the Operating Partnership into any
such partnership interest, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
partnership interests, (ii) authorize or create, or increase the authorized or
issued amount of any Series B Parity Preferred Units or reclassify any
partnership interest of the Operating Partnership into any Series B Parity
Preferred Units or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any Series B Parity
Preferred Units but only to the extent such Series B Parity Preferred Units are
issued to an affiliate of the Operating Partnership, other than the general
partner to the
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extent the issuance of such interests was to allow the general partner to issue
corresponding preferred stock to persons who are not affiliates of the Operating
Partnership, or (iii) either consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to, any corporation or
other entity or amend, alter or repeal the provisions of the Operating
Partnership's partnership agreement, whether by merger, consolidation or
otherwise, in each case in a manner that would materially and adversely affect
the powers, special rights, preferences, privileges or voting power of the
Series B Preferred Units or the holders of Series B Preferred Units.
Redemption and Exchange. Beginning November 12, 2003, the Series B
Preferred Units may be redeemed by the Operating Partnership out of proceeds
from issuances the Company's capital stock at a redemption price equal to $50.00
per unit, plus accrued and unpaid distributions to the date of redemption.
Beginning November 12, 2008, the Series B Preferred Units may be exchanged, in
whole but not in part, into shares of the Company's 8.625% Series B Cumulative
Redeemable Preferred Stock (the "Series B Preferred Stock") at the option of 51%
of the holders. In addition, the Series B Preferred Units may be exchanged, in
whole but not in part, into shares of Series B Preferred Stock at any time at
the option of 51% of the holders if (i) distributions on the Series B Preferred
Units have not been made for six prior quarterly distribution periods, whether
or not consecutive or (ii) the Operating Partnership is or is likely to become a
"publicly traded partnership" for federal income tax purposes. In addition, the
Series B Preferred Units may be exchanged, in whole but not in part, on or after
November 12, 2001 and prior to November 12, 2008 if the Series B Preferred Units
would not be considered "stock and securities" for federal income tax purposes.
The Series B Units also are exchangeable, in whole but not in part, if the
initial holder determines that its interest is the Operating Partnership is or
is likely to represent more than 19.5% of the total profits or capital interests
in the Operating Partnership for any taxable year. The Company may, in lieu of
exchanging the Series B Preferred Units for shares of Series B Preferred Stock,
elect to redeem all or a portion of the Series B Preferred Units for cash in an
amount equal to $50 per unit plus accrued and unpaid distributions. The right of
the holders of Series B Preferred Units to exchange the Series B Preferred Units
for shares of Series B Preferred Stock shall in each case be subject to the
ownership limitations set forth in the Company's charter in order for the
Company to maintain its qualification as a real estate investment trust (a
"REIT") for federal income tax purposes.
SERIES B PREFERRED STOCK
General. Each share of Series B Preferred Stock (the "Series B Preferred
Shares") into which the Series B Preferred Units may be exchanged will be
entitled to receive cumulative preferential dividends from the date of issue
(including any accrued but unpaid distributions in respect of Series B Preferred
Units at the time that such units are exchanged for shares of Series B Preferred
Stock) payable on or before the 15th of January, April, July and October of each
year, in cash, at the rate of 8.625% per annum in preference to any payment made
on any other classes or series of capital stock or other equity securities of
the Company ranking junior to the Series B Preferred Stock.
Ranking. The Series B Preferred Stock will rank on parity with the
Company's 8.50% Series A Cumulative Redeemable Preferred Stock, its 8.75% Series
C Cumulative Redeemable Preferred Stock, if and when issued, and all other
classes or series of preferred stock designated as ranking on a parity with the
Series B Preferred Stock with respect to distributions and rights upon
liquidation, dissolution, or winding-up (collectively, the "Series B Parity
Preferred Stock"), senior to all classes or series of preferred stock designated
as ranking junior to the Series B Preferred Stock and junior to all other
classes or series of preferred partnership units designated as ranking senior to
Series B Preferred Stock.
Redemption. The Series B Preferred Stock may be redeemed, at the
Company's option, on and after November 12, 2003, in whole or in part from time
to time, at a redemption price payable in cash equal to $50.00 per share, plus
any accrued but unpaid dividends to the date of redemption. The Company may
redeem Series B Preferred Stock prior to November 12, 2003 to the extent
necessary to maintain its qualification as a REIT. The redemption price of the
Series B Preferred Stock (other than the portion of the
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redemption price consisting of accumulated but unpaid dividends) will be payable
solely out of proceeds from issuances of the Company's capital stock.
Limited Voting Rights. If dividends on any Series B Preferred Shares
remain unpaid for six or more quarterly periods (whether or not consecutive),
the holders of such Series B Preferred Shares (voting as a single class with all
other shares of Series B Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable) will be entitled to vote for the
election of two additional directors of the Company who will be elected by a
plurality of the votes cast in such election for a one-year term and until their
successors are duly elected and qualify (or until such director's right to hold
such office terminates, whichever occurs earlier, subject to such director's
earlier death, disqualification, resignation or removal), at a special meeting
called by the holders of at least 20% of the outstanding Series B Preferred
Shares or the holders of shares of any other class or series of Series B Parity
Preferred Stock with respect to which dividends are also accrued and unpaid
(unless such request is received less than 90 days before the date fixed for the
next annual or special meeting of stockholders) or, if the request for a special
meeting is received by the Company less than 90 days before the date fixed for
the next annual or special meeting of stockholders, at the next annual or
special meeting of stockholders, and at each subsequent annual meeting until all
dividends accumulated on the Series B Preferred Shares for all past dividend
periods and the dividend for the then current dividend period have been fully
paid or declared and a sum sufficient for the payment of such dividends
irrevocably set aside in trust for payment in full. Upon the payment in full of
all such dividends, the holders of Series B Preferred Stock will be divested of
their voting rights and the term of any member of the Board of Directors elected
by the holders of Series B Preferred Stock and holders of any other shares of
Series B Parity Preferred Stock will terminate.
In addition, for so long as any shares of Series B Preferred Stock are
outstanding, without the consent of two-thirds of the holders of the Series B
Preferred Stock then outstanding, the Company shall not (i) authorize or create
or increase the authorized or issued amount of any shares ranking senior to the
Series B Preferred Stock or reclassify any authorized shares of the Company into
any such shares, (ii) designate or create, or increase the authorized or issued
amount of, or reclassify any authorized shares of the Company into any Series B
Parity Preferred Stock, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such shares,
but only to the extent such Series B Parity Preferred Stock is issued to an
affiliate of the Company, or (iii) either (A) consolidate, merge into or with,
or convey, transfer or lease its assets substantially as an entirety, to any
corporation or other entity, or (B) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation or
otherwise, in each case that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series B
Preferred Stock or the holders of Series B Preferred Stock. The Series B
Preferred Stock will have no voting rights other than as discussed above and as
otherwise provided by applicable law.
Liquidation Preference. Each share of Series B Preferred Stock is
entitled to a liquidation preference of $50.00 per share, plus any accrued but
unpaid dividends, in preference to any other class or series of capital stock of
the Company, other than any class or series of equity securities of the Company
expressly designated as ranking on a parity with or senior to the Series B
Preferred Stock.
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SERIES C PREFERRED UNITS
General. Each Series C Preferred Unit will be entitled to receive
cumulative preferential distributions from November 24, 1998 payable on or
before the 15th of January, April, July and October of each year, commencing
January 15, 1999, at a rate of 8.75% per annum in preference to any payment made
on any other class or series of partnership interest of the Subsidiary Operating
Partnership, other than any class or series of partnership interest expressly
designated as ranking on parity with or senior to the Series C Preferred Units.
Ranking. The Series C Preferred Units will rank on parity with all
classes or series of preferred partnership units designated as ranking on a
parity with the Series C Preferred Units with respect to distributions and
rights upon liquidation, dissolution and winding-up (collectively, the "Series C
Parity Preferred Units"), senior to all classes or series of preferred
partnership units designated as ranking junior to the Series C Preferred Units
and junior to all other classes or series of preferred partnership units
designated as ranking senior to the Series C Preferred Units.
Limited Consent Rights. For so long as any Series C Preferred Units
remain outstanding, the Subsidiary Operating Partnership shall not, without the
affirmative vote of the holders of at least two-thirds of the Series C Preferred
Units (i) authorize, create or increase the authorized or issued amount of any
class or series of partnership interests ranking prior to the Series C Preferred
Units or reclassify any partnership interests of the Subsidiary Operating
Partnership into any such partnership interest, or create, authorize or issue
any obligations or security convertible into or evidencing the right to purchase
any such partnership interests, (ii) authorize or create, or increase the
authorized or issued amount of any Series C Parity Preferred Units or reclassify
any partnership interest of the Subsidiary Operating Partnership into any such
partnership interest or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such partnership
interests but only to the extent such Series C Parity Preferred Units are issued
to an affiliate of the Subsidiary Operating Partnership, other than the general
partner to the extent the issuance of such interests was to allow the general
partner to issue corresponding preferred stock to persons who are not affiliates
of the Subsidiary Operating Partnership, or (iii) either consolidate, merge into
or with, or convey, transfer or lease its assets substantially as an entirety
to, any corporation or other entity or amend, alter or repeal the provisions of
the Subsidiary Operating Partnership's partnership agreement, whether by merger,
consolidation or otherwise, in each case in a manner that would materially and
adversely affect the powers, special rights, preferences, privileges or voting
power of the Series C Preferred Units or the holders of Series C Preferred
Units.
Redemption and Exchange. Beginning November 24, 2003, the Series C
Preferred Units may be redeemed by the Subsidiary Operating Partnership out of
proceeds from issuances the Company's capital stock at a redemption price equal
to $50.00 per unit, plus accrued and unpaid distributions to the date of
redemption. Beginning November 24, 2008, the Series C Preferred Units may be
exchanged, in whole but not in part, into shares of the Company's 8.75% Series C
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") at the
option of 51% of the holders. In addition, the Series C Preferred Units may be
exchanged, in whole but not in part, into shares of Series C Preferred Stock at
any time at the option of 51% of the holders if (i) distributions on the Series
C Preferred Units have not been made for six prior quarterly distribution
periods, whether or not consecutive or (ii) the Subsidiary Operating Partnership
is or is likely to become a "publicly traded
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partnership" for federal income tax purposes. In addition, the Series C
Preferred Units may be exchanged, in whole but not in part, on or after November
24, 2001 and prior to November 24, 2008 if the Series C Preferred Units would
not be considered "stock and securities" for federal income tax purposes. The
Series C Units also are exchangeable, in whole but not in part, if the initial
holder determines that its interest in the Subsidiary Operating Partnership is
or is likely to represent more than 19.5% of the total profits or capital
interests in the Subsidiary Operating Partnership for any taxable year. The
Company may, in lieu of exchanging the Series C Preferred Units for shares of
Series C Preferred Stock, elect to redeem all or a portion of the Series C
Preferred Units for cash in an amount equal to $50 per unit plus accrued and
unpaid distributions. The right of the holders of Series C Preferred Units to
exchange the Series C Preferred Units for shares of Series C Preferred Stock
shall in each case be subject to the ownership limitations set forth in the
Company's charter in order for the Company to maintain its qualification as a
REIT for federal income tax purposes.
SERIES C PREFERRED STOCK
General. Each share of Series C Preferred Stock (the "Series C Preferred
Shares") into which the Series C Preferred Units may be exchanged will be
entitled to receive cumulative preferential dividends from the date of issue
(including any accrued but unpaid distributions in respect of Series C Preferred
Units at the time that such units are exchanged for shares of Series C Preferred
Stock) payable on or before the 15th of January, April, July and October of each
year, in cash, at the rate of 8.75% per annum in preference to any payment made
on any other classes or series of capital stock or other equity securities of
the Company, other than any class or series of equity securities of the Company
expressly designated as ranking on a parity with or senior to the Series C
Preferred Stock.
Ranking. The Series C Preferred Stock will rank on parity with the
Company's 8.50% Series A Cumulative Redeemable Preferred Stock, its 8.75% Series
C Cumulative Redeemable Preferred Stock, if and when issued, and all other
classes or series of preferred stock designated as ranking on a parity with the
Series C Preferred Stock with respect to distributions and rights upon
liquidation, dissolution, or winding-up (collectively, the "Series C Parity
Preferred Stock"), senior to all classes or series of preferred stock designated
as ranking junior to the Series C Preferred Stock and junior to all other
classes or series of preferred partnership units designated as ranking senior to
Series C Preferred Stock.
Redemption. The Series C Preferred Stock may be redeemed, at the
Company's option, on and after November 24, 2003, in whole or in part from time
to time, at a redemption price payable in cash equal to $50.00 per share, plus
any accrued but unpaid dividends to the date of redemption. The Company may
redeem Series C Preferred Stock prior to November 24, 2003 to the extent
necessary to maintain its qualification as a REIT. The redemption price of the
Series C Preferred Stock (other than the portion of the redemption price
consisting of accumulated but unpaid dividends) will be payable solely out of
proceeds from issuances of the Company's of capital stock.
Limited Voting Rights. If dividends on any Series C Preferred Shares
remain unpaid for six or more quarterly periods (whether or not consecutive),
the holders of such Series C Preferred Shares (voting as a single class with all
other shares of Series C Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable) will be entitled to vote for the
election of two additional directors of the Company who will be elected by a
plurality of the votes cast in such election for a one-year term and until their
successors are duly elected and shall qualify (or until such director's right to
hold such office terminates, whichever occurs earlier, subject to such
director's earlier death, disqualification, resignation or removal), at a
special meeting called by the holders of at least 20% of the outstanding Series
C Preferred Shares or the holders of shares of any other class or series of
Series C Parity Preferred Stock with respect to which dividends are also accrued
and unpaid (unless such request is received less than 90 days before the date
fixed for the next annual or special meeting of stockholders) or, if the request
for a special meeting is received by the Company less than 90 days before the
date fixed for the next annual or special meeting of stockholders, at the next
annual or special meeting of stockholders, and at each subsequent annual meeting
until all dividends accumulated on the Series C Preferred Shares for all past
dividend periods and the dividend for the then current
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dividend period have been fully paid or declared and a sum sufficient for the
payment of such dividends irrevocably set aside in trust for payment in full.
Upon the payment in full of all such dividends, the holders of Series C
Preferred Stock will be divested of their voting rights and the term of any
member of the Board of Directors elected by the holders of Series C Preferred
Stock and holders of any other shares of Series C Parity Preferred Stock will
terminate.
In addition, for so long as any shares of Series C Preferred Stock are
outstanding, without the consent of two-thirds of the holders of the Series C
Preferred Stock then outstanding, the Company shall not (i) authorize or create
or increase the authorized or issued amount of any shares ranking senior to the
Series C Preferred Stock or reclassify any authorized shares of the Company into
any such shares, (ii) designate or create, or increase the authorized or issued
amount of, or reclassify any authorized shares of the Company into any Series C
Parity Preferred Stock, or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such shares,
but only to the extent such Series C Parity Preferred Stock is issued to an
affiliate of the Company, or (iii) either (A) consolidate, merge into or with,
or convey, transfer or lease its assets substantially as an entirety, to any
corporation or other entity, or (B) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation or
otherwise, in each case that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series C
Preferred Stock or the holders of Series C Preferred Stock. The Series C
Preferred Stock will have no voting rights other than as discussed above and as
otherwise provided by applicable law.
Liquidation Preference. Each share of Series C Preferred Stock is
entitled to a liquidation preference of $50.00 per share, plus any accrued but
unpaid dividends, in preference to any other class or series of capital stock of
the Company, other than any class or series of equity securities of the Company
expressly designated as ranking on a parity with or senior to the Series C
Preferred Stock.
* * * * *
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) EXHIBITS
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EXHIBIT
NO. DESCRIPTION
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3.1 Articles Supplementary of the Registrant, filed November 12,
1998
3.2 Articles Supplementary of the Registrant, filed November 24,
1998
3.3 Registration Rights Agreement dated November 12, 1998
3.4 Registration Rights Agreement dated November 24, 1998
10.1 Third Amended and Restated Agreement of Limited Partnership of
AMB Property, L.P. dated November 12, 1998
10.2 Third Amended and Restated Agreement of Limited Partnership of
AMB Property II, L.P. dated November 24, 1998
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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,
AMB PROPERTY CORPORATION
Date: January 7, 1999 By: /s/ MICHAEL A. COKE
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Name: Michael A. Coke
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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<S> <C>
3.1 Articles Supplementary of the Registrant, filed November 12,
1998
3.2 Articles Supplementary of the Registrant, filed November 24,
1998
3.3 Registration Rights Agreement dated November 12, 1998
3.4 Registration Rights Agreement dated November 24, 1998
10.1 Third Amended and Restated Agreement of Limited Partnership of
AMB Property, L.P. dated November 12, 1998
10.2 Third Amended and Restated Agreement of Limited Partnership of
AMB Property II, L.P. dated November 24, 1998
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II-1
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EXHIBIT 3.1
AMB PROPERTY CORPORATION
ARTICLES SUPPLEMENTARY
ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF 8 5/8% SERIES B CUMULATIVE
REDEEMABLE PREFERRED STOCK
AMB Property Corporation, a corporation organized and existing under the
laws of the State of Maryland (the "Corporation"), certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation (sometimes referred to herein as the "Board") by
Article IV of the Articles of Incorporation of the Corporation filed with the
Department on November 24, 1997, which comprises, together with the Articles
Supplementary filed by the Corporation on July 23, 1998 establishing a class of
Preferred Stock of the Corporation, par value $0.01 per share (the "Preferred
Stock"), designated as the "8 1/2% Series A Cumulative Redeemable Preferred
Stock" (the "Series A Preferred Stock") and these Articles Supplementary, the
charter (the "Charter") of the Corporation, and Section 2-105 of the Maryland
General Corporation Law (the "MGCL"), the Board of Directors of the Corporation,
on September 3, 1998, adopted resolutions authorizing the Corporation, among
other things, to issue up to a stated maximum number of shares of Preferred
Stock of the Corporation, having a stated maximum aggregate liquidation
preference and dividend rate and certain other stated terms applicable to the
issuance thereof, and appointing, pursuant to the MGCL and the powers contained
in the Bylaws of the Corporation, a committee (the "Committee") of the Board of
Directors comprised of Hamid R. Moghadam and delegating to the Committee, to the
fullest extent permitted by Maryland law and the Charter and Bylaws of the
Corporation, all powers of the Board of Directors with respect to classifying,
authorizing, approving, ratifying and/or confirming the terms of the Preferred
Stock to be issued, including, without limitation, the preferences, conversion
and other rights, voting powers, restrictions, limitations as to dividends and
other distributions, qualifications and terms and conditions of redemption, and
determining the consideration per share to be received in respect of the
issuance and sale of each share of Preferred Stock to be issued and sold, and
the number of shares of Preferred Stock to be so classified or reclassified and
issued by the Corporation, subject to the limitations set forth in the
resolutions of the Board of Directors adopted on September 3, 1998.
SECOND: Pursuant to the authority conferred upon the Committee as
aforesaid, the Committee has, on November 11, 1998, adopted resolutions
classifying and designating a separate class of Preferred Stock as the 8 5/8%
Series B Cumulative Redeemable Preferred
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Stock, with the preferences, conversions and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption and other terms and
conditions of such 8 5/8% Series B Cumulative Redeemable Preferred Stock (within
the limitations set by the Board of Directors in the resolutions adopted on
September 3, 1998 and referred to in Article First of these Articles
Supplementary) and establishing 1,300,000 as the number of shares to be so
classified and designated, and authorizing the issuance of up to 1,300,000
shares of 8 5/8% Series B Cumulative Redeemable Preferred Stock.
THIRD: The separate class of Preferred Stock of the Corporation created
by the resolutions duly adopted by the Board of Directors of the Corporation and
by the Committee and referred to in Articles First and Second of these Articles
Supplementary shall have the designation, number of shares, preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption and other terms
and conditions as follows (and which, upon any restatement of the Charter, may
be made a part of Article IV thereof, with any necessary or appropriate changes
to the numeration or lettering of the sections or subsections hereof):
(1) DESIGNATION AND NUMBER. A class of Preferred Stock, designated the
"8 5/8% Series B Cumulative Redeemable Preferred Stock" (the "Series B Preferred
Stock"), is hereby established. The number of shares of Series B Preferred Stock
shall be 1,300,000 (the "Series B Preferred Shares").
(2) RANK. The Series B Preferred Shares will rank, with respect to
dividend rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, (a) senior to all classes or
series of Common Stock (as defined in the Charter) and to all equity securities
of the Corporation the terms of which provide that such equity securities shall
rank junior to such Series B Preferred Shares; (b) on a parity with all equity
securities issued by the Corporation other than those referred to in clauses (a)
and (c) (including the Series A Preferred Stock); and (c) junior to all equity
securities issued by the Corporation which rank senior to the Series B Preferred
Shares in accordance with Section 6(d) of this Article Third. The term "equity
securities" does not include convertible debt securities.
(3) DIVIDENDS.
(a) Holders of Series B Preferred Shares shall be entitled to receive,
if, when and as authorized by the Board, out of funds legally available for the
payment of dividends, cumulative preferential cash dividends at the rate of 8
5/8% of the $50.00 liquidation preference per annum (equivalent to $4.3125 per
annum per share). Such dividends shall accumulate on a daily basis computed on
the basis of a 360-day year consisting of twelve 30-day months and be
cumulative,
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shall accrue from the original date of issuance and shall be payable quarterly
in equal amounts in arrears on the 15th day of each January, April, July and
October, or, if not a business day, the next succeeding business day (each a
"Dividend Payment Date"). Dividends shall be payable to holders of record as
they appear in the share records of the Corporation at the close of business on
the applicable record date (each, a "Dividend Record Date"), which shall be the
date designated by the Board for the payment of dividends that is not more than
30 nor less than 10 days prior to the applicable payment date therefor. Any
dividend payable on the Series B Preferred Shares for any partial dividend
period shall be prorated and computed on the basis of a 360-day year consisting
of twelve 30-day months. If any date on which distributions are to be made on
the Series B Preferred Stock is not a Business Day (as defined herein), 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 any 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 such date. Notwithstanding any provision to the contrary contained herein,
each outstanding share of Series B Preferred Stock shall be entitled to receive,
and shall receive, a dividend with respect to any Dividend Record Date equal to
the dividend paid with respect to each other share of Series B Preferred Stock
which is outstanding on such date. In addition, notwithstanding anything to the
contrary set forth herein, each share of Series B Preferred Stock shall also
continue to accrue all accrued and unpaid distributions up to the exchange date
on any Series B Preferred Unit (as defined in the Third Amended and Restated
Limited Partnership Agreement of AMB Property, L.P. dated as of November 12,
1998, as amended and supplemented from time to time (the "Partnership
Agreement")) validly exchanged into such share of Series B Preferred Stock in
accordance with the provisions of the Partnership Agreement.
(b) No dividend on the Series B Preferred Shares shall be authorized by
the Board or be paid or set apart for payment by the Corporation at such time as
the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof, or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
(c) Notwithstanding anything to the contrary contained herein, dividends
on the Series B Preferred Shares shall accumulate whether or not restrictions
exist in respect thereof, whether or not there are funds legally available for
the payment thereof and whether or not such dividends are declared. Accumulated
but unpaid dividends on the Series B Preferred Shares will accumulate as of the
Dividend Payment Date on which they first become payable or on the date of
redemption, as the case may be.
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(d) If any Series B Preferred Shares are outstanding, no full dividends
will be declared or paid or set apart for payment on any other equity securities
of the Corporation of any other class or series ranking, as to distributions or
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, junior to or on a parity with the Series B Preferred Shares
(including the Series A Preferred Stock) unless full cumulative dividends have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series B Preferred
Shares for all dividend periods. When dividends are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series B
Preferred Shares and any other equity securities ranking as to distributions on
a parity with the Series B Preferred Shares (including the Series A Preferred
Stock), all dividends declared upon the Series B Preferred Shares and any other
equity securities of the Corporation ranking on a parity with the Series B
Preferred Stock as to distributions and upon voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (including the Series
A Preferred Stock) shall be declared pro rata so that the amount of dividends
declared per Series B Preferred Share and each such other equity securities
shall in all cases bear to each other the same ratio that accumulated dividends
per Series B Preferred Share and such other equity securities (which shall not
include any accumulation in respect of unpaid dividends for prior dividend
periods if such other equity securities 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.
(e) 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 dividend periods, no dividends
(other than in Common Stock or other equity securities of the Corporation
ranking junior to the Series B Preferred Shares as to distributions and upon
voluntary or involuntary liquidation, dissolution and winding up of the
Corporation) shall be declared or paid or set aside for payment nor shall any
other dividend be declared or made upon the Common Stock or any other equity
securities of the Corporation ranking as to distributions or upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation junior to
or on a parity with the Series B Preferred Stock (including the Series A
Preferred Stock), nor shall any Common Stock or any other equity securities of
the Corporation ranking junior to or on a parity with the Series B Preferred
Stock as to distributions or upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (including the Series A Preferred
Stock) be redeemed, purchased or otherwise acquired for any consideration (or
any monies be paid to or made available for a sinking fund for the redemption of
any such securities) by the Corporation (except by conversion into or exchange
for other equity securities of the Corporation ranking junior to the Series B
Preferred Stock as to distributions and upon voluntary and involuntary
liquidation, dissolution and winding up of the Corporation, and except
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<PAGE> 5
pursuant to Section 7 of this Article Third to ensure the Corporation's
continued status as a REIT or comparable Charter provisions with respect to
other classes or series of the Corporation's stock).
(f) Accumulated but unpaid dividends on the Series B Preferred Shares
will not bear interest and holders of Series B Preferred Shares shall not be
entitled to any dividend in excess of full cumulative dividends as described
above. Any dividend payment made on the Series B Preferred Shares shall first be
credited against the earliest accumulated but unpaid dividend due with respect
to such shares which remains payable.
(g) If, for any taxable year, the Corporation elects to designate as a
"capital gain dividend" (as defined in Section 857 of the Code), any portion
(the "Capital Gains Amount") of the dividends paid or made available for the
year to holders of any class or series of stock of the Corporation, the portion
of the Capital Gains Amount that shall be allocable to holders of the Series B
Preferred Stock shall be the amount that the total dividends (as determined for
Federal income tax purposes) paid or made available to the holders of the Series
B Preferred Stock for the year bears to the aggregate amount of dividends (as
determined for Federal income tax purposes) paid or made available to the
holders of all classes or series of stock of the Corporation for such year.
(4) LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of Series B Preferred
Shares then outstanding shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders remaining
after payment or provision for payment of all debts and liabilities of the
Corporation, a liquidation preference in cash of $50.00 per share, plus an
amount equal to any accumulated and unpaid dividends to the date of such
payment, before any distribution of assets is made to holders of Common Stock or
any other equity securities of the Corporation that rank junior to the Series B
Preferred Shares as to liquidation rights.
(b) If, upon any such voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation are insufficient
to make full payment to holders of Series B Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of equity
securities of the Corporation ranking on a parity with the Series B Preferred
Shares as to liquidation rights (including the Series A Preferred Stock), then
the holders of the Series B Preferred Shares and all other such classes or
series of 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.
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(c) Written notice of any such liquidation, dissolution or winding up of
the Corporation, 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 Corporation.
(d) 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 Corporation.
(e) The consolidation or merger of the Corporation with or into any
other entity, a merger of another entity with or into the Corporation, a
statutory share exchange by the Corporation or a sale, lease, transfer or
conveyance of all or substantially all of the property or business of the
Corporation shall not be deemed to constitute a liquidation, dissolution or
winding up of the Corporation.
(f) In determining whether a distribution (other than upon voluntary or
involuntary liquidation, dissolution or winding up of the Corporation) by
dividend, redemption or other acquisition of shares of stock of the Corporation
or otherwise is permitted under the MGCL, no effect shall be given to amounts
that would be needed, if the Corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of holders of
the Series B Preferred Shares whose preferential rights upon dissolution are
superior to those receiving the distribution.
(5) OPTIONAL REDEMPTION.
(a) The Series B Preferred Shares are not redeemable prior to November
12, 2003. To ensure that the Corporation remains a qualified real estate
investment trust ("REIT") for federal income tax purposes, however, the Series B
Preferred Shares shall be subject to the provisions of Section 7 of this Article
Third pursuant to which Series B Preferred Shares owned by a stockholder in
excess of the Ownership Limit (as defined in Section 7 of this Article Third) or
certain other limitations shall automatically be transferred to a Trust for the
benefit of a Charitable Beneficiary (as defined in Section 7 of this Article
Third) and the Corporation shall have the right to purchase such shares, as
provided in Section 7 of this Article Third. On and after November 12, 2003, the
Corporation, at its option, upon giving notice as provided below, may redeem the
Series B Preferred Shares, in whole or from time to time in part, for cash, at a
redemption price of $50.00 per share, plus all accumulated and unpaid dividends
on such Series B Preferred Shares to the date fixed for redemption.
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<PAGE> 7
(b) The redemption price of the Series B Preferred Shares (other than
any portion thereof consisting of accumulated and unpaid dividends) is payable
solely from the sale proceeds of other equity securities of the Corporation, and
not from any other source. For purposes of the preceding sentence, "equity
securities" means any equity securities (including Common Stock and Preferred
Stock (as defined in the Charter)), depositary shares in respect of any of the
foregoing, interests, participations 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.
(c) If fewer than all of the outstanding Series B Preferred Shares are
to be redeemed, the shares to be redeemed shall be selected pro rata (as nearly
as practicable without creating fractional shares) or by lot or by any other
equitable method determined by the Corporation. If such redemption is to be by
lot and, as a result of such redemption, any holder of Series B Preferred Shares
would become a holder of a number of Series B Preferred Shares in excess of the
Ownership Limit (or other limitations set forth in Section 7 of this Article
Third) because such holder's Series B Preferred Shares were not redeemed, or
were only redeemed in part, then, except as otherwise provided in the Charter,
the Corporation will redeem the requisite number of Series B Preferred Shares of
such holder such that no holder will hold in excess of the Ownership Limit (or
such other limits) subsequent to such redemption.
(d) Notwithstanding anything to the contrary contained herein, 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; provided,
however, that the foregoing shall not prevent the purchase by the Corporation of
Series B Preferred Shares pursuant to Section 7 of this Article Third or
otherwise in order to ensure that the Corporation remains qualified as a REIT
for Federal or state 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. In addition,
unless full cumulative dividends on all outstanding Series B Preferred Shares
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all dividend
periods, the Corporation shall not purchase or otherwise acquire directly or
indirectly any Series B Preferred Shares or any equity securities of the
Corporation ranking junior to or on a parity with the Series B Preferred Shares
as to dividends or upon voluntary or involuntary liquidation, dissolution or
winding up of the Corporation (including the Series A Preferred Stock) (except
by conversion into or exchange for equity securities of the Corporation ranking
junior to the Series B Preferred Shares as to dividends and upon voluntary or
involuntary liquidation, dissolution or winding up of the
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Corporation and except pursuant to Section 7 of this Article Third or comparable
Charter provisions with respect to other classes or series of the Corporation's
stock).
(e) The holders of shares of Series B Preferred Stock at the close of
business on a Dividend Record Date will be entitled to receive the dividend
payable with respect to the shares of Series B Preferred Stock held on the
corresponding Dividend Payment Date notwithstanding the redemption thereof
between such Dividend Record Date and the corresponding Dividend Payment Date or
the Corporation's default in the payment of the dividend due. Except as provided
herein, the Corporation will make no payment or allowance for unpaid dividends,
whether or not in arrears, on Series B Preferred Shares to be redeemed.
(f) The following provisions set forth the procedures for Redemption:
(i) Notice of redemption will be 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. A similar notice will be mailed by
the Corporation, 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 share records of the Corporation. No failure to give such notice
or any defect therein or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series B Preferred Shares 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 the 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 Series B Preferred Shares to be
redeemed; (D) the place or places where the certificates evidencing shares of
Series B Preferred Shares are to be surrendered for payment of the redemption
price; and (E) that dividends on the Series B Preferred Shares to be redeemed
will cease to accumulate on such redemption date. If fewer 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
to be redeemed from such holder.
(iii) On or after the redemption date, each holder of Series B
Preferred Shares to be redeemed shall present and surrender the certificates
representing such holder's Series B Preferred Shares to the Corporation at the
place designated in the notice of redemption and shall be entitled to the
redemption price and any accumulated and unpaid dividends payable upon such
redemption upon such surrender and thereupon the redemption price of such shares
(including all accumulated and unpaid dividends up to the redemption date) shall
be paid to or on the order of
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<PAGE> 9
the person whose name appears on such certificate representing Series B
Preferred Shares as the owner thereof and each surrendered certificate shall be
canceled. If fewer than all the shares represented by any such certificate
representing Series B Preferred Shares are to be redeemed, a new certificate
shall be issued representing the unredeemed shares.
(iv) 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 Corporation in trust for the benefit of the holders thereof, then from and
after the redemption date all dividends on such Series B Preferred Shares shall
cease to accumulate and any such Series B Preferred Shares will no longer be
deemed outstanding and all rights of the holders thereof will terminate, except
the right to receive the redemption price (including all accumulated and unpaid
dividends up to the redemption date) and such shares shall not thereafter be
transferred (except with the consent of the Corporation) on the Corporation's
stock transfer records. At its election, the Corporation, prior to a redemption
date, may irrevocably deposit the redemption price (including accumulated and
unpaid dividends to the redemption date) of the Series B Preferred Shares so
called for redemption in trust for the holders thereof with a bank or trust
company, in which case the redemption notice to holders of the Series B
Preferred Shares to be redeemed shall (A) state the date of such deposit, (B)
specify the office of such bank or trust company as the place of payment of the
redemption price and (C) require such holders to surrender the certificates
representing such shares at such place on or about the date fixed in such
redemption notice (which may not be later than the redemption date) against
payment of the redemption price (including all accumulated and unpaid dividends
to the redemption date). Any monies so deposited which remain unclaimed by the
holders of the Series B Preferred Shares at the end of two years after the
redemption date shall be returned by such bank or trust company to the
Corporation.
(g) 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 Stock, without further designation as to series or class
until such shares are once more designated as part of a particular series or
class by the Board.
(6) VOTING RIGHTS.
(a) Holders of the Series B Preferred Shares will not have any voting
rights, except as set forth below.
(b) Whenever dividends on any Series B Preferred Shares shall remain
unpaid for six or more quarterly periods (whether or not consecutive) (a
"Preferred Dividend Default"), the holders of such Series B Preferred Shares
(voting as a single class with all other equity securities of the Corporation
ranking on a parity with the Series B Preferred Shares as to dividends and
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upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation upon which like voting rights have been conferred and are
exercisable, including the Series A Preferred Stock ("Parity Preferred Stock"))
will be entitled to vote for the election of two additional directors of the
Corporation (the "Preferred Stock Directors"), who will be elected for a
one-year term and until their successors are duly elected and shall qualify (or
until such director's right to hold such office terminates as provided herein,
whichever occurs earlier, subject to such director's earlier death,
disqualification, resignation or removal), at a special meeting called by the
holders of at least 20% of the outstanding Series B Preferred Shares or the
holders of shares of any other class or series of Parity Preferred Stock with
respect to which dividends are so unpaid (unless such request is received less
than 90 days before the date fixed for the next annual or special meeting of
stockholders) or, if the request for a special meeting is received by the
Corporation less than 90 days before the date fixed for the next annual or
special meeting of stockholders, at the next annual or special meeting of
stockholders, and at each subsequent annual meeting until all dividends
accumulated on the Series B Preferred Shares for all 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 in
full.
(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 declared by the Corporation and 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) of this Article Third (subject to revesting in the event
of each and every Preferred Dividend Default) and, if all accumulated dividends
have been paid in full or declared by the Corporation and set aside for payment
in full on all other classes or series of Parity Preferred Stock upon which like
voting rights have been conferred and are exercisable, the term of office of
each Preferred Stock Director so elected shall forthwith terminate. Any
Preferred Stock Director elected by the holders of Series B Preferred Shares and
any other such Parity Preferred Shares 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 a majority of the outstanding Series B Preferred Shares
when they only have the voting rights set forth, or like those set forth, in
Section 6(b) of this Article Third, and by the majority vote of the Series B
Preferred Shares and all other classes or series of Parity Preferred Stock upon
which like voting rights have been conferred and are exercisable (voting as a
single class) when the Series B Preferred Shares and such Parity Preferred Stock
is entitled to vote thereon. So long as a Preferred Dividend Default shall
continue, any vacancy in the office of a Preferred Stock Director so elected may
be filled by written consent of the Preferred Stock Director so elected
remaining in office or, if none remains in office, by a vote of the holders of a
majority of the outstanding Series B Preferred Shares when they only have the
voting rights set forth, or like those set forth, in Section 6(b) of this
Article Third, and by the majority vote of the Series B Preferred Shares and
other classes or series of Parity Preferred Stock upon which like voting
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rights have been conferred and are exercisable (voting as a single class) when
the Series B Preferred Shares and such Parity Preferred Stock is entitled to
vote thereon.
(d) So long as any Series B Preferred Stock remains outstanding, the
Corporation shall not, without the affirmative vote of the holders of at least
two-thirds of the Series B Preferred Stock outstanding at the time (i) authorize
or create, or increase the authorized or issued amount of, any class or series
of shares ranking senior to the Series B Preferred Stock with respect to payment
of distributions or rights upon liquidation, dissolution or winding-up or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, (ii) designate or create, or
increase the authorized or issued amount of, any Parity Preferred Stock or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, but only to the extent such
Parity Preferred Stock is issued to an affiliate of the Corporation, or (iii)
either (A) consolidate, merge into or with, or convey, transfer or lease its
assets substantially as an entirety, to any corporation or other entity, or (B)
amend, alter or repeal the provisions of the Corporation's Charter (including
these Articles Supplementary) or Bylaws, whether by merger, consolidation or
otherwise, in each case that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series B
Preferred Stock or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Corporation is the surviving entity and the Series B Preferred Stock remains
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a corporation organized under the laws of any state and
substitutes the Series B Preferred Stock for other preferred stock having
substantially the same terms and same rights as the Series B Preferred Stock,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed materially and adversely affect such rights, privileges or
voting powers of the holders of the Series B Preferred Stock and provided
further that any increase in the amount of authorized Preferred Stock or the
creation or issuance of any other class or series of Preferred Stock, or any
increase in an amount of authorized shares of each class or series, in each case
ranking either (a) junior to the Series B Preferred Stock with respect to
payment of distributions or the distribution of assets upon liquidation,
dissolution or winding-up, or (b) on a parity with the Series B Preferred Stock
with respect to payment of distributions or the distribution of assets upon
liquidation, dissolution or winding-up to the extent such Preferred Stock is not
issued to an affiliate of the Corporation, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
(e) The foregoing voting provisions shall not apply if, at or prior to
the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding
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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) RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT.
(a) Definitions. for the purposes of Section 7 of these Articles
Supplementary, the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Series B
Preferred Stock by a Person who is or would be treated as an
owner of such Series B Preferred Stock either actually or
constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to Section
7(c)(vi) of these Articles Supplementary, each of which shall be
an organization described in Sections 170(b)(1)(A), 170(c)(2)
and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986, as
amended. All section references to the Code shall include any
successor provisions thereof as may be adopted from time to
time.
"Constructive Ownership" shall mean ownership of Series
B Preferred Stock by a Person who is or would be treated as an
owner of such Series B Preferred Stock either actually or
constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively
Owned" shall have the correlative meanings.
"IRS" means the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price
reported on the New York Stock Exchange of the Series B
Preferred Stock on the trading day immediately preceding the
relevant date, or if the Series B Preferred Stock is not then
traded on the New York Stock Exchange, the last reported sales
price of the Series B Preferred Stock on the trading day
immediately preceding the relevant date as reported on any
exchange or quotation system over which the Series B Preferred
Stock may be traded, or if the Series B Preferred Stock is not
then
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traded over any exchange or quotation system, then the market
price of the Series B Preferred Stock on the relevant date as
determined in good faith by the Board of Directors of the
Corporation.
"MGCL" shall mean the Maryland General Corporation Law,
as amended from time to time, and any successor statute
hereafter enacted.
"Operating Partnership" shall mean AMB Property, L.P., a
Delaware limited partnership.
"Ownership Limit" shall mean 9.8% (by value) of the
outstanding shares of capital stock of the Corporation.
"Partnership Agreement" shall mean the Agreement of
Limited Partnership of the Operating Partnership, as such
agreement may be amended from time to time.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust (including
a trust qualified under Section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity;
but does not include an underwriter acting in a capacity as such
in a public offering of shares of Series B Preferred Stock
provided that the ownership of such shares of Series B Preferred
Stock by such underwriter would not result in the Corporation
being "closely held" within the meaning of Section 856(h) of the
Code, or otherwise result in the Corporation failing to qualify
as a REIT.
"Purported Beneficial Transferee" shall mean, with
respect to any purported Transfer (or other event) which results
in a transfer to a Trust, as provided in Section 7(b)(ii) of
these Articles Supplementary, the Purported Record Transferee,
unless the Purported Record Transferee would have acquired or
owned shares of Series B Preferred Stock for another Person who
is the beneficial transferee or owner of such shares, in which
case the Purported Beneficial Transferee shall be such Person.
"Purported Record Transferee" shall mean, with respect
to any purported Transfer (or other event) which results in a
transfer to a Trust, as provided in Section 7(b)(ii) of these
Articles Supplementary, the record holder of the Series B
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Preferred Stock if such Transfer had been valid under Section
7(b)(i) of these Articles Supplementary.
"REIT" shall mean a real estate investment trust under
Sections 856 through 860 of the Code and, for purposes of
taxation of the Corporation under applicable state law,
comparable provisions of the law of such state.
"Restriction Termination Date" shall mean the first day
after the date hereof on which the Board of Directors of the
Corporation determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to,
qualify as a REIT.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Series B Preferred
Stock, (including (i) the granting of any option or entering
into any agreement for the sale, transfer or other disposition
of Series B Preferred Stock or (ii) the sale, transfer,
assignment or other disposition of any securities (or rights
convertible into or exchangeable for Series B Preferred Stock),
whether voluntary or involuntary, whether such transfer has
occurred of record or beneficially or Beneficially or
Constructively (including but not limited to transfers of
interests in other entities which result in changes in
Beneficial or Constructive Ownership of Series B Preferred
Stock), and whether such transfer has occurred by operation of
law or otherwise.
"Trust" shall mean each of the trusts provided for in
Section 7(c) of these Articles Supplementary.
"Trustee" shall mean any Person unaffiliated with the
Corporation, or a Purported Beneficial Transferee, or a
Purported Record Transferee, that is appointed by the
Corporation to serve as trustee of a Trust.
(b) Restriction on Ownership and Transfers.
(i) Prior to the Restriction Termination Date:
(A) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Beneficially Own Series B
Preferred Stock which, taking into account any other capital
stock of the Corporation Beneficially Owned by such Person,
would cause such ownership to exceed the Ownership Limit;
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(B) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Constructively Own Series B
Preferred Stock which, taking into account any other capital
stock of the Corporation Constructively Owned by such Person,
would cause such ownership to exceed the Ownership Limit;
(C) no Person shall Beneficially or Constructively Own
Series B Preferred Stock which, taking into account any other
capital stock of the Corporation Beneficially or Constructively
Owned by such Person, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code,
or otherwise failing to qualify as a REIT (including but not
limited to Beneficial or Constructive Ownership that would
result in the Corporation owning (actually or Constructively) an
interest in a tenant that is described in Section 856(d)(2)(B)
of the Code if the income derived by the Corporation (either
directly or indirectly through one or more partnerships or
limited liability companies) from such tenant would cause the
Corporation to fail to satisfy any of the gross income
requirements of Section 856(c) of the Code or comparable
provisions of state law).
(ii) If, prior to the Restriction Termination Date, any Transfer
or other event occurs that, if effective, would result in any Person
Beneficially or Constructively Owning Series B Preferred Stock in violation of
Section 7(b)(i) of these Articles Supplementary, (1) then that number of shares
of Series B Preferred Stock that otherwise would cause such Person to violate
Section 7(b)(i) of these Articles Supplementary (rounded up to the nearest whole
share) shall be automatically transferred to a Trust for the benefit of a
Charitable Beneficiary, as described in Section 7(c), effective as of the close
of business on the business day prior to the date of such Transfer or other
event, and such Purported Beneficial Transferee shall thereafter have no rights
in such shares or (2) if, for any reason, the transfer to the Trust described in
clause (1) of this sentence is not automatically effective as provided therein
to prevent any Person from Beneficially or Constructively Owning Series B
Preferred Stock in violation of Section 7(b)(i) of these Articles Supplementary,
then the Transfer of that number of shares of Series B Preferred Stock that
otherwise would cause any Person to violate Section 7(b)(i) shall be void ab
initio, and the Purported Beneficial Transferee shall have no rights in such
shares.
(iii) Subject to Section 7(n) of this Article Third and
notwithstanding any other provisions contained herein, prior to the Restriction
Termination Date, any Transfer of Series B Preferred Stock that, if effective,
would result in the capital stock of the Corporation being beneficially owned by
less than 100 Persons (determined without reference to any rules of attribution)
shall be void ab initio, and the intended transferee shall acquire no rights in
such Series B Preferred Stock.
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<PAGE> 16
It is expressly intended that the restrictions on ownership and
Transfer described in this Section 7(b) shall apply to the exchange rights
provided in Section 17.8 of the Partnership Agreement. Notwithstanding any of
the provisions of the Partnership Agreement to the contrary, a partner of the
Operating Partnership shall not be entitled to effect an exchange of an interest
in the Operating Partnership for Series B Preferred Stock if the actual or
beneficial or Beneficial or Constructive Ownership of Series B Preferred Stock
would be prohibited under the provisions of this Section 7.
(c) Transfers of Series B Preferred Stock in Trust.
(i) Upon any purported Transfer or other event described in
Section 7(b)(ii) of these Articles Supplementary, such Series B Preferred Stock
shall be deemed to have been transferred to the Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the purported Transfer or
other event that results in a transfer to the Trust pursuant to Section
7(b)(ii). The Trustee shall be appointed by the Corporation and shall be a
Person unaffiliated with the Corporation, any Purported Beneficial Transferee,
or any Purported Record Transferee. Each Charitable Beneficiary shall be
designated by the Corporation as provided in Section 7(c)(vi) of these Articles
Supplementary.
(ii) Series B Preferred Stock held by the Trustee shall be
issued and outstanding Series B Preferred Stock of the Corporation. The
Purported Beneficial Transferee or Purported Record Transferee shall have no
rights in the shares of Series B Preferred Stock held by the Trustee. The
Purported Beneficial Transferee or Purported Record Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares of Series B Preferred Stock held in the Trust.
(iii) The Trustee shall have all voting rights and rights to
dividends with respect to Series B Preferred Stock held in the Trust, which
rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that shares of Series B Preferred Stock have been transferred to the
Trustee shall be paid to the Trustee upon demand, and any dividend or
distribution declared but unpaid shall be paid when due to the Trustee with
respect to such Series B Preferred Stock. Any dividends or distributions so paid
over to the Trustee shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to the Series B Preferred
Stock held in the Trust and, subject to
16
<PAGE> 17
Maryland law, effective as of the date the Series B Preferred Stock has been
transferred to the Trustee, the Trustee shall have the authority (at the
Trustee's sole discretion) (i) to rescind as void any vote cast by a Purported
Record Transferee with respect to such Series B Preferred Stock prior to the
discovery by the Corporation that the Series B Preferred Stock has been
transferred to the Trustee and (ii) to recast such vote in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary;
provided, however, that if the Corporation has already taken irreversible
corporate action, then the Trustee shall not have the authority to rescind and
recast such vote. Notwithstanding any other provision of these Articles
Supplementary to the contrary, until the Corporation has received notification
that the Series B Preferred Stock has been transferred into a Trust, the
Corporation shall be entitled to rely on its share transfer and other
stockholder records for purposes of preparing lists of stockholders entitled to
vote at meetings, determining the validity and authority of proxies and
otherwise conducting votes of stockholders.
(iv) Within 20 days of receiving notice from the Corporation
that shares of Series B Preferred Stock have been transferred to the Trust, the
Trustee of the Trust shall sell the shares of Series B Preferred Stock held in
the Trust to a Person, designated by the Trustee, whose ownership of the shares
of Series B Preferred Stock will not violate the ownership limitations set forth
in Section 7(b)(i). Upon such sale, the interest of the Charitable Beneficiary
in the shares of Series B Preferred Stock sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Purported Record Transferee
and to the Charitable Beneficiary as provided in this Section 7(c)(iv). The
Purported Record Transferee shall receive the lesser of (1) the price paid by
the Purported Record Transferee for the shares of Series B Preferred Stock in
the transaction that resulted in such transfer to the Trust (or, if the event
which resulted in the transfer to the Trust did not involve a purchase of such
shares of Series B Preferred Stock at Market Price, the Market Price of such
shares of Series B Preferred Stock on the day of the event which resulted in the
transfer of such shares of Series B Preferred Stock to the Trust) and (2) the
price per share received by the Trustee (net of any commissions and other
expenses of sale) from the sale or other disposition of the shares of Series B
Preferred Stock held in the Trust. Any net sales proceeds in excess of the
amount payable to the Purported Record Transferee shall be immediately paid to
the Charitable Beneficiary together with any dividends or other distributions
thereon. If, prior to the discovery by the Corporation that shares of such
Series B Preferred Stock have been transferred to the Trustee, such shares of
Series B Preferred Stock are sold by a Purported Record Transferee then (i) such
shares of Series B Preferred Stock shall be deemed to have been sold on behalf
of the Trust and (ii) to the extent that the Purported Record Transferee
received an amount for such shares of Series B Preferred Stock that exceeds the
amount that such Purported Record Transferee was entitled to receive pursuant to
this Section 7(c)(iv), such excess shall be paid to the Trustee upon demand.
17
<PAGE> 18
(v) Series B Preferred Stock transferred to the Trustee shall be
deemed to have been offered for sale to the Corporation, or its designee, at a
price per share equal to the lesser of (i) the price paid by the Purported
Record Transferee for the shares of Series B Preferred Stock in the transaction
that resulted in such transfer to the Trust (or, if the event which resulted in
the transfer to the Trust did not involve a purchase of such shares of Series B
Preferred Stock at Market Price, the Market Price of such shares of Series B
Preferred Stock on the day of the event which resulted in the transfer of such
shares of Series B Preferred Stock to the Trust) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer until the Trustee has sold the shares
of Series B Preferred Stock held in the Trust pursuant to Section 7(c)(iv). Upon
such a sale to the Corporation, the interest of the Charitable Beneficiary in
the shares of Series B Preferred Stock sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Purported Record Transferee
and any dividends or other distributions held by the Trustee with respect to
such Series B Preferred Stock shall thereupon be paid to the Charitable
Beneficiary.
(vi) By written notice to the Trustee, the Corporation shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the Series B Preferred Stock held in the
Trust would not violate the restrictions set forth in Section 7(b)(i) in the
hands of such Charitable Beneficiary.
(d) Remedies For Breach. If the Board of Directors or a committee
thereof or other designees if permitted by the MGCL shall at any time determine
in good faith that a Transfer or other event has taken place in violation of
Section 7(b) of these Articles Supplementary or that a Person intends to
acquire, has attempted to acquire or may acquire beneficial ownership
(determined without reference to any rules of attribution), Beneficial Ownership
or Constructive Ownership of any shares of Series B Preferred Stock of the
Corporation in violation of Section 7(b) of these Articles Supplementary, the
Board of Directors or a committee thereof or other designees if permitted by the
MGCL shall take such action as it deems advisable to refuse to give effect or to
prevent such Transfer, including, but not limited to, causing the Corporation to
redeem shares of Series B Preferred Stock, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin
such Transfer; provided, however, that any Transfers (or, in the case of events
other than a Transfer, ownership or Constructive Ownership or Beneficial
Ownership) in violation of Section 7(b)(i) of these Articles Supplementary,
shall automatically result in the transfer to a Trust as described in Section
7(b)(ii) and any Transfer in violation of Section 7(b)(iii) shall automatically
be void ab initio irrespective of any action (or non-action) by the Board of
Directors.
(e) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire shares of Series B Preferred Stock in violation of Section
7(b) of these Articles Supplementary,
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<PAGE> 19
or any Person who is a Purported Beneficial Transferee such that an automatic
transfer to a Trust results under Section 7(b)(ii) of these Articles
Supplementary, shall immediately give written notice to the Corporation of such
event and shall provide to the Corporation such other information as the
Corporation may request in order to determine the effect, if any, of such
Transfer or attempted Transfer on the Corporation's status as a REIT.
(f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of Series B Preferred Stock and each Person (including the
shareholder of record) who is holding Series B Preferred Stock for a beneficial
owner or Beneficial Owner or Constructive Owner shall provide to the Corporation
such information that the Corporation may request, in good faith, in order to
determine the Corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in these Articles
Supplementary (but subject to Section 7(n) of these Articles Supplementary)
shall limit the authority of the Board of Directors to take such other action as
it deems necessary or advisable to protect the Corporation and the interests of
its shareholders by preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Section 7 of these Articles Supplementary, including
any definition contained in Section 7(a), the Board of Directors shall have the
power to determine the application of the provisions of this Section 7 with
respect to any situation based on the facts known to it (subject, however, to
the provisions of Section 7(n) of these Articles Supplementary). In the event
Section 7 requires an action by the Board of Directors and these Articles
Supplementary fail to provide specific guidance with respect to such action, the
Board of Directors shall have the power to determine the action to be taken so
long as such action is not contrary to the provisions of Section 7. Absent a
decision to the contrary by the Board of Directors (which the Board may make in
its sole and absolute discretion), if a Person would have (but for the remedies
set forth in Section 7(b)) acquired Beneficial or Constructive Ownership of
Series B Preferred Stock in violation of Section 7(b)(i), such remedies (as
applicable) shall apply first to the shares of Series B Preferred Stock which,
but for such remedies, would have been actually owned by such Person, and second
to shares of Series B Preferred Stock which, but for such remedies, would have
been Beneficially Owned or Constructively Owned (but not actually owned) by such
Person, pro rata among the Persons who actually own such shares of Series B
Preferred Stock based upon the relative number of the shares of Series B
Preferred Stock held by each such Person.
(i) Exceptions.
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<PAGE> 20
(i) Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Beneficially Owning shares of Series B Preferred Stock in violation of Section
7(b)(i)(A) if the Board of Directors obtains any representations and
undertakings from such Person as are reasonably necessary in the opinion of the
Board of Directors to ascertain that no individual's Beneficial Ownership of
such shares of Series B Preferred Stock will violate Section 7(b)(i)(A) or that
any such violation will not cause the Corporation to fail to qualify as a REIT
under the Code, and that any violation of such representations or undertakings
(or other action which is contrary to the restrictions contained in Section 7(b)
of these Articles Supplementary) or attempted violation will result in such
Series B Preferred Stock being transferred to a Trust in accordance with Section
7(b)(ii) of these Articles Supplementary.
(ii) Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Constructively Owning Series B Preferred Stock in violation of Section
7(b)(i)(B), if the Corporation obtains any representations and undertakings from
such Person as are reasonably necessary in the opinion of the Board of Directors
to ascertain that such Person does not and will not own, actually or
Constructively, an interest in a tenant of the Corporation (or a tenant of any
entity owned in whole or in part by the Corporation) that would cause the
Corporation to own, actually or Constructively, more than a 9.8% interest (as
set forth in Section 856(d)(2)(B) of the Code) in such tenant and that any
violation or attempted violation will result in such Series B Preferred Stock
being transferred to a Trust in accordance with Section 7(b)(ii) of these
Articles Supplementary. Notwithstanding the foregoing, the inability of a Person
to make the certification described in this Section 7(i)(ii) shall not prevent
the Board of Directors, in its sole discretion, from exempting such Person from
the limitation on a Person Constructively Owning Series B Preferred Stock in
violation of Section 7(b)(i)(B) if the Board of Directors determines that the
resulting application of Section 856(d)(2)(B) of the Code would affect the
characterization of less than 0.5% of the gross income (as such term is used in
Section 856(c)(2) of the Code) of the Corporation in any taxable year, after
taking into account the effect of this sentence with respect to all other
capital stock of the Corporation to which this sentence applies.
(iii) Prior to granting any exception pursuant to Section
7(i)(i) or (ii) of these Articles Supplementary, the Board of Directors may
require a ruling from the Internal Revenue Service, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of Directors in its
sole discretion, as it may deem necessary or advisable in order to determine or
ensure the Corporation's status as a REIT.
20
<PAGE> 21
(j) Legends. Each certificate for Series B Preferred Stock shall
bear substantially the following legends in addition to any legends required to
comply with federal and state securities laws:
CLASS OF STOCK
"THE CORPORATION IS AUTHORIZED TO ISSUE CAPITAL STOCK OF MORE THAN ONE
CLASS, CONSISTING OF COMMON STOCK AND ONE OR MORE CLASSES OF PREFERRED
STOCK. THE BOARD OF DIRECTORS IS AUTHORIZED TO DETERMINE THE
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF ANY CLASS OF PREFERRED
STOCK BEFORE THE ISSUANCE OF SHARES OF SUCH CLASS OF PREFERRED STOCK.
THE CORPORATION WILL FURNISH, WITHOUT CHARGE, TO ANY STOCKHOLDER MAKING
A WRITTEN REQUEST THEREFOR, A COPY OF THE CORPORATION'S CHARTER AND A
WRITTEN STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES,
CONVERSION OR OTHER RIGHTS, VOTING POWERS, RESTRICTIONS, LIMITATIONS AS
TO DIVIDENDS AND OTHER DISTRIBUTIONS, QUALIFICATIONS AND TERMS AND
CONDITIONS OF REDEMPTION OF THE STOCK OF EACH CLASS WHICH THE
CORPORATION HAS THE AUTHORITY TO ISSUE AND, IF THE CORPORATION IS
AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN SERIES, (i) THE
DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES BETWEEN THE SHARES OF
EACH SERIES TO THE EXTENT SET, AND (ii) THE AUTHORITY OF THE BOARD OF
DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES.
REQUESTS FOR SUCH WRITTEN STATEMENT MAY BE DIRECTED TO THE SECRETARY OF
THE CORPORATION AT ITS PRINCIPAL OFFICE."
RESTRICTION ON OWNERSHIP AND TRANSFER
"THE SHARES OF SERIES B PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND
TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS
AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN
21
<PAGE> 22
FURTHER RESTRICTIONS AND EXCEPT AS EXPRESSLY PROVIDED IN THE ARTICLES
SUPPLEMENTARY FOR THE SERIES B PREFERRED STOCK, (i) NO PERSON MAY
BENEFICIALLY OWN SHARES OF THE CORPORATION'S SERIES B PREFERRED STOCK
WHICH, TAKING INTO ACCOUNT ANY OTHER CAPITAL STOCK OF THE CORPORATION
BENEFICIALLY OWNED BY SUCH PERSON, WOULD CAUSE SUCH OWNERSHIP TO EXCEED
THE OWNERSHIP LIMIT OF 9.8%; (ii) NO PERSON MAY CONSTRUCTIVELY OWN
SHARES OF THE CORPORATION'S SERIES B PREFERRED STOCK WHICH, TAKING INTO
ACCOUNT ANY OTHER CAPITAL STOCK OF THE CORPORATION CONSTRUCTIVELY OWNED
BY SUCH PERSON, WOULD CAUSE SUCH OWNERSHIP TO EXCEED THE OWNERSHIP LIMIT
OF 9.8%; (iii) NO PERSON MAY BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES
OF THE CORPORATION'S SERIES B PREFERRED STOCK THAT, TAKING INTO ACCOUNT
ANY OTHER CAPITAL STOCK OF THE CORPORATION BENEFICIALLY OR
CONSTRUCTIVELY OWNED BY SUCH PERSON, WOULD RESULT IN THE CORPORATION
BEING "CLOSELY HELD" UNDER SECTION 856(h) OF THE CODE OR OTHERWISE CAUSE
THE CORPORATION TO FAIL TO QUALIFY AS A REIT; AND (iv) NO PERSON MAY
TRANSFER SHARES OF SERIES B PREFERRED STOCK IF SUCH TRANSFER WOULD
RESULT IN THE CAPITAL STOCK OF THE CORPORATION BEING OWNED BY FEWER THAN
100 PERSONS. ANY PERSON WHO BENEFICIALLY OR CONSTRUCTIVELY OWNS OR
ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN SERIES B PREFERRED STOCK
WHICH CAUSES OR WILL CAUSE A PERSON TO BENEFICIALLY OR CONSTRUCTIVELY
OWN SERIES B PREFERRED STOCK IN EXCESS OF THE ABOVE LIMITATIONS MUST
IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF THE RESTRICTIONS ON
TRANSFER OR OWNERSHIP ARE VIOLATED, THE SERIES B PREFERRED STOCK
REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO THE TRUSTEE OF A
TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE BENEFICIARIES. IN
ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE TERMS AND
CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE DISCRETION IF
THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A TRANSFER OR OTHER
EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE. FURTHERMORE, UPON
THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS IN
22
<PAGE> 23
VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO. ALL
TERMS IN THIS LEGEND WHICH ARE DEFINED IN THE ARTICLES SUPPLEMENTARY FOR
THE SERIES B PREFERRED STOCK SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
SUCH ARTICLES SUPPLEMENTARY, AS THE SAME MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER AND
OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SERIES B PREFERRED STOCK
ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE DIRECTED
TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE."
(k) Exchange of Series B Preferred Units. So long as the Corporation
remains the general partner of the Operating Partnership, the Board of Directors
of the Corporation is hereby expressly vested with authority (subject to the
restrictions on ownership, transfer and redemption of Series B Preferred Stock
set forth in this Section 7) to issue, and shall issue to the extent provided in
the Partnership Agreement, Series B Preferred Stock in exchange for Series B
Preferred Units (as defined in the Partnership Agreement) (the "Series B
Preferred Units").
(l) Reservation of Shares. Pursuant to the obligations of the
Corporation under the Partnership Agreement to issue Series B Preferred Stock in
exchange for Series B Preferred Units, the Board of Directors is hereby required
to reserve and authorize for issuance a number of authorized but unissued shares
of Series B Preferred Stock not less than the number of Series B Preferred Units
issued to permit the Corporation to issue Series B Preferred Stock in exchange
for Series B Preferred Units that may be exchanged for or converted into Series
B Preferred Stock as provided in the Partnership Agreement.
(m) Severability. If any provision of this Section 7 or any
application of any such provision is determined to be invalid by any Federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
(n) New York Stock Exchange. Nothing in this Section 7 shall
preclude the settlement of any transaction entered into through the facilities
of the New York Stock Exchange. The shares of Series B Preferred Stock that are
the subject of such transaction shall continue to be subject to the provisions
of this Section 7 after such settlement.
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<PAGE> 24
(o) Applicability of Section 7. The provisions set forth in this
Section 7 shall apply to the Series B Preferred Stock notwithstanding any
contrary provisions of the Series B Preferred Stock provided for elsewhere in
these Articles Supplementary.
(8) CONVERSION. The Series B Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Corporation.
(9) NO SINKING FUND. No sinking fund shall be established for the
retirement or redemption of Series B Preferred Stock.
(10) NO PREEMPTIVE RIGHTS. No holder of the Series B Preferred Stock of
the Corporation shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
FOURTH: The Series B Preferred Stock has been classified and designated
by the Board under the authority contained in the Charter.
FIFTH: These Articles Supplementary have been approved by the Board in
the manner and by the vote required by law.
SIXTH: These Articles Supplementary shall be effective at the time the
State Department of Assessments and Taxation of Maryland accepts these Articles
Supplementary for record
SEVENTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the act of the Corporation and, as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
(Signature Page Follows)
24
<PAGE> 25
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Assistant Secretary on this 11th day of
November, 1998.
AMB PROPERTY CORPORATION
BY: /s/ HAMID R. MOGHADAM
--------------------------------------
Hamid R. Moghadam
President and Chief Executive Officer
[SEAL]
ATTEST:
/s/ MICHAEL A. COKE
- -----------------------------------
Michael A. Coke
Assistant Secretary
<PAGE> 1
EXHIBIT 3.2
AMB PROPERTY CORPORATION
ARTICLES SUPPLEMENTARY
ESTABLISHING AND FIXING THE RIGHTS AND
PREFERENCES OF 8.75% SERIES C CUMULATIVE
REDEEMABLE PREFERRED STOCK
AMB Property Corporation, a corporation organized and existing under the
laws of the State of Maryland (the "Corporation"), certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Directors of the Corporation (sometimes referred to herein as the "Board") by
Article IV of the Articles of Incorporation of the Corporation filed with the
Department on November 24, 1997, which comprises, together with the Articles
Supplementary filed by the Corporation on July 23, 1998 establishing a class of
Preferred Stock of the Corporation, par value $0.01 per share (the "Preferred
Stock"), designated as the "8 1/2% Series A Cumulative Redeemable Preferred
Stock" (the "Series A Preferred Stock"), the Articles Supplementary filed by the
Corporation on November 12, 1998 (the "Series B Articles Supplementary")
establishing a class of Preferred Stock designated as the "8 5/8% Series B
Cumulative Redeemable Preferred Stock" (the "Series B Preferred Stock"), and
these Articles Supplementary, the charter (the "Charter") of the Corporation,
and Section 2-105 of the Maryland General Corporation Law (the "MGCL"), the
Board of Directors of the Corporation, on September 3, 1998, adopted resolutions
authorizing the Corporation, among other things, to issue up to a stated maximum
number of shares of Preferred Stock of the Corporation, having a stated maximum
aggregate liquidation preference and dividend rate and certain other stated
terms applicable to the issuance thereof, and appointing, pursuant to the MGCL
and the powers contained in the Bylaws of the Corporation, a committee (the
"Committee") of the Board of Directors comprised of Hamid R. Moghadam and
delegating to the Committee, to the fullest extent permitted by Maryland law and
the Charter and Bylaws of the Corporation, all powers of the Board of Directors
with respect to classifying, authorizing, approving, ratifying and/or confirming
the terms of the Preferred Stock to be issued, including, without limitation,
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends and other distributions, qualifications and terms
and conditions of redemption, and determining the consideration per share to be
received in respect of the issuance and sale of each share of Preferred Stock to
be issued and sold, and the number of shares of Preferred Stock to be so
classified or reclassified and issued by the Corporation, subject to the
limitations set forth in the resolutions of the Board of Directors adopted on
September 3, 1998.
SECOND: Pursuant to the authority conferred upon the Committee as
aforesaid, the Committee has on November 23, 1998, adopted resolutions
classifying and designating as a separate class of Preferred Stock as the 8.75%
Series C Cumulative Redeemable Preferred Stock, with the preferences,
conversions and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption and other terms and conditions of such 8.75% Series C Cumulative
Redeemable Preferred Stock (within the limitations
<PAGE> 2
set by the Board of Directors in the resolutions adopted on September 3, 1998
and referred to in Article First of these Articles Supplementary) and
establishing 2,200,000 as the number of shares to be so classified and
designated, and authorizing the issuance of up to 2,200,000 shares of 8.75%
Series C Cumulative Redeemable Preferred Stock.
THIRD: The separate class of Preferred Stock of the Corporation created
by the resolutions duly adopted by the Board of Directors of the Corporation and
by the Committee and referred to in Articles First and Second of these Articles
Supplementary shall have the designation, number of shares, preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption and other terms
and conditions as follows (and which, upon any restatement of the Charter, may
be made a part of Article IV thereof, with any necessary or appropriate changes
to the numeration or lettering of the sections or subsections hereof):
(1) DESIGNATION AND NUMBER. A class of Preferred Stock, designated the
"8.75% Series C Cumulative Redeemable Preferred Stock" (the "Series C Preferred
Stock"), is hereby established. The number of shares of Series C Preferred Stock
shall be 2,200,000 (the "Series C Preferred Shares").
(2) RANK. The Series C Preferred Shares will rank, with respect to
dividend rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, (a) senior to all classes or
series of Common Stock (as defined in the Charter) and to all equity securities
of the Corporation the terms of which provide that such equity securities shall
rank junior to such Series C Preferred Shares; (b) on a parity with the Series A
Preferred Stock and Series B Preferred Stock and all equity securities issued by
the Corporation other than those referred to in clauses (a) and (c) (it being
the intent of the Corporation that the Series C Preferred Stock be on a parity
with the Series A Preferred Stock and the Series B Preferred Stock with respect
to dividend rights and rights upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, notwithstanding any provision
contained in these Articles Supplementary, which, if given effect, would make
the Series C Preferred Stock not in parity with the Series A Preferred Stock and
the Series B Preferred Stock; and any such provision contained in these Articles
Supplementary shall be of no force or effect); and (c) junior to all equity
securities issued by the Corporation which rank senior to the Series C Preferred
Shares in accordance with Section 6(d) of this Article Third. The term "equity
securities" does not include convertible debt securities, until the same are
converted into equity securities.
(3) DIVIDENDS.
(a) Holders of Series C Preferred Shares shall be entitled to receive,
if, when and as authorized by the Board, out of funds legally available for the
payment of dividends, cumulative preferential cash dividends at the rate of
8.75% of the $50.00 liquidation preference per annum (equivalent to $4.375 per
annum per share). Such dividends shall accumulate on a daily basis computed on
the basis of a 360-day year consisting of twelve 30-day months and be
cumulative, shall accrue from the original date of issuance and shall be payable
quarterly (such quarterly periods for purposes of payment and accrual will be
the quarterly periods ending on the dates specified in this sentence and not
calendar year quarters) in equal amounts in arrears on the 15th day of each
January, April, July and October, or, if not a business day, the next succeeding
business day (each a "Dividend Payment Date"). Dividends shall be payable to
holders of
<PAGE> 3
record as they appear in the share records of the Corporation at the close of
business on the applicable record date (each, a "Dividend Record Date"), which
shall be the date designated by the Board for the payment of dividends that is
not more than 30 nor less than 10 days prior to the applicable payment date
therefor. Any dividend payable on the Series C Preferred Shares for any partial
dividend period shall be prorated and computed on the basis of a 360-day year
consisting of twelve 30-day months. If any date on which distributions are to be
made on the Series C Preferred Stock 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 any 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 such date.
Notwithstanding any provision to the contrary contained herein, each outstanding
share of Series C Preferred Stock shall be entitled to receive, and shall
receive, a dividend with respect to any Dividend Record Date equal to the
dividend paid with respect to each other share of Series C Preferred Stock which
is outstanding on such date which shall be equal to the greatest dividend per
share payable on any such share on such date. In addition, notwithstanding
anything to the contrary set forth herein, each share of Series C Preferred
Stock shall also continue to accrue all accrued and unpaid distributions up to
the exchange date on any Series C Preferred Unit (as defined in the Third
Amended and Restated Limited Partnership Agreement of AMB Property II, L.P.
dated as of November 24, 1998, as amended and supplemented from time to time
(the "Subsidiary Partnership Agreement")) validly exchanged into such share of
Series C Preferred Stock in accordance with the provisions of the Subsidiary
Partnership Agreement.
(b) No dividend on the Series C Preferred Shares shall be authorized by
the Board or be paid or set apart for payment by the Corporation at such time as
the terms and provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such authorization, payment or
setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof, or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law.
(c) Notwithstanding anything to the contrary contained herein, dividends
on the Series C Preferred Shares shall accumulate whether or not restrictions
exist in respect thereof, whether or not there are funds legally available for
the payment thereof and whether or not such dividends are declared or
authorized. Accrued but unpaid dividends on the Series C Preferred Shares will
accumulate as of the Dividend Payment Date on which they first become payable or
on the date of redemption, as the case may be.
(d) If any Series C Preferred Shares are outstanding, no full dividends
will be declared or paid or set apart for payment on any other equity securities
of the Corporation of any other class or series ranking, as to distributions or
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, junior to or on a parity with the Series C Preferred Shares
(including the Series A Preferred Stock and Series B Preferred Stock) unless
full cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof irrevocably set apart
in trust for such payment on the Series C Preferred Shares for all dividend
periods. When dividends are not paid in full (or a sum
<PAGE> 4
sufficient for such full payment is not so set apart) upon the Series C
Preferred Shares and any other equity securities ranking as to distributions on
a parity with the Series C Preferred Shares (including the Series A Preferred
Stock and Series B Preferred Stock), all dividends declared upon the Series C
Preferred Shares and any other equity securities of the Corporation ranking on a
parity with the Series C Preferred Stock as to distributions and upon voluntary
or involuntary liquidation, dissolution or winding up of the Corporation
(including the Series A Preferred Stock and Series B Preferred Stock) shall be
declared pro rata so that the amount of dividends declared per Series C
Preferred Share and each such other equity securities shall in all cases bear to
each other the same ratio that accumulated dividends per Series C Preferred
Share and such other equity securities (which shall not include any accumulation
in respect of unpaid dividends for prior dividend periods if such other equity
securities 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 C Preferred Shares which may be in arrears.
(e) Except as provided in the immediately preceding paragraph, unless
full cumulative dividends on the Series C Preferred Shares have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is irrevocably set apart in trust for payment for all dividend
periods, no dividends (other than in Common Stock or other equity securities of
the Corporation ranking junior to the Series C Preferred Shares as to
distributions and upon voluntary or involuntary liquidation, dissolution and
winding up of the Corporation) shall be declared or paid or set aside for
payment nor shall any other dividend be declared or made upon the Common Stock
or any other equity securities of the Corporation ranking as to distributions or
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation junior to or on a parity with the Series C Preferred Stock
(including the Series A Preferred Stock and Series B Preferred Stock), nor shall
any Common Stock or any other equity securities of the Corporation ranking
junior to or on a parity with the Series C Preferred Stock as to distributions
or upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (including the Series A Preferred Stock and Series B Preferred
Stock) be redeemed, purchased or otherwise acquired for any consideration (or
any monies be paid to or made available for a sinking fund for the redemption of
any such securities) by the Corporation (except by conversion into or exchange
for other equity securities of the Corporation ranking junior to the Series C
Preferred Stock as to distributions and upon voluntary and involuntary
liquidation, dissolution and winding up of the Corporation, and except pursuant
to Section 7 of this Article Third to ensure the Corporation's continued status
as a REIT or comparable Charter provisions with respect to other classes or
series of the Corporation's stock).
(f) Accumulated but unpaid dividends on the Series C Preferred Shares
will not bear interest and holders of Series C Preferred Shares shall not be
entitled to any dividend in excess of full cumulative dividends as described
above. Any dividend payment made on the Series C Preferred Shares shall first be
credited against the earliest accumulated but unpaid dividend due with respect
to such shares which remains payable.
(g) If, for any taxable year, the Corporation elects to designate as a
"capital gain dividend" (as defined in Section 857 of the Code), any portion
(the "Capital Gains Amount") of the dividends paid or made available for the
year to holders of every class or series of stock of
<PAGE> 5
the Corporation, the portion of the Capital Gains Amount that shall be allocable
to holders of the Series C Preferred Stock shall be the amount that the total
dividends (as determined for Federal income tax purposes) paid or made available
to the holders of the Series C Preferred Stock for the year bears to the
aggregate amount of dividends (as determined for Federal income tax purposes)
paid or made available to the holders of all classes or series of stock of the
Corporation for such year.
(4) LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of Series C Preferred
Shares then outstanding shall be entitled to receive out of the assets of the
Corporation legally available for distribution to its stockholders remaining
after payment or provision for payment of all debts and liabilities of the
Corporation, a liquidation preference in cash of $50.00 per share, plus an
amount equal to any accumulated or accrued and unpaid dividends to the date of
such payment, before any distribution of assets is made to holders of Common
Stock or any other equity securities of the Corporation that rank junior to the
Series C Preferred Shares as to liquidation rights.
(b) If, upon any such voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation are
insufficient to make full payment to holders of Series C Preferred Shares and
the corresponding amounts payable on all shares of other classes or series of
equity securities of the Corporation ranking on a parity with the Series C
Preferred Shares as to liquidation rights (including the Series A Preferred
Stock and Series B Preferred Stock), then the holders of the Series C Preferred
Shares and all other such classes or series of 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) Written notice of any such liquidation, dissolution or winding
up of the Corporation, 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 C Preferred Shares at the respective addresses of such holders as the
same shall appear on the stock transfer records of the Corporation.
(d) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series C Preferred
Shares will have no right or claim to any of the remaining assets of the
Corporation.
(e) The consolidation or merger of the Corporation with or into any
other entity, a merger of another entity with or into the Corporation, a
statutory share exchange by the Corporation or a sale, lease, transfer or
conveyance of all or substantially all of the property or business of the
Corporation shall not be deemed to constitute a liquidation, dissolution or
winding up of the Corporation.
(f) In determining whether a distribution (other than upon voluntary
or involuntary liquidation, dissolution or winding up of the Corporation) by
dividend, redemption or other
<PAGE> 6
acquisition of shares of stock of the Corporation or otherwise is permitted
under the MGCL, no effect shall be given to amounts that would be needed, if the
Corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of holders of the Series C Preferred Shares
whose preferential rights upon dissolution are superior to those receiving the
distribution.
(5) OPTIONAL REDEMPTION.
(a) The Series C Preferred Shares are not redeemable prior to
November 24, 2003. To ensure that the Corporation remains a qualified real
estate investment trust ("REIT") for federal income tax purposes, however, the
Series C Preferred Shares shall be subject to the provisions of Section 7 of
this Article Third pursuant to which Series C Preferred Shares owned by a
stockholder in excess of the Ownership Limit (as defined in Section 7 of this
Article Third) or certain other limitations shall automatically be transferred
to a Trust for the benefit of a Charitable Beneficiary (as defined in Section 7
of this Article Third) and the Corporation shall have the right to purchase such
shares, as provided in Section 7 of this Article Third. On and after November
24, 2003, the Corporation, at its option, upon giving notice as provided below,
may redeem the Series C Preferred Shares, in whole or from time to time in part,
for cash, at a redemption price of $50.00 per share, plus all accumulated and
unpaid dividends on such Series C Preferred Shares to the date fixed for
redemption.
(b) The redemption price of the Series C Preferred Shares (other
than any portion thereof consisting of accumulated and unpaid dividends) is
payable solely from the sale proceeds of other equity securities of the
Corporation, and not from any other source. For purposes of the preceding
sentence, "equity securities" means any equity securities (including Common
Stock and Preferred Stock (as defined in the Charter)), depositary shares in
respect of any of the foregoing, interests, participations 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.
(c) If fewer than all of the outstanding Series C Preferred Shares
are to be redeemed, the shares to be redeemed shall be selected pro rata (as
nearly as practicable without creating fractional shares).
(d) Notwithstanding anything to the contrary contained herein,
unless full cumulative dividends on all Series C 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 C Preferred Shares shall be redeemed
unless all outstanding Series C Preferred Shares are simultaneously redeemed;
provided, however, that the foregoing shall not prevent the purchase by the
Corporation of Series C Preferred Shares pursuant to Section 7 of this Article
Third or otherwise in order to ensure that the Corporation remains qualified as
a REIT for Federal or state income tax purposes or the purchase or acquisition
of Series C Preferred Shares pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding Series C Preferred Shares. In
addition, unless full cumulative dividends on all outstanding Series C Preferred
Shares have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment
<PAGE> 7
thereof irrevocably set apart in trust for payment for all dividend periods, the
Corporation shall not purchase or otherwise acquire directly or indirectly any
Series C Preferred Shares or any equity securities of the Corporation ranking
junior to or on a parity with the Series C Preferred Shares as to dividends or
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (including the Series A Preferred Stock and Series B Preferred
Stock) (except by conversion into or exchange for equity securities of the
Corporation ranking junior to the Series C Preferred Shares as to dividends and
upon voluntary or involuntary liquidation, dissolution or winding up of the
Corporation and except pursuant to Section 7 of this Article Third or comparable
Charter provisions with respect to other classes or series of the Corporation's
stock).
(e) The holders of shares of Series C Preferred Stock at the close
of business on a Dividend Record Date will be entitled to receive the dividend
payable with respect to the shares of Series C Preferred Stock held on the
corresponding Dividend Payment Date notwithstanding the redemption thereof
between such Dividend Record Date and the corresponding Dividend Payment Date or
the Corporation's default in the payment of the dividend due. Except as provided
herein, the Corporation will make no payment or allowance for unpaid dividends,
whether or not in arrears, on Series C Preferred Shares to be redeemed.
(f) The following provisions set forth the procedures for
Redemption:
(i) Notice of redemption will be 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. A similar notice will be (i) faxed
and (ii) mailed by the Corporation, 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 C Preferred Shares to be redeemed at their respective
addresses as they appear on the share records of the Corporation. No failure to
give such notice or any defect therein or in the mailing thereof shall affect
the validity of the proceedings for the redemption of any Series C Preferred
Shares 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 the Series C 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 Series C Preferred Shares to be
redeemed; (D) the place or places where the certificates evidencing shares of
Series C Preferred Shares are to be surrendered for payment of the redemption
price; and (E) that dividends on the Series C Preferred Shares to be redeemed
will cease to accumulate on such redemption date. If fewer than all of the
Series C Preferred Shares held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of Series C Preferred Shares
to be redeemed from such holder.
(iii) On or after the redemption date, each holder of Series C
Preferred Shares to be redeemed shall present and surrender the certificates
representing such holder's Series C Preferred Shares to the Corporation at the
place designated in the notice of redemption and shall be entitled to the
redemption price and any accrued or accumulated and unpaid dividends payable
upon such redemption upon such surrender and thereupon the redemption price of
such shares (including all accumulated and unpaid dividends up to the redemption
date) shall be paid to or on
<PAGE> 8
the order of the person whose name appears on such certificate representing
Series C Preferred Shares as the owner thereof and each surrendered certificate
shall be canceled. If fewer than all the shares represented by any such
certificate representing Series C Preferred Shares are to be redeemed, a new
certificate shall be issued representing the unredeemed shares.
(iv) If notice of redemption of any Series C Preferred Shares
has been given and if the funds necessary for such redemption have been
irrevocably set aside by the Corporation in trust for the benefit of the holders
thereof, then from and after the redemption date all dividends on such Series C
Preferred Shares shall cease to accumulate and any such Series C Preferred
Shares will no longer be deemed outstanding and all rights of the holders
thereof will terminate, except the right to receive the redemption price
(including all accrued or accumulated and unpaid dividends up to the redemption
date) and such shares shall not thereafter be transferred (except with the
consent of the Corporation) on the Corporation's stock transfer records. At its
election, the Corporation, prior to a redemption date, may irrevocably deposit
the redemption price (including accumulated and unpaid dividends to the
redemption date) of the Series C Preferred Shares so called for redemption in
trust for the holders thereof with a bank or trust company, in which case the
redemption notice to holders of the Series C Preferred Shares to be redeemed
shall (A) state the date of such deposit, (B) specify the office of such bank or
trust company as the place of payment of the redemption price and (C) require
such holders to surrender the certificates representing such shares at such
place on or about the date fixed in such redemption notice (which may not be
later than the redemption date) against payment of the redemption price
(including all accrued or accumulated and unpaid dividends to the redemption
date). Any monies so deposited which remain unclaimed by the holders of the
Series C Preferred Shares at the end of two years after the redemption date
shall be returned by such bank or trust company to the Corporation.
(g) Any Series C Preferred Shares that shall at any time have been
redeemed shall, after such redemption, have the status of authorized but
unissued Preferred Stock, without further designation as to series or class
until such shares are once more designated as part of a particular series or
class by the Board.
(6) VOTING RIGHTS.
(a) Holders of the Series C Preferred Shares will not have any
voting rights, except as set forth below.
(b) (i) Whenever dividends on any Series C Preferred Shares shall
remain unpaid for six or more quarterly periods (whether or not consecutive) (a
"Preferred Dividend Default"), the holders of such Series C Preferred Shares
(voting as a single class with all other equity securities of the Corporation
ranking on a parity with the Series C Preferred Shares as to dividends and upon
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation upon which like voting rights have been conferred and are
exercisable, including the Series A Preferred Stock and Series B Preferred Stock
("Parity Preferred Stock")) will be entitled to vote for the election of two
additional directors of the Corporation (the "Preferred Stock Directors"), who
will be elected by a plurality of the votes cast in such election for a one-year
term and until their successors are duly elected and shall qualify (or until
such director's right to hold such
<PAGE> 9
office terminates as provided herein, whichever occurs earlier, subject to such
director's earlier death, disqualification, resignation or removal), at a
special meeting called by the holders of at least 20% of the outstanding Series
C Preferred Shares or the holders of shares of any other class or series of
Parity Preferred Stock with respect to which dividends are so unpaid (unless
such request is received less than 90 days before the date fixed for the next
annual or special meeting of stockholders) or, if the request for a special
meeting is received by the Corporation less than 90 days before the date fixed
for the next annual or special meeting of stockholders, at the next annual or
special meeting of stockholders, and at each subsequent annual meeting until all
dividends accumulated on the Series C Preferred Shares for all 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 irrevocably
set aside in trust for payment in full.
(ii) At any time when the voting rights described in Section
6(b)(i) above shall have vested, a proper officer of the Corporation shall call
or cause to be called, a special meeting of the holders of Series C Preferred
Stock and all the series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable (collectively, the "Parity Securities")
by mailing or causing to be mailed to such holders a notice of such special
meeting to be held not less than ten and not more than 45 days after the date
such notice is given. The record date for determining holders of the Parity
Securities entitled to notice of and to vote at such special meeting will be the
close of business on the third business day preceding the day on which such
notice is mailed. At any such special meeting, all of the holders of the Parity
Securities, by plurality vote, voting together as a single class without regard
to series will be entitled to elect two directors on the basis of one vote per
$25.00 of liquidation preference to which such Parity Securities are entitled by
their terms (excluding amounts in respect of accumulated and unpaid dividends)
and not cumulatively. Notice of all meetings at which holders of the Series C
Preferred Shares shall be entitled to vote will be given to such holders at
their addresses as they appear in the transfer records. If a Preferred Dividend
Default shall terminate after the notice of a special meeting has been given but
before such special meeting has been held, the Corporation shall, as soon as
practicable after such termination, mail or cause to be mailed notice of such
termination to holders of the Series C Preferred Shares that would have been
entitled to vote at such special meeting.
(c) If and when all accumulated dividends and the dividend for the
then current dividend period on the Series C Preferred Shares shall have been
paid in full or declared by the Corporation and irrevocably set aside in trust
for payment in full, the holders of Series C Preferred Shares shall be divested
of the voting rights set forth in Section 6(b) of this Article Third (subject to
revesting in the event of each and every Preferred Dividend Default) and, if all
accumulated dividends have been paid in full or declared by the Corporation and
irrevocably set aside in trust for payment in full on all other classes or
series of Parity Preferred Stock upon which like voting rights have been
conferred and are exercisable, the term of office of each Preferred Stock
Director so elected shall forthwith terminate. Any Preferred Stock Director
elected by the holders of Series C Preferred Shares and any other such Parity
Preferred Shares 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 a
majority of the outstanding Series C Preferred Shares when they have the voting
rights set forth, or like those set forth, in Section 6(b) of this
<PAGE> 10
Article Third, by the majority vote of the Series C Preferred Shares and all
other classes or series of Parity Preferred Stock upon which like voting rights
have been conferred and are exercisable (voting as a single class) when the
Series C Preferred Shares and such Parity Preferred Stock is entitled to vote
thereon. So long as a Preferred Dividend Default shall continue, any vacancy in
the office of a Preferred Stock Director so elected may be filled by written
consent of the Preferred Stock Director so elected remaining in office or, if
none remains in office, by a vote of the holders of a majority of the
outstanding Series C Preferred Shares when they only have the voting rights set
forth, or like those set forth, in Section 6(b) of this Article Third and by the
majority vote of the Series C Preferred Shares and other classes or series of
Parity Preferred Stock upon which like voting rights have been conferred and are
exercisable (voting as a single class) when the Series C Preferred Shares and
such Parity Preferred Stock is entitled to vote thereon.
(d) So long as any Series C Preferred Stock remains outstanding, the
Corporation shall not, without the affirmative vote of the holders of at least
two-thirds of the Series C Preferred Stock outstanding at the time (i) authorize
or create, or increase the authorized or issued amount of, any class or series
of shares ranking senior to the Series C Preferred Stock with respect to payment
of distributions or rights upon liquidation, dissolution or winding-up or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, (ii) designate or create, or
increase the authorized or issued amount of, any Parity Preferred Stock or
reclassify any authorized shares of the Corporation into any such shares, or
create, authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such shares, but only to the extent such
Parity Preferred Stock is issued to an affiliate of the Corporation, or (iii)
either (A) consolidate, merge into or with, or convey, transfer or lease its
assets substantially as an entirety, to any corporation or other entity, or (B)
amend, alter or repeal the provisions of the Corporation's Charter (including
these Articles Supplementary) or Bylaws, whether by merger, consolidation or
otherwise, in each case that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series C
Preferred Stock or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (A) above, so long as (a) the
Corporation is the surviving entity and the Series C Preferred stock remains
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a corporation, a business trust or like entity organized
under the laws of any state and substitutes for the Series C Preferred Stock
other preferred stock or preferred shares having substantially the same terms
and same rights as the Series C Preferred Stock, including with respect to
distributions, voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series C Preferred Stock and provided further that any increase
in the amount of authorized Preferred Stock or the creation or issuance of any
other class or series of Preferred Stock, or any increase in an amount of
authorized shares of each class or series, in each case ranking either (a)
junior to the Series C Preferred Stock with respect to payment of distributions
and the distribution of assets upon liquidation, dissolution or winding-up, or
(b) on a parity with the Series C Preferred Stock with respect to payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up to the extent such Preferred Stock is not issued
<PAGE> 11
to an affiliate of the Corporation, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
(e) The foregoing voting provisions shall not apply if, at or prior
to the time when the act with respect to which such vote would otherwise be
required shall be effected, all outstanding Series C Preferred Shares shall have
been redeemed or called for redemption upon proper notice and sufficient funds
shall have been irrevocably deposited in trust to effect such redemption.
(7) RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT.
(a) Definitions. for the purposes of Section 7 of these Articles
Supplementary, the following terms shall have the following meanings:
"Beneficial Ownership" shall mean ownership of Series C
Preferred Stock by a Person who is or would be treated as an
owner of such Series C Preferred Stock either actually or
constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned"
shall have the correlative meanings.
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to Section
7(c)(vi) of these Articles Supplementary, each of which shall be
an organization described in Sections 170(b)(1)(A), 170(c)(2)
and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986, as
amended. All section references to the Code shall include any
successor provisions thereof as may be adopted from time to
time.
"Constructive Ownership" shall mean ownership of Series
C Preferred Stock by a Person who is or would be treated as an
owner of such Series C Preferred Stock either actually or
constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively
Owned" shall have the correlative meanings.
"IRS" means the United States Internal Revenue Service.
"Market Price" shall mean the last reported sales price
reported on the New York Stock Exchange of the Series C
Preferred Stock on the trading day immediately preceding the
relevant date, or if the Series C Preferred Stock is not then
traded on the New York Stock Exchange, the last reported sales
price of the Series C Preferred Stock on the trading day
immediately preceding the relevant date as reported on any
exchange or quotation system over which the Series C Preferred
Stock may be traded, or if the Series C Preferred Stock is not
then traded over any exchange or quotation system, then the
market price of the Series
<PAGE> 12
C Preferred Stock on the relevant date as determined in good
faith by the Board of Directors of the Corporation.
"MGCL" shall mean the Maryland General Corporation Law,
as amended from time to time, and any successor statute
hereafter enacted.
"Operating Partnership" shall mean AMB Property, L.P., a
Delaware limited partnership.
"Ownership Limit" shall mean 9.8% (by value) of the
outstanding shares of capital stock of the Corporation.
"Subsidiary Partnership Agreement" shall mean the
Agreement of Limited Partnership of the Subsidiary Operating
Partnership, as such agreement may be amended from time to time.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust (including
a trust qualified under Section 401(a) or 501(c)(17) of the
Code), a portion of a trust permanently set aside for or to be
used exclusively for the purposes described in Section 642(c) of
the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity;
but does not include an underwriter acting in a capacity as such
in a public offering of shares of Series C Preferred Stock
provided that the ownership of such shares of Series C Preferred
Stock by such underwriter would not result in the Corporation
being "closely held" within the meaning of Section 856(h) of the
Code, or otherwise result in the Corporation failing to qualify
as a REIT.
"Purported Beneficial Transferee" shall mean, with
respect to any purported Transfer (or other event) which results
in a transfer to a Trust, as provided in Section 7(b)(ii) of
these Articles Supplementary, the Purported Record Transferee,
unless the Purported Record Transferee would have acquired or
owned shares of Series C Preferred Stock for another Person who
is the beneficial transferee or owner of such shares, in which
case the Purported Beneficial Transferee shall be such Person.
"Purported Record Transferee" shall mean, with respect
to any purported Transfer (or other event) which results in a
transfer to a Trust, as provided in Section 7(b)(ii) of these
Articles Supplementary, the record holder of the Series C
Preferred Stock if such Transfer had been valid under Section
7(b)(i) of these Articles Supplementary.
"REIT" shall mean a real estate investment trust under
Sections 856 through 860 of the Code and, for purposes of
taxation of the Corporation under applicable state law,
comparable provisions of the law of such state.
<PAGE> 13
"Restriction Termination Date" shall mean the first day
after the date hereof on which the Board of Directors of the
Corporation determines that it is no longer in the best
interests of the Corporation to attempt to, or continue to,
qualify as a REIT.
"Subsidiary Operating Partnership" shall mean AMB
Property II, L.P., a Delaware limited partnership.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Series C Preferred
Stock, (including (i) the granting of any option or entering
into any agreement for the sale, transfer or other disposition
of Series C Preferred Stock or (ii) the sale, transfer,
assignment or other disposition of any securities (or rights
convertible into or exchangeable for Series C Preferred Stock),
whether voluntary or involuntary, whether such transfer has
occurred of record or beneficially or Beneficially or
Constructively (including but not limited to transfers of
interests in other entities which result in changes in
Beneficial or Constructive Ownership of Series C Preferred
Stock), and whether such transfer has occurred by operation of
law or otherwise.
"Trust" shall mean each of the trusts provided for in
Section 7(c) of these Articles Supplementary.
"Trustee" shall mean any Person unaffiliated with the
Corporation, or a Purported Beneficial Transferee, or a
Purported Record Transferee, that is appointed by the
Corporation to serve as trustee of a Trust.
(b) Restriction on Ownership and Transfers.
(i) Prior to the Restriction Termination Date:
(A) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Beneficially Own Series C Preferred Stock which,
taking into account any other capital stock of the Corporation Beneficially
Owned by such Person, would cause such ownership to exceed the Ownership Limit;
(B) except as provided in Section 7(i) of these Articles
Supplementary, no Person shall Constructively Own Series C Preferred Stock
which, taking into account any other capital stock of the Corporation
Constructively Owned by such Person, would cause such ownership to exceed the
Ownership Limit;
(C) no Person shall Beneficially or Constructively Own
Series C Preferred Stock which, taking into account any other capital stock of
the Corporation Beneficially or Constructively Owned by such Person, would
result in the Corporation being "closely held" within the meaning of Section
856(h) of the Code, or otherwise failing to qualify as a REIT (including but not
limited to Beneficial or Constructive Ownership that would result in the
Corporation owning (actually or Constructively) an interest in a tenant that is
described in
<PAGE> 14
Section 856(d)(2)(B) of the Code if the income derived by the Corporation
(either directly or indirectly through one or more partnerships or limited
liability companies) from such tenant would cause the Corporation to fail to
satisfy any of the gross income requirements of Section 856(c) of the Code or
comparable provisions of state law).
(ii) If, prior to the Restriction Termination Date, any Transfer
or other event occurs that, if effective, would result in any Person
Beneficially or Constructively Owning Series C Preferred Stock in violation of
Section 7(b)(i) of these Articles Supplementary, (1) then that number of shares
of Series C Preferred Stock that otherwise would cause such Person to violate
Section 7(b)(i) of these Articles Supplementary (rounded up to the nearest whole
share) shall be automatically transferred to a Trust for the benefit of a
Charitable Beneficiary, as described in Section 7(c), effective as of the close
of business on the business day prior to the date of such Transfer or other
event, and such Purported Beneficial Transferee shall thereafter have no rights
in such shares or (2) if, for any reason, the transfer to the Trust described in
clause (1) of this sentence is not automatically effective as provided therein
to prevent any Person from Beneficially or Constructively Owning Series C
Preferred Stock in violation of Section 7(b)(i) of these Articles Supplementary,
then the Transfer of that number of shares of Series C Preferred Stock that
otherwise would cause any Person to violate Section 7(b)(i) shall be void ab
initio, and the Purported Beneficial Transferee shall have no rights in such
shares.
(iii) Subject to Section 7(n) of this Article Third and
notwithstanding any other provisions contained herein, prior to the Restriction
Termination Date, any Transfer of Series C Preferred Stock that, if effective,
would result in the capital stock of the Corporation being beneficially owned by
less than 100 Persons (determined without reference to any rules of attribution)
shall be void ab initio, and the intended transferee shall acquire no rights in
such Series C Preferred Stock.
It is expressly intended that the restrictions on ownership and
Transfer described in this Section 7(b) shall apply to the exchange rights
provided in Section 16.8 of the Subsidiary Partnership Agreement.
Notwithstanding any of the provisions of the Subsidiary Partnership Agreement to
the contrary, a partner of the Subsidiary Operating Partnership shall not be
entitled to effect an exchange of an interest in the Subsidiary Operating
Partnership for Series C Preferred Stock if the actual or beneficial or
Beneficial or Constructive Ownership of Series C Preferred Stock would be
prohibited under the provisions of this Section 7.
(c) Transfers of Series C Preferred Stock in Trust.
(i) Upon any purported Transfer or other event described in
Section 7(b)(ii) of these Articles Supplementary, such Series C Preferred Stock
shall be deemed to have been transferred to the Trustee in his capacity as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as
of the close of business on the business day prior to the purported Transfer or
other event that results in a transfer to the Trust pursuant to Section
7(b)(ii). The Trustee shall be appointed by the Corporation and shall be a
Person unaffiliated with the Corporation, any Purported Beneficial Transferee,
or any Purported Record Transferee. Each Charitable Beneficiary shall be
designated by the Corporation as provided in Section 7(c)(vi) of these Articles
Supplementary.
<PAGE> 15
(ii) Series C Preferred Stock held by the Trustee shall be
issued and outstanding Series C Preferred Stock of the Corporation. The
Purported Beneficial Transferee or Purported Record Transferee shall have no
rights in the shares of Series C Preferred Stock held by the Trustee. The
Purported Beneficial Transferee or Purported Record Transferee shall not benefit
economically from ownership of any shares held in trust by the Trustee, shall
have no rights to dividends and shall not possess any rights to vote or other
rights attributable to the shares of Series C Preferred Stock held in the Trust.
(iii) The Trustee shall have all voting rights and rights to
dividends with respect to Series C Preferred Stock held in the Trust, which
rights shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or distribution paid prior to the discovery by the
Corporation that shares of Series C Preferred Stock have been transferred to the
Trustee shall be paid to the Trustee upon demand, and any dividend or
distribution declared but unpaid shall be paid when due to the Trustee with
respect to such Series C Preferred Stock. Any dividends or distributions so paid
over to the Trustee shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to the Series C Preferred
Stock held in the Trust and, subject to Maryland law, effective as of the date
the Series C Preferred Stock has been transferred to the Trustee, the Trustee
shall have the authority (at the Trustee's sole discretion) (i) to rescind as
void any vote cast by a Purported Record Transferee with respect to such Series
C Preferred Stock prior to the discovery by the Corporation that the Series C
Preferred Stock has been transferred to the Trustee and (ii) to recast such vote
in accordance with the desires of the Trustee acting for the benefit of the
Charitable Beneficiary; provided, however, that if the Corporation has already
taken irreversible corporate action, then the Trustee shall not have the
authority to rescind and recast such vote. Notwithstanding any other provision
of these Articles Supplementary to the contrary, until the Corporation has
received notification that the Series C Preferred Stock has been transferred
into a Trust, the Corporation shall be entitled to rely on its share transfer
and other stockholder records for purposes of preparing lists of stockholders
entitled to vote at meetings, determining the validity and authority of proxies
and otherwise conducting votes of stockholders.
(iv) Within 20 days of receiving notice from the Corporation
that shares of Series C Preferred Stock have been transferred to the Trust, the
Trustee of the Trust shall sell the shares of Series C Preferred Stock held in
the Trust to a Person, designated by the Trustee, whose ownership of the shares
of Series C Preferred Stock will not violate the ownership limitations set forth
in Section 7(b)(i). Upon such sale, the interest of the Charitable Beneficiary
in the shares of Series C Preferred Stock sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Purported Record Transferee
and to the Charitable Beneficiary as provided in this Section 7(c)(iv). The
Purported Record Transferee shall receive the lesser of (1) the price paid by
the Purported Record Transferee for the shares of Series C Preferred Stock in
the transaction that resulted in such transfer to the Trust (or, if the event
which resulted in the transfer to the Trust did not involve a purchase of such
shares of Series C Preferred Stock at Market Price, the Market Price of such
shares of Series C Preferred Stock on the day of the event
<PAGE> 16
which resulted in the transfer of such shares of Series C Preferred Stock to the
Trust) and (2) the price per share received by the Trustee (net of any
commissions and other expenses of sale) from the sale or other disposition of
the shares of Series C Preferred Stock held in the Trust. Any net sales proceeds
in excess of the amount payable to the Purported Record Transferee shall be
immediately paid to the Charitable Beneficiary together with any dividends or
other distributions thereon. If, prior to the discovery by the Corporation that
shares of such Series C Preferred Stock have been transferred to the Trustee,
such shares of Series C Preferred Stock are sold by a Purported Record
Transferee then (i) such shares of Series C Preferred Stock shall be deemed to
have been sold on behalf of the Trust and (ii) to the extent that the Purported
Record Transferee received an amount for such shares of Series C Preferred Stock
that exceeds the amount that such Purported Record Transferee was entitled to
receive pursuant to this Section 7(c)(iv), such excess shall be paid to the
Trustee upon demand.
(v) Series C Preferred Stock transferred to the Trustee shall be
deemed to have been offered for sale to the Corporation, or its designee, at a
price per share equal to the lesser of (i) the price paid by the Purported
Record Transferee for the shares of Series C Preferred Stock in the transaction
that resulted in such transfer to the Trust (or, if the event which resulted in
the transfer to the Trust did not involve a purchase of such shares of Series C
Preferred Stock at Market Price, the Market Price of such shares of Series C
Preferred Stock on the day of the event which resulted in the transfer of such
shares of Series C Preferred Stock to the Trust) and (ii) the Market Price on
the date the Corporation, or its designee, accepts such offer. The Corporation
shall have the right to accept such offer until the Trustee has sold the shares
of Series C Preferred Stock held in the Trust pursuant to Section 7(c)(iv). Upon
such a sale to the Corporation, the interest of the Charitable Beneficiary in
the shares of Series C Preferred Stock sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Purported Record Transferee
and any dividends or other distributions held by the Trustee with respect to
such Series C Preferred Stock shall thereupon be paid to the Charitable
Beneficiary.
(vi) By written notice to the Trustee, the Corporation shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the Series C Preferred Stock held in the
Trust would not violate the restrictions set forth in Section 7(b)(i) in the
hands of such Charitable Beneficiary.
(d) Remedies For Breach. If the Board of Directors or a committee
thereof or other designees if permitted by the MGCL shall at any time determine
in good faith that a Transfer or other event has taken place in violation of
Section 7(b) of these Articles Supplementary or that a Person intends to
acquire, has attempted to acquire or may acquire beneficial ownership
(determined without reference to any rules of attribution), Beneficial Ownership
or Constructive Ownership of any shares of Series C Preferred Stock of the
Corporation in violation of Section 7(b) of these Articles Supplementary, the
Board of Directors or a committee thereof or other designees if permitted by the
MGCL shall take such action as it deems advisable to refuse to give effect or to
prevent such Transfer, including, but not limited to, causing the Corporation to
redeem shares of Series C Preferred Stock, refusing to give effect to such
Transfer on the books of the Corporation or instituting proceedings to enjoin
such Transfer; provided, however, that any Transfers (or, in the case of events
other than a Transfer, ownership or Constructive Ownership
<PAGE> 17
or Beneficial Ownership) in violation of Section 7(b)(i) of these Articles
Supplementary, shall automatically result in the transfer to a Trust as
described in Section 7(b)(ii) and any Transfer in violation of Section 7(b)(iii)
shall automatically be void ab initio irrespective of any action (or non-action)
by the Board of Directors.
(e) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire shares of Series C Preferred Stock in violation of Section
7(b) of these Articles Supplementary, or any Person who is a Purported
Beneficial Transferee such that an automatic transfer to a Trust results under
Section 7(b)(ii) of these Articles Supplementary, shall immediately give written
notice to the Corporation of such event and shall provide to the Corporation
such other information as the Corporation may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on the Corporation's
status as a REIT.
(f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Beneficial Owner or
Constructive Owner of Series C Preferred Stock and each Person (including the
shareholder of record) who is holding Series C Preferred Stock for a beneficial
owner or Beneficial Owner or Constructive Owner shall provide to the Corporation
such information that the Corporation may request, in good faith, in order to
determine the Corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in these Articles
Supplementary (but subject to Section 7(n) of these Articles Supplementary)
shall limit the authority of the Board of Directors to take such other action as
it deems necessary or advisable to protect the Corporation and the interests of
its shareholders by preservation of the Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
of the provisions of this Section 7 of these Articles Supplementary, including
any definition contained in Section 7(a), the Board of Directors shall have the
power to determine the application of the provisions of this Section 7 with
respect to any situation based on the facts known to it (subject, however, to
the provisions of Section 7(n) of these Articles Supplementary). In the event
Section 7 requires an action by the Board of Directors and these Articles
Supplementary fail to provide specific guidance with respect to such action, the
Board of Directors shall have the power to determine the action to be taken so
long as such action is not contrary to the provisions of Section 7. Absent a
decision to the contrary by the Board of Directors (which the Board may make in
its sole and absolute discretion), if a Person would have (but for the remedies
set forth in Section 7(b)) acquired Beneficial or Constructive Ownership of
Series C Preferred Stock in violation of Section 7(b)(i), such remedies (as
applicable) shall apply first to the shares of Series C Preferred Stock which,
but for such remedies, would have been actually owned by such Person, and second
to shares of Series C Preferred Stock which, but for such remedies, would have
been Beneficially Owned or Constructively Owned (but not actually owned) by such
Person, pro rata among the Persons who actually own such shares of Series C
Preferred Stock based upon the relative number of the shares of Series C
Preferred Stock held by each such Person.
(i) Exceptions.
<PAGE> 18
(i) Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Beneficially Owning shares of Series C Preferred Stock in violation of Section
7(b)(i)(A) if the Board of Directors obtains any representations and
undertakings from such Person as are reasonably necessary in the opinion of the
Board of Directors to ascertain that no individual's Beneficial Ownership of
such shares of Series C Preferred Stock will violate Section 7(b)(i)(A) or that
any such violation will not cause the Corporation to fail to qualify as a REIT
under the Code, and that any violation of such representations or undertakings
(or other action which is contrary to the restrictions contained in Section 7(b)
of these Articles Supplementary) or attempted violation will result in such
Series C Preferred Stock being transferred to a Trust in accordance with Section
7(b)(ii) of these Articles Supplementary.
(ii) Subject to Section 7(b)(i)(C), the Board of Directors, in
its sole discretion, may exempt a Person from the limitation on a Person
Constructively Owning Series C Preferred Stock in violation of Section
7(b)(i)(B), if the Corporation obtains such representations and undertakings
from such Person as are reasonably necessary in the opinion of the Board of
Directors to ascertain that such Person does not and will not own, actually or
Constructively, an interest in a tenant of the Corporation (or a tenant of any
entity owned in whole or in part by the Corporation) that would cause the
Corporation to own, actually or Constructively, more than a 9.8% interest (as
set forth in Section 856(d)(2)(B) of the Code) in such tenant and that any
violation or attempted violation will result in such Series C Preferred Stock
being transferred to a Trust in accordance with Section 7(b)(ii) of these
Articles Supplementary. Notwithstanding the foregoing, the inability of a Person
to make the certification described in this Section 7(i)(ii) shall not prevent
the Board of Directors, in its sole discretion, from exempting such Person from
the limitation on a Person Constructively Owning Series C Preferred Stock in
violation of Section 7(b)(i)(B) if the Board of Directors determines that the
resulting application of Section 856(d)(2)(B) of the Code would affect the
characterization of less than 0.5% of the gross income (as such term is used in
Section 856(c)(2) of the Code) of the Corporation in any taxable year, after
taking into account the effect of this sentence with respect to all other
capital stock of the Corporation to which this sentence applies.
(iii) Prior to granting any exception pursuant to Section
7(i)(i) or (ii) of these Articles Supplementary, the Board of Directors may
require a ruling from the Internal Revenue Service, or an opinion of counsel, in
either case in form and substance satisfactory to the Board of Directors in its
sole discretion, as it may deem necessary or advisable in order to determine or
ensure the Corporation's status as a REIT.
(j) Legends. Each certificate for Series C Preferred Stock shall
bear substantially the following legends in addition to any legends required to
comply with federal and state securities laws:
CLASSES OF STOCK
"THE CORPORATION IS AUTHORIZED TO ISSUE CAPITAL STOCK OF MORE THAN ONE
CLASS, CONSISTING OF COMMON STOCK AND ONE
<PAGE> 19
OR MORE CLASSES OF PREFERRED STOCK. THE BOARD OF DIRECTORS IS AUTHORIZED
TO DETERMINE THE PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF ANY
CLASS OF PREFERRED STOCK BEFORE THE ISSUANCE OF SHARES OF SUCH CLASS OF
PREFERRED STOCK. THE CORPORATION WILL FURNISH, WITHOUT CHARGE, TO ANY
STOCKHOLDER MAKING A WRITTEN REQUEST THEREFOR, A COPY OF THE
CORPORATION'S CHARTER AND A WRITTEN STATEMENT OF THE DESIGNATIONS,
RELATIVE RIGHTS, PREFERENCES, CONVERSION OR OTHER RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS AS TO DIVIDENDS AND OTHER DISTRIBUTIONS,
QUALIFICATIONS AND TERMS AND CONDITIONS OF REDEMPTION OF THE STOCK OF
EACH CLASS WHICH THE CORPORATION HAS THE AUTHORITY TO ISSUE AND, IF THE
CORPORATION IS AUTHORIZED TO ISSUE ANY PREFERRED OR SPECIAL CLASS IN
SERIES, (i) THE DIFFERENCES IN THE RELATIVE RIGHTS AND PREFERENCES
BETWEEN THE SHARES OF EACH SERIES TO THE EXTENT SET, AND (ii) THE
AUTHORITY OF THE BOARD OF DIRECTORS TO SET SUCH RIGHTS AND PREFERENCES
OF SUBSEQUENT SERIES. REQUESTS FOR SUCH WRITTEN STATEMENT MAY BE
DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE."
RESTRICTION ON OWNERSHIP AND TRANSFER
"THE SHARES OF SERIES C PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON BENEFICIAL AND CONSTRUCTIVE OWNERSHIP AND
TRANSFER FOR THE PURPOSE OF THE CORPORATION'S MAINTENANCE OF ITS STATUS
AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"). SUBJECT TO CERTAIN FURTHER RESTRICTIONS
AND EXCEPT AS EXPRESSLY PROVIDED IN THE ARTICLES SUPPLEMENTARY FOR THE
SERIES C PREFERRED STOCK, (i) NO PERSON MAY BENEFICIALLY OWN SHARES OF
THE CORPORATION'S SERIES C PREFERRED STOCK WHICH, TAKING INTO ACCOUNT
ANY OTHER CAPITAL STOCK OF THE CORPORATION BENEFICIALLY OWNED BY SUCH
PERSON, WOULD CAUSE SUCH OWNERSHIP TO EXCEED THE OWNERSHIP LIMIT OF
9.8%; (ii) NO PERSON MAY CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S
SERIES C PREFERRED STOCK WHICH, TAKING INTO ACCOUNT ANY OTHER CAPITAL
STOCK OF THE CORPORATION CONSTRUCTIVELY OWNED BY SUCH PERSON, WOULD
CAUSE SUCH
<PAGE> 20
OWNERSHIP TO EXCEED THE OWNERSHIP LIMIT OF 9.8%; (iii) NO PERSON MAY
BENEFICIALLY OR CONSTRUCTIVELY OWN SHARES OF THE CORPORATION'S SERIES C
PREFERRED STOCK THAT, TAKING INTO ACCOUNT ANY OTHER CAPITAL STOCK OF THE
CORPORATION BENEFICIALLY OR CONSTRUCTIVELY OWNED BY SUCH PERSON, WOULD
RESULT IN THE CORPORATION BEING "CLOSELY HELD" UNDER SECTION 856(h) OF
THE CODE OR OTHERWISE CAUSE THE CORPORATION TO FAIL TO QUALIFY AS A
REIT; AND (iv) NO PERSON MAY TRANSFER SHARES OF SERIES C PREFERRED STOCK
IF SUCH TRANSFER WOULD RESULT IN THE CAPITAL STOCK OF THE CORPORATION
BEING OWNED BY FEWER THAN 100 PERSONS. ANY PERSON WHO BENEFICIALLY OR
CONSTRUCTIVELY OWNS OR ATTEMPTS TO BENEFICIALLY OR CONSTRUCTIVELY OWN
SERIES C PREFERRED STOCK WHICH CAUSES OR WILL CAUSE A PERSON TO
BENEFICIALLY OR CONSTRUCTIVELY OWN SERIES C PREFERRED STOCK IN EXCESS OF
THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE CORPORATION. IF ANY OF
THE RESTRICTIONS ON TRANSFER OR OWNERSHIP ARE VIOLATED, THE SERIES C
PREFERRED STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY TRANSFERRED TO
THE TRUSTEE OF A TRUST FOR THE BENEFIT OF ONE OR MORE CHARITABLE
BENEFICIARIES. IN ADDITION, THE CORPORATION MAY REDEEM SHARES UPON THE
TERMS AND CONDITIONS SPECIFIED BY THE BOARD OF DIRECTORS IN ITS SOLE
DISCRETION IF THE BOARD OF DIRECTORS DETERMINES THAT OWNERSHIP OR A
TRANSFER OR OTHER EVENT MAY VIOLATE THE RESTRICTIONS DESCRIBED ABOVE.
FURTHERMORE, UPON THE OCCURRENCE OF CERTAIN EVENTS, ATTEMPTED TRANSFERS
IN VIOLATION OF THE RESTRICTIONS DESCRIBED ABOVE MAY BE VOID AB INITIO.
ALL TERMS IN THIS LEGEND WHICH ARE DEFINED IN THE ARTICLES SUPPLEMENTARY
FOR THE SERIES C PREFERRED STOCK SHALL HAVE THE MEANINGS ASCRIBED TO
THEM IN SUCH ARTICLES SUPPLEMENTARY, AS THE SAME MAY BE AMENDED FROM
TIME TO TIME, A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON TRANSFER
AND OWNERSHIP, WILL BE FURNISHED TO EACH HOLDER OF SERIES C PREFERRED
STOCK ON REQUEST AND WITHOUT CHARGE. REQUESTS FOR SUCH A COPY MAY BE
DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL OFFICE."
(k) Exchange of Series C Preferred Units. The Corporation is hereby
expressly vested with authority (subject to the restrictions on ownership,
transfer and redemption of Series C Preferred Stock set forth in this Section 7)
to issue, and, so long as AMB Property Holding Corporation, a Maryland
corporation, remains the general partner of the Subsidiary Operating
Partnership, and the Operating Partnership remains a limited partner of the
Subsidiary Operating Partnership, the Corporation shall issue to the extent
provided above and in the Subsidiary
<PAGE> 21
Partnership Agreement, Series C Preferred Stock in exchange for Series C
Preferred Units (as defined in the Subsidiary Partnership Agreement) (the
"Series C Preferred Units").
(l) Reservation of Shares. Pursuant to the obligations of the
Corporation under the Subsidiary Partnership Agreement to issue Series C
Preferred Stock in exchange for Series C Preferred Units, the Board of Directors
is hereby required to reserve and authorize for issuance a number of authorized
but unissued shares of Series C Preferred Stock not less than the number of
Series C Preferred Units issued to permit the Corporation to issue Series C
Preferred Stock in exchange for Series C Preferred Units that may be exchanged
for or converted into Series C Preferred Stock as provided in the Subsidiary
Partnership Agreement.
(m) Severability. If any provision of this Section 7 or any
application of any such provision is determined to be invalid by any Federal or
state court having jurisdiction over the issues, the validity of the remaining
provisions shall not be affected and other applications of such provision shall
be affected only to the extent necessary to comply with the determination of
such court.
(n) New York Stock Exchange. Nothing in this Section 7 shall
preclude the settlement of any transaction entered into through the facilities
of the New York Stock Exchange. The shares of Series C Preferred Stock that are
the subject of such transaction shall continue to be subject to the provisions
of this Section 7 after such settlement.
(o) Applicability of Section 7. The provisions set forth in this
Section 7 shall apply to the Series C Preferred Stock notwithstanding any
contrary provisions of the Series C Preferred Stock provided for elsewhere in
these Articles Supplementary.
(8) CONVERSION. The Series C Preferred Stock is not convertible into or
exchangeable for any other property or securities of the Corporation.
(9) NO SINKING FUND. No sinking fund shall be established for the
retirement or redemption of Series C Preferred Stock.
(10) NO PREEMPTIVE RIGHTS. No holder of the Series C Preferred Stock of
the Corporation shall, as such holder, have any preemptive rights to purchase or
subscribe for additional shares of stock of the Corporation or any other
security of the Corporation which it may issue or sell.
FOURTH: The Series C Preferred Stock has been classified and designated
by the Board under the authority contained in the Charter.
FIFTH: These Articles Supplementary have been approved by the Board in
the manner and by the vote required by law.
SIXTH: 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> 22
SEVENTH: The undersigned President of the Corporation acknowledges these
Articles Supplementary to be the act of the Corporation and, as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
(Signature Page Follows)
<PAGE> 23
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
President and attested to by its Secretary on this 23rd day of November, 1998.
AMB PROPERTY CORPORATION
By: /s/ HAMID R. MOGHADAM
--------------------------------------
Hamid R. Moghadam
President and Chief Executive Officer
[SEAL]
ATTEST:
/s/ DAVID S. FRIES
- -----------------------------------
David S. Fries
Secretary
<PAGE> 1
EXHIBIT 3.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 12,
1998 (this "Agreement"), is entered into by and among AMB Property Corporation,
a Maryland corporation (the "Company" or the "REIT"), AMB Property, L.P., a
Delaware limited partnership (the "Operating Partnership"), and the unit holders
whose names are set forth on the signature pages hereto (each, a "Unit Holder"
and collectively, the "Unit Holders").
RECITALS
WHEREAS, in connection with the offering of 8 5/8% Series B
Cumulative Redeemable Preferred Units of the Operating Partnership (the "OP
Units"), Greene Street 1998 Exchange Fund, L.P., a Delaware limited partnership
(the "Contributor"), desires to contribute to the Operating Partnership cash in
return for the OP Units on terms and conditions set forth in the Contribution
Agreement, dated November 12, 1998 (the "Contribution Agreement"), by and among
the Company, the Operating Partnership and the Contributor;
WHEREAS, the Unit Holders will receive the OP Units in
exchange for cash to the Contributor;
WHEREAS, pursuant to the Partnership Agreement (as defined
below), the OP Units owned by the Unit Holders will be redeemable for cash or
exchangeable for shares of the Company's 8 5/8% Series B Cumulative Redeemable
Preferred Stock (the "Preferred Stock") upon the terms and subject to the
conditions contained therein; and
WHEREAS, in order to induce the Contributor to enter into the
Contribution Agreement, the Company and the Operating Partnership have agreed to
provide registration rights set forth to the Contributor and any subsequent
holder or holders of the OP Units.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. In addition to the definitions set
forth above, the following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms
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"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning given to such term in the preamble
hereto.
"Articles of Incorporation" means the Articles of
Incorporation of the Company as filed with the Secretary of State of the State
of Maryland on November 24, 1997, as the same may be amended, modified or
restated from time to time.
"Articles Supplementary" means the Articles Supplementary of
the Company, filed with the Maryland State Department of Assessments and
Taxation on November 12, 1998, designating the Preferred Stock.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York or San Francisco,
California are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Contribution Agreement" means the Contribution Agreement,
dated November 12, 1998, by and among the Company, the Operating Partnership and
the Contributor.
"Contributor" means Greene Street 1998 Exchange Fund, L.P., a
Delaware limited partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchangeable OP Units" means OP Units which may be redeemable
for cash pursuant to Section 17.5 of the Partnership Agreement or exchangeable
for Preferred Stock or redeemable for cash pursuant to Section 17.8 of the
Partnership Agreement (without regard to any limitations on the exercise of such
exchange right as a result of the Ownership Limit Provisions, as defined below).
"General Partner" means the Company or its successors as
general partner of the Operating Partnership.
"Holder" means any Person who is the record or beneficial
owner of any Registrable Security or any assignee or transferee of such
Registrable Security (including assignments or transfers of Registrable
Securities to such assignees or transferees as a result of the foreclosure on
any loans secured by such Registrable Securities) unless such Registrable
Security is acquired in a public distribution pursuant to a registration
statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act, in each such case where
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securities sold in such transaction may be resold without subsequent
registration under the Securities Act.
"Incapacitated" shall have the meaning set forth in the
Partnership Agreement.
"OP Units" means 8 5/8% Series B Cumulative Redeemable
Preferred Units of the Operating Partnership.
"Ownership Limit Provisions" mean the various provisions of
the Articles Supplementary set forth in Section 7 of Article Third thereof
restricting the ownership of Preferred Stock by certain Persons to specified
percentages of the outstanding Preferred Stock.
"Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership of the Operating Partnership, dated as of
November 12, 1998, as the same may be amended, modified or restated from time to
time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Preferred Stock" means the Company's 8 5/8% Series B
Cumulative Redeemable Preferred Stock.
"REIT" means a real estate investment trust under Section 856
through Section 860 of the Code.
"Registrable Securities" means shares of Preferred Stock of
the Company at any time owned, either of record or beneficially, by any Holder
issued upon exchange of Exchangeable OP Units until (i) a registration statement
covering such securities has been declared effective by the Commission and such
shares have been sold or transferred pursuant to such effective registration
statement, (ii) such shares are sold under circumstances in which all of the
applicable conditions of Rule 144 are met or under which such shares may be sold
pursuant to Rule 144(k) under the Securities Act or (iii) such shares have been
otherwise transferred in a transaction that would constitute a sale thereof
under the Securities Act, the Company has delivered a new certificate or other
evidence of ownership for such shares not bearing the Securities Act restricted
stock legend and such shares may be resold without subsequent registration under
the Securities Act.
"Rule 144" means Rule 144 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of the Company of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
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"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act
pursuant to this Agreement.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 Shelf Registration. The Company shall prepare and
file with the Commission a "shelf" registration statement on any form for which
the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the Registrable
Securities by the Holders for an offering to be made on a continuous or delayed
basis pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement") as soon as practicable but in any event not later than 60 days after
the date the OP Units are exchanged for shares of Preferred Stock and shall use
its best efforts to cause the Shelf Registration Statement to be declared
effective within 120 days after the date of such exchange. The Company shall use
its best efforts to keep such Shelf Registration Statement continuously
effective until the earliest of (A) 24 months following the effective date of
the Shelf Registration Statement, (B) such time as all of the Registrable
Securities have been sold pursuant to the Shelf Registration Statement or Rule
144 and (C) the date on which the Registrable Securities may be sold without
volume restrictions in accordance with Rule 144.
SECTION 2.2 Registration Procedures; Filings; Information. In
connection with any Shelf Registration Statement, the Company will use its best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as quickly as
practicable, and in connection therewith:
(a) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish to each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement or prospectus copies of such
registration statement or prospectus or any amendment or supplement thereto as
proposed to be filed, and thereafter furnish to such Selling Holder and
Underwriter, if any, one conformed copy of such registration statement, each
amendment thereof and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein; provided, that each
such exhibit need only be provided once), and such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holder.
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(b) After the filing of the registration statement, the
Company will promptly notify each Selling Holder of Registrable Securities
covered by such registration statement of any stop order issued or threatened by
the Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(c) The Company will use its best efforts to (i) register
or qualify the Registrable Securities under such other securities or blue sky
laws of such jurisdictions in the United States (where an exemption is not
available) as any Selling Holder or managing Underwriter or Underwriters, if
any, reasonably (in light of such Selling Holder's intended plan of
distribution) requests and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company and
do any and all other acts and things that may be reasonably necessary or
advisable to enable such Selling Holder to consummate the disposition of the
Registrable Securities owned by such Selling Holder; provided that the Company
will not be required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph (d),
(B) subject itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction.
(d) The Company will promptly notify each Selling Holder
of such Registrable Securities, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the occurrence of an
event requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly make available to each Selling Holder a
reasonable number of copies of any such supplement or amendment.
(e) The Company will enter into customary agreements
(including an underwriting agreement, if any, in customary form) and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities.
(f) The Company will make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of
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competent jurisdiction. Each Selling Holder of such Registrable Securities
agrees that information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates or otherwise
disclosed by it unless and until such is made generally available to the public.
Each Selling Holder of such Registrable Securities further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(g) The Company will otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Commission promulgated thereunder (or any successor rule or
regulation hereafter adopted by the Commission).
(h) The Company will use its best efforts to cause all
such Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(i) The Company will use its best efforts to obtain CUSIP
numbers for the Preferred Stock not later than the effective date of the Shelf
Registration Statement.
The Company may require, as a condition precedent to the
obligations of the Company under the Agreement, each Selling Holder of
Registrable Securities to promptly furnish in writing to the Company such
information regarding such Selling Holder, the Registrable Securities held by it
and the intended method of distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of, or such Selling Holder obtains knowledge of, the happening
of any event of the kind described in Section 2.2(d) hereof, such Selling Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement and prospectus covering such Registrable Securities until
such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2.2(d) hereof, and, if so directed by the
Company, such Selling Holder will deliver to the Company all copies, other than
permanent file copies then in such Selling Holder's possession, of the most
recent prospectus and each amendment thereof and supplement thereto covering
such Registrable Securities at the time of receipt of such notice. Each Selling
Holder of Registrable Securities agrees that it will immediately notify the
Company at any time when a prospectus relating to the registration of such
Registrable Securities is required to be delivered under the Securities Act of
the happening of an event known to such Selling Holder as a result of which
information previously furnished by such Selling Holder to
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the Company in writing for inclusion in such prospectus contains an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. In the event the Company
shall give such notice, the Company shall extend the period during which such
registration statement shall be maintained effective (including the period
referred to in Section 2.1 hereof) by the number of days during the period from
and including the date of the giving of notice pursuant to Section 2.2(d) hereof
to the date when the Company shall make available to the Selling Holders of
Registrable Securities covered by such registration statement a prospectus
supplemented or amended to conform with the requirements of Section 2.2(d)
hereof.
SECTION 2.3 Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities on each securities exchange on which similar securities issued by the
Company are then listed, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company, (vii) the reasonable fees and expenses of
any special experts retained by the Company in connection with such
registration; and (viii) the reasonable fees and expenses of one counsel (who
shall be reasonably acceptable to the Company) for the Selling Holders. Except
as expressly set forth in the preceding sentence, the Company shall have no
obligation to pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or any out-of-pocket expenses of the
Holders (or the agents who manage their accounts) or any transfer taxes relating
to the registration or sale of the Registrable Securities.
SECTION 2.4 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder of Registrable Securities,
its officers, directors and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission of material
fact so made in reliance upon and in conformity with information furnished in
writing to the Company by such Selling Holder or on such Selling Holder's behalf
expressly for inclusion therein. The Company also agrees to
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indemnify any Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 2.4, provided that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter of the Registrable Securities from whom the person asserting any
such losses, claims, damages or liabilities purchased the Registrable Securities
which are the subject thereof if such person did not receive a copy of the
prospectus (or the prospectus as supplemented) at or prior to the confirmation
of the sale of such Registrable Securities to such person in any case where such
delivery is required by the Securities Act and the untrue statement or omission
of a material fact contained in such preliminary prospectus was corrected in the
prospectus (or the prospectus as supplemented).
SECTION 2.5 Indemnification by Holders of Registrable
Securities. Each Selling Holder agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.4 hereof. Each Selling
Holder also agrees to indemnify and hold harmless Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act on substantially the same basis as that of
the indemnification of the Company provided in this Section 2.5.
SECTION 2.6 Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Sections 2.4 or 2.5 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel, (ii) the
Indemnifying Party has not employed counsel to assume the defense of such
proceeding within a
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reasonable time after receiving notice of the commencement of the proceeding, or
(iii) the named parties to any such proceeding (including any impleaded parties)
include both the Indemnified Party and the Indemnifying Party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be designated in
writing by (i) in the case of Persons indemnified pursuant to Section 2.4
hereof, by the Selling Holders which owned a majority of the Registrable
Securities sold under the applicable registration statement and (ii) in the case
of Persons indemnified pursuant to Section 2.5 hereof, the Company. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than thirty (30) Business Days after receipt by
such Indemnifying Party of the aforesaid request and (ii) such Indemnifying
Party shall not have reimbursed the Indemnified Party in accordance with such
request prior to the date of such settlement. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in which any Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such proceeding.
SECTION 2.7 Contribution. If the indemnification provided for
in Sections 2.4 or 2.5 hereof is unavailable to an Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Company and the Selling Holders on the one hand and the
Underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other from the offering of the securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault
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of the Company and of each Selling Holder in connection with such statements or
omissions which resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Holders on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the Selling Holders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the prospectus. The
relative fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Holders or by the Underwriters. The
relative fault of the Company on the one hand and of each Selling Holder on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or such Selling Holder, and the Company's and the Selling Holder's relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 2.7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in Sections 2.4 and 2.5
hereof shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holders' obligations to contribute pursuant to
this Section 2.7 are several in the proportion that the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
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SECTION 2.8 Participation in Underwritten Registrations. No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in the
applicable underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents in customary form and reasonably required under the terms of
such underwriting arrangements and these registration rights provided for in
this Article II.
SECTION 2.9 Rule 144. The Company covenants that it will file
any reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 2.10 Holdback Agreements.
(a) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement or the use of any related
prospectus would require the disclosure of non-public material information that
the Company has a bona fide business purpose for preserving as confidential or
the disclosure of which would impede the Company's ability to consummate a
material action, and that the Company is not otherwise required by applicable
securities laws or regulations to disclose, upon written notice of such
determination by the Company, the rights of the Holders to offer, sell or
distribute any Registrable Securities pursuant to the Shelf Registration
Statement or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement shall be suspended until the earlier of (i) the date upon
which the Company notifies the Holders in writing that suspension of such rights
for the grounds set forth in this Section 2.10(a) is no longer necessary and
(ii) 120 days. The Company agrees to grant to the Holders any rights granted
after the date of this Agreement to holders of shares of another class or series
of the Company's preferred stock which limit the Company's ability to suspend
the rights of such holders under the registration rights agreement applicable to
such shares which are more favorable than the rights granted to the Holders
pursuant to this Section 2.10(a). The Company agrees to give such notice as
promptly as practicable following the date that such suspension of rights is no
longer necessary.
(b) If all reports required to be filed by the Company
pursuant to the Exchange Act have not been filed by the required date without
regard to any extension, or if the consummation of any business combination by
the Company has occurred or is probable for purposes of Rule 3-05 or Article 11
of Regulation S-X under the Act, upon written notice thereof by the Company to
the Holders, the rights of the Holders to offer, sell or distribute any
Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take action
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with respect to the registration or sale of any Registrable Securities pursuant
to the Shelf Registration Statement shall be suspended until the date on which
the Company has filed such reports or obtained and filed the financial
information required by Rule 3-05 or Article 11 of Regulation S-X to be included
or incorporated by reference, as applicable, in the Shelf Registration
Statement, and the Company shall notify the Holders as promptly as practicable
when such suspension is no longer required.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 Remedies. In addition to being entitled to
exercise all rights provided herein and granted by law, including recovery of
damages, the Holders shall be entitled to specific performance of the rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
SECTION 3.2 Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
Company and the Holders or any such Holder's representative if any such Holder
is Incapacitated. No failure or delay 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 any breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 3.3 Notices. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to any Unit Holder:
Greene Street 1998 Exchange Fund, L.P.
c/o Goldman, Sachs & Co.
One New York Plaza, 41st Floor
New York, NY 10004
Attn: Elizabeth Groves
Facsimile Number: (212) 346-8961
(2) if to the Company, initially at 505 Montgomery
Street, San Francisco, California 94111 (Attention: President and Chief
Executive Officer), or to such other address as the Company may hereafter
specify in writing.
All such notices and communications shall be deemed to have
been duly given: at the
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time delivered by hand, if personally delivered; when received if deposited in
the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied;
and on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
SECTION 3.4 Successors and Assigns. Except as expressly
provided in this Agreement, the rights and obligations of the Holders under this
Agreement shall not be assignable by any Holder to any Person that is not a
Holder. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns.
SECTION 3.5 Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Each party
shall become bound by this Agreement immediately upon affixing its signature
hereto. Counterparts hereof containing facsimile copy signatures shall have the
same force and effect as original signed counterparts.
SECTION 3.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California
without regard to the choice of law provisions thereof.
SECTION 3.7 Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 3.8 Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 3.9 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 3.10 No Third Party Beneficiaries. Nothing express or
implied herein is intended or shall be construed to confer upon any person or
entity, other than the parties hereto and their respective successors and
assigns, any rights, remedies or other benefits under or by reason of this
Agreement.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
AMB PROPERTY CORPORATION,
a Maryland corporation
By: /s/ John T. Roberts
--------------------------------------
John T. Roberts
Vice President and Director of Capital
Markets
AMB PROPERTY, L.P.,
a Delaware limited partnership
By: AMB Property Corporation,
its general partner
By: /s/ John T. Roberts
--------------------------------------
John T. Roberts
Vice President and Director of Capital
Markets
UNIT HOLDERS
GREENE STREET 1998 EXCHANGE FUND, L.P.
By: GOLDMAN SACHS MANAGEMENT
PARTNERS, L.P., as general partner of
Greene Street 1998 Exchange Fund, L.P.
By: GOLDMAN SACHS MANAGEMENT,
INC., as general partner of Goldman
Sachs Management Partners, L.P.
By: /s/ Elizabeth C. Groves
---------------------------------
Elizabeth C. Groves
Vice President
S-1
<PAGE> 1
EXHIBIT 3.4
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 24,
1998 (this "Agreement"), is entered into by and among AMB Property Corporation,
a Maryland corporation (the "Company" or the "REIT"), AMB Property II, L.P., a
Delaware limited partnership (the "Subsidiary Operating Partnership"), and the
unit holders whose names are set forth on the signature pages hereto (each, a
"Unit Holder" and collectively, the "Unit Holders").
RECITALS
WHEREAS, in connection with the offering of 8.75% Series C
Cumulative Redeemable Preferred Units of the Subsidiary Operating Partnership
(the "Units"), Belcrest Realty Corporation, a Delaware corporation ("Belcrest"),
and Belair Real Estate Corporation, a Delaware corporation ("Belair") (each a
"Contributor" and, together the "Contributors"), desire to contribute to the
Subsidiary Operating Partnership cash in return for the Units on terms and
conditions set forth in the Contribution Agreement, dated November 24, 1998 by
and among the Company, the Subsidiary Operating Partnership, AMB Property, L.P.,
a Delaware limited partnership (the "OP Parent"), AMB Property Holding
Corporation, a Maryland corporation (the "General Partner") and Belcrest, and
the Contribution Agreement, dated November 24, 1998 by and among the Company,
the Subsidiary Operating Partnership, the OP Parent, the General Partner and
Belair (each a "Contribution Agreement" and together, the "Contribution
Agreements");
WHEREAS, the Unit Holders will receive the Units in exchange
for cash to each of the Contributors;
WHEREAS, pursuant to the Partnership Agreement (as defined
below), the Units owned by the Unit Holders will be redeemable for cash or
exchangeable for shares of the Company's 8.75% Series C Cumulative Redeemable
Preferred Stock (the "Preferred Stock") upon the terms and subject to the
conditions contained therein; and
WHEREAS, in order to induce each of the Contributors to enter
into their respective Contribution Agreements, the Company and the Subsidiary
Operating Partnership have agreed to provide registration rights set forth to
each of the Contributors and any subsequent holder or holders of the Units.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 2
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. In addition to the definitions set
forth above, the following terms, as used herein, have the following meanings:
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning given to such term in the preamble
hereto.
"Articles of Incorporation" means the Articles of
Incorporation of the Company as filed with the Secretary of State of the State
of Maryland on November 24, 1997, as the same may be amended, modified or
restated from time to time.
"Articles Supplementary" means the Articles Supplementary of
the Company, filed with the Maryland State Department of Assessments and
Taxation on November 24, 1998, designating the Preferred Stock.
"Belair" means Belair Real Estate Corporation, a Delaware
corporation.
"Belcrest" means Belcrest Realty Corporation, a Delaware
corporation.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York or San Francisco,
California are authorized by law to close.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder.
"Commission" means the Securities and Exchange Commission.
"Contribution Agreements" means the Contribution Agreement,
dated November 24, 1998 by and among the Company, the Subsidiary Operating
Partnership, the OP Parent, the General Partner and Belcrest, and the
Contribution Agreement, dated November 24, 1998 by and among the Company, the
Subsidiary Operating Partnership, the OP Parent, the General Partner and Belair.
"Contributors" means Belcrest Realty Corporation, a Delaware
corporation, and Belair Real Estate Corporation, a Delaware corporation .
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules
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and regulations of the Commission promulgated thereunder.
"Exchangeable Units" means Units which may be redeemable for
cash pursuant to Section 16.5 of the Partnership Agreement or exchangeable for
Preferred Stock or redeemable for cash pursuant to Section 16.8 of the
Partnership Agreement (without regard to any limitations on the exercise of such
exchange right as a result of the Ownership Limit Provisions, as defined below).
"General Partner" means AMB Property Holding Corporation, a
Maryland corporation or its successors as general partner of the Subsidiary
Operating Partnership.
"Holder" means any Person who is the record or beneficial
owner of any Registrable Security or any assignee or transferee of such
Registrable Security (including assignments or transfers of Registrable
Securities to such assignees or transferees as a result of the foreclosure on
any loans secured by such Registrable Securities) unless such Registrable
Security is acquired in a public distribution pursuant to a registration
statement under the Securities Act or pursuant to transactions exempt from
registration under the Securities Act, in each such case where securities sold
in such transaction may be resold without subsequent registration under the
Securities Act.
"Incapacitated" shall have the meaning set forth in the
Partnership Agreement.
"Ownership Limit Provisions" mean the various provisions of
the Articles Supplementary set forth in Section 7 of Article Third thereof
restricting the ownership of Preferred Stock by certain Persons to specified
percentages of the outstanding Preferred Stock.
"Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership of the Subsidiary Operating Partnership, dated
as of November 24, 1998, as the same may be amended, modified or restated from
time to time.
"Person" means an individual or a corporation, partnership,
limited liability company, association, trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Preferred Stock" means the Company's 8.75% Series C
Cumulative Redeemable Preferred Stock.
"REIT" means a real estate investment trust under Section 856
through Section 860 of the Code.
"Registrable Securities" means shares of Preferred Stock of
the Company at any time owned, either of record or beneficially, by any Holder
issued upon exchange of Exchangeable Units until (i) a registration statement
covering such securities has been declared effective by the Commission and such
shares have been sold or transferred pursuant to such effective registration
statement, (ii) such shares are sold under circumstances in which all of the
applicable conditions of Rule 144 are met or under which such shares may be sold
pursuant to Rule 144(k) under the
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<PAGE> 4
Securities Act or (iii) such shares have been otherwise transferred in a
transaction that would constitute a sale thereof under the Securities Act, the
Company has delivered a new certificate or other evidence of ownership for such
shares not bearing the Securities Act restricted stock legend and such shares
may be resold without subsequent registration under the Securities Act.
"Rule 144" means Rule 144 promulgated under the Securities
Act, as such rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not affiliates of the Company of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means a Holder who is selling Registrable
Securities pursuant to a registration statement under the Securities Act
pursuant to this Agreement.
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
"Units" means 8.75% Series C Cumulative Redeemable Preferred
Units of the Subsidiary Operating Partnership.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1 Shelf Registration. The Company shall prepare and
file with the Commission a "shelf" registration statement on any form for which
the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the Registrable
Securities by the Holders for an offering to be made on a continuous or delayed
basis pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement") as soon as practicable but in any event not later than 60 days after
the date the Units are exchanged for shares of Preferred Stock and shall use its
best efforts to cause the Shelf Registration Statement to be declared effective
within 120 days after the date of such exchange. The Company shall use its best
efforts to keep such Shelf Registration Statement continuously effective until
the earliest of such time as all of the Registrable Securities have been sold
pursuant to the Shelf Registration Statement or Rule 144.
SECTION 2.2 Registration Procedures; Filings; Information. In
connection with any Shelf Registration Statement, the Company will use its best
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof as quickly as
practicable, and in connection therewith:
(a) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
notify each Holder of Registrable Securities that a Shelf Registration Statement
is being filed and advise such Holder that an offering of
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Registrable Securities will be made in accordance with the method or methods
elected (which method may also include an underwritten offering by a nationally
recognized Underwriter selected by the Company and reasonably acceptable to the
electing Holders) by the Holders of a majority of the Registrable Securities,
furnish to each Selling Holder and each Underwriter, if any, of the Registrable
Securities covered by such registration statement or prospectus copies of such
registration statement or prospectus or any amendment or supplement thereto as
proposed to be filed, and thereafter furnish to such Selling Holder and
Underwriter, if any, one conformed copy of such registration statement, each
amendment thereof and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein; provided, that each
such exhibit need only be provided once), and such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such Selling Holder or Underwriter may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Selling Holder.
(b) After the filing of the registration statement, the
Company will promptly (i) notify each Selling Holder of Registrable Securities
covered by such registration statement of any stop order issued or threatened by
the Commission or any state securities authority and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered and
(ii) notify each Selling Holder of Registrable Securities (A) of any request by
the Commission or any state securities authority for post-effective amendments
and supplements to a registration statement that has become effective, (B) of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose, and (C) of any
determination by the Company that a post-effective amendment to a registration
statement is required.
(c) The Company will use its best efforts to (i) register or
qualify the Registrable Securities under such other securities or blue sky laws
of such jurisdictions in the United States (where an exemption is not available)
as any Selling Holder or managing Underwriter or Underwriters, if any,
reasonably (in light of such Selling Holder's intended plan of distribution)
requests and (ii) cause such Registrable Securities to be registered with or
approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company and do any and all other
acts and things that may be reasonably necessary or advisable to enable such
Selling Holder to consummate the disposition of the Registrable Securities owned
by such Selling Holder; provided that the Company will not be required to (A)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (d), (B) subject itself
to taxation in any such jurisdiction or (C) consent to general service of
process in any such jurisdiction.
(d) The Company will promptly notify each Selling Holder of
such Registrable Securities, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the occurrence of an event
requiring the preparation of a supplement or amendment to such prospectus and
shall file with the Commission such amendments and supplements to such
prospectus and deliver copies of the same to each Selling Holder or underwriter,
as the case may be, so that, as thereafter delivered to the purchasers of such
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Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly make available to each Selling Holder a
reasonable number of copies of any such supplement or amendment.
(e) The Company will enter into customary agreements
(including an underwriting agreement, if any, in customary form containing
customary representations and warranties) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.
(f) The Company will make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records which the Company
determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Selling Holder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates or otherwise
disclosed by it unless and until such is made generally available to the public.
Each Selling Holder of such Registrable Securities further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(g) The Company will otherwise use its best efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its securityholders, as soon as reasonably practicable, an earnings statement
covering a period of twelve (12) months, beginning within three (3) months after
the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder (or any successor rule or regulation
hereafter adopted by the Commission).
(h) In connection with an underwritten offering of Registrable
Securities, the Company will furnish to each Underwriter a signed counterpart,
addressed to Underwriter, of (i) an opinion or opinions of counsel to the
Company and (ii) a comfort letter or comfort letters from the Company's
independent public accountants (to the extent permitted by the standards of the
American Institute of Certified Public Accountants), each in customary form and
covering such
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matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the managing Underwriter or Underwriters therefor reasonably
request.
(i) The Company will use its best efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(j) The Company will use its best efforts to obtain CUSIP
numbers for the Preferred Stock not later than the effective date of the Shelf
Registration Statement.
The Company may require, as a condition precedent to the
obligations of the Company under the Agreement, each Selling Holder of
Registrable Securities to promptly furnish in writing to the Company such
information regarding such Selling Holder, the Registrable Securities held by it
and the intended method of distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other information as
may be legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice
from the Company of, or such Selling Holder obtains knowledge of, the happening
of any event of the kind described in Section 2.2(d) hereof, such Selling Holder
will forthwith discontinue disposition of Registrable Securities pursuant to the
registration statement and prospectus covering such Registrable Securities until
such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2.2(d) hereof, and, if so directed by the
Company, such Selling Holder will deliver to the Company all copies, other than
permanent file copies then in such Selling Holder's possession, of the most
recent prospectus and each amendment thereof and supplement thereto covering
such Registrable Securities at the time of receipt of such notice. Each Selling
Holder of Registrable Securities agrees that it will immediately notify the
Company at any time when a prospectus relating to the registration of such
Registrable Securities is required to be delivered under the Securities Act of
the happening of an event known to such Selling Holder as a result of which
information previously furnished by such Selling Holder to the Company in
writing for inclusion in such prospectus contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading. In the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective (including the period referred to in
Section 2.1 hereof) by the number of days during the period from and including
the date of the giving of notice pursuant to Section 2.2(d) hereof to the date
when the Company shall make available to the Selling Holders of Registrable
Securities covered by such registration statement a prospectus supplemented or
amended to conform with the requirements of Section 2.2(d) hereof.
SECTION 2.3 Registration Expenses. In connection with any
registration statement required to be filed hereunder, the Company shall pay the
following registration expenses incurred in connection with the registration
hereunder (the "Registration Expenses"): (i) all registration, listing and
filing fees, (ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky
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qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), (v) the fees
and expenses incurred in connection with the listing of the Registrable
Securities on each securities exchange on which similar securities issued by the
Company are then listed, (vi) reasonable fees and disbursements of counsel for
the Company and customary fees and expenses for independent certified public
accountants retained by the Company, (including the expenses of any special
audits or comfort letters or costs associated with compliance with such special
audits or with the delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section 2.2(h) hereof)
(vii) the reasonable fees and expenses of any special experts retained by the
Company in connection with such registration; and (viii) the reasonable fees and
expenses of one counsel (who shall be reasonably acceptable to the Company) for
the Selling Holders. Except as expressly set forth in the preceding sentence,
the Company shall have no obligation to pay any underwriting fees, discounts or
commissions attributable to the sale of Registrable Securities, or any
out-of-pocket expenses of the Holders (or the agents who manage their accounts)
or any transfer taxes relating to the registration or sale of the Registrable
Securities.
SECTION 2.4 Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder of Registrable Securities,
its officers, directors and agents, and each Person, if any, who controls such
Selling Holder within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by such Selling Holder or on
such Selling Holder's behalf expressly for inclusion therein. The Company also
agrees to indemnify any Underwriters of the Registrable Securities, their
officers and directors and each Person who controls such Underwriters within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on
substantially the same basis as that of the indemnification of the Selling
Holders provided in this Section 2.4, provided that the foregoing indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter of the Registrable Securities from whom the person asserting any
such losses, claims, damages or liabilities purchased the Registrable Securities
which are the subject thereof if such person did not receive a copy of the
prospectus (or the prospectus as supplemented) at or prior to the confirmation
of the sale of such Registrable Securities to such person in any case where such
delivery is required by the Securities Act and the untrue statement or omission
of a material fact contained in such preliminary prospectus was corrected in the
prospectus (or the prospectus as supplemented).
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SECTION 2.5 Indemnification by Holders of Registrable
Securities. Each Selling Holder agrees, severally but not jointly, to indemnify
and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling Holder shall
have the rights and duties given to the Company, and the Company or its
officers, directors or agents or such controlling person shall have the rights
and duties given to such Selling Holder, by Section 2.4 hereof. Each Selling
Holder also agrees to indemnify and hold harmless Underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such Underwriters within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act on substantially the same basis as that of
the indemnification of the Company provided in this Section 2.5.
SECTION 2.6 Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Sections 2.4 or 2.5 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all fees and expenses. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by (i) in the case
of Persons indemnified pursuant to Section 2.4 hereof, by the Selling Holders
which owned a majority of the Registrable Securities sold under the applicable
registration statement and (ii) in the case of Persons indemnified pursuant to
Section 2.5 hereof, the Company. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment. Notwithstanding
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<PAGE> 10
the foregoing sentence, if at any time an Indemnified Party shall have requested
an Indemnifying Party to reimburse the Indemnified Party for fees and expenses
of counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than thirty (30) Business Days after receipt by such
Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
SECTION 2.7 Contribution. If the indemnification provided for
in Sections 2.4 or 2.5 hereof is unavailable to an Indemnified Party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Company and the Selling Holders on the one hand and the
Underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Holders on the one
hand and the Underwriters on the other from the offering of the securities, or
if such allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Holders on the one hand and of the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations and (ii) as between the Company on the one
hand and each Selling Holder on the other, in such proportion as is appropriate
to reflect the relative fault of the Company and of each Selling Holder in
connection with such statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Holders on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Holders bear to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of the Company and
the Selling Holders on the one hand and of the Underwriters on the other shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and the Selling
Holders or by the Underwriters. The relative fault of the Company on the one
hand and of each Selling Holder on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Selling Holder, and the
Company's and the Selling Holder's relative intent,
10
<PAGE> 11
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Section 2.7 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in Sections 2.4 and 2.5
hereof shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 2.7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Selling Holders' obligations to contribute pursuant to
this Section 2.7 are several in the proportion that the proceeds of the offering
received by such Selling Holder bears to the total proceeds of the offering
received by all the Selling Holders and not joint.
SECTION 2.8 Participation in Underwritten Registrations. No
Person may participate in any underwritten registration hereunder unless such
Person (a) agrees to sell such Person's securities on the basis provided in the
applicable underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents in customary form and reasonably required under the terms of
such underwriting arrangements and these registration rights provided for in
this Article II.
SECTION 2.9 Rule 144. The Company covenants that it will file
any reports required to be filed by it under the Securities Act and the Exchange
Act and that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable Holders to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder,
the Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
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<PAGE> 12
SECTION 2.10 Holdback Agreements.
(a) If the Company determines in its good faith judgment that
the filing of the Shelf Registration Statement or the use of any related
prospectus would require the disclosure of non-public material information that
the Company has a bona fide business purpose for preserving as confidential or
the disclosure of which would impede the Company's ability to consummate a
material action, and that the Company is not otherwise required by applicable
securities laws or regulations to disclose, upon written notice of such
determination by the Company, the rights of the Holders to offer, sell or
distribute any Registrable Securities pursuant to the Shelf Registration
Statement or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to the Shelf
Registration Statement shall be suspended until the earlier of (i) the date upon
which the Company notifies the Holders in writing that suspension of such rights
for the grounds set forth in this Section 2.10(a) is no longer necessary and
(ii) 120 days. The Company agrees to grant to the Holders any rights granted
after the date of this Agreement to holders of shares of another class or series
of the Company's preferred stock which limit the Company's ability to suspend
the rights of such holders under the registration rights agreement applicable to
such shares which are more favorable than the rights granted to the Holders
pursuant to this Section 2.10(a). The Company agrees to give such notice as
promptly as practicable following the date that such suspension of rights is no
longer necessary.
(b) If all reports required to be filed by the Company
pursuant to the Exchange Act have not been filed by the required date without
regard to any extension, or if the consummation of any business combination by
the Company has occurred or is probable for purposes of Rule 3-05 or Article 11
of Regulation S-X under the Act, upon written notice thereof by the Company to
the Holders, the rights of the Holders to offer, sell or distribute any
Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take action with respect to the registration or sale of
any Registrable Securities pursuant to the Shelf Registration Statement shall be
suspended until the date on which the Company has filed such reports or obtained
and filed the financial information required by Rule 3-05 or Article 11 of
Regulation S-X to be included or incorporated by reference, as applicable, in
the Shelf Registration Statement, and the Company shall notify the Holders as
promptly as practicable when such suspension is no longer required.
SECTION 2.11"Piggy Back" Rights. If at any time hereafter the
Company shall extend any holder of any shares of preferred stock of the Company
so called "piggy back" registration rights, such rights shall be extended to the
Holders of Registrable Securities upon the same terms and conditions.
ARTICLE III
MISCELLANEOUS
SECTION 3.1 Remedies. In addition to being entitled to
exercise all rights provided herein and granted by law, including recovery of
damages, the Holders shall be entitled to specific performance of the rights
under this Agreement. The Company agrees that monetary
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<PAGE> 13
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate.
SECTION 3.2 Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
Company and the Holders or any such Holder's representative if any such Holder
is Incapacitated. No failure or delay 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 any breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
SECTION 3.3 Notices. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier, or air courier guaranteeing
overnight delivery:
(1) if to any Unit Holder:
c/o Eaton Vance Management
One Federal Street
Boston, MA 02110
Attn: Mr. Alan Dynner
Facsimile Number: (617) 338-8054
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Attn: Peter H. Blessing, Esq.
Facsimile Number: (212) 848-7300
(2) if to the Company, initially at 505 Montgomery Street, San
Francisco, California 94111 (Attention: President and Chief Executive Officer),
or to such other address as the Company may hereafter specify in writing.
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; when
received if deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
SECTION 3.4 Successors and Assigns. Except as expressly
provided in this Agreement, the rights and obligations of the Holders under this
Agreement shall not be
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<PAGE> 14
assignable by any Holder to any Person that is not a Holder. This Agreement
shall be binding upon the parties hereto and their respective successors and
assigns.
SECTION 3.5 Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Each party
shall become bound by this Agreement immediately upon affixing its signature
hereto. Counterparts hereof containing facsimile copy signatures shall have the
same force and effect as original signed counterparts.
SECTION 3.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California
without regard to the choice of law provisions thereof.
SECTION 3.7 Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
SECTION 3.8 Entire Agreement. This Agreement is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Company with respect to the Registrable Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such
subject matter.
SECTION 3.9 Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
SECTION 3.10 No Third Party Beneficiaries. Nothing express or
implied herein is intended or shall be construed to confer upon any person or
entity, other than the parties hereto and their respective successors and
assigns, any rights, remedies or other benefits under or by reason of this
Agreement.
(Signature Page Follows)
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<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
AMB PROPERTY CORPORATION,
a Maryland corporation
By: /s/ John T. Roberts
----------------------------------
John T. Roberts
Vice President and Director of Capital
Markets
AMB PROPERTY II, L.P.,
a Delaware limited partnership
By: AMB Property Holding Corporation,
its general partner
By: /s/ John T. Roberts
----------------------------------
John T. Roberts
Vice President and Director of Capital
Markets
UNIT HOLDERS
BELCREST REALTY CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Faust, Jr.
----------------------------------
Thomas E. Faust, Jr.
Executive Vice President
BELAIR REAL ESTATE CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Faust, Jr.
----------------------------------
Thomas E. Faust, Jr.
Executive Vice President
S-1
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY, L.P.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINED TERMS AND RULES OF CONSTRUCTION 2
SECTION 1.1. DEFINITIONS 2
SECTION 1.2. RULES OF CONSTRUCTION 19
ARTICLE 2. ORGANIZATIONAL MATTERS 19
SECTION 2.1. ORGANIZATION 19
SECTION 2.2. NAME 19
SECTION 2.3. RESIDENT AGENT; PRINCIPAL OFFICE 19
SECTION 2.4. POWER OF ATTORNEY 20
SECTION 2.5. TERM 21
SECTION 2.6. NUMBER OF PARTNERS 21
ARTICLE 3. PURPOSE 21
SECTION 3.1. PURPOSE AND BUSINESS 21
SECTION 3.2. POWERS 22
SECTION 3.3. PARTNERSHIP ONLY FOR PURPOSES SPECIFIED 22
SECTION 3.4. REPRESENTATIONS AND WARRANTIES BY THE PARTIES 22
SECTION 3.5. CERTAIN ERISA MATTERS 24
ARTICLE 4. CAPITAL CONTRIBUTIONS 25
SECTION 4.1. CAPITAL CONTRIBUTIONS OF THE PARTNERS 25
SECTION 4.2. LOANS BY THIRD PARTIES 25
SECTION 4.3. ADDITIONAL FUNDING AND CAPITAL CONTRIBUTIONS 25
SECTION 4.4. STOCK INCENTIVE PLAN 28
SECTION 4.5. NO PREEMPTIVE RIGHTS 28
SECTION 4.6. OTHER CONTRIBUTION PROVISIONS 28
ARTICLE 5. DISTRIBUTIONS 28
SECTION 5.1. REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS 28
SECTION 5.2. DISTRIBUTIONS IN KIND 29
SECTION 5.3. DISTRIBUTIONS UPON LIQUIDATION 29
SECTION 5.4. DISTRIBUTIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS 29
SECTION 5.5 CHARACTER OF PLP DISTRIBUTIONS 30
ARTICLE 6. ALLOCATIONS 30
SECTION 6.1. TIMING AND AMOUNT OF ALLOCATIONS OF NET INCOME AND NET LOSS 30
SECTION 6.2. GENERAL ALLOCATIONS 30
SECTION 6.3. ADDITIONAL ALLOCATION PROVISIONS 33
SECTION 6.4. TAX ALLOCATIONS 35
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS 36
SECTION 7.1. MANAGEMENT 36
SECTION 7.2. CERTIFICATE OF LIMITED PARTNERSHIP 39
SECTION 7.3. RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY 40
SECTION 7.4. REIMBURSEMENT OF THE GENERAL PARTNER 42
SECTION 7.5. OUTSIDE ACTIVITIES OF THE GENERAL PARTNER 43
SECTION 7.6. CONTRACTS WITH AFFILIATES 44
</TABLE>
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<TABLE>
<S> <C>
SECTION 7.7. INDEMNIFICATION 44
SECTION 7.8. LIABILITY OF THE GENERAL PARTNER 46
SECTION 7.9. OTHER MATTERS CONCERNING THE GENERAL PARTNER 47
SECTION 7.10. TITLE TO PARTNERSHIP ASSETS 48
SECTION 7.11. RELIANCE BY THIRD PARTIES 48
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 49
SECTION 8.1. LIMITATION OF LIABILITY 49
SECTION 8.2. MANAGEMENT OF BUSINESS 49
SECTION 8.3. OUTSIDE ACTIVITIES OF LIMITED PARTNERS 49
SECTION 8.4. RETURN OF CAPITAL 49
SECTION 8.5. RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP 50
SECTION 8.6. COMMON LIMITED PARTNER REDEMPTION RIGHTS 51
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS 53
SECTION 9.1. RECORDS AND ACCOUNTING 53
SECTION 9.2. FISCAL YEAR 53
SECTION 9.3. REPORTS 53
SECTION 9.4. NONDISCLOSURE OF CERTAIN INFORMATION 54
ARTICLE 10. TAX MATTERS 54
SECTION 10.1. PREPARATION OF TAX RETURNS 54
SECTION 10.2. TAX ELECTIONS 54
SECTION 10.3. TAX MATTERS PARTNER 54
SECTION 10.4. ORGANIZATIONAL EXPENSES 56
SECTION 10.5. WITHHOLDING 56
ARTICLE 11. TRANSFERS AND WITHDRAWALS 57
SECTION 11.1. TRANSFER 57
SECTION 11.2. TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST 57
SECTION 11.3. LIMITED PARTNERS' RIGHTS TO TRANSFER 59
SECTION 11.4. SUBSTITUTED LIMITED PARTNERS 61
SECTION 11.5. ASSIGNEES 62
SECTION 11.6. GENERAL PROVISIONS 62
ARTICLE 12. ADMISSION OF PARTNERS 64
SECTION 12.1. ADMISSION OF SUCCESSOR GENERAL PARTNER 64
SECTION 12.2. ADMISSION OF ADDITIONAL LIMITED PARTNERS 64
SECTION 12.3. AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP 65
ARTICLE 13. DISSOLUTION AND LIQUIDATION 65
SECTION 13.1. DISSOLUTION 65
SECTION 13.2. WINDING UP 66
SECTION 13.3. COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS 67
SECTION 13.4. DEEMED DISTRIBUTION AND RECONTRIBUTION 68
SECTION 13.5. RIGHTS OF LIMITED PARTNERS 68
SECTION 13.6. NOTICE OF DISSOLUTION 68
SECTION 13.7. CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP 69
SECTION 13.8. REASONABLE TIME FOR WINDING-UP 69
SECTION 13.9. WAIVER OF PARTITION 69
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS 69
SECTION 14.1. AMENDMENTS 69
SECTION 14.2. ACTION BY THE PARTNERS 69
ARTICLE 15. GENERAL PROVISIONS 70
SECTION 15.1. ADDRESSES AND NOTICE 70
SECTION 15.2. TITLES AND CAPTIONS 70
SECTION 15.3. PRONOUNS AND PLURALS 71
SECTION 15.4. FURTHER ACTION 71
SECTION 15.5. BINDING EFFECT 71
SECTION 15.6. CREDITORS 71
SECTION 15.7. WAIVER 71
SECTION 15.8. COUNTERPARTS 71
SECTION 15.9. APPLICABLE LAW 71
SECTION 15.10. INVALIDITY OF PROVISIONS 71
SECTION 15.11. LIMITATION TO PRESERVE REIT STATUS 72
SECTION 15.12. ENTIRE AGREEMENT 72
SECTION 15.13. NO RIGHTS AS STOCKHOLDERS 72
ARTICLE 16. SERIES A PREFERRED UNITS 73
SECTION 16.1. DESIGNATION AND NUMBER 73
SECTION 16.2 RANKING 73
SECTION 16.3. DISTRIBUTIONS 73
SECTION 16.4. LIQUIDATION PROCEEDS 75
SECTION 16.5. REDEMPTION 75
SECTION 16.6. VOTING RIGHTS 77
SECTION 16.7. TRANSFER RESTRICTIONS 77
SECTION 16.8. NO CONVERSION RIGHTS 77
SECTION 16.9. NO SINKING FUND 77
ARTICLE 17. SERIES B PREFERRED UNITS 77
SECTION 17.1. DESIGNATION AND NUMBER 77
SECTION 17.2. RANKING 77
SECTION 17.3. DISTRIBUTIONS 77
SECTION 17.4. LIQUIDATION PROCEEDS 79
SECTION 17.5. REDEMPTION 79
SECTION 17.6. VOTING RIGHTS 81
SECTION 17.7. TRANSFER RESTRICTIONS 82
SECTION 17.8. EXCHANGE RIGHTS 83
SECTION 17.9. NO CONVERSION RIGHTS 87
SECTION 17.10. NO SINKING FUND 87
</TABLE>
iii
<PAGE> 5
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of November 12, 1998, is entered into by and among AMB
Property Corporation, a Maryland corporation (the "Company"), as the General
Partner, and the Persons whose names are set forth on Exhibit A attached hereto,
as the Limited Partners (the "Existing Limited Partners"), together with any
other Persons who become Partners in the Partnership as provided herein.
WHEREAS, the General Partner and the Existing Limited Partners
are parties to that certain Second Amended and Restated Agreement of Limited
Partnership, dated July 27, 1998, as amended;
WHEREAS, pursuant to Section 4.3.C of the Partnership
Agreement, the General Partner may, in its sole and absolute discretion subject
to Delaware law, in connection with any Capital Contribution, issue additional
Partnership Interests in one or more classes, or one or more series of any such
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers, and duties, including rights, powers,
and duties senior to then existing Limited Partnership Interests;
WHEREAS, on the date hereof, Greene Street 1998 Exchange Fund,
L.P., a Delaware limited partnership ("Contributor") has made a Capital
Contribution of $65,000,000, in cash, to the Partnership in exchange for which
Contributor is entitled to receive an aggregate of 1,300,000 Series B Preferred
Units in the Partnership with rights, preferences, exchange and other rights,
voting powers and restrictions, limitations as to distributions, qualifications
and terms and conditions as set forth herein;
WHEREAS, pursuant to the authority granted to the General
Partner under the Partnership Agreement, the General Partner desires to amend
and restate the Partnership Agreement to reflect (i) the issuance of the Series
B Preferred Units, (ii) the admission of the Contributor as an Additional
Limited Partner and holder of a certain number of Series B Preferred Units and
(iii) certain other matters described herein;
WHEREAS, Contributor desires to become a party to the
Partnership Agreement as a Limited Partner and to be bound by all terms,
conditions and other provisions of the Partnership Agreement; and
WHEREAS, by virtue of the execution of this Agreement by the
Company in its capacity as General Partner of the Partnership, the General
Partner hereby consent to the amendment and restatement of the Second Amended
and Restated Agreement of Limited Partnership.
<PAGE> 6
NOW, THEREFORE, for good and adequate consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINED TERMS AND RULES OF CONSTRUCTION
Section 1.1. Definitions
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 Funds" shall have the meaning set forth in Section
4.3.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts which such
Partner is obligated to restore pursuant to this
Agreement or is deemed to be obligated to restore
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)
or the penultimate sentence of each of Regulations
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjustment Date" shall have the meaning set forth in Section
4.3.E.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"Agreed Value" means (i) in the case of any Contributed
Property set forth in Exhibit A and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit A; (ii)
in the case of any Contributed Property not set forth in Exhibit A and as of the
time of its contribution to the Partnership, the fair market value of such
property or other consideration as determined by the General Partner, 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,
2
<PAGE> 7
the fair market value of such property as determined by the General Partner 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 the distribution as determined under Section 752 of the
Code and the Regulations thereunder.
"Agreement" means this Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, modified, supplemented or restated
from time to time.
"Appraisal" means with respect to any assets, the opinion of
an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith; such opinion may be in the form
of an opinion by such independent third party that the value for such asset as
set by the General Partner is fair, from a financial point of view, to the
Partnership.
"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,
(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 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 the net proceeds from the sale,
exchange, disposition, or refinancing of Partnership property
for such period over the gain (or loss, as the case may be)
recognized from any such sale, exchange, disposition, or
refinancing during such period (excluding Terminating Capital
Transactions), and
(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 during such
period by the Partnership,
(b) capital expenditures made by the Partnership
during such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clauses (ii)(a) or (b),
3
<PAGE> 8
(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
established during such period which the General Partner
determines are 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.
"Board of Directors" means the Board of Directors of the
General Partner.
"Business Day" means each day, other than a Saturday or a
Sunday, which is not a day on which banking institutions in Los Angeles,
California or New York, New York are authorized or required by law, regulation
or executive order to close.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall be added
such Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to such Partner.
(ii) From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 6.3 hereof,
and the amount of any liabilities of such Partner assumed by the Partnership or
which are secured by any property contributed by such Partner to the
Partnership.
(iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
(iv) In determining the amount of any liability for purposes
of subsections (i) and (ii) hereof, there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Regulations.
4
<PAGE> 9
(v) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification; provided that,
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of this Agreement upon the dissolution of the
Partnership. The General Partner also shall (a) 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 (b) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.
"Cash Amount" means, with respect to any Partnership Units
subject to a Redemption, an amount of cash equal to the Deemed Partnership
Interest Value attributable to such Partnership Units.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Secretary of State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Charter" means the Company's Articles of Incorporation as of
November 24, 1997, as amended by the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on July 23, 1998, as further
amended by the Articles Supplementary filed with the Maryland Department of
Assessments and Taxation on November 12, 1998 and as further amended or restated
from time to time.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Common Unit" means each Partnership Unit that is not entitled
to any preference with respect to any other Partnership Unit as to distribution
or voluntary or involuntary liquidation, dissolution or winding up of the
Partnership.
"Consent" means the consent to, approval of, or vote on a
proposed action by a Partner given in accordance with Article 14 hereof.
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<PAGE> 10
"Consent of the Limited Partners" means the Consent of a
Majority in Interest of the Limited Partners, other than the Preferred Limited
Partners, which Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and may be given or withheld by a
Majority in Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.
"Consent of the Partners" means the Consent of Partners, other
than the Preferred Limited Partners, holding Percentage Interests that in the
aggregate are equal to or greater than a majority of the aggregate Percentage
Interests of all Partners, other than the Preferred Limited Partners, which
Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by such Partners, in
their sole and absolute discretion.
"Constructively Own" means ownership under the constructive
ownership rules described in Exhibit C.
"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 (or, to the extent provided in applicable
regulations, deemed contributed by the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"Debt" means, as to any Person, as of any date of
determination: (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"Deemed Partnership Interest Value" means, as of any date with
respect to any class of Partnership Interests, the Deemed Value of the
Partnership Interests of such class multiplied by the applicable Partner's
Percentage Interest of such class.
"Deemed Value of the Partnership Interests" means, as of any
date with respect to any class or series of Partnership Interests, (i) the total
number of Partnership Units of the General Partner in such class or series of
Partnership Interests (as provided for in Sections 4.1 and 4.3.C) issued and
outstanding as of the close of business on such date multiplied by the Fair
Market Value determined as of such date of a share of capital stock of the
General Partner which corresponds to such class or series of Partnership
Interests; (ii) divided by the Percentage Interest of the General Partner in
such class or series of Partnership Interests on such date; provided, that if no
outstanding shares of capital stock of the General Partner correspond to a class
of series of Partnership Interests, the Deemed Value of the Partnership
Interests with respect to such class or series shall be equal to an amount
reasonably determined by the General Partner.
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<PAGE> 11
"Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset 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 Gross Asset
Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset 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 upon which date contributions set forth on
Exhibit A shall become effective.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agreements" means one or more of the agreements
between the Company, the Partnership and one or more of the Performance
Investors, dated as of the closing of the date of the initial public offering of
the common stock of the General Partner, pursuant to which the Performance
Investors have deposited their Performance Shares in escrow for possible
transfer to the General Partner or the Partnership (as applicable).
"Excess Performance Capital" means, with respect to a
Performance Partner, an amount equal to the number of Partnership Units held by
such Performance Partner, multiplied by the excess of (i) the Capital Account
per Partnership Unit for such Performance Partner; over (ii) the Capital Account
per Partnership Unit for a Limited Partner which is not a PLP or a Performance
Partner. For purposes of (ii) above, it shall be assumed that the Limited
Partner has no special arrangements with the Partnership, other than as set
forth in this Agreement, which would cause its Capital Account per Partnership
Unit to be different from the Capital Account per Partnership Unit of other
Limited Partners who are not Performance Partners or PLPs. If the Partner
described in (ii) above does not exist, the amount used for purposes of (ii)
shall be the projected Capital Account balance per Partnership Unit for such
Partner, determined in the reasonable discretion of the General Partner. For
purposes of this definition, to the extent the Capital Account of a Partner
which owns both Common Units and Preference Units is being considered, such
Capital Account shall be equal to such Partner's Capital Account determined
without regard to the adjustments arising from or as a result of the acquisition
or ownership of Preference Units by such Partner.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Fair Market Value" means, with respect to any share of
capital stock of the General Partner, the average of the daily market price for
the ten (10) consecutive trading days immediately preceding the date with
respect to which "Fair Market Value" must be determined hereunder or, if such
date is not a Business Day, the immediately preceding Business Day. The market
price for each such trading day shall be (i) if such shares are listed or
admitted to trading
7
<PAGE> 12
on any securities exchange or the Nasdaq National Market, 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 such shares are
not listed or admitted to trading on any securities exchange or the Nasdaq
National Market, 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 such shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market 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 Fair Market Value of such 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 for such shares includes rights that a holder of
such shares would be entitled to receive, then the Fair Market 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; provided, that in connection with determining
the Deemed Value of the Partnership Interests for purposes of determining the
number of additional Partnership Units issuable upon a Capital Contribution
funded by an underwritten public offering of shares of capital stock of the
General Partner, the Fair Market Value of such shares shall be the public
offering price per share of such class of capital stock sold. Notwithstanding
the foregoing, the General Partner in its reasonable discretion may use a
different "Fair Market Value" for purposes of making the determinations under
subparagraph (ii) of the definition of "Gross Asset Value" and Section 4.3.E. in
connection with the contribution of Property to the Partnership by a
third-party, provided such value shall be based upon the value per REIT Share
(or per Partnership Unit) agreed upon by the General Partner and such
third-party for purposes of such contribution.
"Funding Debt" means the incurrence of any Debt by or on
behalf of the General Partner for the purpose of providing funds to the
Partnership.
"General Partner" means the Company or its successors as
general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held
by the General Partner. A General Partner Interest may be expressed as a number
of Partnership Units.
"General Partner Loan" shall have the meaning set forth in
Section 4.3.B.
"General Partner Payment" shall have the meaning set forth in
Section 15.11.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
8
<PAGE> 13
(i) The initial Gross Asset Value of any asset contributed by
a Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time);
provided, that if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit A, or capital contributions of cash, REIT
Shares or other shares of capital stock of the General Partner, the
determination of the fair market value of the contributed asset shall be
determined by (a) the price paid by the General Partner if the asset is acquired
by the General Partner contemporaneously with its contribution to the
Partnership or (b) by Appraisal if otherwise acquired by the General Partner.
(ii) Immediately prior to the times listed below, the Gross
Asset Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt; provided, however, that for
such purpose, the net value of all of the Partnership assets, in the aggregate,
shall be equal to the Deemed Value of the Partnership Interests of all classes
of Partnership Interests then outstanding, regardless of the method of valuation
adopted by the General Partner:
(a) the acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange
for more than a de minimis Capital Contribution, if
the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership;
(b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership
if the General Partner reasonably determines that
such adjustment is necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership; the Partners agree that
such an adjustment is appropriate when the
Partnership effects a Redemption;
(c) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g);
(d) the issuance of Performance Units; and
(e) at such other times as the General Partner shall
reasonably determine necessary or advisable in order
to comply with Regulations Sections 1.704-1(b) and
1.704-2.
(iii) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the General
Partner; provided, that if the distributee is the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.
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<PAGE> 14
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the General Partner reasonably determines
that an adjustment pursuant to subparagraph (ii) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).
(v) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.
"Holder" means either the Partner or Assignee owning a
Partnership Unit.
"Immediate Family" means, with respect to any natural Person,
such natural Person's estate or heirs or current spouse or former spouse,
parents, parents-in-law, children, siblings and grandchildren and any trust or
estate, all of the beneficiaries of which consist of such Person or such
Person's spouse, former spouse, parents, parents-in-law, children, siblings or
grandchildren.
"IMS" means AMB Investment Management, Inc., a Maryland
corporation, and any of its direct or indirect subsidiaries.
"Incapacity" or "Incapacitated" means: (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him or her incompetent to manage his or her
Person or his or her 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 under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred and
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<PAGE> 15
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) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person subject to a claim or demand
or made or threatened to be made a party to, or involved or threatened to be
involved in, an action, suit or proceeding by reason of his or her status as (a)
the General Partner or (b) a director, officer, employee or agent of the
Partnership or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Junior Units" means Partnership Units representing any class
or series of Partnership Interest ranking, as to distributions or voluntary or
involuntary liquidation, dissolution or winding up of the Partnership, junior to
the Series A Preferred Units and the Series B Preferred Units.
"Limited Partner" means any Person (including any PLP) named
as a Limited Partner in Exhibit A attached hereto, as such Exhibit may be
amended from time to time, any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner representing a fractional part of the Partnership Interests of
all Limited Partners and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partnership Interest may be expressed as
a number of Partnership Units.
"Liquidating Events" shall have the meaning set forth in
Section 13.1.
"Liquidator" shall have the meaning set forth in Section
13.2.A.
"Majority in Interest of the Limited Partners" means Limited
Partners (other than the General Partner and any Limited Partner 50% or more of
whose equity is owned, directly or indirectly, by the General Partner, and any
Preferred Limited Partner) holding Percentage Interests that in the aggregate
are greater than fifty percent (50%) of the aggregate Percentage Interests of
all Limited Partners (other than the General Partner and any Limited Partner 50%
or more of whose equity is owned, directly or indirectly, by the General Partner
and any Preferred Limited Partner).
"Majority in Interest of Partners" means Partners (other than
Preferred Limited Partners) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Partners (other
than Preferred Limited Partners).
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<PAGE> 16
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from Federal
income tax and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition of Net Income or Net Loss shall be added to
such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (ii) or (iii) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss; in the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset
Value, the amount of such adjustment shall be taken into account as gain or loss
from the disposition of all Partnership assets in a Terminating Capital
Transaction for purposes of computing Net Income or Net Loss as set forth in
Article 6;
(iv) Gain or loss resulting from any disposition of property
with respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax basis of such property differs from
its Gross Asset Value;
(v) 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;
(vi) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
(vii) Notwithstanding any other provision of this definition
of Net Income or Net Loss, any items which are specially allocated pursuant to
Section 6.3 shall not be taken into account in computing Net Income or Net Loss.
The amounts of the items of Partnership income, gain, loss, or deduction
available to be specially allocated pursuant to Section 6.3 shall be
12
<PAGE> 17
determined by applying rules analogous to those set forth in this definition of
Net Income or Net Loss.
"New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or other shares of capital stock of the General Partner,
excluding grants under any Stock Incentive Plan or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).
"Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" shall have 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 B to this Agreement.
"Offering Costs" means the aggregate amounts expended by the
General Partner which related to the organization of the Partnership and the
General Partner, or to the initial public offering or subsequent offerings of
REIT Shares or other shares of capital stock of the General Partner, the net
proceeds of which were used to make a contribution to the Partnership, in each
case to the extent such expenses of the General Partner were not reimbursed by
the Partnership.
"Parity Preferred Unit" means any class or series of
Partnership Interests of the Partnership now or hereafter authorized, issued or
outstanding expressly designated by the Partnership to rank on a parity with the
Series A Preferred Units and the Series B Preferred Units with respect to
distributions or rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, or both, as the context may require.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set
forth in Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
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<PAGE> 18
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. There may be
one or more classes of Partnership Interests as provided in Section 4.3. A
Partnership Interest may be expressed as a number of Partnership Units. Unless
otherwise expressly provided for by the General Partner at the time of the
original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class.
The Partnership Interests represented by the Common Units (including Performance
Units), the Series A Preferred Units and the Series B Preferred Units are the
only Partnership Interests and each such type of unit is a separate class of
Partnership Interest for all purposes of this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash with respect to
Common Units pursuant to Section 5.1 which record date shall be the same as the
record date established by the General Partner for a distribution to its
stockholders of some or all of its portion of such distribution.
"Partnership Unit" means, with respect to any class of
Partnership Interest, a fractional, undivided share of such class of Partnership
Interest issued pursuant to Sections 4.1 and 4.3 (including Performance Units).
The ownership of Partnership Units may be evidenced by a certificate for units
substantially in the form of Exhibit D-1 or D-2 hereto or as the General Partner
may determine with respect to any class of Partnership Units issued from time to
time under Sections 4.1 and 4.3.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class
of Partnership Interests, its interest in the Partnership as determined by
dividing the Partnership Units of such class owned by such Partner by the total
number of Partnership Units of such class then outstanding as specified in
Exhibit A attached hereto, as such Exhibit may be amended from time to time. If
the Partnership issues more than one class of Partnership Interest, the interest
in the Partnership among the classes of Partnership Interests shall be
determined as set forth in the amendment to the Partnership Agreement setting
forth the rights and privileges of such additional classes of Partnership
Interest, if any, as contemplated by Section 4.3.C.
"Performance Amount" means, with respect to a PLP on a
specified date, (i) in the case of a Redemption, a number of Performance Units
equal to (a) the amount of such PLP's
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<PAGE> 19
Capital Account balance immediately following the revaluation of the
Partnership's assets as of such date pursuant to the definitions of "Gross Asset
Value" (paragraph (ii) therein) and "Net Income" (paragraph (iii) therein),
divided by (b) the Fair Market Value of a REIT Share; and (ii) in the case of an
exchange of Performance Units for the REIT Shares Amount, the same number of
Performance Units as determined pursuant to subparagraph (i) above.
"Performance Investors" means shareholders of the General
Partner and Limited Partners who are parties to one or more of the Escrow
Agreements.
"Performance Partners" means Partners which had the number of
their Partnership Units reduced pursuant to Section 4.3.F.
"Performance Shares" means a portion of the REIT Shares or
Partnership Units issued to the Performance Investors which were escrowed
pursuant to the Escrow Agreements for possible transfer to the General Partner
or the Partnership (as applicable), the applicable number of which for each
Performance Investor is described in the applicable Escrow Agreement.
"Performance Units" means those Partnership Units issued
pursuant to Section 4.3.F.
"Permitted Reason" means a termination of employment by reason
of death, disability, termination by the employer without "cause," or
termination by a Person of their employment for "good reason." For purposes of
this definition, "cause" shall mean (i) gross negligence or willful misconduct,
(ii) breach by the Person of the covenant not to compete provided in their
employment agreement during the one year period following the closing of the
initial public offering of common stock of the General Partner, (iii) fraud or
other conduct against the material best interests of the General Partner, the
Partnership or their subsidiaries, or (iv) conviction of a felony if such
conviction has a material adverse effect on the General Partner, the Partnership
or their subsidiaries. For purposes of this definition, "good reason" means (a)
a substantial adverse change in the nature or scope of a Person's
responsibilities or authority under the Person's employment agreement, or (b) an
uncured breach by the employer of any of its material obligations under such
employment agreement.
"Person" means an individual or a corporation, partnership,
limited liability company, trust, unincorporated organization, association or
other entity.
"Plan Asset Regulation" means the regulations promulgated by
the United States Department of Labor in Title 29, Code of Federal Regulations,
Part 2510, Section 101-3, and any successor regulations thereto.
"Pledge" shall have the meaning set forth in Section 11.3.A.
"PLP" means at any time, any Person who then owns one or more
Performance Units, including Performance Units which have not vested.
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"Preferred Distribution Shortfall" shall have the meaning
given to such term in Section 5.1 hereof.
"Preferred Limited Partner" means any Person holding a
Preferred Unit, and named as a Preferred Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Preferred Limited Partner in the Partnership.
"Preferred Limited Partner" means a Limited Partner holding
any series of Preferred Units.
"Preferred Share" means a share of the General Partner's
preferred stock, par value $.01 per share, with such rights, priorities and
preferences as shall be designated by the Board of Directors in accordance with
the Charter.
"Preferred Unit" means a Partnership Unit representing a
Partnership Interest, with such rights, priorities and preferences as shall be
designated by the General Partner pursuant to Section 4.3.C hereof.
"Properties" means such interests in real property and
personal property including without limitation, fee interests, interests in
ground leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"Qualified REIT Subsidiary" means any Subsidiary of the
General Partner that is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
"Qualified Transferee" means an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act.
"Redemption" shall have the meaning set forth in Section
8.6.A.
"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).
"Regulatory Allocations" shall have the meaning set forth in
Section 6.3.A(viii).
"REIT" means a real estate investment trust under Sections 856
through 860 of the Code.
"REIT Requirements" shall have the meaning set forth in
Section 5.1.
"REIT Share" means a share of common stock, par value $.01 per
share, of the General Partner.
"REIT Shares Amount" means, as of any date, an aggregate
number of REIT Shares equal to the number of Tendered Units, or in the case of
Section 11.2.B, all Units, as adjusted pursuant to Section 7.5 (in the event the
General Partner acquires material assets, other
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than on behalf of the Partnership) and for stock dividends and distributions,
stock splits and subdivisions, reverse stock splits and combinations,
distributions of rights, warrants or options, and distributions of evidences of
indebtedness or assets relating to assets not received by the General Partner
pursuant to a pro rata distribution by the Partnership.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Series A Articles Supplementary" means the Articles
Supplementary of the General Partner in connection with its Series A Preferred
Shares, as filed with the Maryland Department of Revenue and Taxation on July
23, 1998.
"Series A Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series A Preferred Units then held by
the General Partner multiplied by (ii) the sum of $25 and any Preferred
Distribution Shortfall per Series A Preferred Unit.
"Series A Preferred Share" means a share of 8 1/2% Series A
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $25 per share, of the General Partner.
"Series A Preferred Units" means the Partnership's 8 1/2%
Series A Cumulative Redeemable Partnership Units.
"Series A Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 16.3.A hereof.
"Series A Priority Return" shall mean an amount equal to
8 1/2% per annum on an amount equal to $25 per Series A Preferred Unit then
outstanding (equivalent to $2.125 per annum). Such amount shall be determined on
a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from July 27, 1998 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 16.3 hereof. Notwithstanding
the foregoing, distributions on the Series A Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series A Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
"Series B Articles Supplementary" means the Articles
Supplementary of the General Partner in connection with its Series B Preferred
Shares, as filed with the Maryland Department of Revenue and Taxation on
November 12, 1998.
"Series B Limited Partner" means any Person holding Series B
Preferred Units and named as a Series B Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
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"Series B Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series B Preferred Units then held by
the General Partner multiplied by (ii) the sum of $50 and any Preferred
Distribution Shortfall per Series B Preferred Unit.
"Series B Preferred Share" means a share of 8 5/8% Series B
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50 per share, of the General Partner.
"Series B Preferred Units" means the Partnership's 8 5/8%
Series B Cumulative Redeemable Partnership Units.
"Series B Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 17.3.A hereof.
"Series B Priority Return" shall mean an amount equal to
8 5/8% per annum on an amount equal to $50 per Series B Preferred Unit then
outstanding (equivalent to $4.3125 per annum). Such amount shall be determined
on a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from November 12, 1998 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 17.3 hereof. Notwithstanding
the foregoing, distributions on the Series B Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series B Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
"Specified Redemption Date" means the day of receipt by the
General Partner of a Notice of Redemption.
"Stock Incentive Plan" means any stock incentive plan of the
General Partner.
"Subsidiary" shall mean, with respect to any person, any
corporation, partnership, limited liability company, joint venture or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests, is owned, directly or
indirectly, by such person.
"Subsidiary Partnership" means any partnership or limited
liability company that is a Subsidiary of the Partnership.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Surviving Partnership" shall have the meaning set forth in
Section 11.2.C.
"Tax Items" shall have the meaning set forth in Section 6.4.A.
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"Tenant" means any tenant from which the General Partner
derives rent either directly or indirectly through partnerships, including the
Partnership.
"Tendered Units" shall have the meaning set forth in Section
8.6.A.
"Tendering Partner" shall have the meaning set forth in
Section 8.6.A.
"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.
"Termination Transaction" shall have the meaning set forth in
Section 11.2.B.
Section 1.2. Rules of Construction
Unless otherwise indicated, all references herein to "REIT,"
"REIT Requirements," "REIT Shares" and "REIT Shares Amount" with respect to the
General Partner shall apply only with reference to the Company.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1. Organization
The Partnership is a limited partnership formed pursuant to
the provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2. Name
The name of the Partnership is AMB Property, L.P. 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. Resident Agent; Principal Office
The name and address of the resident agent of the Partnership
in the State of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The address of the principal office of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801 at such address.
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The principal office of the Partnership is located at 505 Montgomery Street, San
Francisco, California 94111, or such other place as the General Partner may from
time to time designate by notice to the Limited Partners. The Partnership may
maintain offices at such other place or places within or outside the State of
Delaware as the General Partner deems advisable.
Section 2.4. Power of Attorney
A. Each Limited Partner and each Assignee 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:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices: (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or 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
conduct business or own property; (b) all instruments
that the General Partner or any Liquidator 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 any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other
events described in, Articles 11, 12 and 13 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 Interests;
and
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners
hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole
discretion of the General Partner or any Liquidator,
to effectuate the terms or intent of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
or as may be otherwise expressly provided for in this Agreement.
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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 any 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, 1997 and
shall continue until December 31, 2096 unless it is dissolved sooner pursuant to
the provisions of Article 13 or as otherwise provided by law.
Section 2.6. Number of Partners
Without the consent of the General Partner which may be given
or withheld in its sole discretion, the Partnership shall not at any time have
more than one hundred (100) partners (including as partners those persons
indirectly owning an interest in the Partnership through a partnership, limited
liability company, S corporation or grantor trust (such entity, a "flow through
entity"), but only if substantially all of the value of such person's interest
in the flow through entity is attributable to the flow through entity's interest
(direct or indirect) in the Partnership).
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
General Partner at all times to be classified as a REIT for Federal income tax
purposes, unless the General Partner 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, directly or indirectly,
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 General
Partner's right
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in its sole discretion to cease qualifying as a REIT, the Partners acknowledge
that the General Partner's current status as a REIT inures to the benefit of all
the Partners and not solely the General Partner.
Section 3.2. Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire and develop real
property, and manage, lease, sell, transfer and dispose of real property;
provided, however, not withstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of the General Partner, in its sole and absolute discretion, (i) could
adversely affect the ability of the General Partner to continue to qualify as a
REIT, (ii) absent the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, and except with respect to the
distribution of Available Cash to the Series B Limited Partners in accordance
with Section 17.3, could subject the General Partner to any taxes under Section
857 or Section 4981 of the Code, or (iii) could violate any law or regulation of
any governmental body or agency having jurisdiction over the General Partner or
its securities, unless any such action (or inaction) under the foregoing clauses
(i), (ii) or (iii) shall have been specifically consented to by the General
Partner in writing.
Section 3.3. Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, nor
shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.
Section 3.4. Representations and Warranties by the Parties
A. Each Partner that is an individual represents and warrants
to each other Partner that (i) such Partner has in the case of any Person other
than an individual, the power and authority, and in the case of an individual,
the legal capacity, to enter into this Agreement and perform such Partner's
obligations hereunder, (ii) the consummation of the transactions contemplated by
this Agreement to be performed by such Partner will not result in a breach or
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violation of, or a default under, any agreement by which such Partner or any of
such Partner's property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject, (iii) such Partner is neither a
"foreign person" within the meaning of Section 1445(f) of the Code nor a
"foreign partner" within the meaning of Section 1446(e) of the Code and (iv)
this Agreement has been duly executed and delivered by such Partner and is
binding upon, and enforceable against, such Partner in accordance with its
terms.
B. Each Partner that is not an individual represents and
warrants to each other Partner that (i) its execution and delivery of this
Agreement and all transactions contemplated by this Agreement to be performed by
it have been duly authorized by all necessary action, including without
limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its certificate of limited partnership,
partnership agreement, trust agreement, limited liability company operating
agreement, charter or by-laws, as the case may be, any agreement by which such
Partner or any of such Partner's properties or any of its partners,
beneficiaries, trustees or stockholders, as the case may be, is or are bound, or
any statute, regulation, order or other law to which such Partner or any of its
partners, trustees, beneficiaries or stockholders, as the case may be, is or are
subject, (iii) such Partner is neither a "foreign person" within the meaning of
Section 1445(f) of the Code nor a "foreign partner" within the meaning of
Section 1446(e) of the Code and (iv) this Agreement has been duly executed and
delivered by such Partner and is binding upon, and enforceable against, such
Partner in accordance with its terms.
C. Each Partner represents, warrants and agrees that it has
acquired and continues to hold its interest in the Partnership for its own
account for investment only and not for the purpose of, or with a view toward,
the resale or distribution of all or any part thereof, nor with a view toward
selling or otherwise distributing such interest or any part thereof at any
particular time or under any predetermined circumstances. Each Partner further
represents and warrants that it is a sophisticated investor, able and accustomed
to handling sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.
D. Each Partner further represents, warrants and agrees as
follows:
(i) Except as provided in Exhibit E, at any time such
Partner actually or Constructively owns a 25% or greater capital
interest or profits interest in the Partnership, it does not and will
not, without the prior written consent of the General Partner, actually
own or Constructively Own (a) with respect to any Tenant that is a
corporation, any stock of such Tenant and (b) with respect to any
Tenant that is not a corporation, any interests in either the assets or
net profits of such Tenant.
(ii) Except as provided in Exhibit F, at any time
such Partner actually or Constructively owns a 25% or greater capital
interest or profits interest in the Partnership, it does not, and
agrees that it will not without the prior written consent of the
General Partner, actually own or Constructively Own, any stock in the
General Partner,
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other than any REIT Shares or other shares of capital stock of the
General Partner such Partner may acquire (a) as a result of an exchange
of Tendered Units pursuant to Section 8.6 or (b) upon the exercise of
options granted or delivery of REIT Shares pursuant to any Stock
Incentive Plan, in each case subject to the ownership limitations set
forth in the General Partner's Charter.
(iii) Upon request of the General Partner, it will
disclose to the General Partner the amount of REIT Shares or other
shares of capital stock of the General Partner that it actually owns or
Constructively Owns.
(iv) It understands that if, for any reason, (a) the
representations, warranties or agreements set forth in Section 3.4.D(i)
or (ii) are violated or (b) the Partnership's actual or Constructive
Ownership of the REIT Shares or other shares of capital stock of the
General Partner violates the limitations set forth in the Charter, then
(x) some or all of the Redemption rights or rights to exchange
Partnership Interests for Series B Preferred Shares of the Limited
Partners may become non-exercisable, and (y) some or all of such shares
owned by the Partners and/or some or all of the Partnership Interests
owned by the Limited Partners may be automatically transferred to a
trust for the benefit of a charitable beneficiary, as provided in the
Charter and Exhibit J of this Agreement, respectively.
E. The representations and warranties contained in Sections
3.4.A, 3.4.B, 3.4.C and 3.4.D shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and winding up of the Partnership.
F. Each Partner hereby acknowledges that no representations as
to potential profit, cash flows, funds from operations or yield, if any, in
respect of the Partnership or the General Partner have been made by any Partner
or any employee or representative or Affiliate of any Partner, and that
projections and any other information, including, without limitation, financial
and descriptive information and documentation, which may have been in any manner
submitted to such Partner shall not constitute any representation or warranty of
any kind or nature, express or implied.
Section 3.5. Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner will use its reasonable best efforts
to structure the investments in, relationships with and conduct with respect to
Properties and any other assets of the Partnership so that the Partnership will
be a "real estate operating company" (as such term is defined in the Plan Asset
Regulation).
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ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions of the Partners
At the time of their respective execution of this Agreement,
the Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class and in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to accurately reflect exchanges, redemptions, Capital
Contributions, the issuance of additional Partnership Units (including the
issuance of Performance Units pursuant to Section 4.3.F) or similar events
having an effect on a Partner's Percentage Interest. Except as required by law
or as otherwise provided in Sections 4.3, 4.4 and 10.5, no Partner shall be
required or permitted to make any additional Capital Contributions or loans to
the Partnership. Unless otherwise specified by the General Partner at the time
of the creation of any class of Partnership Interests, the corresponding class
of capital stock for any Partnership Units issued shall be REIT Shares.
Section 4.2. Loans by Third Parties
Subject to Section 4.3, the Partnership may incur Debt, or
enter into other similar credit, guarantee, financing or refinancing
arrangements for any purpose (including, without limitation, in connection with
any further acquisition of Properties) with any Person that is not the General
Partner upon such terms as the General Partner determines appropriate; provided,
that the Partnership shall not incur any Debt that is recourse to the General
Partner, except to the extent otherwise agreed to by the General Partner in its
sole discretion.
Section 4.3. Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition of additional Properties or for such other
Partnership purposes as the General Partner may determine. Additional Funds may
be raised by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3. No
Person shall have any preemptive, preferential or similar right or rights to
subscribe for or acquire any Partnership Interest, except as set forth in this
Section 4.3.
B. General Partner Loans. The General Partner may enter into a
Funding Debt, including, without limitation, Funding Debt that is convertible
into REIT Shares, and lend the Additional Funds to the Partnership (a "General
Partner Loan"); provided, however, that the General Partner shall not be
obligated to lend the net proceeds of any Funding Debt to the Partnership in a
manner that would be inconsistent with the General Partner's ability to remain
qualified as a REIT. If the General Partner enters into such a Funding Debt, the
General Partner Loan will consist of the net proceeds from such Funding Debt and
will be on comparable terms and conditions, including interest rate, repayment
schedule and costs and expenses, as shall be applicable with respect to or
incurred in connection with such Funding Debt.
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C. Issuance of Additional Partnership Interests. The General
Partner may raise all or any portion of the Additional Funds by accepting
additional Capital Contributions of cash. The General Partner may also accept
additional Capital Contributions of real property or other non-cash assets. In
connection with any such additional Capital Contributions (of cash or property),
and subject to Section 17.6 hereof, the General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners (including the
General Partner) or other Persons (including, without limitation, in connection
with the contribution of property to the Partnership) 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 then existing Limited Partnership
Interests, all as shall be determined by the General Partner in its sole and
absolute discretion subject to Delaware law, and as set forth by amendment to
this Agreement, including without limitation: (i) the allocations of items of
Partnership income, gain, loss, deduction, and credit to such class or series of
Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; (iii) the rights of
each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; and (iv) the right to vote, including, without
limitation, the limited partner approval rights set forth in Section 11.2.A;
provided, that no such additional Partnership Units or other Partnership
Interests shall be issued to the General Partner unless either (a) the
additional Partnership Interests are issued in connection with the grant, award,
or issuance of shares of the General Partner pursuant to Section 4.3.D below,
which shares have designations, preferences, and other rights (except voting
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 General Partner in accordance
with this Section 4.3.C or (b) the additional Partnership Interests are issued
to all Partners holding Partnership Interests in the same class in proportion to
their respective Percentage Interests in such class. In the event that the
Partnership issues additional Partnership Interests pursuant to this Section
4.3.C, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Sections 5.4, 6.2.C,
and 8.6) as it determines are necessary to reflect the issuance of such
additional Partnership Interests.
D. Issuance of REIT Shares or Other Securities by the General
Partner. The General Partner shall not issue any additional REIT Shares (other
than REIT Shares issued pursuant to Section 8.6 or pursuant to a dividend or
distribution (including any stock split) of REIT Shares to all of its
stockholders or all of its stockholders who hold a class of stock of the General
Partner), other shares of capital stock of the General Partner (other than in
connection with the acquisition of Partnership Interests in exchange for capital
stock of the General Partner which corresponds in ranking to the Partnership's
Partnership Interests being acquired) or New Securities unless the General
Partner shall make a Capital Contribution of the net proceeds (including,
without limitation, cash and Properties) from the issuance of such additional
REIT Shares, other shares of capital stock or New Securities, as the case may
be, and from the exercise of the rights contained in such additional New
Securities, as the case may be. The General Partner's Capital Account shall be
increased by the amount of cash or the value of Properties so contributed.
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E. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for any class or series of Partnership Units, the
Percentage Interest related thereto shall be equal to a fraction, the numerator
of which is equal to the amount of cash and the Agreed Value of the Properties
contributed as of the Business Day immediately preceding the date on which the
additional Capital Contributions are made (an "Adjustment Date") and the
denominator of which is equal to the sum of (i) the Deemed Value of the
Partnership Interests of such class or series (computed as of the Business Day
immediately preceding the Adjustment Date) plus (ii) the aggregate amount of
cash and the Agreed Value of the Property contributed to the Partnership on such
Adjustment Date in respect of such class or series of Partnership Interests. The
Percentage Interest of each other Partner holding Partnership Interests of such
class or series not making a full pro rata Capital Contribution shall be
adjusted to equal a fraction, the numerator of which is equal to the sum of (i)
the Deemed Partnership Interest Value of such Limited Partner in respect of such
class or series (computed as of the Business Day immediately preceding the
Adjustment Date) plus (ii) the amount of cash and the Agreed Value of the
Property contributed by such Partner to the Partnership in respect of such class
or series as of such Adjustment Date, and the denominator of which is equal to
the sum of (a) the Deemed Value of the Partnership Interests of such class
(computed as of the Business Day immediately preceding the Adjustment Date),
plus (b) the aggregate amount of cash and the Agreed Value of the Property
contributed to the Partnership on such Adjustment Date in respect of such class
or series. Notwithstanding the foregoing, solely for purposes of calculating a
Partner's Percentage Interest pursuant to this Section 4.3.E, (i) in the case of
cash Capital Contributions by the General Partner, such Capital Contributions
will be deemed to equal the cash contributed by the General Partner plus, in the
case of cash contributions funded by an offering of REIT Shares or other shares
of capital stock of the General Partner, the offering costs attributable to the
cash contributed to the Partnership, and (ii) in the case of the contribution of
Properties (or any portion thereof) by the General Partner which were acquired
by the General Partner in exchange for REIT Shares immediately prior to such
contribution, the General Partner shall be issued a number of Partnership Units
equal to the number of REIT Shares issued by the General Partner in exchange for
such Properties, the Partnership Units held by the other Partners shall not be
adjusted, and the Partners' Percentage Interests shall be adjusted accordingly.
The General Partner shall promptly give each Partner written notice of its
Percentage Interest, as adjusted.
F. Issuance of Performance Units to the PLPs. Performance
Investors may be required pursuant to the terms of the Escrow Agreements to
transfer all or a portion of their Performance Shares to the General Partner or
the Partnership (as applicable). To the extent Performance Shares (i.e., REIT
Shares) are transferred by Performance Investors to the General Partner pursuant
to the Escrow Agreements, the number of Partnership Units held by the General
Partner shall be automatically reduced by such amount on such date. To the
extent Performance Shares (i.e., Partnership Units) are transferred by
Performance Investors to the Partnership pursuant the Escrow Agreements, the
number of Partnership Units held by each such Performance Investor shall be
automatically reduced by such amount on such date. To the extent the Partnership
Units held by the General Partner or Performance Investors are reduced as set
forth in the preceding two sentences, the Partnership shall immediately issue an
equal number of Performance Units to the Persons listed on Schedule G-1 and
Schedule G-2 to Exhibit G in accordance with the allocations set forth on
Exhibit G. The adjustments in the number of
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Partnership Units held by the Performance Partners and the PLPs set forth above
shall have no effect on each such Partners' Capital Account in the Partnership
(except with respect to subsequent allocations of items of Partnership income,
gain, loss, deduction, and credit made to such Partners and possibly with
respect to the reissuance of a Performance Unit subsequent to its forfeiture by
a PLP) and no PLP shall have an obligation to make a contribution to the capital
of the Partnership in connection with the issuance of Performance Units.
Section 4.4. Stock Incentive Plan
If at any time or from time to time the General Partner sells
or issues REIT Shares pursuant to any Stock Incentive Plan, the General Partner
shall contribute any proceeds therefrom to the Partnership as an additional
Capital Contribution and shall receive an amount of additional Partnership Units
equal to the number of REIT Shares so sold or issued. The General Partner's
Capital Account shall be increased by the amount of cash so contributed.
Section 4.5. No Preemptive Rights
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) additional Capital Contributions or
loans to the Partnership or (ii) issuance or sale of any Partnership Units or
other Partnership Interests.
Section 4.6. Other Contribution Provisions
In the event that any Partner is admitted to the Partnership
and is given (or is treated as having received) a Capital Account in exchange
for services rendered to the Partnership, such transaction shall be treated by
the Partnership and the affected Partner as if the Partnership had compensated
such Partner in cash, and the Partner had contributed such cash to the capital
of the Partnership. In addition, with the consent of the General Partner, in its
sole discretion, one or more Limited Partners may enter into contribution
agreements with the Partnership which have the effect of providing a guarantee
of certain obligations of the Partnership.
ARTICLE 5.
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of Distributions
The General Partner shall cause the Partnership to distribute
all, or such portion as the General Partner may in its discretion determine,
Available Cash generated by the Partnership (i) first, to the extent that the
amount of cash distributed with respect to any Partnership Interests that are
entitled to any preference in distribution for any prior distribution period was
less than the required distribution for such outstanding Partnership Interests
for such prior distribution period, and to the extent such deficiency has not
been subsequently distributed pursuant to this Section 5.1 (a "Preferred
Distribution Shortfall"), in accordance with the rights of such class of
Partnership Interests (and within such class, pro rata in proportion to the
respective Percentage Interests on the applicable
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record date) and to the Partners who are Partners on the applicable record date
with respect to such distribution, (ii) second, with respect to any Partnership
Interests that are entitled to any preference in distribution, in accordance
with the rights of such class of Partnership Interests (and within such class,
pro rata in proportion to the respective Percentage Interests on the applicable
record date) and (iii) third, with respect to Partnership Interests that are not
entitled to any preference in distribution, pro rata to each such class on a
quarterly basis and in accordance with the terms of such class to Partners who
are Partners of such class on the Partnership Record Date with respect to such
distribution (and within each such class, pro rata in proportion with the
respective Percentage Interests on such Partnership Record Date). Except as
expressly provided for in Article 16 with respect to the Series A Preferred
Units, Article 17 with respect to the Series B Preferred Units and in an
agreement, if any, entered into in connection with the creation of a new class
of Partnership Interests in accordance with Article 4, no Partnership Interest
shall be entitled to a distribution in preference to any other Partnership
Interest. The General Partner shall take such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with its qualification
as a REIT, to cause the Partnership to distribute sufficient amounts to enable
the General Partner, for so long as the General Partner has determined to
qualify as a REIT, to pay stockholder dividends that will (a) satisfy the
requirements for qualifying as a REIT under the Code and Regulations ("REIT
Requirements") and (b) except to the extent otherwise determined by the General
Partner, avoid any Federal income or excise tax liability of the General
Partner, except to the extent that a distribution pursuant to clause (b) would
prevent the Partnership from making a distribution to the holders of Series B
Preferred Units in accordance with Section 17.3.
Section 5.2. Distributions in Kind
Except as expressly provided herein, no right is given to any
Partner to demand and receive property other than cash. The General Partner may
determine, in its sole and absolute discretion, to make a distribution in kind
to the Partners of Partnership assets, and such assets shall be distributed in
such a fashion as to ensure that the fair market value is distributed and
allocated in accordance with Articles 5, 6 and 10; provided, however, that, in
such case, the General Partners shall distribute only cash to the Series B
Limited Partners.
Section 5.3. Distributions Upon Liquidation
Proceeds from a Terminating Transaction shall be distributed
to the Partners in accordance with Section 13.2.
Section 5.4. Distributions to Reflect Issuance of Additional
Partnership Interests
In the event that the Partnership issues additional
Partnership Interests (other than Performance Units, which shall receive
distributions as set forth in Section 5.1) to the General Partner or any
Additional Limited Partner pursuant to Section 4.3.C or 4.4, the General Partner
shall make such revisions to this Article 5 as it determines are necessary to
reflect the issuance of such additional Partnership Interests. In the absence of
any agreement to the contrary, an Additional Limited Partner shall be entitled
to the distributions set forth in Section 5.1 (without regard to this Section
5.4) with respect to the quarter during which the closing of its contribution to
the Partnership occurs, multiplied by a fraction the numerator of which is the
number of days
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from and after the date of such closing through the end of the applicable
quarter, and the denominator of which is the total number of days in such
quarter.
Section 5.5 Character of PLP Distributions
Distributions to each PLP pursuant to this Agreement shall be
advances or drawings of money or property against such Partner's distributive
share of Net Income (or items thereof) as described in Treasury Regulation
Section 1.731-1(a)(1)(ii).
ARTICLE 6.
ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net Income
and Net Loss
Net Income and Net Loss of the Partnership shall be determined
and allocated with respect to each fiscal year of the Partnership as of the end
of each such year. Subject to the other provisions of this Article 6, an
allocation to a Partner of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.
Section 6.2. General Allocations
A. In General. Except as otherwise provided in this Article 6,
Net Income and Net Loss allocable with respect to a class of Partnership
Interests, shall be allocated to each of the Partners holding such class of
Partnership Interests in accordance with their respective Percentage Interest of
such class.
B.1. Net Income. Except as provided in Section 6.2.B.3, Net
Income for any Partnership Year shall be allocated in the following manner and
order of priority:
(a) First, 100% to the General Partner in an amount equal
to the remainder, if any, of the cumulative Net
Losses allocated to the General Partner pursuant to
Section 6.2.B.2(d) for all prior Partnership Years
minus the cumulative Net Income allocated to the
General Partner pursuant to this Section 6.2.B.1(a)
for all prior Partnership Years;
(b) Second, 100% to each Limited Partner in an amount
equal to the remainder, if any, of the cumulative Net
Losses allocated to each such Limited Partner
pursuant to Section 6.2.B.2(c) for all prior
Partnership Years minus the cumulative Net Income
allocated to such Limited Partner pursuant to this
Section 6.2.B.1(b) for all prior Partnership Years;
(c) Third, 100% to the General Partner and any other
Preferred Partners in an amount equal to the
remainder, if any, of the cumulative Net Losses
allocated to such Partners pursuant to Section
6.2.B.2(b) for all prior
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Partnership Years minus the cumulative Net Income
allocated to such Partners pursuant to this Section
6.2.B.1(c) for all prior Partnership Years;
(d) Fourth, 100% to the General Partner and the Limited
Partners in an amount equal to the remainder, if any,
of the cumulative Net Losses allocated to each such
Partner pursuant to Section 6.2.B.2(a) for all prior
Partnership Years minus the cumulative Net Income
allocated to each Partner pursuant to this Section
6.2.B.1(d) for all prior Partnership Years;
(e) Fifth, 100% to the General Partner and any other
Preferred Partners in an amount equal to the excess
of (i) the sum of (x) in respect of the Series A
Preferred Units, an amount equal to the cumulative
Series A Priority Return to the last day of the
current Partnership Year or to the date of
redemption, to the extent Series A Preferred Units
are redeemed during such year, and (y) in respect of
the Series B Preferred Units, an amount equal to the
cumulative Series B Priority Return to the last day
of the current Partnership Year or to the date of
redemption, to the extent Series B Preferred Units
are redeemed during such year, over (ii) the
cumulative Net Income allocated to the General
Partner or such Preferred Partner, as applicable,
pursuant to this Section 6.2.B.1(e) for all prior
Partnership Years; and
(f) Sixth, 100% to the General Partner and the Limited
Partners in accordance with their respective
Percentage Interests in the Common Units.
To the extent the allocations of Net Income set forth above in
any paragraph of this Section 6.2.B.1 are not sufficient to entirely satisfy the
allocation set forth in such paragraph, such allocation shall be made in
proration to the total amount that would have been allocated pursuant to such
paragraph without regard to such shortfall.
B.2. Net Losses. Except as provided in Section 6.2.B.3, Net
Losses for any Partnership Year shall be allocated in the following manner and
order of priority:
(a) First, 100% to the General Partner and the Limited
Partners in accordance with their respective
Percentage Interests in the Common Units (to the
extent consistent with this Section 6.2.B.2(a)) until
the Adjusted Capital Account (ignoring for this
purpose any amounts a Partner is obligated to
contribute to the capital of the Partnership or is
deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2) and
ignoring the Partner's Series A Preferred Capital and
Series B Preferred Capital) of each such Partner is
zero;
(b) Second, 100% to the General Partner and any other
Preferred Partners, pro rata to each such Partner's
Adjusted Capital Account (ignoring for this purpose
any amounts a Partner is obligated to contribute to
the capital of the Partnership or is deemed obligated
to contribute pursuant to
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Regulations Section 1.704-1(b)(2)(ii)(c)(2)), until
the Adjusted Capital Account (as so modified) of each
such Partner is zero;
(c) Third, 100% to the Limited Partners to the extent of,
and in proportion to, the positive balance (if any)
in their Adjusted Capital Accounts; and
(d) Fourth, 100% to the General Partner.
B.3. Terminating Capital Transactions.
(a) If no Performance Units are outstanding at the time
of a Terminating Capital Transaction, any Net Income
attributable to such Terminating Capital Transaction
shall first be allocated to the General Partner in an
amount equal to the Offering Costs, to the extent the
General Partner's Capital Account has not previously
been adjusted to account for such amounts.
(b) If Performance Units are outstanding at the time of a
Terminating Capital Transaction
(1) any Net Income attributable to such
Terminating Capital Transaction shall be
allocated as follows: such Net Income shall
first be tentatively allocated solely as an
interim step in calculating final
allocations pursuant to this Section
6.2.B.3(b)(1), among the Partners in
accordance with Section 6.2.B.3(a), Section
6.2.A and Section 6.2.B.1. Then the amount
so tentatively allocated to each Performance
Partner, to the extent of each such
Performance Partner's Excess Performance
Capital, shall instead be allocated to the
PLPs, pro rata to the number of Performance
Units held by each PLP.
(2) any Net Loss attributable to such
Terminating Capital Transaction shall be
allocated as follows: such Net Loss shall
first be tentatively allocated, solely as an
interim step in calculating final
allocations pursuant to this Section
6.2.B.3(b)(2), among the Partners in
accordance with Section 6.2.A and Section
6.2.B.2. Then the amount so tentatively
allocated to the PLPs shall instead be
allocated to the Performance Partners to the
extent of the aggregate Excess Performance
Capital of the Performance Partners. Any
amounts so allocated away from the PLPs
shall be done on a basis which is
proportionate to each PLP's Performance
Units. Any amounts so allocated to the
Performance Partners shall be done on a
basis which is proportionate to each
Performance Partner's Excess Performance
Capital.
C. Allocations to Reflect Issuance of Additional Partnership
Interests. In the event that the Partnership issues additional Partnership
Interests to the General Partner or any
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Additional Limited Partner pursuant to Section 4.3 or 4.4, the General Partner
shall make such revisions to this Section 6.2 or to Section 12.2.B as it
determines are necessary to reflect the terms of the issuance of such additional
Partnership Interests, including making preferential allocations to certain
classes of Partnership Interests, subject to the terms of the Series A Preferred
Units and the Series B Preferred Units. In addition, for any quarter in which
Performance Units were issued, Net Income and Net Loss relating to such units
shall be allocated among (i) the PLPs who received such units and (ii) the
Performance Partners who returned the corresponding Partnership Units to the
Partnership, in accordance with any method selected by the General Partner which
is permitted under Section 706 of the Code.
Section 6.3. Additional Allocation Provisions
Notwithstanding the foregoing provisions of this Article 6:
A. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 6.2, or any other provision of this Article 6, if
there is a net decrease in Partnership Minimum Gain during any fiscal
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 allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.3.A(i) is intended to qualify as a
"minimum gain chargeback" within the meaning of Regulation Section
1.704-2(f) which shall be controlling in the event of a conflict
between such Regulation and this Section 6.3.A(i).
(ii) Partner Minimum Gain Chargeback. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 6.2, or any other provision
of this Article 6 (except Section 6.3.A(i)), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any fiscal year, each Partner who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance
with Regulations Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts
required to be allocated to each General Partner and Limited Partner
pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2).
This Section 6.3.A(ii) is intended to qualify as a "chargeback of
partner nonrecourse debt minimum gain" within the meaning of Regulation
Section
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1.704-2(i) which shall be controlling in the event of a conflict
between such Regulation and this Section 6.3.A(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Partners in accordance with their respective
Percentage Interest in Common Units. Any Partner Nonrecourse Deductions
for any fiscal year shall be specially allocated to the Partner(s) who
bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable, in
accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iv) Qualified Income Offset. If any Partner
unexpectedly receives an adjustment, allocation or distribution
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of Partnership income and gain shall be allocated, in accordance
with Regulations Section 1.704-1(b)(2)(ii)(d), to the Partner in an
amount and manner sufficient to eliminate, to the extent required by
such Regulations, the Adjusted Capital Account Deficit of the Partner
as quickly as possible provided that an allocation pursuant to this
Section 6.3.A(iv) shall be made if and only to the extent that such
Partner would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if
this Section 6.3.A(iv) were not in the Agreement. It is intended that
this Section 6.3.A(iv) qualify and be construed as a "qualified income
offset" within the meaning of Regulations 1.704-1(b)(2)(ii)(d), which
shall be controlling in the event of a conflict between such
Regulations and this Section 6.3.A(iv).
(v) Gross Income Allocation. In the event any Partner
has a deficit Capital Account at the end of any fiscal year which is in
excess of the sum of (a) the amount (if any) such Partner is obligated
to restore to the Partnership and (b) the amount such Partner is deemed
to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible; provided, that an allocation
pursuant to this Section 6.3.A(v) shall be made if and only to the
extent that such Partner would have a deficit Capital Account in excess
of such sum after all other allocations provided in this Article 6 have
been tentatively made as if this Section 6.3.A(v) and Section 6.3.A(iv)
were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the
extent any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Partner, such allocation of Net Loss
shall be reallocated among the other Partners in accordance with their
respective Percentage Interests in Common Units, subject to the
limitations of this Section 6.3.A(vi).
(vii) Section 754 Adjustment. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or
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Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account
in determining Capital Accounts as the result of a distribution to a
Partner in complete liquidation of his interest in the Partnership, the
amount of such adjustment to the Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the asset) or
loss (if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Partners in accordance with their
interests in the Partnership in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth
in Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the
"Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of
Sections 6.1 and 6.2, the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and deduction
among the Partners so that, to the extent possible, the net amount of
such allocations of other items and the Regulatory Allocations to each
Partner shall be equal to the net amount that would have been allocated
to each such Partner if the Regulatory Allocations had not occurred.
B. For purposes of determining a Partner's proportional share
of the "excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership
profits shall be such Partner's Percentage Interest in Common Units.
Section 6.4. Tax Allocations
A. In General. Except as otherwise provided in this Section
6.4, for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") 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 Sections 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A, Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to the
Partnership upon its formation pursuant to Section 4.1, such variation between
basis and initial Gross Asset Value shall be taken into account under the
"traditional method" as described in Regulations Section 1.704-3(b). With
respect to properties subsequently contributed to the Partnership, the
Partnership shall account for such variation under any method approved under
Section 704(c) of the Code and the applicable regulations as chosen by the
General Partner. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value
(provided in Article 1), subsequent allocations of Tax Items with respect to
such asset shall take account of the variation, if any, between the adjusted
basis of such asset and its Gross Asset Value in the same manner as under
Section 704(c) of the Code and the applicable
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regulations consistent with the requirements of Regulations Section
1.704-1(b)(2)(iv)(g) using any method approved under 704(c) of the Code and the
applicable regulations as chosen by the General Partner.
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 of the Partnership are
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, except with the consent of the
General Partner. In addition to the powers now or hereafter granted a general
partner of a limited partnership under the Act and other applicable law or which
are granted to the General Partner under any other provision of this Agreement,
the General Partner, subject to the other provisions hereof including Section
7.3, shall have full power and authority to do all things deemed necessary or
desirable by it to conduct the business of the Partnership, to exercise all
powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including, without limitation:
(i) 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 General
Partner (for so long as the General Partner has
determined to qualify 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
stockholders sufficient to permit the General Partner
to maintain REIT status), the assumption or guarantee
of, or other contracting for, indebtedness and other
liabilities, the issuance of evidences of
indebtedness (including the securing of same by
mortgage, deed of trust or other lien or encumbrance
on all or any of the Partnership's assets) and the
incurring of any obligations it deems necessary for
the conduct of the activities of the Partnership;
(ii) 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;
(iii) subject to the provisions of Section 7.3.D, the
acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership or the merger or other combination
of the Partnership with or into another entity;
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(iv) the mortgage, pledge, encumbrance or hypothecation of
all or any assets of the Partnership, and the use of
the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct or the operations of the
General Partner or the Partnership, the lending of
funds to other Persons (including, without
limitation, the General Partner (if necessary to
permit the financing or capitalization of a
subsidiary of the General Partner or the Partnership)
and any Subsidiaries of the Partnership) and the
repayment of obligations of the Partnership, any of
its Subsidiaries and any other Person in which it has
an equity investment;
(v) the negotiation, execution, and performance of any
contracts, leases, conveyances or other instruments
that the General Partner considers useful or
necessary to the conduct of the Partnership's
operations or the implementation of the General
Partner's powers under this Agreement;
(vi) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(vii) the selection and dismissal of employees of the
Partnership (including, without limitation, employees
having titles such as "president," "vice president,"
"secretary" and "treasurer"), and agents, outside
attorneys, accountants, consultants and contractors
of the Partnership, the determination of their
compensation and other terms of employment or hiring,
including waivers of conflicts of interest and the
payment of their expenses and compensation out of the
Partnership's assets;
(viii) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(ix) 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
any Subsidiary and any other Person in which it has
an equity investment from time to time); provided
that, as long as the General Partner has determined
to continue to qualify as a REIT, the Partnership may
not engage in any such formation, acquisition or
contribution that would cause the General Partner to
fail to qualify as a REIT;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct
of litigation and the incurring of legal expense and
the settlement of claims and litigation, and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
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(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any
Person (including, without limitation, contributing
or loaning Partnership funds to, incurring
indebtedness on behalf of, or guarantying the
obligations of any such Persons);
(xii) subject to the other provisions in this Agreement,
the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as it may adopt;
provided that, such methods are otherwise consistent
with requirements of this Agreement;
(xiii) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or
any Person in which the Partnership has made a direct
or indirect equity investment;
(xiv) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(xv) the collection and receipt of revenues and income of
the Partnership;
(xvi) 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;
(xvii) 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;
(xviii) 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
(xix) 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 other agreements in writing necessary or
appropriate in the judgment of the General Partner
for the accomplishment of any of the powers of the
General Partner enumerated in this Agreement.
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 provisions of
this Agreement (except as provided in Section 7.3), the Act or any applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the
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Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance (including, without limitation, earthquake insurance) on the
properties of the Partnership and (ii) liability insurance for the Indemnities
hereunder.
D. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital and
other reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the
General Partner may, but other than as set forth in the following sentence and
as expressly set forth in the agreements listed on Exhibit I hereto, shall be
under no obligation to, take into account the tax consequences to any Partner
(including the General Partner) of any action taken by the General Partner. The
General Partner, on behalf of the Partnership, shall use commercially reasonable
efforts to cooperate with the Limited Partners to minimize any taxes payable in
connection with any sale, exchange or any other disposition of assets of the
Partnership. 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.
F. Except as otherwise provided herein, to the extent the
duties of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
Section 7.2. Certificate of Limited Partnership
To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and to maintain the Partnership's qualification to do business as a foreign
limited partnership in each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(iv), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and
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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 or other jurisdiction, in which the Partnership may
elect to do business or own property.
Section 7.3. Restrictions on General Partner's Authority
A. The General Partner may not take any action in
contravention of this Agreement, including, without limitation:
(i) take any action that would make it impossible to
carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement;
(ii) possess Partnership property, or assign any rights in
specific Partnership property, for other than a
Partnership purpose except as otherwise provided in
this Agreement;
(iii) admit a Person as a Partner, except as otherwise
provided in this Agreement (including with respect to
the PLPs, who shall become Partners upon their
receipt of Performance Units);
(iv) perform any act that would subject a Limited Partner
to liability as a general partner in any jurisdiction
or any other liability except as provided herein or
under the Act; or
(v) enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the
effect of prohibiting or restricting, the ability of
a Limited Partner to exercise its rights to a
Redemption in full, except with the written consent
of such Limited Partner.
B. The General Partner shall not, without the prior Consent of
the Partners (in addition to any Consent of the Limited Partners required by any
other provision hereof), undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction which would have the effect of
such transactions:
(i) except as provided in Section 7.3.D below, amend,
modify or terminate this Agreement other than to
reflect the admission, substitution, termination or
withdrawal of partners pursuant to Article 12;
(ii) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment
of a custodian, receiver or trustee for all or any
part of the assets of the Partnership;
(iii) institute any proceeding for bankruptcy on behalf of
the Partnership;
(iv) confess a judgment against the Partnership; or
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(v) enter into a merger (including a triangular merger),
consolidation or other combination of the Partnership
with or into another entity.
C. Except in the case of a Liquidating Event pursuant to
Section 13.1 (other than Section 13.1.F), the General Partner shall not, without
the prior Consent of the Limited Partners, undertake, on behalf of the
Partnership, any actions or enter into any transaction which would have the
effect of a dissolution of the Partnership, including a sale, exchange, transfer
or other disposition of all or substantially all of the Partnership's assets in
a single transaction or a series of related transactions.
D. Notwithstanding Sections 7.3.B and 7.3.C, but subject to
Section 7.3.E, the General Partner shall have the power, without the Consent of
the Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(i) 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;
(ii) to reflect the issuance of additional Partnership
Interests pursuant to Sections 4.3.C, 4.3.F and 4.4,
or the admission, substitution, termination,
reduction in Partnership Units or withdrawal of
Partners in accordance with this Agreement (which may
be effected through the replacement of Exhibit A with
an amended Exhibit A);
(iii) to set forth or amend the designations, rights,
powers, duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Article 4;
(iv) 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 in, correct or supplement any provision, 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;
(v) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a Federal, state of
local agency or contained in Federal, state or local
law.
(vi) to reflect such changes as are reasonably necessary
for the General Partner to maintain its status as a
REIT, including changes which may be necessitated due
to a change in applicable law (or an authoritative
interpretation thereof) or a ruling of the IRS; and
(vii) to modify, as set forth in the definition of "Capital
Account," the manner in which Capital Accounts are
computed.
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The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.D is taken.
E. Notwithstanding Sections 7.3.B, 7.3.C and 7.3.D, this
Agreement shall not be amended, and no action may be taken by the General
Partner, including in either case through merger or sale of assets of the
Partnership or otherwise, without the Consent of each Common Limited Partner or
Preferred Limited Partner adversely affected if such amendment or action would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest (except as the result of the General Partner acquiring such
interest), (ii) modify the limited liability of a Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5, Section
13.2.A(4) or Article 16 or the allocations specified in Article 6 (except as
permitted pursuant to Section 4.3 and Section 7.3.D), (iv) alter or modify the
rights to a Redemption or the REIT Shares Amount as set forth in Section 8.6,
and related definitions hereof, (v) alter the Redemption or exchange rights as
set forth in Sections 17.5 and 17.8 hereof, respectively, or (vi) amend this
Section 7.3.E. Further, no amendment may alter the restrictions on the General
Partner's authority set forth elsewhere in this Section 7.3 without the Consent
specified in such section. In addition, (a) Section 11.2 of this Agreement shall
not be amended, and no action in contravention of Section 11.2 shall be taken,
including in either case through merger or sale of assets of the Partnership or
otherwise, without the Consent of the Limited Partners and (b) this Agreement
shall not be amended, and no action shall be taken, including in either case
through merger or sale of assets of the Partnership or otherwise, which would
adversely affect the rights of the Persons set forth in Exhibit G to receive
Performance Units as described herein.
F. Other than incident to a transaction pursuant to Sections
11.2.B or 11.2.C, the General Partner shall not undertake to dispose of any
Partnership Property specified in the agreements listed in Exhibit H in a
taxable sale or taxable exchange prior to the dates specified in such agreements
without the prior consent of each Limited Partner which contributed all or any
portion of an interest in such Property to the Partnership, as set forth in such
agreements.
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. Subject to Section 15.11, the General Partner shall be
reimbursed on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all expenses it incurs
relating to the ownership of interests in and operation of, or for the benefit
of, the Partnership. The Limited Partners acknowledge that the General Partner's
sole business is the ownership of interests in and operation of the Partnership
and that such expenses are incurred for the benefit of the Partnership; provided
that, the General Partner shall not be reimbursed for expenses it incurs
relating to the organization of the Partnership and the General Partner, or the
initial public offering or subsequent offerings of REIT Shares, other shares of
capital stock or Funding Debt by the General Partner, but shall be reimbursed
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expenses it incurs with respect to any other issuance of additional
Partnership Interests pursuant to the provisions hereof. Such reimbursements
shall be in addition to any reimbursement to the General Partner as a result of
indemnification pursuant to Section 7.7.
C. If and to the extent any reimbursements to the General
Partner pursuant to this Section 7.4 constitute gross income of the General
Partner (as opposed to the repayment of advances made by the General Partner on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
Section 7.5. Outside Activities of the General Partner
A. Except in connection with a transaction authorized in
Section 11.2, without the Consent of the Limited Partners, the General Partner
shall not, directly or indirectly, enter into or conduct any business, other
than in connection with the ownership, acquisition and disposition of
Partnership Interests as a General Partner and the management of the business of
the Partnership, its operation as a public reporting company with a class (or
classes) of securities registered under the Exchange Act, its operation as a
REIT and such activities as are incidental to the same. Without the Consent of
the Limited Partners, the General Partner shall not, directly or indirectly,
participate in or otherwise acquire any interest in any real or personal
property, except its General Partner Interest, its interest in any Subsidiary
Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary)
that the General Partner holds in order to maintain such Subsidiary
Partnership's status as a partnership, and such bank accounts, similar
instruments or other short-term investments as it deems necessary to carry out
its responsibilities contemplated under this Agreement and the Charter. In the
event the General Partner desires to contribute cash to any Subsidiary
Partnership to acquire or maintain an interest of 1% or less in the capital of
such partnership, the General Partner may acquire such cash from the Partnership
in exchange for a reduction in the General Partner's Units, in an amount equal
to the amount of such cash divided by the Fair Market Value of a REIT Share on
the day such cash is received by the General Partner. Notwithstanding the
foregoing, the General Partner may acquire Properties in exchange for REIT
Shares, to the extent such Properties are immediately contributed by the General
Partner to the Partnership, pursuant to the terms described in Section 4.3.E.
Any Limited Partner Interests acquired by the General Partner, whether pursuant
to exercise by a Limited Partner of its right of Redemption, or otherwise, shall
be automatically converted into a General Partner Interest comprised of an
identical number of Partnership Units with the same rights, priorities and
preferences as the class or series so acquired. If, at any time, the General
Partner acquires material assets (other than on behalf of the Partnership) the
definition of "REIT Shares Amount" shall be adjusted, as reasonably agreed to by
the General Partner and the other Limited Partners, to reflect the relative Fair
Market Value of a share of capital stock of the General Partner relative to the
Deemed Partnership Interest Value of the related Partnership Unit. The General
Partner's General Partner Interest in the Partnership, its minority interest in
any Subsidiary Partnership(s) (held directly or indirectly through a Qualified
REIT Subsidiary) that the General Partner holds in order to maintain such
Subsidiary Partnership's status as a partnership, and interests in such
short-term liquid investments, bank accounts or similar instruments as the
General Partner deems necessary to carry out its responsibilities contemplated
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under this Agreement and the Charter are interests which the General Partner is
permitted to acquire and hold for purposes of this Section 7.5.A.
B. In the event the General Partner exercises its rights under
the Charter to purchase REIT Shares or Preferred Shares, then the General
Partner shall cause the Partnership to redeem from it a number of Partnership
Units of the appropriate class as determined based on, in the case of REIT
Shares, the REIT Shares Amount equal to the number of REIT Shares so purchased,
or in the case of Preferred Shares an equal number of Preferred Units which
correspond in ranking to the Preferred Shares so purchased, in each case on the
same terms that the General Partner purchased such REIT Shares or Preferred
Shares (as applicable).
Section 7.6. Contracts with Affiliates
A. Except as expressly permitted by this Agreement, the
Partnership shall not, directly or indirectly, sell, transfer or convey any
property to, or purchase any property from, or borrow funds from, or lend funds
to, any Partner or any Affiliate of the Partnership that is not also a
Subsidiary of the Partnership, except pursuant to transactions that are on terms
that are fair and reasonable and no less favorable to the Partnership than would
be obtained from an unaffiliated third party.
B. The General Partner, in its sole and absolute discretion
and without the approval of the Limited Partners, may propose and adopt on
behalf of the Partnership employee benefit plans funded by the Partnership for
the benefit of employees of the General Partner, the Partnership, Subsidiaries
of the Partnership or any Affiliate of any of them in respect of services
performed, directly or indirectly, for the benefit of the Partnership, the
General Partner, or any of the Partnership's Subsidiaries. The General Partner
also is expressly authorized to cause the Partnership to issue to it Partnership
Units corresponding to REIT Shares issued by the General Partner pursuant to its
Stock Incentive Plan or any similar or successor plan and to repurchase such
Partnership Units from the General Partner to the extent necessary to permit the
General Partner to repurchase such REIT Shares in accordance with such plan.
Section 7.7. Indemnification
A. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including 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 as set forth in this Agreement in which any
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 (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan 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
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subject to), and the General Partner is hereby authorized and empowered, on
behalf of the Partnership, to enter into one or more indemnity agreements
consistent with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
or upon a plea of nolo contendere or its equivalent, or any entry of an order of
probation prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this Section 7.7.A.
Any indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and any insurance proceeds from the liability policy
covering the General Partner and any Indemnitee, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership or otherwise provide funds to enable the Partnership to fund
its obligations under this Section 7.7.
B. 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 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.
D. The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any 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.
F. In no event may an Indemnitee subject the Limited Partners
to personal liability by reason of the indemnification provisions set forth in
this Agreement.
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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.
I. If and to the extent any reimbursements to the General
Partner pursuant to this Section 7.7 constitute gross income of the General
Partner (as opposed to the repayment of advances made by the General Partner on
behalf of the Partnership) such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
J. Any indemnification hereunder is subject to, and limited
by, the provisions of Section 17-108 of the Act.
K. In the event the Partnership is made a party to any
litigation or otherwise incurs any loss or expense as a result of or in
connection with any Partner's personal obligations or liabilities unrelated to
Partnership business, such Partner shall indemnify and reimburse the Partnership
for all such loss and expense incurred, including legal fees, and the
Partnership Interest of such Partner may be charged therefor. The liability of a
Partner under this Section 7.7.K shall not be limited to such Partner's
Partnership Interest, but shall be enforceable against such Partner personally.
Section 7.8. Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in this
Agreement, none of the General Partner and any of its officers, directors,
agents and employees shall be liable or accountable in damages or otherwise to
the Partnership, any Partners or any Assignees, or their successors or assigns,
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.
B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's stockholders collectively, that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's stockholders (including, without limitation,
the tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions and that the
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General Partner shall not be liable to the Partnership or to any Limited Partner
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, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith. In no event shall the liability of the
General Partner and its officers, directors, agents and employees, to the
Partnership and the Limited Partners under this Section 7.8 be greater than the
Partnership Interest of the General Partner.
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 liability of the General Partner and any of its
officers, directors, agents and employees 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 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 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
any non-mandatory provision of 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 to protect the
ability of the General Partner, for so long as the General Partner has
determined to qualify as a REIT, to (i) continue to qualify as a REIT or (ii)
except with respect to the distribution of Available Cash to the Series B
Limited Partners in accordance with Section 17.3
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avoid the General Partner 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.
E. So long as the Company holds any interest in the
Partnership (as either a General Partner or Limited Partner), the Company shall
have "management rights" (as such term is defined in the Plan Asset Regulation)
with respect to the Partnership and its Properties to the extent necessary to
qualify the Company as a "venture capital operating company" (as such term is
defined in the Plan Asset Regulation).
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 Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be deemed held by the General Partner or such nominee or
Affiliate 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 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 such Person shall be entitled to
deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies 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.
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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 or under the Act.
Section 8.2. Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, general
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such) shall take part in the operations,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. The transaction of any
such business by the General Partner, any of its Affiliates or any officer,
director, employee, general 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 by a Limited Partner or
its Affiliates with the General Partner, Partnership or a Subsidiary, any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate
or stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct 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. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such other 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 other Person.
Section 8.4. Return of Capital
Except pursuant to the rights of Redemption set forth in
Section 8.6 and the Redemption and exchange rights set forth in Sections 17.5
and 17.8, no Limited Partner shall be entitled to the withdrawal or return of
his or her Capital Contribution, except to the extent of distributions made
pursuant to this Agreement or upon termination of the Partnership as provided
herein. Except as expressly set forth herein with respect to the rights,
priorities and preferences of the Preferred Limited Partners holding any series
of Preferred Units, no Limited Partner or
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Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions, or as otherwise expressly provided in
this Agreement, as to profits, losses, distributions or credits.
Section 8.5. Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this Agreement or
by the Act, and except as limited by Section 8.5.C, 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 the Partnership's expense:
(i) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by the General Partner pursuant
to the Exchange Act, and each communication sent to
the stockholders of the General Partner;
(ii) to obtain a copy of the Partnership's Federal, state
and local income tax returns for each Partnership
Year;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(iv) 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
(v) 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 Common Limited Partner in
writing of any adjustment made in the calculation of the REIT Shares Amount
within ten (10) Business Days of the date such change becomes effective.
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
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 (ii) the Partnership or the General Partner
is required by law or by agreements with unaffiliated third parties to keep
confidential.
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Section 8.6. Common Limited Partner Redemption Rights
A. On or after the date one year after the Effective Date, or
on or after such later date as expressly provided in an agreement entered into
between the Partnership and any Common Limited Partner, each Common Limited
Partner shall have the right (subject to the terms and conditions set forth
herein and in any other such agreement, as applicable) to require the
Partnership to redeem all or a portion of the Common Partnership Units held by
such Common Limited Partner (such Partnership Units being hereafter referred to
as "Tendered Units") in exchange for the Cash Amount (a "Redemption"); provided,
that the terms of such Common Partnership Units do not provide that such Common
Partnership Units are not entitled to a right of Redemption. Unless otherwise
expressly provided in this Agreement or a separate agreement entered into
between the Partnership and the holders of such Partnership Units, all Common
Partnership Units shall be entitled to a right of Redemption hereunder.
Notwithstanding the foregoing, a PLP shall not have the right to require the
Partnership to redeem, and the Partnership may not redeem, (i) a number of
Performance Units held by such PLP in excess of the Performance Amount; or (ii)
any Performance Units prior to the second anniversary of their issuance. Any
Redemption shall be exercised pursuant to a Notice of Redemption delivered to
the General Partner by the Common Limited Partner who is exercising the right
(the "Tendering Partner"). The Cash Amount shall be delivered as a certified
check payable to the Tendering Partner within ten (10) days of the Specified
Redemption Date in accordance with the instructions set forth in the Notice of
Redemption.
B. Notwithstanding Section 8.6.A above, if a Common Limited
Partner has delivered to the General Partner a Notice of Redemption then the
General Partner may, in its sole and absolute discretion, (subject to the
limitations on ownership and transfer of REIT Shares set forth in Article IV.E
of the Charter) elect to acquire some or all of the Tendered Units from the
Tendering Partner in exchange for the REIT Shares Amount (as of the Specified
Redemption Date) and, if the General Partner so elects, the Tendering Partner
shall sell the Tendered Units to the General Partner in exchange for the REIT
Shares Amount. In such event, the Tendering Partner shall have no right to cause
the Partnership to redeem such Tendered Units. The General Partner shall
promptly give such Tendering Partner written notice of its election, and the
Tendering Partner may elect to withdraw its redemption request at any time prior
to the acceptance of the Cash Amount or REIT Shares Amount by such Tendering
Partner.
C. The REIT Shares Amount, if applicable, shall be delivered
as duly authorized, validly issued, fully paid and nonassessable REIT Shares
and, if applicable, free of any pledge, lien, encumbrance or restriction, other
than those provided in the Charter, the Bylaws of the General Partner, the
Securities Act, relevant state securities or blue sky laws and any applicable
registration rights agreement with respect to such REIT Shares entered into by
the Tendering Partner. The REIT Shares Amount shall be registered in the name
and otherwise delivered as set forth in the Notice of Redemption.
Notwithstanding any delay in such delivery (but subject to Section 8.6.E below),
the Tendering Partner shall be deemed the owner of such REIT Shares for all
purposes, including without limitation, rights to vote or consent, and receive
dividends, as of the Specified Redemption Date.
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D. Each Common Limited Partner covenants and agrees with the
General Partner that all Tendered Units shall be delivered to the General
Partner free and clear of all liens, claims and encumbrances whatsoever and
should any such liens, claims and/or encumbrances exist or arise with respect to
such Tendered Units, the General Partner shall be under no obligation to acquire
the same. Each Common Limited Partner further agrees that, in the event any
state or local property transfer tax is payable as a result of the transfer of
its Tendered Units to the General Partner (or its designee), such Common Limited
Partner shall assume and pay such transfer tax.
E. Notwithstanding the provisions of Sections 8.6.A, 8.6.B,
8.6.C or any other provision of this Agreement, a Common Limited Partner (i)
shall not be entitled to effect a Redemption for cash or an exchange for REIT
Shares to the extent the ownership or right to acquire REIT Shares pursuant to
such exchange by such Partner on the Specified Redemption Date would cause such
Partner or any other Person, or, in the opinion of counsel selected by the
General Partner, may cause such Partner or any other Person, to violate the
restrictions on ownership and transfer of REIT Shares set forth in Article IV.E
of the Charter and (ii) shall have no rights under this Agreement to acquire
REIT Shares which would otherwise be prohibited under the Charter. To the extent
any attempted Redemption or exchange for REIT Shares would be in violation of
this Section 8.6.E, it shall be null and void ab initio and such Common Limited
Partner shall not acquire any rights or economic interest in the cash otherwise
payable upon such redemption or the REIT Shares otherwise issuable upon such
exchange.
F. Notwithstanding anything herein to the contrary (but
subject to Section 8.6.E above), with respect to any Redemption or exchange for
REIT Shares pursuant to this Section 8.6:
(i) All Common Partnership Units acquired by the General
Partner pursuant thereto shall automatically, and
without further action required, be converted into
and deemed to be General Partner Interests comprised
of the same number and class of Common Partnership
Units.
(ii) Without the consent of the General Partner, each
Common Limited Partner may not effect a Redemption
for less than 10,000 Partnership Units or, if the
Common Limited Partner holds less than 10,000
Partnership Units, all of the Common Partnership
Units held by such Common Limited Partner.
(iii) Without the consent of the General Partner, each
Common Limited Partner may not effect a Redemption
during the period after the Partnership Record Date
with respect to a distribution and before the record
date established by the General Partner for a
distribution to its common stockholders of some or
all of its portion of such distribution.
(iv) The consummation of any Redemption or exchange for
REIT Shares shall be subject to the expiration or
termination of the applicable waiting period, if any,
under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
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(v) Each Tendering Partner shall continue to own all
Common Partnership Units subject to any Redemption or
exchange for REIT Shares, and be treated as a Common
Limited Partner with respect to such Common
Partnership Units for all purposes of this Agreement,
until such Common Partnership Units are transferred
to the General Partner and paid for or exchanged as
of the Specified Redemption Date. Until a Specified
Redemption Date, the Tendering Partner shall have no
rights as a stockholder of the General Partner with
respect to such Tendering Partner's Common
Partnership Units.
G. In the event that the Partnership issues additional
Partnership Interests to any Additional Limited Partner pursuant to Section
4.3.C, the General Partner shall make such revisions to this Section 8.6 as it
determines are necessary to reflect the issuance of such additional Partnership
Interests.
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 appropriate books and records with respect
to the Partnership's business, including without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided,
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2. Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. Reports
A. As soon as practicable, but in no event later than one
hundred and five (105) days after the close of each Partnership Year, or such
earlier date as they are filed with the Securities and Exchange Commission, 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 if such statements are prepared solely on
a consolidated basis with the General Partner, for such Partnership Year,
presented in accordance with generally accepted accounting principles, such
statements to be audited by a nationally recognized firm of independent public
accountants selected by the General Partner.
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B. As soon as practicable, but in no event later than
forty-five (45) days after the close of each calendar quarter (except the last
calendar quarter of each year), or such earlier date as they are filed with the
Securities and Exchange Commission, 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, if such statements are prepared solely on a consolidated basis with the
General Partner, presented in accordance with the applicable law or regulation,
or as the General Partner determines to be appropriate.
Section 9.4. Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the
General Partner may keep confidential from the Limited Partners any information
that the General Partner 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 which the Partnership is
required by law or by agreements with unaffiliated third parties to keep
confidential.
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. Each
Limited Partner shall promptly provide the General Partner with such information
relating to any Contributed Property contributed by such Limited Partner to the
Partnership.
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, including the election under Section
754 of the Code. The General Partner shall have the right to seek to revoke any
such election (including without limitation, any election under Section 754 of
the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is 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 6223(c) 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 and profit interest of each
of the Limited Partners and Assignees; provided, however, that such information
is provided to the Partnership by the Limited Partners and Assignees.
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B. The tax matters partner is authorized, but not required:
(i) 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 (a) 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 (b) who is a "notice
partner" (as defined in Section 6231 of the Code) or
a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(ii) 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 United
States Claims Court, or the filing of a complaint for
refund with the District Court of the United States
for the district in which the Partnership's principal
place of business is located;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or an item affected by such
item; and
(vi) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.
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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)
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, 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 (including, without
limitation, the right to receive distributions and the holding of a security
interest in such Limited Partner's Partnership Interest). Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus two percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e., 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.
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ARTICLE 11.
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
A. The term "transfer," when used in this Article 11 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign its General Partner Interest to
another Person or by which a Limited Partner purports to assign its Limited
Partnership Interest to another Person, and includes a sale, assignment, gift
(outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. Except to the extent otherwise
specified, the term "transfer" when used in this Article 11 does not include any
Redemption or exchange for REIT Shares pursuant to Section 8.6 or any exchange
for Series B Preferred Shares pursuant to Section 17.8. No part of the interest
of a Limited Partner shall be subject to the claims of any creditor, any spouse
for alimony or support, or to legal process, and may not be voluntarily or
involuntarily alienated or encumbered, except as may be specifically provided
for in this Agreement.
B. 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 ab initio unless
otherwise consented by the General Partner in its sole and absolute discretion.
Section 11.2. Transfer of General Partner's Partnership
Interest
A. The General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger, consolidation, liquidation or otherwise)
without the Consent of the Limited Partners which may be given or withheld by
each such Limited Partner in its sole and absolute discretion, and only upon the
admission of a successor General Partner pursuant to Section 12.1; provided,
however, that, subject to Sections 11.2.B, 11.2.C, 11.2.D and 11.2.E, the
General Partner may withdraw from the Partnership and transfer all of its
interest upon the merger, consolidation or sale of substantially all of the
assets of the General Partner without the consent of any Limited Partners. Upon
any transfer of a Partnership Interest in accordance with the provisions of this
Section 11.2, the transferee shall become a substitute General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It is a condition to any transfer otherwise permitted hereunder that
the transferee assumes, by operation of law or express agreement, all of the
obligations of the transferor General Partner under this Agreement with respect
to such transferred Partnership Interest, and no such transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor General Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor General Partner of
its
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obligations under this Agreement without the Consent of the Partners, in their
reasonable discretion. In the event the General Partner withdraws from the
Partnership, or otherwise dissolves or terminates, or upon the Incapacity of the
General Partner, all of the remaining Partners may elect to continue the
Partnership business by selecting a substitute General Partner in accordance
with the Act.
B. Neither the General Partner nor the Partnership may engage
in any merger, consolidation or other combination with or into another person,
or effect any reclassification, recapitalization or change of its outstanding
equity interests, and the General Partner may not sell all or substantially all
of its assets (each a "Termination Transaction") unless in connection with the
Termination Transaction all holders of Partnership Units either will receive, or
will have the right to elect to receive, for each Partnership Unit an amount of
cash, securities or other property equal to the product of the REIT Share Amount
and the greatest amount of cash, securities or other property paid to the holder
of one REIT Share in consideration of one REIT Share pursuant to the Termination
Transaction. If, in connection with the Termination Transaction, a purchase,
tender or exchange offer shall have been made to and accepted by the holders of
the outstanding REIT Shares, each holder of Partnership Units will receive, or
will have the right to elect to receive, the greatest amount of cash, securities
or other property which such holder would have received had it exercised its
rights to Redemption (as set forth in Section 8.6) 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. The PLPs shall have the benefit of the foregoing
provisions with respect to all of their Performance Units, notwithstanding the
limitation set forth in Section 8.6.A on a PLPs ability to exercise its rights
to a Redemption.
C. A Termination Transaction may also occur if the following
conditions are met: (i) substantially all of the assets directly or indirectly
owned by the surviving entity are held directly or indirectly by the Partnership
or another limited partnership or limited liability company which is the
survivor of a merger, consolidation or combination of assets with the
Partnership (in each case, the "Surviving Partnership"); (ii) the holders of
Partnership Units, including the holders of Performance Units issued or to be
issued, own a percentage interest of the Surviving Partnership based on the
relative fair market value of the net assets of the Partnership and the other
net assets of the Surviving Partnership immediately prior to the consummation of
such transaction; (iii) the rights, preferences and privileges of such holders
in the Surviving Partnership, including the holders of Performance Units issued
or to be issued, are at least as favorable as those in effect immediately prior
to the consummation of such transaction and as those applicable to any other
limited partners or non-managing members of the Surviving Partnership (except,
as to Performance Units, for such differences with Partnership Units regarding
liquidation, Redemption and exchange as are set forth herein); and (iv) such
rights of the Limited Partners, including the holders of Performance Units
issued or to be issued, include at least one of the following: (a) the right to
redeem their interests in the Surviving Partnership for the consideration
available to such persons pursuant to Section 11.2.B; or (b) the right to redeem
their Partnership Units for cash on terms equivalent to those in effect with
respect to their Partnership Units immediately prior to the consummation of such
transaction, or, if the ultimate controlling person of the Surviving Partnership
has publicly traded common equity securities,
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such common equity securities, with an exchange ratio based on the determination
of relative fair market value of such securities and the REIT Shares.
D. In connection with any transaction permitted by Section
11.2.B or 11.2.C the determination of relative fair market values and rights,
preferences and privileges of the Limited Partners shall be reasonably
determined by the General Partner's Board of Directors as of the time of the
Termination Transaction and, to the extent applicable, the values shall be no
less favorable to the holders of Partnership Units than the relative values
reflected in the terms of the Termination Transaction.
E. In the event of a Termination Transaction, the arrangements
with respect to Performance Units and Performance Shares will be equitably
adjusted to reflect the terms of the transaction, including, to the extent that
the REIT Shares are exchanged for consideration other than publicly traded
common equity, the transfer or release of remaining Performance Shares pursuant
to the Escrow Agreements, and resulting issuance of any Performance Units as set
forth in Section 4.3.F.
Section 11.3. Limited Partners' Rights to Transfer
A. Any Limited Partner may, at any time without the consent of
the General Partner, (i) transfer all or any portion of its Partnership Interest
to the General Partner, (ii) transfer all or any portion of its Partnership
Interest to an Affiliate controlled thereby or to an Immediate Family member,
subject to the provisions of Section 11.6, (iii) transfer all or any portion of
its Partnership Interest to a trust for the benefit of a charitable beneficiary
or to a charitable foundation, subject to the provisions of Section 11.6 and
(iv) subject to the provisions of Section 11.6, (a) pledge (a "Pledge") all or
any portion of its Partnership Interest to a lending institution, which is not
an Affiliate of such Limited Partner, as collateral or security for a bona fide
loan or other extension of credit, or (b) transfer such pledged Partnership
Interest to such lending institution in connection with the exercise of remedies
under such loan or extension of credit. In addition, each Limited Partner or
Assignee (resulting from a transfer made pursuant to clauses (i)-(iv) of the
preceding sentence) shall have the right to transfer all or any portion of its
Partnership Interest, subject to the provisions of Section 11.6 and the
satisfaction of each of the following conditions:
(a) General Partner Right of First Refusal. The
transferring Partner shall give written notice of the
proposed transfer to the General Partner, which
notice shall state (x) the identity of the proposed
transferee and (y) the amount and type of
consideration proposed to be received for the
transferred Partnership Units. The General Partner
shall have ten (10) days upon which to give the
transferring Partner notice of its election to
acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership
Units on such terms within ten (10) days after giving
notice of such election. If it does not so elect, the
transferring Partner may transfer such Partnership
Units to a third party, on economic terms no more
favorable to the transferee than the proposed terms,
subject to the other conditions of this Section 11.3.
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(b) Qualified Transferee. Any transfer of a Partnership
Interest shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Charter, which may limit or restrict such
transferee's ability to exercise its Redemption rights or the exchange rights
set forth in Section 17.8 and to the representations set forth in Section 3.4.D.
Any transferee, whether or not admitted as a Substituted Limited Partner, shall
take subject to the obligations of the transferor hereunder. Unless admitted as
a Substituted Limited Partner, no transferee, whether by a voluntary transfer,
by operation of law or otherwise, shall have any rights hereunder, other than
the rights of an Assignee as provided in Section 11.5.
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 otherwise
permitted under this Section 11.3 by a Limited Partner of his or her Partnership
Units if, in the opinion of legal counsel to the Partnership, such transfer
would require the filing of a registration statement under the Securities Act by
the Partnership 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 his or her Partnership
Units (including any Redemption or exchange for REIT Shares pursuant to Section
8.6, the Redemption or exchange rights set forth in Sections 17.5 and 17.8, or
any other acquisition of Common Units or Series B Preferred Partnership Units by
the General Partner or the Partnership) may be made to any person if (i) in the
opinion of legal counsel for the Partnership, it could result in the Partnership
being treated as an association taxable as a corporation or (ii) absent the
consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, such transfer could be treated as effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within 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,
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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 redeem
or exchange for the REIT Shares Amount, or the specified amount of Series B
Preferred Shares, as the case may be, 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.
F. No Limited Partner may withdraw from the Partnership except
as a result of transfer, Redemption or exchange of Partnership Units pursuant
hereto.
G. No PLP (or any transferee described below) shall be
entitled to transfer any Performance Units prior to the second anniversary of
their issuance, without the consent of the General Partner, which may be given
or withheld in its sole discretion; provided, however, no such consent shall be
required under this Section 11.3.G (but subject to the other limitations of this
Article 11) for a transfer of all or a portion of such Performance Units to an
Affiliate, to Immediate Family Members, to a trust described in Section
11.3.A(iii), pursuant to a Pledge, or a transfer of such pledged units to such
lending institution in connection with the exercise of remedies under such loan
or extension of credit.
Section 11.4. Substituted Limited Partners
A. No Limited Partner shall have the right to substitute a
transferee as a Limited Partner in his or her place (including any transferee
permitted by Section 11.3 above). The General Partner shall, however, have the
right to consent to the admission of a permitted transferee of the interest of a
Limited Partner, as a Substituted Limited Partner, pursuant to this Section
11.4, 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. The admission of any transferee as a Substituted Limited
Partner shall be subject to the transferee executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
(including, without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the admission, each in
form and substance satisfactory to the General Partner) and the acknowledgment
by such transferee that each of the representations and warranties set forth in
Section 3.4 are true and correct with respect to such transferee as of the date
of the transfer of the Partnership Interest to such transferee and will continue
to be true to the extent required by such representations and warranties.
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.
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Section 11.5. Assignees
If the General Partner, in its sole and absolute discretion,
does not consent to the admission of any permitted transferee under Section 11.3
as a Substituted Limited Partner, as described in Section 11.4, such transferee
shall be considered an Assignee for purposes of this Agreement. An Assignee
shall be entitled to all the rights of an assignee of a limited partnership
interest under the Act, including the right to receive distributions from the
Partnership and the share of Net Income, Net Losses, gain and loss attributable
to the Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, the right of Redemption provided
in Section 8.6, and the right of exchange for Series B Preferred Shares set
forth in Section 17.8, but shall not be deemed to be a holder of Partnership
Units for any other purpose under this Agreement, and shall not be entitled to
effect a Consent with respect to such Partnership Units on any matter presented
to the Limited Partners for approval (such Consent remaining with the transferor
Limited Partner). 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.
Notwithstanding anything contained in this Agreement to the contrary, as a
condition to becoming an Assignee, any prospective Assignee must first execute
and deliver to the Partnership an acknowledgment that each of the
representations and warranties set forth in Section 3.4 hereof are true and
correct with respect to such prospective Assignee as of the date of the
prospective assignment of the Partnership Interest to such prospective Assignee
and will continue to be true to the extent required by such representations or
warranties.
Section 11.6. General Provisions
A. No Limited Partner may withdraw from the Partnership other
than as a result of (i) a permitted transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11 and the transferee(s) of
such Units being admitted to the Partnership as a Substituted Limited Partner(s)
or (ii) pursuant to the exercise of its right of Redemption of all of such
Limited Partner's Partnership Units under Section 8.6 or its right of Redemption
or exchange of all of such Limited Partner's Series B Preferred Units under
Section 17.8.
B. Any Limited Partner who shall transfer all of such Limited
Partner's Partnership Units in a transfer permitted pursuant to this Article 11
where such transferee was admitted as a Substituted Limited Partner or pursuant
to the exercise of its rights of Redemption of all of such Limited Partner's
Partnership Units under Section 8.6 or its right of Redemption or exchange of
all of such Limited Partner's Series B Preferred Units under Section 17.8, shall
cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made
effective on the last day of the month set forth on the written instrument of
transfer, unless the General Partner otherwise agrees.
D. If any Partnership Interest is transferred, assigned or
redeemed during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article 11 or transferred or redeemed
pursuant to Sections 8.6 or 17.5, on any day other than the
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first day of a Partnership Year, then Net Income, Net Losses, each item thereof
and all other items attributable to such Partnership Interest for such fiscal
year shall be divided and allocated between the transferor Partner and the
transferee Partner by taking into account their varying interests during the
fiscal year in accordance with Section 706(d) of the Code, using the interim
closing of the books method. Except as otherwise required by Section 706(d) of
the Code or as otherwise specified in this Agreement or as otherwise determined
by the General Partner (to the extent consistent with Section 706(d) of the
Code), solely for purposes of making such allocations, each of such items for
the calendar month in which the transfer, assignment or redemption occurs shall
be allocated among all the Partners and Assignees in a manner determined by the
General Partner in its sole discretion.
E. In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article 11 and
Section 2.6, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including by way of a Redemption or exchange for Series
B Preferred Shares, or any other acquisition of Common Units or Series B
Preferred Units by the Partnership or the General Partner) be made (i) to any
person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) except with the
consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, of any component portion of a Partnership Interest, such as
the Capital Account, or rights to distributions, separate and apart from all
other components of a Partnership Interest; (iv) except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, if in the opinion of legal counsel to the Partnership such transfer
would cause a termination of the Partnership for Federal or state income tax
purposes (except as a result of the Redemption or exchange for REIT Shares, and
a Redemption or exchange for Preferred Shares or cash pursuant to Sections 17.5
and 17.8, of all Partnership Units held by all Limited Partners or pursuant to a
Termination Transaction expressly permitted under Section 11.2); (v) if in the
opinion of counsel to the Partnership such transfer would cause the Partnership
to cease to be classified as a partnership for Federal or state income tax
purposes (except as a result of the Redemption or exchange for REIT Shares and a
Redemption or exchange for Preferred Shares pursuant to Sections 17.5 and 17.8
of all Partnership Units held by all Limited Partners); (vi) if such transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (viii) if such transfer requires the registration of such
Partnership Interest or requires the registration of the exchange of such
Partnership Interests for any capital stock pursuant to any applicable Federal
or state securities laws; (ix) except with the consent of the General Partner,
which may be given or withheld in its sole and absolute discretion, if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become a
"Publicly Traded Partnership," as such term is defined in Sections 469(k)(2) or
7704(b) of the Code; (x) if such transfer subjects the Partnership to be
regulated under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or the Employee Retirement Income Security Act of 1974, each as amended;
(xi) if the transferee or assignee of such Partnership Interest is
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unable to make the representations set forth in Section 3.4.D or such transfer
could otherwise adversely affect the ability of the General Partner to remain
qualified as a REIT; or (xii) if in the opinion of legal counsel for the
Partnership such transfer would adversely affect the ability of the General
Partner to continue to qualify as a REIT or, except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, subject the General Partner to any additional taxes under Section
857 or Section 4981 of the Code.
F. The General Partner shall monitor the transfers of
interests in the Partnership (including any acquisition of Common Units or
Series B Preferred Partnership Units by the Partnership or the General Partner)
to determine (i) if such interests are being traded on an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code and (ii) whether such
transfers of interests would result in the Partnership being unable to qualify
for at least one of the "safe harbors" set forth in Regulations Section 1.7704-1
(or such other applicable guidance subsequently published by the IRS setting
forth safe harbors under which interests will not be treated as "readily
tradable on a secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code) (the "Safe Harbors"). The General
Partner shall have authority (but shall not be required to) to take any steps it
determines are necessary or appropriate in its sole and absolute discretion to
prevent any trading of interests which could cause the Partnership to become a
"publicly traded partnership," or any recognition by the Partnership of such
transfers, or to insure that at least one of the Safe Harbors is met.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner
A successor to all of the General Partner's General Partner
Interest pursuant to Section 11.2 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 Article 11.
Section 12.2. Admission of Additional Limited Partners
A. 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 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.
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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 receipt of the Capital Contribution in respect of such Limited
Partner, the documents set forth in this Section 12.2.A and the consent of the
General Partner to such admission. 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 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 items for the calendar month
in which an admission of an Additional Limited Partner occurs shall be allocated
among all the Partners and Assignees, including such Additional Limited Partner,
in a manner determined by the General Partner in its sole discretion.
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.
ARTICLE 13.
DISSOLUTION AND LIQUIDATION
Section 13.1. Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
(selected as described in Section 13.1.B below) 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 term as provided in Section 2.5;
B. an event of withdrawal of the General Partner, as defined
in the Act, unless, within ninety (90) days after the withdrawal, all of the
remaining Partners agree in writing, in their sole and absolute discretion, to
continue the business of the Partnership and to the appointment, effective as of
the date of withdrawal, of a substitute General Partner;
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C. prior to December 31, 2096, an election to dissolve the
Partnership made by the General Partner with the consent of Limited Partners who
hold ninety percent (90%) of the outstanding Units held by Limited Partners;
D. subject to the provisions of Section 7.3.C, 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 or disposition of all or substantially all of the
assets and properties of the Partnership;
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 or at the time of the entry of such order or judgment a
Majority in Interest of the remaining Limited Partners Consent in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such order or judgment, of a substitute General
Partner; or
H. the Redemption or exchange for REIT Shares or Series B
Preferred Shares of all Partnership Units (other than those of the General
Partner) pursuant to this Agreement.
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 "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 assets 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 of 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;
(iii) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
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(iv) The balance, if any, to the Partners in accordance
with their Capital Account balances determined after
giving effect to all contributions and distributions
for all periods, and after taking into account all
Capital Account adjustments for the Partnership
taxable year during which the liquidation occurs
(other than those made as a result of the liquidating
distribution set forth in this Section 13.2.A(iv)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
B. Notwithstanding the provisions of Section 13.2.A which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as 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, 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. The Partnership shall be terminated when any notes received
in connection with any such sale or disposition referenced in Section 13.1.E
above, or in connection with the liquidation of the Partnership have been paid
and all of the cash or property available for application and distribution under
this Agreement have been applied and distributed in accordance with this
Agreement.
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 any Partner has a deficit balance in his or her
Capital Account (after giving effect to all contributions, distributions and
allocations for the taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever, except to the extent otherwise agreed
to by such Partner and the General Partner. In the discretion of the Liquidator
or the General Partner, a pro rata portion of the distributions that would
otherwise be made to the General Partner and Limited Partners pursuant to this
Article 13 may be:
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A. distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. 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 or the General
Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or
B. withheld to establish any reserves deemed necessary or
appropriate for any contingent or unforeseen liabilities or obligations of the
Partnership; and to reflect the unrealized portion of any installment
obligations owed to the Partnership; provided that, such withheld amounts shall
be distributed to the General Partner and Limited Partners as soon as
practicable.
Section 13.4. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the
event the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Partnership
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 his
Capital Contribution and shall have no right or power to demand or receive
property from the General Partner. Except as expressly set forth herein with
respect to the rights, priorities and preferences of the Preferred Limited
Partners holding any series of Preferred Units, no Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital
Contributions, distributions or allocations.
Section 13.6. Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
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Section 13.7. Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
Section 13.8. 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, 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; CONSENTS
Section 14.1. Amendments
A. The actions requiring consent or approval of the Partners
or of the Limited Partners pursuant to this Agreement, including Section 7.3, or
otherwise pursuant to applicable law, are subject to the procedures in this
Article 14.
B. Amendments to this Agreement requiring the consent or
approval of Limited Partners may be proposed by the General Partner or by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held by Limited Partners. Following such proposal, the General Partner
shall submit any proposed amendment to the Partners or of the Limited Partners,
as applicable. The General Partner shall seek the written consent or approval of
the Partners or of the Limited 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 consent, the General Partner
may require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute a
consent which is consistent with the General Partner's recommendation (if so
recommended); provided that, an action shall become effective at such time as
requisite consents are received even if prior to such specified time.
Section 14.2. Action by 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-five percent (25%) or more of the
Partnership Interests held by the Limited Partners. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall be
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given to all Partners not less than seven 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 of the Percentage Interests of the Partners, or
the Consent of the Partners or Consent of the Limited Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.1.
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 the Percentage Interests as is expressly
required by this Agreement for the action in question. Such consent may be in
one instrument or in several instruments, and shall have the same force and
effect as a vote of the Percentage Interests of the Partners (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.
D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.
E. On matters on which Limited Partners are entitled to vote,
each Limited Partner shall have a vote equal to the number of Partnership Units
held.
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 certified first class United States mail, nationally recognized overnight
delivery service or facsimile transmission to the Partner or Assignee at the
address set forth in Exhibit A or such other address as the Partners shall
notify the General Partner in writing.
Section 15.2. Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
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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 including the Persons set forth in Exhibit G, 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
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 or delay 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 any breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.8. Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such 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 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.
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Section 15.11. Limitation to Preserve REIT Status
To the extent that any amount paid or credited to the General
Partner or its officers, directors, employees or agents pursuant to Section 7.4
or 7.7 would constitute gross income to the General Partner for purposes of
Sections 856(c)(2) or 856(c)(3) of the Code (a "General Partner Payment") then,
notwithstanding any other provision of this Agreement, the amount of such
General Partner Payments for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of (a)
4.17% of the General Partner's total gross income (but not including
the amount of any General Partner Payments) for the fiscal year which
is described in subsections (A) through (H) of Section 856(c)(2) of the
Code over (b) the amount of gross income (within the meaning of Section
856(c)(2) of the Code) derived by the General Partner from sources
other than those described in subsections (A) through (H) of Section
856(c)(2) of the Code (but not including the amount of any General
Partner Payments); or
(ii) an amount equal to the excess, if any, of (a)
25% of the General Partner's total gross income (but not including the
amount of any General Partner Payments) for the fiscal year which is
described in subsections (A) through (I) of Section 856(c)(3) of the
Code over (b) the amount of gross income (within the meaning of Section
856(c)(3) of the Code) derived by the General Partner from sources
other than those described in subsections (A) through (I) of Section
856(c)(3) of the Code (but not including the amount of any General
Partner Payments);
provided, however, that General Partner Payments in excess of the amounts set
forth in subparagraphs (i) and (ii) above may be made if the General Partner, as
a condition precedent, obtains an opinion of tax counsel that the receipt of
such excess amounts would not adversely affect the General Partner's ability to
qualify as a REIT. To the extent General Partner Payments may not be made in a
year due to the foregoing limitations, such General Partner Payments shall carry
over and be treated as arising in the following year; provided, however, that
such amounts shall not carry over for more than five years, and if not paid
within such five year period, shall expire; provided, further, that (a) as
General Partner Payments are made, such payments shall be applied first to carry
over amounts outstanding, if any and (b) with respect to carry over amounts for
more than one Partnership Year, such payments shall be applied to the earliest
Partnership Year first.
Section 15.12. Entire Agreement
This Agreement (together with the agreements listed on Exhibit
I hereto as to rights and obligations in respect of the Units held by the
Limited Partners who are parties thereto, or their permitted transferees)
contains the entire understanding and agreement among the Partners with respect
to the subject matter hereof and supersedes any other prior written or oral
understandings or agreements among them with respect thereto.
Section 15.13. No Rights as Stockholders
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Nothing contained in this Agreement shall be construed as
conferring upon the holders of Partnership Units any rights whatsoever as
stockholders of the General Partner, including without limitation any right to
receive dividends or other distributions made to stockholders of the General
Partner or to vote or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the General
Partner or any other matter.
ARTICLE 16.
SERIES A PREFERRED UNITS
Section 16.1. Designation and Number
A series of Partnership Units in the Partnership designated as
the 8 1/2% Series A Cumulative Redeemable Preferred Units (the "Series A
Preferred Units") is hereby established. The number of Series A Preferred Units
shall be 4,600,000.
Section 16.2 Ranking
The Series A Preferred Units shall, with respect to
distribution rights and rights upon voluntary or involuntary liquidation,
winding up or dissolution of the Partnership, rank (i) senior to the Common
Units and to all Partnership Units the terms of which provide that such
Partnership Units shall rank junior to the Series A Preferred Units; (ii) on a
parity with the Series B Preferred Units and all other Parity Preferred Units;
and (iii) junior to all Partnership Units which rank senior to the Series A
Preferred Units.
Section 16.3. Distributions
A. Payment of Distributions. Subject to the rights of holders
of Parity Preferred Units (including Series B Preferred Units) as to the payment
of distributions, pursuant to Section 5.1 and Section 17.3.A hereof, the General
Partner, as holder of the Series A Preferred Units, will be entitled to receive,
when, as and if declared by the Partnership acting through the General Partner,
out of Available Cash, cumulative preferential cash distributions in an amount
equal to the Series A Priority Return. Such distributions will be payable (A)
quarterly in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of a redemption of Series A Preferred Units, on
the redemption date (each a "Series A Preferred Unit Distribution Payment
Date"), commencing on the first of such payment dates to occur following their
original date of issuance. If any date on which distributions are to be made on
the Series A Preferred Units 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 any 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 such date.
B. No Distributions in Contravention of Agreements. No
distribution on the Series A Preferred Units shall be authorized by the General
Partner or made or set apart for payment by the Partnership at such time as the
terms and provisions of any agreement of the Partnership or the General Partner,
including any agreement relating to indebtedness, prohibits such declaration,
payment or setting apart for payment or provides that such declaration,
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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. Priority as to Distributions. (i) Except to the extent set
forth in Section 16.3.C(ii), so long as any Series A Preferred Units are
outstanding, no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class or
series of Partnership Interest represented by Junior Units, nor shall any Junior
Units or Parity Preferred Units (including the Series B Preferred Units) be
redeemed, purchased or otherwise acquired for any consideration (or any monies
be paid to or made available for a sinking fund for the redemption of any such
Junior Units or Parity Preferred Units) by the Partnership (except by conversion
into or exchange for other Junior Units or Parity Preferred Units) unless, in
each case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series A Preferred Units for all past
distribution periods and the current distribution period. The foregoing sentence
will not prohibit (a) distributions payable solely in Junior Units, (b) the
exchange of Junior Units or Parity Preferred Units (including the Series B
Preferred Units) into Partnership Interests of the Partnership ranking junior to
the Series A Preferred Units as to distributions, or (c) the redemption of
Partnership Interests corresponding to Series A Preferred Shares, Parity
Preferred Stock (including Series B Preferred Shares) with respect to
distributions or Junior Stock to be purchased by the General Partner pursuant to
the Charter to preserve the General Partner's status as a real estate investment
trust, provided that such redemption shall be upon the same terms as the
corresponding stock purchase pursuant to the Charter.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series A
Preferred Units and any other Parity Preferred Units (including the Series B
Preferred Units), all distributions authorized and declared on the Series A
Preferred Units and all classes or series of outstanding Parity Preferred Units
(including the Series B Preferred Units) shall be authorized and declared pro
rata so that the amount of distributions authorized and declared per Series A
Preferred Unit and such other classes or series of Parity Preferred Units shall
in all cases bear to each other the same ratio that accrued distributions per
Series A Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series A Preferred Units which may be in
arrears.
D. No Further Rights. The General Partner, as holder of the
Series A Preferred Units, shall not be entitled to any distributions, whether
payable in cash, other property or otherwise, in excess of the full cumulative
distributions described herein. Any distribution payment made on the Series A
Preferred Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to such Series A Preferred Units which remain
payable.
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Section 16.4. Liquidation Proceeds
A. Upon voluntary or involuntary liquidation, dissolution or
winding-up of the Partnership, distributions on the Series A Preferred Units
shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
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 be given by the General Partner
pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the General Partner, as
holder of the Series A Preferred Units, will have no right or claim to any of
the remaining assets of the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None
of a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.
Section 16.5. Redemption
A. Redemption. The Series A Preferred Units may not be
redeemed prior to July 27, 2003. If, on or after such date, the General Partner
elects to redeem any of the Series A Preferred Shares, the Partnership shall, on
the date set for redemption of such Series A Preferred Shares, redeem the number
of Series A Preferred Units equal to the number of Series A Preferred Shares for
which the General Partner has given notice of redemption pursuant to Section 5
of Article Third of the Series A Articles Supplementary, at a redemption price,
payable in cash, equal to the product of (i) the number of Series A Preferred
Units being redeemed, and (ii) the sum of $25 and the Preferred Distribution
Shortfall per Series A Preferred Unit, if any.
B. Limitation on Redemption. The Redemption Price of the
Series A Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as an additional capital contribution, or out
of the sale of limited partner interests in the Partnership and from no other
source. For purposes of the preceding sentence, "capital stock" means any equity
securities (including Common Stock and Preferred Stock (as such terms are
defined in the Charter)), depository shares, interests, 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.
C. Payment of Accumulated Distributions. Immediately prior to
any redemption of Series A Preferred Units, the Partnership shall pay, in cash,
any accumulated and unpaid distributions on the Series A Preferred Units to be
redeemed through the redemption date. Except as provided above, the Partnership
will make no payment or allowance for unpaid
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distributions, whether or not in arrears, on Series A Preferred Units for which
a notice of redemption has been given.
D. Procedures for Redemption. The following provisions set
forth the procedures for Redemption:
(i) Notice of redemption will be given by the General Partner
to the Partnership concurrently with the notice of the General Partner sent to
the holders of its Series A Preferred Shares in connection with such redemption.
Such notice shall state: (A) the redemption date; (B) the redemption price; (C)
the number of Series A Preferred Units to be redeemed; (D) the place or places
where the Series A Preferred Units are to be surrendered for payment of the
redemption price; and (E) that distributions on the Series A Preferred Units to
be redeemed will cease to accumulate on such redemption date. If less than all
of the Series A Preferred Units are to be redeemed, the notice shall also
specify the number of Series A Preferred Units to be redeemed.
(ii) On or after the redemption date, the General Partner
shall present and surrender the certificates, if any, representing the Series A
Preferred Units to the Partnership at the place designated in the notice of
redemption and thereupon the redemption price of such Units (including all
accumulated and unpaid distributions up to the redemption date) shall be paid to
the General Partner and each surrendered Unit certificate, if any, shall be
canceled. If fewer than all the Units represented by any such certificate
representing Series A Preferred Units are to be redeemed, a new certificate
shall be issued representing the unredeemed shares.
(iii) From and after the redemption date (unless the
Partnership defaults in payment of the redemption price), all distributions on
the Series A Preferred Units designated for redemption in such notice shall
cease to accumulate and all rights of the General Partner, except the right to
receive the redemption price thereof (including all accumulated and unpaid
distributions up to the redemption date), shall cease and terminate, and such
Units shall not be deemed to be outstanding for any purpose whatsoever. At its
election, the Partnership, prior to a redemption date, may irrevocably deposit
the redemption price (including accumulated and unpaid distributions to the
redemption date) of the Series A Preferred Units so called for redemption in
trust for the General Partner with a bank or trust company, in which case the
redemption notice to General Partner shall (A) state the date of such deposit,
(B) specify the office of such bank or trust company as the place of payment of
the redemption price and (C) require the General Partner to surrender the
certificates, if any, representing such Series A Preferred Units at such place
on or about the date fixed in such redemption notice (which may not be later
than the redemption date) against payment of the redemption price (including all
accumulated and unpaid distributions to the redemption date). Any monies so
deposited which remain unclaimed by the General Partner at the end of two years
after the redemption date shall be returned by such bank or trust company to the
Partnership.
E. No Further Rights. Any Series A Preferred Units that shall
at any time have been redeemed shall, after such redemption, have the status of
authorized but unissued Preferred Units, without designation as to series until
such shares are once more designated as part of a particular series by the
General Partner.
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Section 16.6. Voting Rights
The General Partner shall not have any voting or consent
rights in respect of its partnership interest represented by the Series A
Preferred Units.
Section 16.7. Transfer Restrictions
The Series A Preferred Units shall not be transferable.
Section 16.8. No Conversion Rights
The Series A Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.
Section 16.9. No Sinking Fund
No sinking fund shall be established for the retirement or
redemption of Series A Preferred Units.
ARTICLE 17.
SERIES B PREFERRED UNITS
Section 17.1. Designation and Number
A series of Partnership Units in the Partnership designated as
the 8 5/8 Series B Cumulative Redeemable Preferred Units (the "Series B
Preferred Units") is hereby established. The number of Series B Preferred Units
shall be 1,300,000.
Section 17.2. Ranking
The Series B Preferred Units shall, with respect to
distribution rights and rights upon voluntary or involuntary liquidation,
winding up or dissolution of the Partnership, rank (i) senior to the Common
Units and to all Partnership Units the terms of which provide that such
Partnership Units shall rank junior to the Series B Preferred Units; (ii) on a
parity with the Series A Preferred Units and all other Parity Preferred Units;
and (iii) junior to all Partnership Units which rank senior to the Series B
Preferred Units.
Section 17.3. Distributions
A. Payment of Distributions. Subject to the rights of holders
of Parity Preferred Units (including the Series A Preferred Units) as to the
payment of distributions, pursuant to Section 5.1 and Section 16.3.A hereof,
holders of Series B Preferred Units will be entitled to receive, when, as and if
declared by the Partnership acting through the General Partner, out of Available
Cash, cumulative preferential cash distributions in an amount equal to the
Series B Priority Return. Such distributions will be payable (A) quarterly in
arrears, on the 15th day of January, April, July and October of each year and
(B) in the event of (i) an exchange
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of Series B Preferred Units into Series B Preferred Shares, or (ii) a redemption
of Series B Preferred Units, on the exchange date or redemption date, as
applicable (each a "Series B Preferred Unit Distribution Payment Date"),
commencing on the first of such payment dates to occur following their original
date of issuance. If any date on which distributions are to be made on the
Series B Preferred Units 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 any 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 such date. Distributions
on the Series B Preferred Units will be made to the holders of record of the
Series B Preferred Units on the relevant record dates, which will be fifteen
(15) days prior to the relevant Preferred Unit Distribution Payment Date (the
"Series B Preferred Unit Partnership Record Date").
B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series B Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series B Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.
C. Priority as to Distributions. (i) So long as any Series B
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units (including the Series A Preferred
Units) be redeemed, purchased or otherwise acquired for any consideration (or
any monies be paid to or made available for a sinking fund for the redemption of
any such Junior Units or Parity Preferred Units) by the Partnership (except by
conversion into or exchange for other Junior Units or Parity Preferred Units)
unless, in each case, full cumulative distributions have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for such payment on the Series B Preferred Units
and all classes and series of outstanding Parity Preferred Units for all
distribution periods. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the exchange of Junior Units or Parity
Preferred Units (including the Series A Preferred Units) into Partnership
Interests of the Partnership ranking junior to the Series B Preferred Units as
to distributions, or (c) the redemption of Partnership Interests corresponding
to Series B Preferred Shares, Parity Preferred Stock (including Series A
Preferred Shares) with respect to distributions or Junior Stock to be purchased
by the General Partner pursuant to the Charter to preserve the General Partner's
status as a real estate investment trust, provided that such redemption shall be
upon the same terms as the corresponding stock purchase pursuant to the Charter.
(ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series B
Preferred Units and any other Parity Preferred Units (including the Series A
Preferred Units), all distributions authorized and declared on the Series B
Preferred Units and all classes or series of outstanding Parity Preferred Units
(including the Series A Preferred Units) shall be authorized and declared pro
rata so that the
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amount of distributions authorized and declared per Series B Preferred Unit and
such other classes or series of Parity Preferred Units shall in all cases bear
to each other the same ratio that accrued distributions per Series B Preferred
Unit and such other classes or series of Parity Preferred Units (which shall not
include any accumulation in respect of unpaid distributions for prior
distribution periods if such class or series of Parity Preferred Units do not
have cumulative distribution rights) bear to each other. No interest, or sum of
money in lieu of interest, shall be payable in respect of any distributions or
payments on Series B Preferred Units which may be in arrears.
(iii) Notwithstanding anything to the contrary set forth
herein, distributions on Partnership Interests held by either (a) the General
Partner or (b) any other holder of Partnership Interest in the Partnership, in
each case ranking junior to or on parity with the Series B Preferred Units may
be made, without preserving the priority of distributions described in Sections
17.3.C(i) and (ii), but only to the extent such distributions are required to
preserve the real estate investment trust status of the General Partner and in
the case of any holder other than the General Partner only to the extent
required by the Partnership Agreement.
D. No Further Rights. Holders of Series B Preferred Units
shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 17.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series B
Preferred Units shall be made in accordance with Article 13 of this Agreement.
B. Notice. Written notice of any such voluntary or involuntary
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 be given by the General Partner
pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series B
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions. None
of a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.
Section 17.5. Redemption
A. Redemption. The Series B Preferred Units may not be
redeemed prior to November 12, 2003. On or after such date, the Partnership
shall have the right to redeem the Series B Preferred Units, in whole or in
part, at any time or from time to time, upon not less than
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30 nor more than 60 days' written notice, 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 17.5 will be permitted if the Redemption Price does not equal or
exceed the original Capital Contribution of such holder plus the cumulative
Priority Return to the redemption date to the extent not previously distributed.
If fewer than all of the outstanding Series B Preferred Units are to be
redeemed, the Series B Preferred Units to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional units).
B. Limitation on Redemption. (i) The Redemption Price of the
Series B Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as an additional capital contribution, or out
of the sale of limited partner interests in the Partnership and from no other
source. For purposes of the preceding sentence, "capital stock" means any equity
securities (including Common Stock and Preferred Stock (as such terms are
defined in the Charter)), depository shares, interests, 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) The Partnership may not redeem fewer than all of the
outstanding Series B Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series B Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
C. Procedures for Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, 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 at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series B Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (a) the redemption
date, (b) the Redemption Price, (c) the aggregate number of Series B Preferred
Units to be redeemed and if fewer than all of the outstanding Series B Preferred
Units are to be redeemed, the number of Series B Preferred Units to be redeemed
held by such holder, which number 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 to be
redeemed, (d) the place or places where such Series B Preferred Units are to be
surrendered for payment of the Redemption Price, (e) that distributions on the
Series B Preferred Units to be redeemed will cease to accumulate on such
redemption date and (f) that payment of the Redemption Price will be made upon
presentation and surrender of such Series B Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series B Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on
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<PAGE> 85
the redemption date, the Partnership will deposit irrevocably in trust for the
benefit of the Series B Preferred Units being redeemed funds sufficient to pay
the applicable Redemption Price and will give irrevocable instructions and
authority to pay such Redemption Price to the holders of the Series B Preferred
Units upon surrender of the Series B Preferred Units by such holders at the
place designated in the notice of redemption. On and after the date of
redemption, distributions will cease to accumulate on the Series B Preferred
Units or portions thereof called for redemption, unless the Partnership defaults
in the payment thereof. If any date fixed for redemption of Series B Preferred
Units is not a Business Day, then payment of the Redemption Price payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day falls in the next calendar year, such payment will be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the
Redemption Price is improperly withheld or refused and not paid by the
Partnership, distributions on such Series B Preferred Units will continue to
accumulate from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable Redemption Price.
Section 17.6. Voting Rights
A. General. Holders of the Series B Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.
B. Certain Voting Rights. So long as any Series B Preferred
Units remains 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 (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series B Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such Partnership Interests, (ii) authorize or create,
or increase the authorized or issued amount of any Parity Preferred Units or
reclassify any Partnership Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than the General Partner to the extent the issuance of such
interests was to allow the General Partner to issue corresponding preferred
stock to persons who are not affiliates of the Partnership or (iii) either
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or amend, alter
or repeal the provisions of the Partnership Agreement (including, without
limitation, this Article 17), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges 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 (iii) above, so long as (a) the
Partnership is the surviving entity and the Series B Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the
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<PAGE> 86
resulting, surviving or transferee entity is a partnership, limited liability
company or other pass-through entity organized under the laws of any state and
substitutes the Series B Preferred Units for other interests in such entity
having substantially the same terms and rights as the Series B Preferred Units,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series B Preferred Units; and provided
further, that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests
represented by Junior Units or Parity Preferred Units are not issued to an
affiliate of the Partnership, other than the General Partner to the extent the
issuance of such interests was to allow the General Partner to issue
corresponding preferred stock to persons who are not affiliates of the
Partnership, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
Section 17.7. Transfer Restrictions
The Series B Preferred Units shall be subject to the
provisions of Article 11 hereof; provided, however, that the Series B Preferred
Units shall not be subject to the right of first refusal of the General Partner
as described in Section 11.3 hereof. No transfer of Series B Preferred Units, or
other action by the holder or holders of such Units, is permitted, without the
consent of the General Partner which consent may be given or withheld in its
sole and absolute discretion, if such transfer or other action would result in
more than four partners holding all outstanding Series B Preferred Units within
the meaning of Treasury Regulation Section 1.7704-1(h)(3)(i); provided, however,
that the General Partner's consent may not be unreasonably withheld if (a) such
transfer or other action would not result in more than ten partners holding all
outstanding Series B Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(3)(i) and (b) the General Partner is relying on a provision
other than Treasury Regulation Section 1.7704-1(h) to avoid classification of
Operating Partnership as a "publicly traded partnership" within the meaning of
Code Section 7704 (a "PTP"). In addition, no transfer may be made to any person
if such transfer would cause the exchange of the Series B Preferred Units for
Series B Preferred Shares, as provided herein, to be required to be registered
under the Securities Act of 1933, as amended, or any state securities laws. If
(i) 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, (ii) Contributor delivers to the General Partner
an opinion of independent counsel to the effect that there is a substantial risk
that Contributor's interest in the Partnership represents or will represent more
than 19.5% (the "19.5% Limit") of the total profits or capital interests in the
Partnership (determined in accordance with Regulations Section 1.731-2(e)(4)),
and (iii) the General Partner agrees with the conclusions referred to in clauses
(i) and (ii) of this sentence, such agreement not to be unreasonably withheld,
then Contributor shall, subject to the above limitations, be permitted to
transfer so much of its Series B Preferred Units as may be appropriate to
alleviate the risk of not satisfying the 19.5% Limit to the trust described in
Exhibit J, with the Contributor having the rights set forth in such Exhibit.
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Section 17.8. Exchange Rights
A. Right to Exchange. (i) Series B Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after November 12, 2008, at the option of 51% of the holders of
all outstanding Series B Preferred Units, for authorized but previously unissued
Series B Preferred Shares at an exchange rate of one REIT Series B Preferred
Share from the General Partner for one Series B Preferred Unit, subject to
adjustment as described below (the "Exchange Price"), 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 51% of the holders
of all outstanding Series B Preferred Units for Series B Preferred Shares if (y)
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 Preferred Unit Distribution Payment Date if
at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series B Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of 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 PTP 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 Series B Preferred Shares, in whole but not
in part unless expressly otherwise provided herein, at the option of 51% of the
holders of all outstanding Series B Preferred Units after November 12, 2001 and
prior to November 12, 2008 if such holders of a Series B Preferred Units shall
deliver to the General Partner either (i) a private ruling letter addressed to
such holder of Series B Preferred Units or (ii) an opinion of independent
counsel reasonably acceptable to the General Partner based on the enactment of
temporary or final Treasury Regulations or the publication of a Revenue Ruling,
in either case to the effect that an 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 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 Series B Preferred Shares (but only if the
exchange in whole may be accomplished consistently with the ownership
limitations set forth under the Series B Articles Supplementary (as defined
herein), taking into account exceptions thereto) if (1) 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, (2)
Contributor delivers to the General Partner an opinion of independent counsel to
the effect that there is a substantial risk that its interest in the Partnership
does not or will not satisfy the 19.5% Limit and (3) the General Partner agrees
with the conclusions referred to in clauses (1) and (2) of this sentence, such
agreement not to be unreasonably withheld; provided, however, that if, as a
result
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<PAGE> 88
of such conclusion, Contributor's interest in the Partnership is reduced
pursuant to the last sentence of Section 17.7 hereof (which procedure shall be
available to Contributor to the exclusion of the procedure under this sentence
for so long as, on a cumulative basis, sales of 10% or fewer of the Series B
Preferred Units originally acquired by Contributor would in the opinion of the
above-referenced counsel reduce the risk that Contributor's interest in the
Partnership would not satisfy the 19.5% Limit to less than a substantial risk,
and thereafter shall be a permitted alternative to the procedure pursuant to
this sentence) or the risk of Contributor not satisfying the 19.5% Limit
otherwise is reduced below a substantial risk, then an exchange in whole under
this sentence shall not be permitted unless and until a change in facts occurs
and a further determination by Contributor is made under this sentence.
(ii) Notwithstanding anything to the contrary set forth in
Section 17.8.A(i), if an Exchange Notice (as defined herein) has been delivered
to the General Partner, then the General Partner may, at its 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 original Capital Contribution per
Series B Preferred Unit and all accrued and unpaid distributions thereon to the
date of redemption. If the General Partner elects 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.
(iii) In the event an exchange of all Series B Preferred Units
pursuant to Section 17.8.A would violate the provisions on ownership limitation
of the General Partner set forth in Section 7 of the Articles Supplementary to
the Charter with respect to Series B Preferred Shares (the "Series B Articles
Supplementary"), each holder of Series B Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 17.8.B, a number of Series B
Preferred Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in such Section 7 of the Series B
Articles Supplementary, with respect to such holder, 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 original Capital Contribution per Excess
Unit, plus any accrued and unpaid distributions thereon to the date of
redemption subject to any restriction thereon contained in any debt instrument
or agreement of the Partnership. In the event an exchange would result in Excess
Units, as a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by the General
Partner relating to (i) the widely held nature of the interests in such holder,
sufficient to assure the General Partner that the holder's ownership of stock of
the General Partner (without regard to the limits described above) will not
cause any individual to own in excess of 9.0% of the stock of the General
Partner; and (ii) to the extent such holder can so represent and covenant
without obtaining information from its owners, the holder's ownership of tenants
of the Partnership and its affiliates. For purposes of determining the number of
Excess Units under this Section 17.8.A(iii), the "Beneficial Ownership Limit"
and "Constructive Ownership Limit" set forth in the Series B Articles
Supplementary shall be deemed to be 9.0%. To the extent the General Partner
would not be able to pay the cash set forth above in exchange for the Excess
Units, and to the extent consistent with the Charter, the General Partner agrees
that it will grant
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to the holders of the Series B Preferred Units exceptions to the Beneficial
Ownership Limit and Constructive Ownership Limit set forth in the Series B
Articles Supplementary sufficient to allow such holders to exchange all of their
Series B Preferred Units for REIT Series B Preferred Stock, provided such
holders furnish to the General Partner representations acceptable to the General
Partner in its sole and absolute discretion which assure the General Partner
that such exceptions will not jeopardize the General Partner's tax status as a
REIT for purposes of federal and applicable state law. Notwithstanding any
provision of this Agreement to the contrary, no Series B Limited Partner shall
be entitled to effect an exchange of Series B Preferred Units for Series B
Preferred Shares to the extent that ownership or right to acquire such shares
would cause the Partner or any other Person or, in the opinion of counsel
selected by the General Partner, may cause the Partner or any other Person, to
violate the restrictions on ownership and transfer of Series B Preferred Shares
set forth in the Charter. To the extent any such attempted exchange for Series B
Preferred Shares would be in violation of the previous sentence, it shall be
void ab initio and such Series B Limited Partner shall not acquire any rights or
economic interest in the Series B Preferred Shares otherwise issuable upon such
exchange.
(iv) The redemption of Series B Preferred Units described in
Section 17.8.A(ii) and (iii) shall be subject to the provisions of Section
17.5.B(i) and Section 17.5.C(ii); provided, however, that the term "Redemption
Price" in such Sections 17.5.B(i) and 17.5.C(ii) shall be read to mean the
original Capital Contribution per Series B Preferred Unit being redeemed as set
forth on Exhibit A plus all accrued and unpaid distributions to the redemption
date.
B. Procedure for Exchange and/or Redemption of Series B
Preferred Units.
(i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Exchange Notice") delivered to the General Partner by the
Partners representing 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 17.8.A.(i) hereof) by (a) fax and (b) by certified mail postage prepaid.
The General Partner may effect any exchange of Series B Preferred Units, or
exercise its option to cause the Partnership to redeem any portion of the Series
B Preferred Units for cash pursuant to Section 17.8.A(ii) or redeem Excess Units
pursuant to Section 17.8.A(iii), by delivering to each holder of record of
Series B Preferred Units, within ten (10) Business Days following receipt of the
Exchange Notice, (a) if the General Partner elects to cause the Partnership to
acquire any of the Series B Preferred Units then outstanding, (1) certificates
representing the Series B Preferred Shares being issued in exchange for the
Series B Preferred Units of such holder being exchanged and (2) a written notice
(a "Redemption Notice") stating (A) the redemption date, which may be the date
of such Redemption Notice or any other date which is not later than sixty (60)
days following the receipt of the Exchange Notice, (B) the redemption price, (C)
the place or places where the Series B Preferred Units are to be surrendered and
(D) that distributions on the Series B Preferred Units will cease to accrue on
such redemption date, or (b) 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 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).
Holders of Series B
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Preferred Units shall deliver any canceled certificates representing Series B
Preferred Units which have been exchanged or redeemed to the office of General
Partner (which currently is located at 505 Montgomery Street, San Francisco,
California 94111) within ten (10) Business Days of the exchange or redemption
with respect thereto. Notwithstanding anything to the contrary contained herein,
any and all Series B Preferred Units to be exchanged for REIT Series B Preferred
Stock pursuant to this Section 17.8 shall be so exchanged in a single
transaction at one time. As a condition to exchange, the General Partner may
require the holders of Series B Preferred Units to make such representations as
may be reasonably necessary for the General Partner to establish that the
issuance of Series B Preferred Shares pursuant to the exchange shall not be
required to be registered under the Securities Act or any state securities laws.
Any Series B Preferred Shares issued pursuant to this Section 17.8 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 Charter, the Bylaws of the General Partner, the Securities
Act and relevant state securities or blue sky laws.
The certificates representing the 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"), AND STATE SECURITIES LAWS 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 STATE SECURITIES LAWS AND THE RULES AND REGULATIONS
THEREUNDER.
(ii) In the event of an exchange of Series B Preferred Units
for 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 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 as the holder of such REIT Series B Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series B Preferred Unit that was validly exchanged for
Series B Preferred Shares pursuant to this section (other than the General
Partner holding such Series B Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such holder,
after exchange, is entitled to receive a distribution out of Available Cash with
respect to the Series B Preferred Shares for which such Series B Preferred Unit
was exchanged or redeemed. Further for purposes of the
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<PAGE> 91
foregoing, in the event of an exchange of Series B Preferred Units for Series B
Preferred Shares, if the accrued and unpaid distributions per Series B Preferred
Unit is not the same for each Series B Preferred Unit, the accrued and unpaid
distributions per Series B Preferred Unit for each such Series B Preferred Unit
shall be equal to the greatest amount of such accrued and unpaid distributions
per Series B Preferred Unit on any such unit.
(iii) Fractional Series B Preferred Shares are not to be
issued upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series B Preferred Shares on
the day prior to the exchange date as determined in good faith by the Board of
Directors of the General Partner.
C. Adjustment of Exchange Price. In case the General Partner
shall be a party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of the General Partner's capital stock or sale of all or substantially all
of the General Partner's assets), in each case as a result of which the 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 Series B Preferred Shares or
fraction thereof into which one Series B Preferred Unit was exchangeable
immediately prior to such transaction. The General Partner may not become a
party to any such transaction unless the terms thereof are consistent with the
foregoing.
Section 17.9. No Conversion Rights
The Series B Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.
Section 17.10. No Sinking Fund
No sinking fund shall be established for the retirement or
redemption of Series B Preferred Units.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
AMB PROPERTY CORPORATION,
a Maryland corporation
By: /s/ JOHN T. ROBERTS
--------------------------------
John T. Roberts
Vice President and Director of
Capital Markets
LIMITED PARTNERS:
AMB PROPERTY CORPORATION,
as attorney-in-fact for each of the
Limited Partners
By: /s/ JOHN T. ROBERTS
--------------------------------
John T. Roberts
Vice President and Director of
Capital Markets
S-1
<PAGE> 93
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
I. COMMON UNITS
<TABLE>
<CAPTION>
Agreed Value
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
------------ ----------- -------------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
GENERAL PARTNER:
AMB Property Corporation (a) 11/26/97 $73,798,710 $1,693,339,826 $1,767,138,536 85,645,102 95.06305%
LIMITED PARTNERS:
David Brown 11/26/97 $0 $1,150,359 $1,150,359 54,779 0.06080%
Daniel Sarhad 11/26/97 $0 $6,174 $6,174 294 0.00033%
Craig Duncan 11/26/97 $0 $216,447 $216,447 10,307 0.01144%
GP Met Phase One 95, Ltd. 11/26/97 $0 $1,774,164 $1,774,164 84,484 0.09377%
GP Met 4/12, Ltd. 11/26/97 $0 $1,486,212 $1,486,212 70,772 0.07855%
Holbrook W. Goodale 54 Trust 11/26/97 $0 $1,118,754 $1,118,754 53,274 0.05913%
Charles R. Wichman 54 Trust 11/26/97 $0 $1,118,754 $1,118,754 53,274 0.05913%
Frederick B. Wichman 54 Trust 11/26/97 $0 $1,118,754 $1,118,754 53,274 0.05913%
Holbrook W. Goodale 57 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Charles R. Wichman 57 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Frederick B. Wichman 57 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Holbrook W. Goodale 58 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Charles R. Wichman 58 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Frederick B. Wichman 58 Trust 11/26/97 $0 $3,919,734 $3,919,734 186,654 0.20718%
Allmerica Financial Life 11/26/97 $0 $11,752,188 $11,752,188 559,628 0.62117%
Insurance and Annuity Company
The Gamble Family Investment 11/26/97 $0 $10,125,213 $10,125,213 482,153 0.53517%
Limited Partnership
Campanelli Investment Properties 03/30/98 $0 $12,435,871 $12,435,871 517,547 0.57446%
(b)
Campanelli Enterprises (c) 03/30/98 $0 $10,334,678 $10,334,678 438,110 0.48629%
Steve Liefschultz 03/31/98 $0 $1,990,798 $1,990,798 81,174 0.09010%
Stephen M. Vincent 03/31/98 $0 $634,825 $634,825 25,884 0.02873%
Alan Wilensky 03/31/98 $0 $266,073 $266,073 10,849 0.01204%
Craig Gagnon 03/31/98 $0 $806,404 $806,404 32,880 0.03650%
Seefried Properties, Inc. 06/04/98 $0 $61,250 $61,250 2,590 0.00287%
Monique Brouillet Seefried 06/04/98 $0 $660,275 $660,275 27,916 0.03099%
Robert S. Rakusin 06/04/98 $0 $319,725 $319,725 13,518 0.01500%
Gerald L. Daws 06/04/98 $0 $147,000 $147,000 6,215 0.00690%
Thomas Ellis 06/04/98 $0 $36,750 $36,750 1,554 0.00172%
James E. Hayes as trustee of the
James E. Hayes Living Trust
under Agreement dated 06/30/98 $0 $580,747 $580,747 23,801 0.02642%
August 22, 1995
Lawrence J. Hayes 06/30/98 $0 $580,747 $580,747 23,801 0.02642%
Lincoln Property Company No. 238, 09/24/98 $0 $8,320,955 $8,320,955 353,520 0.39239%
LP
Lincoln Property Company No. 287, 09/24/98 $0 $2,760,957 $2,760,957 117,300 0.13020%
LP
Lincoln Property Company No. 355, 09/24/98 $0 $739,600 $739,600 31,422 0.03488%
LP
Lincoln Property Company No. 440, 09/24/98 $0 $767,640 $767,640 32,614 0.03620%
LP
Lincoln Property Company No.1179, 09/24/98 $0 $3,883,230 $3,883,230 164,981 0.18312%
LP
----------- -------------- -------------- ---------- ----------
TOTAL COMMON UNITS $73,798,710 $1,792,052,774 $1,865,851,484 90,092,941 100.00000%
=========== ============== ============== ========== ==========
</TABLE>
(a) Excludes 229,411 of Sub OP and Long Gate LLC shares/units and preferred
partnership units.
(b) Includes 3,402 units reserved.
(c) Includes 10,836 units reserved.
A-1
<PAGE> 94
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
II. SERIES A PREFERRED UNITS
<TABLE>
<CAPTION>
Agreed Value
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- -------------------------------- ------------- -------------- ---------------- ------------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
GENERAL PARTNER:
AMB Property Corporation 7/27/98 $ 96,100,000 $0 $ 96,100,000 4,000,000 100.00000%
============== ================ =================== ============== ===========
TOTAL SERIES A PREFERRED $ 96,100,000 $0 $ 96,100,000 4,000,000 100.00000%
UNITS
============== ================ =================== ============== ===========
</TABLE>
II. SERIES B PREFERRED UNITS
<TABLE>
<CAPTION>
Agreed Value
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- --------------------------------- ------------ --------------- --------------- ------------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
LIMITED PARTNER:
Greene Street 1998 Exchange 11/12/98 $65,000,000 $0 $65,000,000 1,300,000 100.00000%
Fund, L.P.
=============== =============== =================== ============== ===========
TOTAL SERIES B PREFERRED $65,000,000 $0 $65,000,000 1,300,000 100.00000%
UNITS
=============== =============== =================== ============== ===========
</TABLE>
A-2
<PAGE> 95
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby [irrevocably] (i) exchanges
____________ Limited Partnership Units in AMB Property, L.P. in accordance with
the terms of the Limited Partnership Agreement of AMB Property, L.P. dated as of
_________________, as amended, and the rights of Redemption referred to therein,
(ii) surrenders such Limited Partnership Units and all right, title and interest
therein and (iii) directs that the cash (or, if applicable, REIT Shares)
deliverable upon Redemption or exchange be delivered to the address specified
below, and if applicable, that such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below.
Dated: ________________________
Name of Limited Partner:
____________________________________
(Signature of Limited Partner)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
____________________________________
Issue REIT Shares in the name of:
Please insert social security or identifying number:
Address (if different than above):
B-1
<PAGE> 96
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined
through the application of the constructive ownership rules of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules
provide the following:
a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or constructively, by
or for a partnership, limited liability company or estate is considered as owned
proportionately by its partners, members or beneficiaries;
c. an Ownership Interest that is owned, actually or constructively, by
or for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);
d. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;
e. an Ownership Interest that is owned, actually or constructively, by
or for a partner or member which actually or constructively owns a 25% or
greater capital interest or profits interest in a partnership or limited
liability company, or by or for a beneficiary of an estate or trust, shall be
considered as owned by the partnership, limited liability company, estate, or
trust (or, in the case of a grantor trust, the grantors);
f. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such corporation
shall be considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under
paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g) and (iv) for purposes of the above described rules, an S corporation shall
be treated as a partnership and any stockholder of the S corporation shall be
treated as a partner of such partnership except that this rule shall not apply
for purposes of determining whether stock in the S corporation is constructively
owned by any person.
i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.
C-1
<PAGE> 97
EXHIBIT D-1
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
AMB PROPERTY, L.P.
No. _______________ ____________ UNITS
AMB Property Corporation as the General Partner of AMB Property, L.P.,
a Delaware limited partnership (the "Operating Partnership"), hereby certifies
that is a Limited Partner of the Operating Partnership whose Partnership
Interests therein, as set forth in the Agreement of Limited Partnership of AMB
Property, L.P., dated as of ______________, 199_ (as it may be amended, modified
or supplemented from time to time in accordance with its terms, (the
"Partnership Agreement"), under which the Operating Partnership is existing and
as filed in the office of the Delaware [State Department of Assessments and
Taxation] (copies of which are on file at the Operating Partnership's principal
office at __________________________________________________, represent units of
limited partnership interest in the Operating Partnership (the "Partnership
Units").
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A COPY OF
WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED
IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE
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 IN EFFECT THEREUNDER.
DATED:_____________________, 199_.
AMB PROPERTY CORPORATION
General Partner of AMB
Property, L.P.
ATTEST:
By:_______________________________ By:_________________________________
D-1
<PAGE> 98
EXHIBIT D-2
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PERFORMANCE UNITS OF
AMB PROPERTY, L.P.
No. _______________ ____________ UNITS
AMB Property Corporation as the General Partner of AMB Property, L.P.,
a Delaware limited partnership (the "Operating Partnership"), hereby certifies
that is a Limited Partner of the Operating Partnership whose Partnership
Interests therein, as set forth in the Agreement of Limited Partnership of AMB
Property, L.P., dated as of ______________, 199_ (as it may be amended, modified
or supplemented from time to time in accordance with its terms, (the
"Partnership Agreement"), under which the Operating Partnership is existing and
as filed in the office of the Delaware [State Department of Assessments and
Taxation] (copies of which are on file at the Operating Partnership's principal
office at __________________________________________________, represent
performance units (as defined in the Partnership Agreement) of limited
partnership interest in the Operating Partnership (the "Performance Units").
THE PERFORMANCE UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A COPY OF
WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED
IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PERFORMANCE UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER OF THE PERFORMANCE UNITS REPRESENTED BY THIS CERTIFICATE
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 IN EFFECT THEREUNDER.
DATED:_____________________, 199_.
AMB PROPERTY CORPORATION
General Partner of AMB
Property, L.P.
ATTEST:
By:_______________________________ By:_________________________________
D-2
<PAGE> 99
EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
E-1
<PAGE> 100
EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY 25% LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
F-1
<PAGE> 101
EXHIBIT G
PERFORMANCE UNITS
Any Performance Units to be issued by the Partnership pursuant
to Section 4.3.F. shall be issued to the following Persons in the following
amounts:
1. The first 3,000,000 Performance Units to be issued shall be
issued 90% to the "Old PLPs" (as defined below) and 10% to the "New PLPs" (as
defined below).
2. Any Performance Units to be issued in excess of those set
forth in paragraph 1. above shall be issued 80% to the Old PLPs and 20% to the
New PLPs.
3. The Performance Units allocable to each group of PLPs
pursuant to paragraphs 1. and 2. above shall be allocated among the PLPs within
such group in accordance with each PLP's percentage interest as set forth in the
definitions below.
4. The receipt of Performance Units by a PLP is subject to the
following vesting requirements:
A. Any Person who is listed in the definition of Old
PLP or New PLP and who does not remain employed, by one or more of the
Partnership, the IMS or their affiliates, for at least one (1) year from the
closing of the initial public offering of the common stock of the General
Partner, other than Persons who cease to be so employed as a result of a
Permitted Reason, shall have their name removed from such definition and such
Person's percentage as set forth in such definition shall be transferred to the
other Persons listed in such definition in proportion to their immediately
preceding percentages.
B. Performance Units issued to a New PLP shall be
subject to a vesting requirement pursuant to which a
New PLP will have their ownership of Performance Units vest in 25% increments on
each anniversary of such issuance, beginning on the first such anniversary and
ending on the fourth such anniversary. In order for such portion of the
Performance Units to vest on an anniversary, the New PLP must continue to be
employed by one or more of the Partnership, the IMS or their affiliates on such
anniversary (the "Employment Requirement"). In the event a New PLP ceases to
meet the Employment Requirement, he or she shall immediately forfeit any
Performance Units which have not previously vested. Notwithstanding the
foregoing, (i) all Performance Units held by New PLPs meeting the Employment
Requirement at the effective time of a Termination Transaction shall vest at
such time; and (ii) the General Partner may, in its sole and absolute
discretion, cause the immediate vesting of some or all of the Performance Units
issued to one or more of the New PLPs.
C. Any Performance Units forfeited pursuant to
paragraph B. above shall be reissued by the Partnership to each of the Old PLPs
and New PLPs in proportion to the number of Performance Units originally issued
to each such PLP (including Performance Units then held by a New PLP which have
not yet vested). Any Performance Units which are reissued to a New PLP pursuant
to this paragraph 4.C. with respect to such New PLP's Performance Units which
have not yet vested (based on the percentage of such New PLP's Performance Units
that
G-1
<PAGE> 102
have not yet vested), shall be unvested Performance Units and shall vest or
be forfeited in accordance with or at the same time as the Performance Units
with respect to which such reissued Performance Units were acquired. Any other
Performance Units which are reissued to a PLP pursuant to this paragraph 4.C.
shall be fully vested upon such reissuance.
D. Units which have not vested may not be exchanged
or redeemed (including pursuant to Section 8.6), sold or otherwise disposed of
by a PLP.
E. If by January 31, 1999, 100% of the percentage
interests allocable to the New PLPs have not been allocated (i.e., a portion of
such percentage interests continues to be allocable to "TBD"), any such
unallocated percentage interests shall be reallocated on such date to the other
Persons listed in such definition in proportion to their immediately preceding
percentages.
Definitions
"Old PLPs" means the Persons set forth on Schedule G-1 attached hereto, with the
percentage interest so indicated, as adjusted pursuant to paragraph 4.A. above.
"New PLPs" means the Persons set forth on Schedule G-2 attached hereto, with the
percentage interest so indicated, as adjusted pursuant to paragraph 4.A. above.
G-2
<PAGE> 103
SCHEDULE G-1
OLD PLPS
<TABLE>
<CAPTION>
Name of Old PLP Percentage
- --------------- ----------
<S> <C>
Douglas D. Abbey 23.6537%
Luis A. Belmonte 2.8055%
T. Robert Burke 17.8504%
S. Davis Carniglia 4.7271%
John H. Diserens 5.9870%
Bruce H. Freedman 1.9607%
Jean Collier Hurley 2.4411%
Barbara J. Linn 4.2467%
Hamid R. Moghadam 29.4184%
Craig A. Severance 6.9094%
</TABLE>
G-1
<PAGE> 104
SCHEDULE G-2
NEW PLPS
<TABLE>
<CAPTION>
Name of New PLP Percentage
- --------------- ----------
<S> <C>
Lindsey Adams 2%
Mohammad Barzegar 4%
Steven Callaway 3%
Steven Campbell 2%
Michael Coke 4%
Martin Coyne 2%
Dave Doyno 2%
David Fries 8%
Kent Greenawalt 3%
Jane Harris 4%
Carlie Headapohl 2%
Tyler Higgins 4%
Steven Kimball 2%
John Meyer 3%
John R. Roberts 4%
John T. Roberts 4%
John Rossi 2%
Cynthia Sarver 2%
Michael Scandalios 2%
Christine Schadlich 3%
Gary Scheier 2%
Andrew Singer 3%
Gayle Starr 3%
William Steinberg 4%
K.C. Swartzel 4%
Celia Tanaka 2%
Janice Thacher 1.2%
TBD 18.8%
</TABLE>
G-1
<PAGE> 105
EXHIBIT H
SCHEDULE OF CERTAIN AGREEMENTS RELATING TO
PROPERTIES WITH RESTRICTIONS ON DISPOSITION
PURSUANT TO SECTION 7.3.F
1. Joint Venture Interest/Contribution Agreement, dated November 26, 1997,
by and among AMB Property, L.P., David Brown, Daniel Sarhad and Craig
Duncan.
2. Joint Venture Interest Exchange/Contribution Agreement, dated November
26, 1997, by and among AMB Property, L.P., GP Met Phase One 95, Ltd.
and GP Met 4/12, Ltd.
3. Agreement for Transfer of Realty and Assets, dated November 26, 1997,
by and among AMB Property, L.P. and Holbrook W. Goodale, Charles R.
Wichman and Frederick B. Wichman as Trustees for the Wichman Family
Trusts.
4. Contribution Agreement, dated November 26, 1997, between AMB Property,
L.P. and Linder Skokie Real Estate Corporation. (Allmerica Portfolio)
5. Agreement for Transfer of Realty and Assets, dated November 26, 1997,
by and among AMB Property, L.P., Launce E. Gamble and George F. Gamble.
6. Contribution Agreements, dated March 30, 1998, by and among AMB
Property, L.P. and the other parties named therein. (Campanelli
Portfolio)
7. Contribution Agreement, dated March 31, 1998, by and among AMB
Property, L.P., Steve Liefschultz, Stephen M. Vincent, Alan Wilensky
and Craig Gagnon.
8. Contribution Agreement, dated June 4, 1998 by and among AMB Property,
L.P. and the other parties named therein. (Southfield Portfolio)
9. Amended and Restated Contribution Agreement, dated as of August 6,
1998, by and among AMB Property, L.P., AMB Property Corporation and the
other parties named therein. (Willow Park Portfolio)
H-1
<PAGE> 106
EXHIBIT I
SCHEDULE OF CERTAIN AGREEMENTS CONTAINING
LIMITATIONS ON GENERAL PARTNERS GENERAL AUTHORITY
1. Contribution Agreements, dated March 30, 1998, by and among AMB
Property, L.P. and the other parties named therein. (Campanelli
Portfolio)
2. AMB Property, L.P., First Amendment to Amended and Restated Agreement
of Limited Partnership, dated as of March 30, 1998.
3. Contribution Agreement, dated March 31, 1998, by and among AMB
Property, L.P. and Steve Liefschultz, Stephen M. Vincent, Alan Wilensky
and Craig Gagnon.
4. AMB Property, L.P., Second Amendment to Amended and Restated Agreement
of Limited Partnership, dated as of March 31, 1998.
5. Contribution Agreement, dated June 4, 1998 by and among AMB Property,
L.P. and the other parties named therein. (Southfield Portfolio)
6. AMB Property, L.P. Third Amendment to Amended and Restated Agreement of
Limited Partnership, dated as of June 4, 1998.
7. Contribution Agreement, dated May 21, 1998, by and among AMB Property,
L.P. and the other parties named therein. (Alsip Industrial Portfolio)
8. AMB Property, L.P. Fourth Amendment to Amended and Restated Agreement
of Limited Partnership, dated as of June 30, 1998.
9. Amended and Restated Contribution Agreement dated as of August 6, 1998,
by and among AMB Property, L.P., AMB Property Corporation and the other
parties named therein. (Willow Park Portfolio)
10. AMB Property, L.P. First Amendment to Second Amended and Restated
Agreement of Limited Partnership, dated as of September 24, 1998.
I-1
<PAGE> 107
EXHIBIT J
RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT
(a) Definitions. for the purposes of this Exhibit J, the following
terms shall have the following meanings:
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to subsection
(c)(vi), each of which shall be an organization described in
Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Constructive Ownership" shall mean ownership of
Partnership Units by a Person who is or would be treated as an
owner of such Partnership Units either actually or
constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"Exempted Person" shall mean any Person exempted from
time to time by the General Partner in its sole and absolute
discretion.
"Market Price" shall mean the market price of the
Partnership Units on the relevant date as determined in good
faith by the General Partner; provided, however, if the
General Partner has outstanding shares of capital stock which
correspond to such Partnership Units, the Market Price of each
such Partnership Unit shall be equal to the Value of a share
of such capital stock, subject to adjustment if the right to
exchange such Partnership Units for such stock is other than
one-to-one.
"Ownership Limit" shall mean 24.9% of the capital or
profits interests of the Partnership.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust
(including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation
within the meaning of Section 509(a) of the Code, joint stock
company or other entity.
"Purported Beneficial Transferee" shall mean, with
respect to any purported Transfer (or other event) which
results in a transfer to a Trust, as provided in subsection
(b)(ii), the Purported Record Transferee, unless the Purported
Record Transferee would have acquired or owned Partnership
Units for another Person who is the beneficial transferee or
owner of such Partnership Units, in which case the Purported
Beneficial Transferee shall be such Person.
J-1
<PAGE> 108
"Purported Record Transferee" shall mean, with
respect to any purported Transfer (or other event) which
results in a transfer to a Trust, as provided in subsection
(b)(ii), the holder of the Partnership Units as set forth or
to be set forth in Exhibit A to the Partnership Agreement, and
any Assignee of such Partnership Units, if such Transfer or
ownership had been valid under subsection (b)(i).
"Restriction Termination Date" shall mean the first
day after the date hereof on which the General Partner
determines, in its sole and absolute discretion, that
compliance with subsection (b)(i) is no longer necessary or
advisable.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Partnership Units,
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of
Partnership Units or (ii) the sale, transfer, assignment or
other disposition of any securities (or rights convertible
into or exchangeable for Partnership Units), whether voluntary
or involuntary, whether such transfer has occurred of record
or beneficially or Constructively (including but not limited
to transfers of interests in other entities which results in
changes in Constructive Ownership of Partnership Units), and
whether such transfer has occurred by operation of law or
otherwise.
"Trust" shall mean each of the trusts provided for in
subsection (c).
"Trustee" shall mean any Person unaffiliated with the
Partnership, or a Purported Beneficial Transferee, or a
Purported Record Transferee, that is appointed by the
Partnership to serve as trustee of a Trust.
Capitalized terms used and not defined herein shall have the meanings ascribed
to them in the Third Amended and Restated Agreement of Limited Partnership of
AMB Property, L.P. (the "Partnership Agreement), as such agreement may be
amended from time to time. All references to "Section" refer to the Partnership
Agreement.
(b) Restriction on Ownership and Transfers.
(i) Prior to the Restriction Termination Date, no Person,
other than an Exempted Person, shall at any time Constructively Own Partnership
Units in excess of the Ownership Limit if the representations contained in
Section 3.4.D are not at such time true and correct.
(ii) If, prior to the Restriction Termination Date, any
Transfer or other event occurs that, if effective, would result in any Person
Constructively Owning Partnership Units in violation of subsection (b)(i), (1)
then that number of Partnership Units that otherwise would cause such Person to
violate subsection (b)(i) (rounded up to the nearest whole Partnership Unit)
shall be automatically transferred (provided such Transfer is not in violation
of the restrictions on transfer set forth in the Partnership Agreement, except
to the extent the General Partner waives such restrictions) to a Trust for the
benefit of a Charitable Beneficiary, as described in subsection (c),
J-2
<PAGE> 109
effective as of the close of business on the business day prior to the date of
such Transfer or other event, and such Purported Beneficial Transferee shall
thereafter have no rights in such Partnership Units or (2) if, for any reason,
the transfer to the Trust described in clause (1) of this sentence is not
automatically effective as provided therein to prevent any Person from
Constructively Owning Partnership Units in violation of subsection (b)(i), then
the Transfer of that number of Partnership Units that otherwise would cause any
Person to violate subsection (b)(i) shall be void ab initio, and the Purported
Beneficial Transferee shall have no rights in such Partnership Units.
(c) Transfers of Partnership Units in Trust.
(i) Upon any purported Transfer or other event described in
subsection (b)(ii), such Partnership Units shall be deemed to have been
transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that results in a
transfer to the Trust pursuant to subsection (b)(ii). The Trustee shall be
appointed by the Partnership and shall be a Person unaffiliated with the
Partnership, any Purported Beneficial Transferee, or any Purported Record
Transferee. Each Charitable Beneficiary shall be designated by the Partnership
as provided in subsection (c)(vi).
(ii) Partnership Units held by the Trustee shall be issued and
outstanding Partnership Units of the Partnership. The Purported Beneficial
Transferee or Purported Record Transferee shall have no rights in the
Partnership Units held by the Trustee. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of any
Partnership Units held in trust by the Trustee, shall have no rights to
distributions or allocations with respect to Partnership Units held in the Trust
and shall not possess any rights to vote or other rights attributable to the
Partnership Units held in the Trust.
(iii) The Trustee shall have all voting rights and rights to
distributions and allocations with respect to Partnership Units held in the
Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any distribution paid prior to the discovery by the
Partnership that Partnership Units have been transferred to the Trustee shall be
paid to the Trustee upon demand, and any distribution with respect to such
Partnership Units shall be paid when due to the Trustee. Any distributions so
paid over to the Trustee shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to the Partnership Units
held in the Trust and, subject to Delaware law, effective as of the date the
Partnership Units has been transferred to the Trustee, the Trustee shall have
the authority (at the Trustee's sole discretion) (i) to rescind as void any vote
cast by a Purported Record Transferee with respect to such Partnership Units
prior to the discovery by the Partnership that the Partnership Units has been
transferred to the Trustee and (ii) to recast such vote in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary;
provided, however, that if the Partnership has already taken irreversible
action, then the Trustee shall not have the authority to rescind and recast such
vote. Notwithstanding any other provision of this Exhibit J to the contrary,
until the Partnership has received notification that the Partnership Units have
been transferred into a Trust, the Partnership shall be entitled to rely on its
Partnership
J-3
<PAGE> 110
Unit transfer and other unitholder records for purposes of preparing Exhibit A
to the Partnership Agreement, lists of unitholders entitled to vote at meetings,
and otherwise conducting votes of Partners.
(iv) Within 20 days of receiving notice from the Partnership
that Partnership Units have been transferred to the Trust, the Trustee of the
Trust shall, in accordance with the terms of (and subject to the limitations
contained in) the Partnership Agreement, sell the Partnership Units held in the
Trust to a Person, designated by the Trustee, whose ownership of the Partnership
Units will not violate the ownership limitations set forth in subsection (b)(i).
Upon such sale, the interest of the Charitable Beneficiary in the Partnership
Units sold shall terminate and the Trustee shall distribute the net proceeds of
the sale to the Purported Record Transferee and to the Charitable Beneficiary as
provided in this subsection (c)(iv). The Purported Record Transferee shall
receive the lesser of (1) the price paid by the Purported Record Transferee for
the Partnership Units in the transaction that resulted in such transfer to the
Trust (or, if the event which resulted in the transfer to the Trust did not
involve a purchase of such Partnership Units at Market Price, the Market Price
of such Partnership Units on the day of the event which resulted in the transfer
of such Partnership Units to the Trust) and (2) the price per Partnership Unit
received by the Trustee (net of any commissions and other expenses of sale) from
the sale or other disposition of the Partnership Units held in the Trust. Any
net sales proceeds in excess of the amount payable to the Purported Record
Transferee shall be immediately paid to the Charitable Beneficiary together with
any distributions thereon. If, prior to the discovery by the Partnership that
Partnership Units have been transferred to the Trustee, such Partnership Units
are sold by a Purported Record Transferee then (i) such Partnership Units shall
be deemed to have been sold on behalf of the Trust and (ii) to the extent that
the Purported Record Transferee received an amount for such Partnership Units
that exceeds the amount that such Purported Record Transferee was entitled to
receive pursuant to this subsection (c)(iv), such excess shall be paid to the
Trustee upon demand. The expenses described in item (2) above shall include any
expenses of administering the Trust, any transfer of Partnership Units thereto
or disposition of Partnership Units thereby, which shall be allocated equitably
among the Partnership Units which are transferred to the Trust.
(v) Partnership Units transferred to the Trustee shall be
deemed to have been offered for sale to the Partnership, or its designee, at a
price per Partnership Unit equal to the lesser of (i) the price paid by the
Purported Record Transferee for the Partnership Units in the transaction that
resulted in such transfer to the Trust (or, if the event which resulted in the
transfer to the Trust did not involve a purchase of such Partnership Units at
Market Price, the Market Price of such Partnership Units on the day of the event
which resulted in the transfer of such Partnership Units to the Trust) and (ii)
the Market Price on the date the Partnership, or its designee, accepts such
offer. The Partnership shall have the right to accept such offer until the
Trustee has sold the Partnership Units held in the Trust pursuant to subsection
(c)(iv). Upon such a sale to the Partnership, the interest of the Charitable
Beneficiary in the Partnership Units sold shall terminate and the Trustee shall
distribute the net proceeds of the sale to the Purported Record Transferee and
any distributions held by the Trustee with respect to such Partnership Units
shall thereupon be paid to the Charitable Beneficiary.
(vi) By written notice to the Trustee, the Partnership shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the
J-4
<PAGE> 111
Partnership Units held in the Trust would not violate the restrictions set forth
in subsection (b)(i) in the hands of such Charitable Beneficiary.
(d) Remedies For Breach. If the General Partner shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of subsection (b) or that a Person intends to acquire, has attempted
to acquire or may acquire beneficial ownership (determined without reference to
any rules of attribution) or Constructive Ownership of any Partnership Units of
the Partnership in violation of subsection (b), the General Partner shall take
such action as it deems advisable to refuse to give effect or to prevent such
Transfer, including, but not limited to, causing the Partnership to redeem
Partnership Units, refusing to give effect to such Transfer on the books of the
Partnership or instituting proceedings to enjoin such Transfer; provided,
however, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership) in violation of subsection (b)(i), shall
automatically result in the transfer to a Trust as described in subsection
(b)(ii).
(e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire or own Partnership Units in violation of subsection (b), or any
Person who is a Purported Beneficial Transferee such that an automatic transfer
to a Trust results under subsection (b)(ii), shall immediately give written
notice to the Partnership of such event and shall provide to the Partnership
such other information as the Partnership may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on such Person's
compliance with subsection (b)(i).
(f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Constructive Owner of
Partnership Units and each Person who is holding Partnership Units for a
beneficial owner or Constructive Owner shall provide to the Partnership such
information that the Partnership may request, in good faith, in order to
determine the Partnership's status as a partnership (as opposed to a
corporation) or the General Partner's status as a REIT for federal income tax
purposes.
(g) Remedies Not Limited. Nothing contained in this Exhibit J shall
limit the authority of the General Partner to take such other action as it deems
necessary or advisable to protect the Partnership and the interests of its
Partners by preservation of the Partnership's status as a partnership (as
opposed to a corporation) or the General Partner's status as a REIT for federal
income tax purposes.
(h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Exhibit J, including any definition contained in
subsection (a), the General Partner shall have the power to determine the
application of the provisions of this Exhibit J with respect to any situation
based on the facts known to it. In the event that a provision of this Exhibit J
requires an action by the General Partner and Exhibit J fails to provide
specific guidance with respect to such action, the General Partner shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Exhibit J. Absent a decision to the contrary by
the General Partner (which the General Partner may make in its sole and absolute
discretion), if a Person would have (but for the remedies set forth in
subsection (b)) acquired Constructive Ownership of Partnership Units in
violation of subsection (b)(i), such remedies (as applicable) shall apply first
to the Partnership Units which, but for such remedies, would have been actually
owned
J-5
<PAGE> 112
by such Person, and second to Partnership Units which, but for such remedies,
would have been Constructively Owned (but not actually owned) by such Person,
pro rata among the Persons who actually own such Partnership Units based upon
the relative number of the Partnership Units held by each such Person.
J-6
<PAGE> 1
EXHIBIT 10.2
--------------------------------------
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
--------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINED TERMS AND RULES OF CONSTRUCTION 2
Section 1.1. Definitions 2
ARTICLE 2. ORGANIZATIONAL MATTERS 15
Section 2.1. Organization 15
Section 2.2. Name 15
Section 2.3. Resident Agent; Principal Office 16
Section 2.4. Power of Attorney 16
Section 2.5. Term 17
Section 2.6. Number of Partners 17
ARTICLE 3. PURPOSE 18
Section 3.1. Purpose and Business 18
Section 3.2. Powers 18
Section 3.3. Partnership Only for Purposes Specified 18
Section 3.4. Representations and Warranties by the Parties 19
Section 3.5. Certain ERISA Matters 21
ARTICLE 4. CAPITAL CONTRIBUTIONS 21
Section 4.1. Capital Contributions of the Partners 21
Section 4.2. Loans 21
Section 4.3. Additional Funding and Capital Contributions 21
Section 4.4. No Preemptive Rights 22
Section 4.5. Other Contribution Provisions 22
ARTICLE 5. DISTRIBUTIONS 23
Section 5.1. Requirement and Characterization of Distributions 23
Section 5.2. Distributions in Kind 23
Section 5.3. Distributions Upon Liquidation 24
Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests 24
ARTICLE 6. ALLOCATIONS 24
Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss 24
Section 6.2. General Allocations 24
Section 6.3. Additional Allocation Provisions 26
Section 6.4. Tax Allocations 28
ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS 29
Section 7.1. Management 29
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 7.2. Certificate of Limited Partnership 33
Section 7.3. Restrictions on General Partner's Authority 33
Section 7.4. Reimbursement of the General Partner 35
Section 7.5. Outside Activities of the General Partner 36
Section 7.6. Employee Benefit Plans 36
Section 7.7. Indemnification 36
Section 7.8. Liability of the General Partner 38
Section 7.9. Other Matters Concerning the General Partner 39
Section 7.10. Title to Partnership Assets 40
Section 7.11. Reliance by Third Parties 40
ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS 41
Section 8.1. Limitation of Liability 41
Section 8.2. Management of Business 41
Section 8.3. Outside Activities of Limited Partners 41
Section 8.4. Return of Capital 42
Section 8.5. Rights of Limited Partners Relating to the Partnership 42
ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS 43
Section 9.1. Records and Accounting 43
Section 9.2. Fiscal Year 43
Section 9.3. Reports 43
Section 9.4. Nondisclosure of Certain Information 44
ARTICLE 10. TAX MATTERS 44
Section 10.1. Preparation of Tax Returns 44
Section 10.2. Tax Elections 44
Section 10.3. Tax Matters Partner 44
Section 10.4. Organizational Expenses 46
Section 10.5. Withholding 46
ARTICLE 11. TRANSFERS AND WITHDRAWALS 46
Section 11.1. Transfer 46
Section 11.2. Transfer of General Partner's and Common Limited Partner's Partnership
Interest 47
Section 11.3. Preferred Limited Partners' Rights to Transfer 47
Section 11.4. Substituted Limited Partners 49
Section 11.5. Assignees 49
Section 11.6. General Provisions 50
ARTICLE 12. ADMISSION OF PARTNERS 52
Section 12.1. Admission of Successor General Partner 52
Section 12.2. Admission of Additional Limited Partners 52
Section 12.3. Amendment of Agreement and Certificate of Limited Partnership 53
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 13. DISSOLUTION AND LIQUIDATION 53
Section 13.1. Dissolution 53
Section 13.2. Winding Up 54
Section 13.3. Compliance with Timing Requirements of Regulations 55
Section 13.4. Deemed Distribution and Recontribution 56
Section 13.5. Rights of Limited Partners 56
Section 13.6. Notice of Dissolution 56
Section 13.7. Cancellation of Certificate of Limited Partnership 56
Section 13.8. Reasonable Time for Winding-Up 57
Section 13.9. Waiver of Partition 57
ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS 57
Section 14.1. Amendments 57
Section 14.2. Action by the Partners 57
ARTICLE 15. GENERAL PROVISIONS 58
Section 15.1. Addresses and Notice 58
Section 15.2. Titles and Captions 58
Section 15.3. Pronouns and Plurals 58
Section 15.4. Further Action 59
Section 15.5. Binding Effect 59
Section 15.6. Creditors 59
Section 15.7. Waiver 59
Section 15.8. Counterparts 59
Section 15.9. Applicable Law 59
Section 15.10. Invalidity of Provisions 59
Section 15.11. Entire Agreement 59
Section 15.12. No Rights as Stockholders 60
ARTICLE 16. SERIES C PREFERRED UNITS 60
Section 16.1. Designation and Number 60
Section 16.2. Ranking 60
Section 16.3. Distributions 60
Section 16.4. Liquidation Proceeds 62
Section 16.5. Redemption 62
Section 16.6. Voting Rights 64
Section 16.7. Transfer Restrictions 65
Section 16.8. Exchange Rights 65
Section 16.9. No Conversion Rights 70
Section 16.10. No Sinking Fund 70
</TABLE>
iii
<PAGE> 5
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
AMB PROPERTY II, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of November 24, 1998, is entered into by and among AMB
Property Holding Corporation, a Maryland corporation (the "Company"), as the
General Partner, and the Persons whose names are set forth on Exhibit A attached
hereto, as the Limited Partners (the "Existing Limited Partners"), together with
any other Persons who become Partners in the Partnership as provided herein.
WHEREAS, the General Partner and the Existing Limited Partners
are parties to that certain Second Amended and Restated Agreement of Limited
Partnership, dated June 29, 1998, as amended;
WHEREAS, pursuant to Section 4.3.B of the Partnership
Agreement, the General Partner may, in its sole and absolute discretion subject
to Delaware law, in connection with any Capital Contribution, issue additional
Partnership Interests in one or more classes, or one or more series of any such
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers, and duties, including rights, powers,
and duties senior to then existing Limited Partnership Interests;
WHEREAS, on the date hereof, Belcrest Realty Corporation, a
Delaware corporation and Belair Real Estate Corporation, a Delaware corporation
(each a "Contributor" and, together the "Contributors") have made an aggregate
Capital Contribution of $110,000,000, in cash, to the Partnership in exchange
for which Contributors are entitled to receive an aggregate of 2,200,000 Series
C Preferred Units in the Partnership with rights, preferences, exchange and
other rights, voting powers and restrictions, limitations as to distributions,
qualifications and terms and conditions as set forth herein;
WHEREAS, pursuant to the authority granted to the General
Partner under the Partnership Agreement, the General Partner desires to amend
and restate the Partnership Agreement to reflect (i) the issuance of the Series
C Preferred Units, (ii) the admission of the Contributors as Additional Limited
Partners and holder of a certain number of Series C Preferred Units and (iii)
certain other matters described herein;
WHEREAS, each of the Contributors desire to become a party to
the Partnership Agreement as a Limited Partner and to be bound by all terms,
conditions and other provisions of the Partnership Agreement; and
WHEREAS, by virtue of the execution of this Agreement by the
Company in its capacity as General Partner of the Partnership, the General
Partner hereby consent to the
<PAGE> 6
amendment and restatement of the Second Amended and Restated Agreement of
Limited Partnership.
NOW, THEREFORE, for good and adequate consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINED TERMS AND RULES OF CONSTRUCTION
Section 1.1. Definitions
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 Funds" shall have the meaning set forth in Section
4.3.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as
such on the books and records of the Partnership.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) decrease such deficit by any amounts which such
Partner is obligated to restore pursuant to this
Agreement or is deemed to be obligated to restore
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c)
or the penultimate sentence of each of Regulations
Sections 1.704-2(i)(5) and 1.704-2(g); and
(ii) increase such deficit by the items described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and
(6).
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjustment Date" shall have the meaning set forth in Section
4.3.D.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"Agreed Value" means (i) in the case of any Contributed
Property set forth in Exhibit A and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit A; (ii)
in the case of any Contributed Property not set forth in Exhibit A and as of the
time of its contribution to the Partnership, the fair market value of such
2
<PAGE> 7
property or other consideration as determined by the General Partner, 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 fair market value of
such property as determined by the General Partner 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 the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.
"Agreement" means this Third Amended and Restated Agreement of
Limited Partnership, as it may be amended, modified, supplemented or restated
from time to time.
"AMB" means AMB Property Corporation, a Maryland corporation,
in its capacity as the owner of 100% of the common stock of the General Partner
and as the sole general partner of the Operating Partnership.
"Appraisal" means with respect to any assets, the opinion of
an independent third party experienced in the valuation of similar assets,
selected by the General Partner in good faith; such opinion may be in the form
of an opinion by such independent third party that the value for such asset as
set by the General Partner is fair, from a financial point of view, to the
Partnership.
"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,
(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 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 the net proceeds from the sale,
exchange, disposition, or refinancing of Partnership property
for such period over the gain (or loss, as the case may be)
recognized from any such sale, exchange, disposition, or
refinancing during such period, and
(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:
3
<PAGE> 8
(a) all principal debt payments made during such
period by the Partnership,
(b) capital expenditures made by the Partnership
during such period,
(c) investments in any entity (including loans made
thereto) to the extent that such investments are not otherwise
described in clauses (ii)(a) or (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
established during such period which the General Partner
determines are 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.
"Board of Directors" means the Board of Directors of AMB.
"Business Day" means each day, other than a Saturday or a
Sunday, which is not a day on which banking institutions in Los Angeles,
California or New York, New York are authorized or required by law, regulation
or executive order to close.
"Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall be
added such Partner's Capital Contributions, such Partner's share of Net Income
and any items in the nature of income or gain which are specially allocated
pursuant to Section 6.3, and the amount of any Partnership liabilities assumed
by such Partner or which are secured by any property distributed to such
Partner.
(ii) From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 6.3 hereof,
and the amount of any liabilities of such Partner assumed by the Partnership or
which are secured by any property contributed by such Partner to the
Partnership.
4
<PAGE> 9
(iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.
(iv) In determining the amount of any liability for
purposes of subsections (i) and (ii) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
(v) The foregoing provisions and the other provisions of
this Agreement relating to the maintenance of Capital Accounts are intended to
comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification;
provided that, it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 13 of this Agreement upon the
dissolution of the Partnership. The General Partner also shall (a) 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 (b) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.
"Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.
"Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Secretary of State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.
"Charter" means the Company's Articles of Incorporation, as
filed with the Maryland Department of Assessments and Taxation on November 24,
1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time or any successor statute thereto, as interpreted by the
applicable regulations thereunder. Any reference herein to a specific section or
sections of the Code shall be deemed to include a reference to any corresponding
provision of future law.
"Common Unit" means each Partnership Unit that is not entitled
to any preference with respect to any other Partnership Unit as to distribution
or voluntary or involuntary liquidation, dissolution or winding up of the
Partnership.
"Common Limited Partner" means any Person holding Common
Units, and named as a Common Limited Partner in Exhibit A attached hereto, as
such Exhibit may be
5
<PAGE> 10
amended from time to time, or any Substituted Limited Partner or Additional
Limited Partner, in such Person's capacity as a Common Limited Partner in the
Partnership.
"Consent" means the consent to, approval of, or vote on a
proposed action by a Partner given in accordance with Article 14 hereof.
"Consent of the Limited Partners" means the Consent of a
Majority in Interest of the Limited Partners, other than the Preferred Limited
Partners, which Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and may be given or withheld by a
Majority in Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.
"Consent of the Partners" means the Consent of Partners, other
than the Preferred Limited Partners, holding Percentage Interests that in the
aggregate are equal to or greater than a majority of the aggregate Percentage
Interests of all Partners, other than the Preferred Limited Partners, which
Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by such Partners, in
their sole and absolute discretion.
"Constructively Own" means ownership under the constructive
ownership rules described in Exhibit C.
"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 (or, to the extent provided in applicable
regulations, deemed contributed by the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).
"Contributor" shall have the meaning given to such term in the
recitals hereto.
"Debt" means, as to any Person, as of any date of
determination: (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person which, in accordance with generally accepted
accounting principles, should be capitalized.
"Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset 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 Gross Asset
Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the
6
<PAGE> 11
Federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the General
Partner.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Funding Debt" means the incurrence of any Debt by or on
behalf of the General Partner for the purpose of providing funds to the
Partnership.
"General Partner" means the Company or its successors as
general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held
by the General Partner. A General Partner Interest may be expressed as a number
of Partnership Units.
"Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset, as determined by the contributing Partner and the General Partner
(as set forth on Exhibit A attached hereto, as such Exhibit may be amended from
time to time); provided, that if the contributing Partner is the General Partner
then, except with respect to the General Partner's initial Capital Contribution
which shall be determined as set forth on Exhibit A, or capital contributions of
cash, the determination of the fair market value of the contributed asset shall
be determined by (a) the price paid by the General Partner if the asset is
acquired by the General Partner contemporaneously with its contribution to the
Partnership or (b) by Appraisal if otherwise acquired by the General Partner.
(ii) Immediately prior to the times listed below, the
Gross Asset Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt:
(a) the acquisition of an additional interest in the
Partnership by a new or existing Partner in exchange
for more than a de minimis Capital Contribution, if
the General Partner reasonably determines that such
adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the
Partnership;
(b) the distribution by the Partnership to a Partner of
more than a de minimis amount of Partnership property
as consideration for an interest in the Partnership
if the General Partner reasonably determines that
such adjustment is necessary or appropriate to
reflect the relative economic interests of the
Partners in the Partnership;
7
<PAGE> 12
(c) the liquidation of the Partnership within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as the General Partner shall
reasonably determine necessary or advisable in order
to comply with Regulations Sections 1.704-1(b) and
1.704-2.
(iii) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the General
Partner; provided, that if the distributee is the General Partner, or if the
distributee and the General Partner cannot agree on such a determination, by
Appraisal.
(iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the General Partner reasonably determines
that an adjustment pursuant to subparagraph (ii) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).
(v) If the Gross Asset Value of a Partnership asset has
been determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such
Gross Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Income and Net
Losses.
"Holder" means either the Partner or Assignee owning a
Partnership Unit.
"Immediate Family" means, with respect to any natural Person,
such natural Person's estate or heirs or current spouse or former spouse,
parents, parents-in-law, children, siblings and grandchildren and any trust or
estate, all of the beneficiaries of which consist of such Person or such
Person's spouse, former spouse, parents, parents-in-law, children, siblings or
grandchildren.
"Incapacity" or "Incapacitated" means: (i) as to any
individual Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him or her incompetent to manage his or her
Person or his or her 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
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similar law now or hereafter in effect has been entered against the Partner, (c)
the Partner executes and delivers a general assignment for the benefit of the
Partner's creditors, (d) the Partner files an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred and 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) is not vacated within ninety (90) days
after the expiration of any such stay.
"Indemnitee" means (i) any Person subject to a claim or demand
or made or threatened to be made a party to, or involved or threatened to be
involved in, an action, suit or proceeding by reason of his or her status as (a)
the General Partner or (b) a director, officer, employee or agent of the
Partnership or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.
"IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.
"Junior Stock" means shares of capital stock of AMB
representing any class or series of equity interest ranking, as to distributions
and voluntary or involuntary liquidation, dissolution or winding up of AMB,
junior to the Series C Preferred Shares.
"Junior Units" means Partnership Units representing any class
or series of Partnership Interest ranking, as to distributions and voluntary or
involuntary liquidation, dissolution or winding up of the Partnership, junior to
the Series C Preferred Units.
"Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit may be amended from time to time,
any Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.
"Limited Partnership Interest" means a Partnership Interest of
a Limited Partner representing a fractional part of the Partnership Interests of
all Limited Partners and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partnership Interest may be expressed as
a number of Partnership Units.
"Liquidating Events" shall have the meaning set forth in
Section 13.1.
"Liquidator" shall have the meaning set forth in Section
13.2.A.
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"Majority in Interest of the Limited Partners" means Limited
Partners (other than any Preferred Limited Partner) holding Percentage Interests
that in the aggregate are greater than fifty percent (50%) of the aggregate
Percentage Interests of all Limited Partners (other than any Preferred Limited
Partner).
"Majority in Interest of Partners" means Partners (other than
Preferred Limited Partners) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Partners (other
than Preferred Limited Partners).
"Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(i) Any income of the Partnership that is exempt from
Federal income tax and not otherwise taken into account in computing Net Income
or Net Loss pursuant to this definition of Net Income or Net Loss shall be added
to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code
Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income or Net Loss pursuant to this definition of
Net Income or Net Loss shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for purposes of
computing Net Income or Net Loss;
(iv) Gain or loss resulting from any disposition of
property with respect to which gain or loss is recognized for Federal income tax
purposes shall be computed by reference to the Gross Asset Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(v) 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;
(vi) To the extent an adjustment to the adjusted tax basis
of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b)
is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and
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(vii) Notwithstanding any other provision of this
definition of Net Income or Net Loss, any items which are specially allocated
pursuant to Section 6.3 shall not be taken into account in computing Net Income
or Net Loss. The amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Section 6.3 shall be
determined by applying rules analogous to those set forth in this definition of
Net Income or Net Loss.
Solely for purposes of allocating Net Income or Net Loss in
any Fiscal Year to the Holders of the Series A Preferred Units pursuant to
Sections 6.2.B.1(c) and (e), and Section 6.2.B.2(b), items of Net Income and Net
Loss, as the case may be, shall not include Depreciation with respect to
properties that are "ceiling limited" in respect of Preferred Limited Partners.
For purposes of the preceding sentence, Partnership property shall be considered
ceiling limited in respect of a Preferred Limited Partner if Depreciation
attributable to such Partnership property which would otherwise be allocable to
such Partner, without regard to this paragraph, exceeded depreciation determined
for federal income tax purposes attributable to such Partnership property which
would otherwise be allocable to such Partner by more than 5%.
"Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).
"Nonrecourse Liability" shall have 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 B to this Agreement.
"Operating Partnership" means AMB Property, L.P., a Delaware
limited partnership.
"Parity Preferred Stock" means any class or series of equity
interest of AMB now or hereafter authorized, issued or outstanding expressly
designated by AMB to rank on a parity with the Series C Preferred Shares with
respect to distributions and rights upon voluntary or involuntary liquidation,
winding up or dissolution of AMB.
"Parity Preferred Unit" means any class or series of
Partnership Interests of the Partnership now or hereafter authorized, issued or
outstanding expressly designated by the Partnership to rank on a parity with the
Series C Preferred Units with respect to distributions and rights upon voluntary
or involuntary liquidation, winding up or dissolution of the Partnership.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
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"Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" shall have the meaning set
forth in Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).
"Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. There may be
one or more classes of Partnership Interests as provided in Section 4.3. A
Partnership Interest may be expressed as a number of Partnership Units. Unless
otherwise expressly provided for by the General Partner at the time of the
original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class.
The Partnership Interests represented by the Common Units and the Series C
Preferred Units are the only Partnership Interests and each such type of unit is
a separate class of Partnership Interest for all purposes of this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
"Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash with respect to
Common Units pursuant to Section 5.1 which record date shall be the same as the
record date established by AMB for a distribution to its stockholders of some or
all of its portion of such distribution.
"Partnership Unit" means, with respect to any class of
Partnership Interest, a fractional, undivided share of such class of Partnership
Interest issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership
Units may be evidenced by a certificate for units substantially in the form of
Exhibit D-1 hereto or as the General Partner may determine with respect to any
class of Partnership Units issued from time to time under Sections 4.1 and 4.3.
"Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.
"Percentage Interest" means, as to a Partner holding a class
of Partnership Interests, its interest in the Partnership as determined by
dividing the Partnership Units of such class owned by such Partner by the total
number of Partnership Units of such class then outstanding as specified in
Exhibit A attached hereto, as such Exhibit may be amended from time to time. If
the Partnership issues more than one class of Partnership Interest, the interest
in the
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Partnership among the classes of Partnership Interests shall be determined as
set forth in the amendment to the Partnership Agreement setting forth the rights
and privileges of such additional classes of Partnership Interest, if any, as
contemplated by Section 4.3.B.
"Person" means an individual or a corporation, partnership,
limited liability company, trust, unincorporated organization, association or
other entity.
"Plan Asset Regulation" means the regulations promulgated by
the United States Department of Labor in Title 29, Code of Federal Regulations,
Part 2510, Section 101-3, and any successor regulations thereto.
"Pledge" shall have the meaning set forth in Section 11.3.A.
"Preferred Distribution Shortfall" shall have the meaning
given to such term in Section 5.1 hereof.
"Preferred Limited Partner" means any Person holding a
Preferred Unit, and named as a Preferred Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner or Additional Limited Partner, in such Person's capacity as a
Preferred Limited Partner in the Partnership.
"Preferred Share" means a share of AMB preferred stock, par
value $.01 per share, with such rights, priorities and preferences as shall be
designated by the Board of Directors in accordance with the REIT Charter.
"Preferred Unit" means a Partnership Unit representing a
Limited Partnership Interest, with such preferential rights and priorities as
shall be designated by the General Partner pursuant to Section 4.3.C hereof
including, without limitation, the Series C Preferred Units.
"Properties" means such interests in real property and
personal property including without limitation, fee interests, interests in
ground leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.
"Qualified REIT Subsidiary" means any Subsidiary of AMB that
is a "qualified REIT subsidiary" within the meaning of Section 856(i) of the
Code.
"Qualified Transferee" means an "Accredited Investor" as
defined in Rule 501 promulgated under the Securities Act.
"Redemption" shall have the meaning set forth in Section
16.5.A.
"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).
"Regulatory Allocations" shall have the meaning set forth in
Section 6.3.A(viii).
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"REIT" means a real estate investment trust under Sections 856
through 860 of the Code.
"REIT Charter" means the Articles of Incorporation of AMB as
of November 24, 1997, as amended by the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on July 23, 1998 designating the
8 1/2% Series A Cumulative Redeemable Preferred Stock, the Articles
Supplementary filed with the Maryland Department of Assessments and Taxation on
November 12, 1998 designating the 8 3/8% Series B Cumulative Redeemable
Preferred Stock, and the Articles Supplementary filed with the Maryland
Department of Assessments and Taxation on November 24, 1998 designating the 8
3/4% Series C Cumulative Redeemable Preferred Stock, and as further amended or
restated from time to time.
"REIT Requirements" shall have the meaning set forth in
Section 5.1.
"REIT Share" means a share of common stock, par value $.01 per
share, of AMB.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
"Series C Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series C Preferred Shares, as filed
with the Maryland Department of Revenue and Taxation on November 24, 1998.
"Series C Limited Partner" means any Person holding Series C
Preferred Units and named as a Series C Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Series C Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series C Preferred Units then held by
the General Partner multiplied by (ii) the sum of $50 and any Preferred
Distribution Shortfall per Series C Preferred Unit.
"Series C Preferred Share" means a share of 8 3/4% Series C
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50 per share, of AMB.
"Series C Preferred Units" means the Partnership's 8 3/4%
Series C Cumulative Redeemable Partnership Units.
"Series C Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 16.3.A hereof.
"Series C Priority Return" shall mean an amount equal to 8
3/4% per annum on an amount equal to $50 per Series C Preferred Unit then
outstanding (equivalent to $4.375 per annum). Such amount shall be determined on
a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from November 24, 1998 to the extent not distributed for any given
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distribution period pursuant to Sections 5.1 and 16.3 hereof. Notwithstanding
the foregoing, distributions on the Series C Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series C Preferred Units will accumulate
as of the Series C Preferred Unit Distribution Payment Date on which they first
become payable.
"Specified Redemption Date" means the day of receipt by the
General Partner of a Notice of Redemption.
"Subsidiary" shall mean, with respect to any person, any
corporation, partnership, limited liability company, joint venture or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests, is owned, directly or
indirectly, by such person.
"Subsidiary Partnership" means any partnership or limited
liability company that is a Subsidiary of the Partnership or the Operating
Partnership.
"Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4.
"Tax Items" shall have the meaning set forth in Section 6.4.A.
"Tenant" means any tenant from which AMB derives rent either
directly or indirectly through partnerships, including the Partnership.
ARTICLE 2.
ORGANIZATIONAL MATTERS
Section 2.1. Organization
The Partnership is a limited partnership formed pursuant to
the provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
Section 2.2. Name
The name of the Partnership is AMB Property II, L.P. 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
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change in the next regular communication to the Limited Partners.
Section 2.3. Resident Agent; Principal Office
The name and address of the resident agent of the Partnership
in the State of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The address of the principal office of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801 at such address. The principal office
of the Partnership is located at 505 Montgomery Street, San Francisco,
California 94111, or such other place as the General Partner may from time to
time designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
Section 2.4. Power of Attorney
A. Each Limited Partner and each Assignee 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:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices: (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatements
thereof) that the General Partner or 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
conduct business or own property; (b) all instruments
that the General Partner or any Liquidator 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 any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other
events described in, Articles 11, 12 and 13 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 Interests;
and
(ii) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other
instruments appropriate or necessary, in the sole and
absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or
other action which is made or given by the Partners
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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
or as may be otherwise expressly provided for in this Agreement.
B. The foregoing power of attorney is hereby declared to
be irrevocable and a power coupled with an interest, in recognition of the fact
that each of the 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 any 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, 1997 and
shall continue until October 15, 2096 unless it is dissolved sooner pursuant to
the provisions of Article 13 or as otherwise provided by law.
Section 2.6. Number of Partners
Without the consent of the General Partner which may be given
or withheld in its sole discretion, the Partnership shall not at any time have
more than one hundred (100) partners (including as partners those persons
indirectly owning an interest in the Partnership through a partnership, limited
liability company, S corporation or grantor trust (such entity, a "flow through
entity"), but only if substantially all of the value of such person's interest
in the flow through entity is attributable to the flow through entity's interest
(direct or indirect) in the Partnership).
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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 AMB, in
its capacity as the owner of 100% of the Common Stock of the General Partner and
as the sole General Partner of the Operating Partnership, at all times to be
classified as a REIT for Federal income tax purposes, unless the General Partner
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, directly or indirectly, in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting AMB's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that AMB's current status as a
REIT inures to the benefit of all the Partners and not solely the General
Partner.
Section 3.2. Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire and develop real
property, and manage, lease, sell, transfer and dispose of real property;
provided, however, not withstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of AMB, in its sole and absolute discretion, (i) could adversely affect
the ability of AMB, in its capacity as the owner of 100% of the Common Stock of
the General Partner and as the sole general partner of the Operating
Partnership, to continue to qualify as a REIT, (ii) absent the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, and except with respect to the distribution of Available Cash to the
Series C Limited Partners in accordance with Section 16.3, could subject AMB to
any taxes under Section 857 or Section 4981 of the Code, or (iii) could violate
any law or regulation of any governmental body or agency having jurisdiction
over AMB or its securities, unless any such action (or inaction) under the
foregoing clauses (i), (ii) or (iii) shall have been specifically consented to
by AMB in writing.
Section 3.3. Partnership Only for Purposes Specified
The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no
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Partner shall have any authority to act for, bind, commit or assume any
obligation or responsibility on behalf of the Partnership, its properties or any
other Partner. No Partner, in its capacity as a Partner under this Agreement,
shall be responsible or liable for any indebtedness or obligation of another
Partner, nor shall the Partnership be responsible or liable for any indebtedness
or obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.
Section 3.4. Representations and Warranties by the
Parties
A. Each Partner that is an individual represents and
warrants to each other Partner that (i) such Partner has in the case of any
Person other than an individual, the power and authority, and in the case of an
individual, the legal capacity, to enter into this Agreement and perform such
Partner's obligations hereunder, (ii) the consummation of the transactions
contemplated by this Agreement to be performed by such Partner will not result
in a breach or violation of, or a default under, any agreement by which such
Partner or any of such Partner's property is or are bound, or any statute,
regulation, order or other law to which such Partner is subject, (iii) such
Partner is neither a "foreign person" within the meaning of Section 1445(f) of
the Code nor a "foreign partner" within the meaning of Section 1446(e) of the
Code and (iv) this Agreement has been duly executed and delivered by such
Partner and is binding upon, and enforceable against, such Partner in accordance
with its terms.
B. Each Partner that is not an individual represents and
warrants to each other Partner that (i) its execution and delivery of this
Agreement and all transactions contemplated by this Agreement to be performed by
it have been duly authorized by all necessary action, including without
limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its certificate of limited partnership,
partnership agreement, trust agreement, limited liability company operating
agreement, charter or by-laws, as the case may be, any agreement by which such
Partner or any of such Partner's properties or any of its partners,
beneficiaries, trustees or stockholders, as the case may be, is or are bound, or
any statute, regulation, order or other law to which such Partner or any of its
partners, trustees, beneficiaries or stockholders, as the case may be, is or are
subject, (iii) such Partner is neither a "foreign person" within the meaning of
Section 1445(f) of the Code nor a "foreign partner" within the meaning of
Section 1446(e) of the Code and (iv) this Agreement has been duly executed and
delivered by such Partner and is binding upon, and enforceable against, such
Partner in accordance with its terms.
C. Each Partner represents, warrants and agrees that it
has acquired and continues to hold its interest in the Partnership for its own
account for investment only and not for the purpose of, or with a view toward,
the resale or distribution of all or any part thereof, nor with a view toward
selling or otherwise distributing such interest or any part thereof at any
particular time or under any predetermined circumstances. Each Partner further
represents and warrants that it is a sophisticated investor, able and accustomed
to handling sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high
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net worth that it does not anticipate a need for the funds it has invested in
the Partnership in what it understands to be a highly speculative and illiquid
investment.
D. Each Partner further represents, warrants and agrees
as follows:
(i) Except as provided in Exhibit E, at any time such
Partner actually or Constructively owns a 25% or greater capital
interest or profits interest in the Partnership, it does not and will
not, without the prior written consent of the General Partner, actually
own or Constructively Own (a) with respect to any Tenant that is a
corporation, any stock of such Tenant and (b) with respect to any
Tenant that is not a corporation, any interests in either the assets or
net profits of such Tenant.
(ii) Except as provided in Exhibit F, at any time
such Partner actually or Constructively owns a 25% or greater capital
interest or profits interest in the Partnership, it does not, and
agrees that it will not without the prior written consent of the
General Partner, actually own or Constructively Own, any stock in AMB,
other than any shares of capital stock of AMB that such Partner may
acquire pursuant to Section 16.8, subject to the ownership limitations
set forth in the REIT Charter.
(iii) Upon request of the General Partner, it will
disclose to the General Partner the amount of shares of capital stock
of AMB that it actually owns or Constructively Owns.
(iv) It understands that if, for any reason, (a) the
representations, warranties or agreements set forth in Section 3.4.D(i)
or (ii) are violated or (b) the Partnership's actual or Constructive
Ownership of the REIT Shares or other shares of capital stock of AMB
violates the limitations set forth in the Charter, then (x) some or all
of the Redemption rights or rights to exchange Partnership Interests
for Series C Preferred Shares of the Limited Partners may become
non-exercisable, and (y) some or all of such shares owned by the
Partners and/or some or all of the Partnership Interests owned by the
Limited Partners may be automatically transferred to a trust for the
benefit of a charitable beneficiary, as provided in the REIT Charter
and Exhibit I of this Agreement, respectively.
E. The representations and warranties contained in
Sections 3.4.A, 3.4.B, 3.4.C and 3.4.D shall survive the execution and delivery
of this Agreement by each Partner and the dissolution and winding up of the
Partnership.
F. Each Partner hereby acknowledges that no
representations as to potential profit, cash flows, funds from operations or
yield, if any, in respect of the Partnership or the General Partner have been
made by any Partner or any employee or representative or Affiliate of any
Partner, and that projections and any other information, including, without
limitation, financial and descriptive information and documentation, which may
have been in any manner submitted to such Partner shall not constitute any
representation or warranty of any kind or nature, express or implied.
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Section 3.5. Certain ERISA Matters
Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner will use its reasonable best efforts
to structure the investments in, relationships with and conduct with respect to
Properties and any other assets of the Partnership so that the Partnership will
be a "real estate operating company" (as such term is defined in the Plan Asset
Regulation).
ARTICLE 4.
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions of the Partners
At the time of their respective execution of this Agreement,
the Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class and in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to accurately reflect exchanges, redemptions, Capital
Contributions, the issuance of additional Partnership Units or similar events
having an effect on a Partner's Percentage Interest. Except as required by law
or as otherwise provided in Sections 4.3 and 10.5, no Partner shall be required
or permitted to make any additional Capital Contributions or loans to the
Partnership.
Section 4.2. Loans
Subject to Section 4.3, the Partnership may incur Debt, or
enter into other similar credit, guarantee, financing or refinancing
arrangements for any purpose (including, without limitation, in connection with
any further acquisition of Properties) with any Person, including the General
Partner, the Operating Partnership and their affiliates, upon such terms as the
General Partner determines appropriate; provided, that the Partnership shall not
incur any Debt that is recourse to the General Partner, except to the extent
otherwise agreed to by the General Partner in its sole discretion.
Section 4.3. Additional Funding and Capital Contributions
A. General. The General Partner may, at any time and
from time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition of additional Properties or for such
other Partnership purposes as the General Partner may determine. Additional
Funds may be raised by the Partnership, at the election of the General Partner,
in any manner provided in, and in accordance with, the terms of this Section
4.3. No Person shall have any preemptive, preferential or similar right or
rights to subscribe for or acquire any Partnership Interest.
B. Issuance of Additional Partnership Interests. The
General Partner may raise all or any portion of the Additional Funds by
accepting additional Capital Contributions of cash. The General Partner may also
accept additional Capital Contributions of real property or other non-cash
assets. In connection with any such additional Capital Contributions (of cash or
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property), and subject to Section 16.6 hereof, the General Partner is hereby
authorized to cause the Partnership from time to time to issue to Partners
(including the General Partner) or other Persons (including, without limitation,
in connection with the contribution of property to the Partnership) 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 then existing Limited Partnership
Interests, all as shall be determined by the General Partner in its sole and
absolute discretion subject to Delaware law, and as set forth by amendment to
this Agreement, including without limitation: (i) the allocations of items of
Partnership income, gain, loss, deduction, and credit to such class or series of
Partnership Interests; (ii) the right of each such class or series of
Partnership Interests to share in Partnership distributions; (iii) the rights of
each such class or series of Partnership Interests upon dissolution and
liquidation of the Partnership; and (iv) the right to vote. In the event that
the Partnership issues additional Partnership Interests pursuant to this Section
4.3.B, the General Partner shall make such revisions to this Agreement
(including but not limited to the revisions described in Sections 5.4 and 6.2.C)
as it determines are necessary to reflect the issuance of such additional
Partnership Interests.
C. Percentage Interest Adjustments in the Case of
Capital Contributions for Partnership Units. Upon the acceptance of additional
Capital Contributions in exchange for Partnership Units, the Percentage Interest
related thereto, and the Percentage Interest of each other Partner, shall be
equal to the amounts agreed to by the Partnership and the contributors.
D. AMB agrees to comply with Section 4.3.D of the Third
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, as amended or waived from time to time.
Section 4.4. No Preemptive Rights
Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) making additional Capital
Contributions or loans to the Partnership or (ii) issuance or sale of any
Partnership Units or other Partnership Interests.
Section 4.5. Other Contribution Provisions
In the event that any Partner is admitted to the Partnership
and is given (or is treated as having received) a Capital Account in exchange
for services rendered to the Partnership, such transaction shall be treated by
the Partnership and the affected Partner as if the Partnership had compensated
such Partner in cash, and the Partner had contributed such cash to the capital
of the Partnership. In addition, with the consent of the General Partner, in its
sole discretion, one or more Limited Partners may enter into contribution
agreements with the Partnership which have the effect of providing a guarantee
of certain obligations of the Partnership.
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ARTICLE 5.
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of
Distributions
The General Partner shall cause the Partnership to distribute
all, or such portion as the General Partner may in its discretion determine,
Available Cash generated by the Partnership (i) first, to the extent that the
amount of cash distributed with respect to any Partnership Interests that are
entitled to any preference in distribution for any prior distribution period was
less than the required distribution for such outstanding Partnership Interests
for such prior distribution period, and to the extent such deficiency has not
been subsequently distributed pursuant to this Section 5.1 (a "Preferred
Distribution Shortfall"), in accordance with the rights of such class of
Partnership Interests (and within such class, pro rata in proportion to the
respective Percentage Interests on the applicable record date) and to the
Partners who are Partners on the applicable record date with respect to such
distribution, (ii) second, with respect to any Partnership Interests that are
entitled to any preference in distribution, in accordance with the rights of
such class of Partnership Interests (and within such class, pro rata in
proportion to the respective Percentage Interests on the applicable record date)
and (iii) third, with respect to Partnership Interests that are not entitled to
any preference in distribution, pro rata to each such class on a quarterly basis
and in accordance with the terms of such class to Partners who are Partners of
such class on the Partnership Record Date with respect to such distribution (and
within each such class, pro rata in proportion with the respective Percentage
Interests on such Partnership Record Date). Except as expressly provided for in
Article 16 with respect to the Series C Preferred Units and in an agreement, if
any, entered into in connection with the creation of a new class of Partnership
Interests in accordance with Article 4, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with AMB's qualification as a REIT,
to cause the Partnership to distribute sufficient amounts to enable AMB, in its
capacity of general partner of the Operating Partnership, and the sole
stockholder of the General Partner, to pay stockholder dividends that will, so
long as AMB has determined to qualify as a REIT (a) satisfy the requirements for
qualifying as a REIT under the Code and Regulations ("REIT Requirements") and
(b) except to the extent otherwise determined by the General Partner, avoid any
Federal income or excise tax liability of the General Partner, except to the
extent that a distribution pursuant to clause (b) would prevent the Partnership
from making a distribution to the holders of Series C Preferred Units in
accordance with Section 16.3.
Section 5.2. Distributions in Kind
No right is given to any Partner to demand and receive
property other than cash. The General Partner may determine, in its sole and
absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as to
ensure that the fair market value is distributed and allocated in accordance
with Articles 5, 6 and 10; provided, however, that, in such case, the General
Partners shall distribute only cash to the Series C Limited Partners.
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Section 5.3. Distributions Upon Liquidation
Proceeds from a Liquidating Event shall be distributed to the
Partners in accordance with Section 13.2.
Section 5.4. Distributions to Reflect Issuance of Additional
Partnership Interests
In the event that the Partnership issues additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Section 4.3.B or 4.4, the General Partner shall make such revisions
to this Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests. In the absence of any agreement to the
contrary, an Additional Limited Partner shall be entitled to the distributions
set forth in Section 5.1 (without regard to this Section 5.4) with respect to
the quarter during which the closing of its contribution to the Partnership
occurs, multiplied by a fraction the numerator of which is the number of days
from and after the date of such closing through the end of the applicable
quarter, and the denominator of which is the total number of days in such
quarter.
ARTICLE 6.
ALLOCATIONS
Section 6.1. Timing and Amount of Allocations of Net Income
and Net Loss
Net Income and Net Loss of the Partnership shall be determined and allocated
with respect to each fiscal year of the Partnership as of the end of each such
year. Subject to the other provisions of this Article 6, an allocation to a
Holder of a share of Net Income or Net Loss shall be treated as an allocation of
the same share of each item of income, gain, loss or deduction that is taken
into account in computing Net Income or Net Loss.
Section 6.2. General Allocations
A. In General. Except as otherwise provided in this
Article 6, Net Income and Net Loss allocable with respect to a class of
Partnership Interests, shall be allocated to each of the Holders holding such
class of Partnership Interests in accordance with their respective Percentage
Interest of such class.
B.1. Net Income. Except as provided in Section 6.3,
Net Income for any Partnership Year shall be allocated in the following manner
and order of priority:
(a) First, 100% to the General Partner in an amount equal
to the remainder, if any, of the cumulative Net
Losses allocated to the General Partner pursuant to
Section 6.2.B.2(d) for all prior Partnership Years
minus the cumulative Net Income allocated to the
General Partner pursuant to this Section 6.2.B.1(a)
for all prior Partnership Years;
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(b) Second, 100% to each Holder of Partnership Interests
in an amount equal to the remainder, if any, of the
cumulative Net Losses allocated to each such Holder
pursuant to Section 6.2.B.2(c) for all prior
Partnership Years minus the cumulative Net Income
allocated to such Holder pursuant to this Section
6.2.B.1(b) for all prior Partnership Years;
(c) Third, 100% to the Holders of Preferred Units in an
amount equal to the remainder, if any, of the
cumulative Net Losses allocated to such Holders
pursuant to Section 6.2.B.2(b) for all prior
Partnership Years minus the cumulative Net Income
allocated to such Holders pursuant to this Section
6.2.B.1(c) for all prior Partnership Years;
(d) Fourth, 100% to the Holders of Common Units in an
amount equal to the remainder, if any, of the
cumulative Net Losses allocated to each such Holder
pursuant to Section 6.2.B.2(a) for all prior
Partnership Years minus the cumulative Net Income
allocated to each Holder pursuant to this Section
6.2.B.1(d) for all prior Partnership Years;
(e) Fifth, 100% to the Holders of Preferred Units, in an
amount equal to the excess of (i) in respect of the
Series C Preferred Units, an amount equal to the
cumulative Series C Priority Return to the last day
of the current Partnership Year or to the date of
redemption, to the extent Series C Preferred Units
are redeemed during such year, over (ii) the
cumulative Net Income allocated to such Holders,
pursuant to this Section 6.2.B.1(e) for all prior
Partnership Years; and
(f) Sixth, 100% to the Holders of Common Units in
accordance with their respective Percentage Interests
in the Common Units.
To the extent the allocations of Net Income set forth above in
any paragraph of this Section 6.2.B.1 are not sufficient to entirely satisfy the
allocation set forth in such paragraph, such allocation shall be made in
proration to the total amount that would have been allocated pursuant to such
paragraph without regard to such shortfall.
B.2. Net Losses. Except as provided in Section 6.3, Net
Losses for any Partnership Year shall be allocated in the following manner and
order of priority:
(a) First, 100% to the Holders of Common Units in
accordance with their respective Percentage Interests
in the Common Units (to the extent consistent with
this Section 6.2.B.2(a)) until the Adjusted Capital
Account (ignoring for this purpose any amounts a
Holder is obligated to contribute to the capital of
the Partnership or is deemed obligated to contribute
pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2) and ignoring the Holder's
Series C Preferred Capital) of each such Holder is
zero;
(b) Second, 100% to the Holders of Preferred Units, pro
rata to each such Holder's Adjusted Capital Account
(ignoring for this purpose any amounts
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a Holder is obligated to contribute to the capital of
the Partnership or is deemed obligated to contribute
pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2)), until the Adjusted Capital
Account (as so modified) of each such Holder is zero;
(c) Third, 100% to the Holders of Partnership Interests
to the extent of, and in proportion to, the positive
balance (if any) in their Adjusted Capital Accounts;
and
(d) Fourth, 100% to the General Partner.
C. Allocations to Reflect Issuance of Additional
Partnership Interests. In the event that the Partnership issues additional
Partnership Interests to the General Partner or any Additional Limited Partner
pursuant to Section 4.3 or 4.4, the General Partner shall make such revisions to
this Section 6.2 or to Section 12.2.B as it determines are necessary to reflect
the terms of the issuance of such additional Partnership Interests, including
making preferential allocations to certain classes of Partnership Interests,
subject to the terms of the Series C Preferred Units.
Section 6.3. Additional Allocation Provisions
Notwithstanding the foregoing provisions of this Article 6:
A. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 6.2, or any other provision of this Article 6, if
there is a net decrease in Partnership Minimum Gain during any fiscal
year, each Holder shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Holder's share of the net decrease in
Partnership Minimum Gain, as determined under Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to
each Holder pursuant thereto. The items to be allocated shall be
determined in accordance with Regulations Sections 1.704-2(f)(6) and
1.704-2(j)(2). This Section 6.3.A(i) is intended to qualify as a
"minimum gain chargeback" within the meaning of Regulation Section
1.704-2(f) which shall be controlling in the event of a conflict
between such Regulation and this Section 6.3.A(i).
(ii) Partner Minimum Gain Chargeback. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 6.2, or any other provision
of this Article 6 (except Section 6.3.A(i)), if there is a net decrease
in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
during any fiscal year, each Holder who has a share of the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such
Holder's share of the net
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decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated
to each Holder pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.3.A(ii) is intended to qualify as a
"chargeback of partner nonrecourse debt minimum gain" within the
meaning of Regulation Section 1.704-2(i) which shall be controlling in
the event of a conflict between such Regulation and this Section
6.3.A(ii).
(iii) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Holders in accordance with their respective
Percentage Interest in Common Units. Any Partner Nonrecourse Deductions
for any fiscal year shall be specially allocated to the Holder(s) who
bears the economic risk of loss with respect to the Partner Nonrecourse
Debt to which such Partner Nonrecourse Deductions are attributable, in
accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
(iv) Qualified Income Offset. If any Holder
unexpectedly receives an adjustment, allocation or distribution
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of Partnership income and gain shall be allocated, in accordance
with Regulations Section 1.704-1(b)(2)(ii)(d), to the Holder in an
amount and manner sufficient to eliminate, to the extent required by
such Regulations, the Adjusted Capital Account Deficit of the Holder as
quickly as possible provided that an allocation pursuant to this
Section 6.3.A(iv) shall be made if and only to the extent that such
Holder would have an Adjusted Capital Account Deficit after all other
allocations provided in this Article 6 have been tentatively made as if
this Section 6.3.A(iv) were not in the Agreement. It is intended that
this Section 6.3.A(iv) qualify and be construed as a "qualified income
offset" within the meaning of Regulations 1.704-1(b)(2)(ii)(d), which
shall be controlling in the event of a conflict between such
Regulations and this Section 6.3.A(iv).
(v) Gross Income Allocation. In the event any Holder
has a deficit Capital Account at the end of any fiscal year which is in
excess of the sum of (a) the amount (if any) such Holder is obligated
to restore to the Partnership and (b) the amount such Holder is deemed
to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be
specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible; provided, that an allocation
pursuant to this Section 6.3.A(v) shall be made if and only to the
extent that such Holder would have a deficit Capital Account in excess
of such sum after all other allocations provided in this Article 6 have
been tentatively made as if this Section 6.3.A(v) and Section 6.3.A(iv)
were not in the Agreement.
(vi) Limitation on Allocation of Net Loss. To the
extent any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Holder, such allocation of Net Loss
shall be reallocated among the other Holders in
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accordance with their respective Percentage Interests in Common Units,
subject to the limitations of this Section 6.3.A(vi).
(vii) Section 754 Adjustment. To the extent an
adjustment to the adjusted tax basis of any Partnership asset pursuant
to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining
Capital Accounts as the result of a distribution to a Holder in
complete liquidation of his interest in the Partnership, the amount of
such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Holders in accordance with their interests
in the Partnership in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth
in Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the
"Regulatory Allocations") are intended to comply with certain
regulatory requirements, including the requirements of Regulations
Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of
Sections 6.1 and 6.2, the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and deduction
among the Holders so that, to the extent possible, the net amount of
such allocations of other items and the Regulatory Allocations to each
Holder shall be equal to the net amount that would have been allocated
to each such Holder if the Regulatory Allocations had not occurred.
B. For purposes of determining a Holder's proportional
share of the "excess nonrecourse liabilities" of the Partnership within the
meaning of Regulations Section 1.752-3(a)(3), each Holder's interest in
Partnership profits shall be such Holder's Percentage Interest in Common Units.
Section 6.4. Tax Allocations
A. In General. Except as otherwise provided in this
Section 6.4, for income tax purposes each item of income, gain, loss and
deduction (collectively, "Tax Items") shall be allocated among the Holders in
the same manner as its correlative item of "book" income, gain, loss or
deduction is allocated pursuant to Sections 6.2 and 6.3.
B. Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A, Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Holders for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to the
Partnership upon its formation pursuant to Section 4.1, such variation between
basis and initial Gross Asset Value shall be taken into account under the
"traditional method" as described in Regulations Section 1.704-3(b). With
respect to properties subsequently contributed to the Partnership, the
Partnership shall account for such variation under any method approved under
Section 704(c)
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of the Code and the applicable regulations as chosen by the General Partner. In
the event the Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (ii) of the definition of Gross Asset Value (provided in Article
1), subsequent allocations of Tax Items with respect to such asset shall take
account of the variation, if any, between the adjusted basis of such asset and
its Gross Asset Value in the same manner as under Section 704(c) of the Code and
the applicable regulations consistent with the requirements of Regulations
Section 1.704-1(b)(2)(iv)(g) using any method approved under 704(c) of the Code
and the applicable regulations as chosen by the General Partner.
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 of the
Partnership are 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; provided, however, that
the General Partner may be removed by the Majority in Interest of the Limited
Partners, with or without cause, such removal effective upon the delivery of
written notice thereof by the Limited Partners to the General Partner. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under the Act and other applicable law or which are granted to the
General Partner under any other provision of this Agreement, the General
Partner, subject to the other provisions hereof including Section 7.3, shall
have full power and authority to do all things deemed necessary or desirable by
it to conduct the business of the Partnership, to exercise all powers set forth
in Section 3.2 and to effectuate the purposes set forth in Section 3.1,
including, without limitation:
(i) 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 AMB, in its
capacity as the sole General Partner of the Operating
Partnership and as sole stockholder of the General
Partner (for so long as AMB has determined to qualify
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 stockholders sufficient to
permit AMB to maintain REIT status), the assumption
or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of
same by mortgage, deed of trust or other lien or
encumbrance on all or any of 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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(ii) 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;
(iii) subject to the provisions of Section 7.3.D, the
acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership or the merger or other combination
of the Partnership with or into another entity;
(iv) the mortgage, pledge, encumbrance or hypothecation
of all or any assets of the Partnership, and the use
of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent
with the terms of this Agreement and on any terms it
sees fit, including, without limitation, the
financing of the conduct or the operations of the
General Partner or the Partnership, the lending of
funds to other Persons (including, without
limitation, the General Partner (if necessary to
permit the financing or capitalization of a
subsidiary of the General Partner or the Partnership)
and any Subsidiaries of the Partnership) and the
repayment of obligations of the Partnership, any of
its Subsidiaries and any other Person in which it has
an equity investment;
(v) the negotiation, execution, and performance of any
contracts, leases, conveyances or other instruments
that the General Partner considers useful or
necessary to the conduct of the Partnership's
operations or the implementation of the General
Partner's powers under this Agreement;
(vi) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;
(vii) the selection and dismissal of employees of the
Partnership (including, without limitation, employees
having titles such as "president," "vice president,"
"secretary" and "treasurer"), and agents, outside
attorneys, accountants, consultants and contractors
of the Partnership, the determination of their
compensation and other terms of employment or hiring,
including waivers of conflicts of interest and the
payment of their expenses and compensation out of the
Partnership's assets;
(viii) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;
(ix) 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
any Subsidiary and any other Person in which it has
an equity investment from time to time); provided
that, as long as AMB, in its capacity as the sole
stockholder of the General Partner and as the sole
general partner of the
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Operating Partnership, has determined to continue to
qualify as a REIT, the Partnership may not engage in
any such formation, acquisition or contribution that
would cause AMB to fail to qualify as a REIT;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct
of litigation and the incurring of legal expense and
the settlement of claims and litigation, and the
indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any
Person (including, without limitation, contributing
or loaning Partnership funds to, incurring
indebtedness on behalf of, or guarantying the
obligations of any such Persons);
(xii) subject to the other provisions in this Agreement,
the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as it may adopt;
provided that, such methods are otherwise consistent
with requirements of this Agreement;
(xiii) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owned by the
Partnership or any Subsidiary of the Partnership or
any Person in which the Partnership has made a direct
or indirect equity investment;
(xiv) holding, managing, investing and reinvesting cash and
other assets of the Partnership;
(xv) the collection and receipt of revenues and income of
the Partnership;
(xvi) 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;
(xvii) 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;
(xviii) 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
(xix) the making, execution and delivery of any and all
deeds, leases, notes, deeds to secure debt,
mortgages, deeds of trust, security agreements,
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conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments
or other agreements in writing necessary or
appropriate in the judgment of the General Partner
for the accomplishment of any of the powers of the
General Partner enumerated in this Agreement.
(xx) the making of loans by the Partnership to its
Partners, for any purpose, provided that such loans
be upon arm's-length terms.
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 provisions of
this Agreement (except as provided in Section 7.3), the Act or any applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.
C. At all times from and after the date hereof, the
General Partner may cause the Partnership to obtain and maintain (i) casualty,
liability and other insurance (including, without limitation, earthquake
insurance) on the properties of the Partnership and (ii) liability insurance for
the Indemnities hereunder.
D. At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and maintain working
capital and other reserves in such amounts as the General Partner, in its sole
and absolute discretion, deems appropriate and reasonable from time to time.
E. In exercising its authority under this Agreement, the
General Partner may, but other than as set forth in the following sentence and
as expressly set forth in the agreements listed on Exhibit H hereto, shall be
under no obligation to, take into account the tax consequences to any Partner
(including the General Partner) of any action taken by the General Partner. 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.
F. Except as otherwise provided herein, to the extent
the duties of the General Partner require expenditures of funds to be paid to
third parties, the General Partner shall not have any obligations hereunder
except to the extent that Partnership funds are reasonably available to it for
the performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
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Section 7.2. Certificate of Limited Partnership
To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and to maintain the Partnership's qualification to do business as a foreign
limited partnership in each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(iv), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware, and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Section 7.3. Restrictions on General Partner's Authority
A. The General Partner may not take any action in
contravention of this Agreement, including, without limitation:
(i) take any action that would make it impossible to
carry on the ordinary business of the Partnership,
except as otherwise provided in this Agreement;
(ii) possess Partnership property, or assign any rights in
specific Partnership property, for other than a
Partnership purpose except as otherwise provided in
this Agreement;
(iii) admit a Person as a Partner, except as otherwise
provided in this Agreement;
(iv) perform any act that would subject a Limited Partner
to liability as a general partner in any jurisdiction
or any other liability except as provided herein or
under the Act; or
(v) perform any act that would subject the Partnership to
regulation as an "investment company" as such term is
defined under the Investment Company Act of 1940, as
amended.
B. The General Partner shall not, without the prior
Consent of the Partners (in addition to any Consent of the Limited Partners
required by any other provision hereof), undertake, on behalf of the
Partnership, any of the following actions or enter into any transaction which
would have the effect of such transactions:
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(i) except as provided in Section 7.3.D below, amend,
modify or terminate this Agreement other than to
reflect the admission, substitution, termination or
withdrawal of partners pursuant to Article 12;
(ii) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment
of a custodian, receiver or trustee for all or any
part of the assets of the Partnership;
(iii) institute any proceeding for bankruptcy on behalf of
the Partnership;
(iv) confess a judgment against the Partnership; or
(v) enter into a merger (including a triangular merger),
consolidation or other combination of the Partnership
with or into another entity.
C. Except in the case of a Liquidating Event pursuant to
Section 13.1 (other than Section 13.1.F), the General Partner shall not, without
the prior Consent of the Limited Partners, undertake, on behalf of the
Partnership, any actions or enter into any transaction which would have the
effect of a dissolution of the Partnership, including a sale, exchange, transfer
or other disposition of all or substantially all of the Partnership's assets in
a single transaction or a series of related transactions.
D. Notwithstanding Sections 7.3.B and 7.3.C, but subject
to Section 7.3.E, the General Partner shall have the power, without the Consent
of the Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(i) 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;
(ii) to reflect the issuance of additional Partnership
Interests pursuant to Section 4.3.B, or the
admission, substitution, termination, reduction in
Partnership Units or withdrawal of Partners in
accordance with this Agreement (which may be effected
through the replacement of Exhibit A with an amended
Exhibit A);
(iii) to set forth or amend the designations, rights,
powers, duties, and preferences of the holders of any
additional Partnership Interests issued pursuant to
Article 4;
(iv) 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 in, correct or supplement any provision, 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;
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(v) to satisfy any requirements, conditions, or
guidelines contained in any order, directive,
opinion, ruling or regulation of a Federal, state of
local agency or contained in Federal, state or local
law.
(vi) to reflect such changes as are reasonably necessary
for AMB, in its capacity as the sole stockholder of
the General Partner and as the sole general partner
of the Operating Partnership, to maintain its status
as a REIT, including changes which may be
necessitated due to a change in applicable law (or an
authoritative interpretation thereof) or a ruling of
the IRS; and
(vii) to modify, as set forth in the definition of "Capital
Account," the manner in which Capital Accounts are
computed.
The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.D is taken.
E. Notwithstanding Sections 7.3.B, 7.3.C and 7.3.D, this
Agreement shall not be amended, and no action may be taken by the General
Partner, including in either case through merger or sale of assets of the
Partnership or otherwise, without the Consent of each Common Limited Partner or
Preferred Limited Partner adversely affected if such amendment or action would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest (except as the result of the General Partner acquiring such
interest), (ii) modify the limited liability of a Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5 or Section
13.2.A(4) or Article 16 or the allocations specified in Article 6 (except as
permitted pursuant to Section 4.3 and Section 7.3.D), (iv) alter the Redemption
or exchange rights as set forth in Sections 16.5 and 16.8 hereof, respectively,
or (v) amend this Section 7.3.E. Further, no amendment may alter the
restrictions on the General Partner's authority set forth elsewhere in this
Section 7.3 without the Consent specified in such section.
F. The General Partner shall not undertake to dispose of
any Partnership Property specified in the agreements listed in Exhibit G in a
taxable sale or taxable exchange prior to the dates specified in such agreements
without the prior consent of each Limited Partner which contributed all or any
portion of an interest in such Property to the Partnership, as set forth in such
agreements.
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 it incurs relating to the ownership of
interests in and operation of, or for the benefit of, the
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Partnership. Such reimbursements shall be in addition to any reimbursement to
the General Partner as a result of indemnification pursuant to Section 7.7.
C. If and to the extent any reimbursements to the
General Partner pursuant to this Section 7.4 constitute gross income of the
General Partner (as opposed to the repayment of advances made by the General
Partner on behalf of the Partnership), such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners' Capital
Accounts.
Section 7.5. Outside Activities of the General Partner
Without the Consent of the Limited Partners, the General
Partner shall not, directly or indirectly, enter into or conduct any business,
other than in connection with the ownership, acquisition and disposition of
Partnership Interests as a General Partner and the management of the business of
the Partnership and such activities as are incidental to the same and activities
incidental to the ownership of interests permitted by the next succeeding
sentence. Without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly, participate in or otherwise acquire any interest in
any real or personal property, except its General Partner Interest, its interest
in any Subsidiary Partnership(s) (held directly or indirectly through a
Qualified REIT Subsidiary) that the General Partner holds in order to maintain
such Subsidiary Partnership's status as a partnership, and such bank accounts,
similar instruments or other short-term investments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the REIT
Charter. The General Partner's General Partner Interest in the Partnership, and
interests in such short-term liquid investments, bank accounts or similar
instruments as the General Partner deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter are interests
which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.
Section 7.6. Employee Benefit Plans
The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries.
Section 7.7. Indemnification
A. The Partnership shall indemnify an Indemnitee from
and against any and all losses, claims, damages, liabilities, joint or several,
expenses (including 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 as set forth in this Agreement in which any
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
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and either was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan 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
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
any entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership, and any insurance proceeds from
the liability policy covering the General Partner and any Indemnitee, and
neither the General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.
B. 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 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.
D. The Partnership may purchase and maintain insurance,
on behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any 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
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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.
F. In no event may an Indemnitee subject the Limited
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.
I. If and to the extent any reimbursements to the
General Partner pursuant to this Section 7.7 constitute gross income of the
General Partner (as opposed to the repayment of advances made by the General
Partner on behalf of the Partnership) such amounts shall constitute guaranteed
payments within the meaning of Section 707(c) of the Code, shall be treated
consistently therewith by the Partnership and all Partners, and shall not be
treated as distributions for purposes of computing the Partners' Capital
Accounts.
J. Any indemnification hereunder is subject to, and
limited by, the provisions of Section 17-108 of the Act.
K. In the event the Partnership is made a party to any
litigation or otherwise incurs any loss or expense as a result of or in
connection with any Partner's personal obligations or liabilities unrelated to
Partnership business, such Partner shall indemnify and reimburse the Partnership
for all such loss and expense incurred, including legal fees, and the
Partnership Interest of such Partner may be charged therefor. The liability of a
Partner under this Section 7.7.K shall not be limited to such Partner's
Partnership Interest, but shall be enforceable against such Partner personally.
Section 7.8. Liability of the General Partner
A. Notwithstanding anything to the contrary set forth in
this Agreement, none of the General Partner and any of its officers, directors,
agents and employees shall be liable or accountable in damages or otherwise to
the Partnership, any Partners or any Assignees, or their successors or assigns,
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.
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B. The Limited Partners expressly acknowledge that the
General Partner is acting for the benefit of the Partnership, the Limited
Partners and the General Partner's stockholders collectively, that the General
Partner is under no obligation to give priority to the separate interests of the
Limited Partners or the General Partner's stockholders (including, without
limitation, the tax consequences to Limited Partners or Assignees or to
stockholders) in deciding whether to cause the Partnership to take (or decline
to take) any actions and that the General Partner shall not be liable to the
Partnership or to any Limited Partner 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, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by it in good faith.
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 liability of the General Partner and any of its
officers, directors, agents and employees 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 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 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 any non-mandatory provision of 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,
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undertaken in the good faith belief that such action or omission is necessary or
advisable in order to protect the ability of AMB, in its capacity as the sole
stockholder of the General Partner and as the sole general partner of the
Operating Partnership, for so long as AMB has determined to qualify as a REIT,
to (i) continue to qualify as a REIT or (ii) except with respect to the
distribution of Available Cash to the Series C Limited Partners in accordance
with Section 16.3 avoid AMB 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.
E. So long as the General Partner holds any interest in
the Partnership (as either a General Partner or Limited Partner), the General
Partner shall have "management rights" (as such term is defined in the Plan
Asset Regulation) with respect to the Partnership and its Properties to the
extent necessary to qualify AMB as a "venture capital operating company" (as
such term is defined in the Plan Asset Regulation).
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 Partners, individually or collectively, shall
have any ownership interest in such Partnership assets or any portion thereof.
Title to any or all of the Partnership assets may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General Partner
may determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be deemed held by the General Partner or such nominee or
Affiliate 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 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 such Person shall be entitled to
deal with the General Partner as if it were the Partnership's sole party in
interest, both legally and beneficially. Each Limited Partner hereby waives any
and all defenses or other remedies 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
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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 or under the Act.
Section 8.2. Management of Business
No Limited Partner or Assignee (other than the General
Partner, any of its Affiliates or any officer, director, employee, general
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such) shall take part in the operations,
management or control (within the meaning of the Act) of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. Notwithstanding the
foregoing, the General Partner may be removed by the Limited Partners, pursuant
to and in accordance with Section 7.1. Upon the removal of the General Partner,
the Common Limited Partners shall select a successor General Partner, who shall
upon the acceptance of such selection be admitted as a successor General Partner
pursuant to Section 12.1 hereof. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
general 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 by a Limited Partner or
its Affiliates with the General Partner, Partnership or a Subsidiary, any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate
or stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct 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. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such other 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 other Person.
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Section 8.4. Return of Capital
Except pursuant to the Redemption and exchange rights set
forth in Sections 16.5 and 16.8, no Limited Partner shall be entitled to the
withdrawal or return of his or her Capital Contribution, except to the extent of
distributions made pursuant to this Agreement or upon termination of the
Partnership as provided herein. Except as expressly set forth herein with
respect to the rights, priorities and preferences of the Preferred Limited
Partners holding any series of Preferred Units, 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 otherwise expressly provided in this
Agreement, as to profits, losses, distributions or credits.
Section 8.5. Rights of Limited Partners Relating to the
Partnership
A. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.B, 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 the Partnership's expense:
(i) to obtain a copy of the most recent annual and
quarterly reports filed with the Securities and
Exchange Commission by AMB pursuant to the Exchange
Act, and each communication sent to the stockholders
of AMB;
(ii) to obtain a copy of the Partnership's Federal, state
and local income tax returns for each Partnership
Year;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each
Partner;
(iv) 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
(v) 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. 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
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 (ii) the Partnership or the General Partner
is required by law or by agreements with unaffiliated third parties to keep
confidential.
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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 appropriate books and records with respect
to the Partnership's business, including without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided,
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2. Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. Reports
A. (1) As soon as practicable, but in no event later
than the earlier to occur of (a) 105 days after the close of each Partnership
Year and (b) five (5) business days following the date on which Company files
its annual report in respect of a fiscal year on Form 10-K, or such other
applicable form ("Form 10-K"), with the Securities and Exchange Commission (the
"Commission"), a complete copy of Company's audited financial statements for
such fiscal year including a balance sheet, income statement and cash flow
statement for such fiscal year prepared and audited by an independent nationally
recognized firm of certified public accountants in accordance with GAAP and (2)
not later than fifteen (15) days after the date documents are delivered in
clause (A)(1) above, the consolidating balance sheet, cash flow statement and
income statement of the Operating Partnership for such fiscal year, prepared by
the Company; and
B. (1) As soon as practicable, but in no event later
than five (5) business days following the date on which Company files its
quarterly report in respect of a fiscal quarter on Form 10-Q, or such other
applicable form ("Form 10-Q"), with the Commission, a complete copy of the
Company's unaudited quarterly financial statements for such fiscal quarter
including a balance sheet, income statement and cash flow statement for such
fiscal quarter prepared in accordance with GAAP and (2) not later than fifteen
(15) days after the date documents are delivered in clause (B)(1) above, the
consolidating balance sheet, cash flow statement and income statement of the
Operating Partnership for such fiscal quarter, prepared and certified by the
Company.
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Section 9.4. Nondisclosure of Certain Information
Notwithstanding the provisions of Sections 9.1 and 9.3, the
General Partner may keep confidential from the Limited Partners any information
that the General Partner 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 which the Partnership is
required by law or by agreements with unaffiliated third parties to keep
confidential.
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. Each
Limited Partner shall promptly provide the General Partner with such information
relating to any Contributed Property contributed by such Limited Partner to the
Partnership.
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, including the election under Section
754 of the Code. The General Partner shall have the right to seek to revoke any
such election (including without limitation, any election under Section 754 of
the Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is 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
6223(c) 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 and profit interest of each
of the Limited Partners and Assignees; provided, however, that such information
is provided to the Partnership by the Limited Partners and Assignees.
B. The tax matters partner is authorized, but not required:
(i) 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
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agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (a)
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 (b) who is a "notice
partner" (as defined in Section 6231 of the Code) or
a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(ii) 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 United
States Claims Court, or the filing of a complaint for
refund with the District Court of the United States
for the district in which the Partnership's principal
place of business is located;
(iii) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment
with the IRS at any time and, if any part of such
request is not allowed by the IRS, to file an
appropriate pleading (petition or complaint) for
judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a
Partner for tax purposes, or an item affected by such
item; and
(vi) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by
the tax matters partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole and absolute discretion of the
tax matters partner and the provisions relating to indemnification of the
General Partner set forth in Section 7.7 shall be fully applicable to the tax
matters partner in its capacity as such.
C. 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)
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.
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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, 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 (including, without
limitation, the right to receive distributions and the holding of a security
interest in such Limited Partner's Partnership Interest). Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus two percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e., 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 Interest, shall be deemed to refer to a
transaction by which the General Partner purports to assign its General Partner
Interest to another Person or by which a Limited Partner purports to assign its
Limited Partnership Interest to another Person, and includes a sale,
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assignment, gift (outright or in trust), pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise. Except to the
extent otherwise specified, the term "transfer" when used in this Article 11
does not include any exchange for Series C Preferred Shares pursuant to Section
16.8. No part of the interest of a Limited Partner shall be subject to the
claims of any creditor, any spouse for alimony or support, or to legal process,
and may not be voluntarily or involuntarily alienated or encumbered, except as
may be specifically provided for in this Agreement.
B. 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 ab initio
unless otherwise consented by the General Partner in its sole and absolute
discretion.
Section 11.2. Transfer of General Partner's and Common
Limited Partner's Partnership Interest
A. The General Partner shall not withdraw from the
Partnership and shall not transfer all or any portion of its interest in the
Partnership (whether by sale, statutory merger, consolidation, liquidation or
otherwise). Any attempted transfer of the General Partner Interest shall be void
ab initio. To the extent the prior sentence does not have the effect of
preventing any such proposed transfer, the transfer shall cause the dissolution
of the Partnership.
B. Except as otherwise provided in this Section 11.2.B,
no Common Limited Partner shall withdraw from or transfer all or any portion of
its interest in the Partnership (whether by sale, statutory merger,
consolidation, liquidation or otherwise). Any attempted transfer of a Common
Limited Partner Interest contrary to this Section 11.2.B shall be void ab
initio. To the extent the prior sentence does not have the effect of preventing
any such proposed transfer, the transfer shall cause the dissolution of the
Partnership.
C. Notwithstanding Section 11.2.B, any Common Limited
Partner other than the Operating Partnership shall be permitted to transfer,
with the consent of the General Partner (which consent may be given or withheld
in the General Partner's sole and absolute discretion), all or any portion of
its Partnership Interest to the Operating Partnership.
Section 11.3. Preferred Limited Partners' Rights to
Transfer
A. Any Preferred Limited Partner may, at any time
without the consent of the General Partner, (i) transfer all or any portion of
its Partnership Interest to the General Partner, (ii) transfer all or any
portion of its Partnership Interest to an Affiliate controlled thereby or to an
Immediate Family member, subject to the provisions of Section 11.6, (iii)
transfer all or any portion of its Partnership Interest to a trust for the
benefit of a charitable beneficiary or to a charitable foundation, subject to
the provisions of Section 11.6 and (iv) subject to the provisions of Section
11.6, (a) pledge (a "Pledge") all or any portion of its Partnership Interest to
a lending institution, which is not an Affiliate of such Preferred Limited
Partner, as collateral or security for a bona fide loan or other extension of
credit, or (b) transfer such pledged Partnership Interest to such lending
institution in connection with the exercise of remedies under such loan or
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extension of credit. In addition, each Preferred Limited Partner or Assignee
(resulting from a transfer made pursuant to clauses (i)-(iv) of the preceding
sentence) shall have the right to transfer all or any portion of its Partnership
Interest, subject to the provisions of Section 11.6, provided that any transfer
of a Partnership Interest shall be made only to Qualified Transferees.
It is a condition to any transfer otherwise permitted
hereunder that the transferee assumes by operation of law or express agreement
all of the obligations of the transferor Preferred Limited Partner under this
Agreement with respect to such transferred Partnership Interest and no such
transfer (other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the Charter, which may limit or restrict such
transferee's ability to exercise its Redemption rights or the exchange rights
set forth in Section 16.8 and to the representations set forth in Section 3.4.D.
Any transferee, whether or not admitted as a Substituted Limited Partner, shall
take subject to the obligations of the transferor hereunder. Unless admitted as
a Substituted Limited Partner, no transferee, whether by a voluntary transfer,
by operation of law or otherwise, shall have any rights hereunder, other than
the rights of an Assignee as provided in Section 11.5.
B. If a Preferred 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 Preferred Limited Partner, but not more rights than those enjoyed by
other Preferred Limited Partners, for the purpose of settling or managing the
estate, and such power as the Incapacitated Preferred 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
otherwise permitted under this Section 11.3 by a Preferred Limited Partner of
his or her Partnership Units if, in the opinion of legal counsel to the
Partnership, such transfer would require the filing of a registration statement
under the Securities Act by the Partnership 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 Preferred Limited Partner of his or
her Partnership Units (including any Redemption or exchange rights set forth in
Sections 16.5 and 16.8, or any other acquisition of Common Units or Series C
Preferred Units by the General Partner, AMB or the Partnership) may be made to
any person if (i) in the opinion of legal counsel for the Partnership, it could
result in the Partnership being treated as an association taxable as a
corporation or (ii) absent the consent of the General Partner, which may be
given or withheld in its sole and absolute discretion, such transfer could be
treated as effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
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E. No transfer of any Preferred 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 redeem or exchange
for the specified amount of Series C Preferred Shares 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.
F. No Preferred Limited Partner may withdraw from the
Partnership except as a result of transfer, Redemption or exchange of all of its
Partnership Units pursuant hereto.
Section 11.4. Substituted Limited Partners
A. Any Preferrred Limited Partner shall have the right
to substitute a transferee permitted by this Agreement as a Limited Partner in
his or her place. The General Partner shall have the right to consent to the
admission of a permitted transferee of the interest of any other Limited
Partner, as a Substituted Limited Partner, pursuant to this Section 11.4, 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. The admission of any transferee as a Substituted
Limited Partner shall be subject to the transferee executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement (including, without limitation, the provisions of Section 2.4 and such
other documents or instruments as may be required to effect the admission, each
in form and substance satisfactory to the General Partner) and the
acknowledgment by such transferee that each of the representations and
warranties set forth in Section 3.4 are true and correct with respect to such
transferee as of the date of the transfer of the Partnership Interest to such
transferee and will continue to be true to the extent required by such
representations and warranties.
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, with respect to a transferee requiring
the General Partner's consent, does not consent, in its sole and absolute
discretion, 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
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entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain and loss attributable to the
Partnership Units assigned to such transferee, the rights to transfer the
Partnership Units provided in this Article 11, and the right of exchange for
Series C Preferred Shares set forth in Section 16.8, but shall not be deemed to
be a holder of Partnership Units for any other purpose under this Agreement, and
shall not be entitled to effect a Consent with respect to such Partnership Units
on any matter presented to the Limited Partners for approval (such Consent
remaining with the transferor Limited Partner). 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. Notwithstanding anything contained in this
Agreement to the contrary, as a condition to becoming an Assignee, any
prospective Assignee must first execute and deliver to the Partnership an
acknowledgment that each of the representations and warranties set forth in
Section 3.4 hereof are true and correct with respect to such prospective
Assignee as of the date of the prospective assignment of the Partnership
Interest to such prospective Assignee and will continue to be true to the extent
required by such representations or warranties.
Section 11.6. General Provisions
A. No Limited Partner may withdraw from the Partnership
other than as a result of (i) a permitted transfer of all of such Limited
Partner's Partnership Units in accordance with this Article 11 and the
transferee(s) of such Units being admitted to the Partnership as a Substituted
Limited Partner(s) or (ii) pursuant to the Redemption or exchange of all of such
Limited Partner's Series C Preferred Units under Section 16.8.
B. Any Limited Partner who shall transfer all of such
Limited Partner's Partnership Units in a transfer permitted pursuant to this
Article 11 where such transferee was admitted as a Substituted Limited Partner
or pursuant to the exercise of its rights of Redemption or exchange of all of
such Limited Partner's Series C Preferred Units under Section 16.8, shall cease
to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be
made effective on the last day of the month set forth on the written instrument
of transfer, unless the General Partner otherwise agrees.
D. If any Partnership Interest is transferred, assigned
or redeemed during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article 11 or transferred or redeemed
pursuant to Section 16.5, on 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 Partnership Interest for such fiscal year shall be divided
and allocated between the transferor Partner and the transferee Partner by
taking into account their varying interests during the fiscal year in accordance
with Section 706(d) of the Code, using the interim closing of the books method.
Except as otherwise required by Section 706(d) of the Code or as otherwise
specified in this Agreement or as otherwise determined by the General Partner
(to the extent consistent with Section 706(d) of the Code), solely for purposes
of making such
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allocations, each of such items for the calendar month in which the transfer,
assignment or redemption occurs shall be allocated among all the Partners and
Assignees in a manner determined by the General Partner in its sole discretion.
E. In addition to any other restrictions on transfer
herein contained, including without limitation the provisions of this Article 11
and Section 2.6, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including by way of a Redemption or exchange for Series
C Preferred Shares, or any other acquisition of Common Units or Series C
Preferred Units by the Partnership, AMB or the General Partner) be made (i) to
any person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) except with the
consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, of any component portion of a Partnership Interest, such as
the Capital Account, or rights to distributions, separate and apart from all
other components of a Partnership Interest; (iv) except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, if in the opinion of legal counsel to the Partnership such transfer
would cause a termination of the Partnership for Federal or state income tax
purposes (except as a result of the Redemption or exchange for Preferred Shares
or cash pursuant to Sections 16.5 and 16.8, of all Partnership Units held by all
Preferred Limited Partners); (v) if in the opinion of counsel to the Partnership
such transfer would cause the Partnership to cease to be classified as a
partnership for Federal or state income tax purposes (except as a result of a
Redemption or exchange for Preferred Shares pursuant to Sections 16.5 and 16.8
of all Partnership Units held by all Limited Partners); (vi) if such transfer
would cause the Partnership to become, with respect to any employee benefit plan
subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the
Code); (vii) if such transfer would, in the opinion of counsel to the
Partnership, cause any portion of the assets of the Partnership to constitute
assets of any employee benefit plan pursuant to Department of Labor Regulations
Section 2510.2-101; (viii) if such transfer requires the registration of such
Partnership Interest or requires the registration of the exchange of such
Partnership Interests for any capital stock pursuant to any applicable Federal
or state securities laws; (ix) except with the consent of the General Partner,
which may be given or withheld in its sole and absolute discretion, if such
transfer is effectuated through an "established securities market" or a
"secondary market" (or the substantial equivalent thereof) within the meaning of
Section 7704 of the Code or such transfer causes the Partnership to become a
"Publicly Traded Partnership," as such term is defined in Sections 469(k)(2) or
7704(b) of the Code; (x) if such transfer subjects the Partnership to be
regulated under the Investment Company Act of 1940, the Investment Advisors Act
of 1940 or the Employee Retirement Income Security Act of 1974, each as amended;
(xi) if the transferee or assignee of such Partnership Interest is unable to
make the representations set forth in Section 3.4.D or such transfer could
otherwise adversely affect the ability of AMB, in its capacity as the sole
stockholder of General Partner and the sole general partner of the Operating
Partnership, to remain qualified as a REIT; or (xii) if, except with the consent
of the General Partner, which may be given or withheld in its sole and absolute
discretion, such transfer would subject the General Partner to any additional
taxes under Section 857 or Section 4981 of the Code.
F. The General Partner shall monitor the transfers of
interests in the Partnership (including any acquisition of Series C Preferred
Units by the Partnership, AMB or
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the General Partner) to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether such transfers of interests would result in the Partnership being unable
to qualify for at least one of the "safe harbors" set forth in Regulations
Section 1.7704-1 (or such other applicable guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors"). The
General Partner shall have authority (but shall not be required to) to take any
steps it determines are necessary or appropriate in its sole and absolute
discretion to prevent any trading of interests which could cause the Partnership
to become a "publicly traded partnership," or any recognition by the Partnership
of such transfers, or to insure that at least one of the Safe Harbors is met.
ARTICLE 12.
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner
A successor to all of the General Partner's General Partner
Interest pursuant to Section 11.2 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 Article 11.
Section 12.2. Admission of Additional Limited Partners
A. 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 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 receipt of the Capital Contribution in respect of
such Limited Partner, the documents set forth in this Section 12.2.A and the
consent of the General Partner to such admission. If any Additional Limited
Partner is admitted to the Partnership on any day other
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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 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 items for the calendar month in which an admission of
an Additional Limited Partner occurs shall be allocated among all the Partners
and Assignees, including such Additional Limited Partner, in a manner determined
by the General Partner in its sole discretion.
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.
ARTICLE 13.
DISSOLUTION AND LIQUIDATION
Section 13.1. Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
(selected as described in Section 13.1.B below) 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 term as provided in Section
2.5;
B. an event of withdrawal of the General Partner, as
defined in the Act, unless, within ninety (90) days after the withdrawal, all of
the remaining Common Limited Partners agree in writing, in their sole and
absolute discretion, to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a substitute General
Partner;
C. prior to October 15, 2096, an election to dissolve
the Partnership made by the General Partner with the consent of Limited Partners
who hold ninety percent (90%) of the outstanding Units held by Limited Partners;
D. subject to the provisions of Section 7.3.C, an
election to dissolve the Partnership made by the General Partner in its sole and
absolute discretion;
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E. entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
F. the sale or disposition of all or substantially
all of the assets and properties of the Partnership;
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 or at the time of the entry of such order or judgment a
Majority in Interest of the Limited Partners remaining consent in writing to
continue the business of the Partnership and to the appointment, effective as of
a date prior to the date of such order or judgment, of a substitute General
Partner.
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 "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 assets 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 of 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;
(iii) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and
(iv) The balance, if any, to the Partners in accordance
with their Capital Account balances determined after
giving effect to all contributions and distributions
for all periods, and after taking into account all
Capital Account adjustments for the Partnership
taxable year during which the liquidation occurs
(other than those made as a result of the liquidating
distribution set forth in this Section 13.2.A(iv)).
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.
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B. Notwithstanding the provisions of Section 13.2.A
which require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as 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, 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. The Partnership shall be terminated when any notes
received in connection with any such sale or disposition referenced in Section
13.1.E above, or in connection with the liquidation of the Partnership have been
paid and all of the cash or property available for application and distribution
under this Agreement have been applied and distributed in accordance with this
Agreement.
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 any Partner has a deficit balance in his or her
Capital Account (after giving effect to all contributions, distributions and
allocations for the taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever, except to the extent otherwise agreed
to by such Partner and the General Partner. In the discretion of the Liquidator
or the General Partner, a pro rata portion of the distributions that would
otherwise be made to the General Partner and Limited Partners pursuant to this
Article 13 may be:
A. distributed to a trust established for the benefit of
the General Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the Partnership or of the
General Partner arising out of or in connection with the Partnership. 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 or
the General Partner, in the same proportions and 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
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B. withheld to establish any reserves deemed necessary
or appropriate for any contingent or unforeseen liabilities or obligations of
the Partnership; and to reflect the unrealized portion of any installment
obligations owed to the Partnership; provided that, such withheld amounts shall
be distributed to the General Partner and Limited Partners as soon as
practicable.
Section 13.4. Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article 13, in the
event the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Partnership
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 his
Capital Contribution and shall have no right or power to demand or receive
property from the General Partner. Except as expressly set forth herein with
respect to the rights, priorities and preferences of the Preferred Limited
Partners holding any series of Preferred Units, no Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital
Contributions, distributions or allocations.
Section 13.6. Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs
that would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
Section 13.7. Cancellation of Certificate of Limited
Partnership
Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
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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, 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; CONSENTS
Section 14.1. Amendments
A. The actions requiring consent or approval of the
Partners or of the Limited Partners pursuant to this Agreement, including
Sections 7.3 and 16.6, or otherwise pursuant to applicable law, are subject to
the procedures in this Article 14.
B. Amendments to this Agreement requiring the consent or
approval of Limited Partners may be proposed by the General Partner or by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held by Limited Partners. Following such proposal, the General Partner
shall submit any proposed amendment to the Partners or of the Limited Partners,
as applicable. The General Partner shall seek the written consent or approval of
the Partners or of the Limited 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 consent, the General Partner
may require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute a
consent which is consistent with the General Partner's recommendation (if so
recommended); provided that, an action shall become effective at such time as
requisite consents are received even if prior to such specified time.
Section 14.2. Action by 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-five percent (25%) or more of the
Partnership Interests held by the Limited Partners that are entitled to vote on
the matters proposed to be voted on at such meeting. 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 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 of the Percentage Interests of the Partners, or
the Consent of the Partners or Consent of the Limited Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.1.
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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 the Percentage Interests as is
expressly required by this Agreement for the action in question. Such consent
may be in one instrument or in several instruments, and shall have the same
force and effect as a vote of the Percentage Interests of the Partners
(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.
D. Each meeting of Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint pursuant
to such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate.
E. Except as otherwise expressly provided, on matters on
which Limited Partners are entitled to vote, each Limited Partner shall have a
vote equal to the number of Partnership Units held.
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 certified first class United States mail, nationally recognized overnight
delivery service or facsimile transmission to the Partner or Assignee at the
address set forth in Exhibit A or such other address as the Partners shall
notify the General Partner in writing.
Section 15.2. Titles and Captions
All article or section titles or captions in this Agreement
are for convenience only. They shall not be deemed part of this Agreement and in
no way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" 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.
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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
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 or delay 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 any breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
Section 15.8. Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such 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 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 (together with the agreements listed on Exhibit
H hereto as to rights and obligations in respect of the Units held by the
Limited Partners who are parties thereto, or their permitted transferees)
contains the entire understanding and agreement among the
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Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.
Section 15.12. No Rights as Stockholders
Nothing contained in this Agreement shall be construed as
conferring upon the holders of Partnership Units any rights whatsoever as
stockholders of the General Partner, including without limitation any right to
receive dividends or other distributions made to stockholders of the General
Partner or to vote or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the General
Partner or any other matter.
ARTICLE 16.
SERIES C PREFERRED UNITS
Section 16.1. Designation and Number
A series of Partnership Units in the Partnership designated as
the 8 3/4% Series C Cumulative Redeemable Preferred Units (the "Series C
Preferred Units") is hereby established. The number of Series C Preferred Units
shall be 2,200,000.
Section 16.2. Ranking
The Series C Preferred Units shall, with respect to
distribution rights and rights upon voluntary or involuntary liquidation,
winding up or dissolution of the Partnership, rank (i) senior to the Common
Units and to all Partnership Units the terms of which provide that such
Partnership Units shall rank junior to the Series C Preferred Units; (ii) on a
parity with all other Parity Preferred Units; and (iii) junior to all
Partnership Units which rank senior to the Series C Preferred Units.
Section 16.3. Distributions
A. Payment of Distributions. Subject to the rights of
holders of Parity Preferred Units as to the payment of distributions, pursuant
to Section 5.1 hereof, holders of Series C Preferred Units will be entitled to
receive, when, as and if declared by the Partnership acting through the General
Partner, out of Available Cash, cumulative preferential cash distributions in an
amount equal to the Series C Priority Return. Such distributions will be payable
(A) quarterly (such quarterly periods for purposes of payment and accrual will
be the quarterly periods ending on the dates specified in this sentence and not
calendar year quarters) in arrears, on the 15th day of January, April, July and
October of each year and (B) in the event of (i) an exchange of Series C
Preferred Units into Series C Preferred Shares, or (ii) a redemption of Series C
Preferred Units, on the exchange date or redemption date, as applicable (each a
"Series C Preferred Unit Distribution Payment Date"), commencing on the first of
such payment dates to occur following their original date of issuance. If any
date on which distributions are to be made on the Series C Preferred Units 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 any
interest or other payment in respect of any such delay) except that, if such
Business Day is in
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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 such date. Distributions on the Series C Preferred Units will be made to the
holders of record of the Series C Preferred Units on the relevant record dates,
which will be fifteen (15) days prior to the relevant Preferred Unit
Distribution Payment Date (the "Series C Preferred Unit Partnership Record
Date").
B. Distributions Cumulative. Notwithstanding the
foregoing, distributions on the Series C Preferred Units will accrue whether or
not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such of such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series C Preferred Units
will accumulate as of the Preferred Unit Distribution Payment Date on which they
first become payable.
C. Priority as to Distributions. (i) So long as any
Series C Preferred Units are outstanding, no distribution of cash or other
property shall be authorized, declared, paid or set apart for payment on or with
respect to any class or series of Partnership Interest represented by Junior
Units, nor shall any Junior Units or Parity Preferred Units be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid to
or made available for a sinking fund for the redemption of any such Junior Units
or Parity Preferred Units) by the Partnership (except by conversion into or
exchange for other Junior Units or Parity Preferred Units, as the case may be)
unless, in each case, full cumulative distributions have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof set apart for such payment on the Series C Preferred Units
and all classes and series of outstanding Parity Preferred Units for all
distribution periods. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the exchange of Junior Units or Parity
Preferred Units into Partnership Interests of the Partnership ranking junior to
the Series C Preferred Units as to distributions and upon voluntary and
involuntary liquidation, dissolution or winding up of the Partnership, or (c)
distributions necessary to enable the Operating Partnership to redeem
partnership interests corresponding to Series C Preferred Shares, Parity
Preferred Stock with respect to distributions or Junior Stock to be purchased by
AMB pursuant to the REIT Charter to preserve AMB's status as a REIT, provided
that such redemption shall be upon the same terms as the corresponding stock
purchase pursuant to the REIT Charter.
(ii) So long as distributions have not been paid in full
(or a sum sufficient for such full payment is not so set apart) upon the Series
C Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series C Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
C Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series C Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series C Preferred Units which may be in
arrears.
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(iii) Notwithstanding anything to the contrary set forth
herein, distributions on Partnership Interests held by either (a) the General
Partner or (b) any other holder of Partnership Interest in the Partnership, in
each case ranking junior to or on parity with the Series C Preferred Units may
be made, without preserving the priority of distributions described in Sections
16.3.C(i) and (ii), but only to the extent such distributions are required to
preserve the REIT status of AMB, in its capacity as sole general partner of the
Operating Partnership and as sole stockholder of the General Partner, and in the
case of any holder other than the General Partner only to the extent required by
the Partnership Agreement; provided, that the Partnership shall not be
disproportionately burdened by this provision relative to the cash flow
generated by other assets owned directly or indirectly by AMB.
D. No Further Rights. Holders of Series C Preferred
Units shall not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions described
herein.
Section 16.4. Liquidation Proceeds
A. Distributions. Upon voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, distributions on the
Series C Preferred Units shall be made in accordance with Article 13 of this
Agreement.
B. Notice. Written notice of any such voluntary or
involuntary 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 be given by the
General Partner pursuant to Section 13.6 hereof.
C. No Further Rights. After payment of the full amount
of the liquidating distributions to which they are entitled, Holders of Series C
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
D. Consolidation, Merger or Certain Other Transactions.
None of a consolidation or merger of the Partnership with or into another
entity, a merger of another entity with or into the Partnership, or a sale,
lease, transfer or conveyance of all or substantially all of the Partnership's
property or business shall be considered a liquidation, dissolution or winding
up of the Partnership.
Section 16.5. Redemption
A. Redemption. The Series C Preferred Units may not be
redeemed prior to November 24, 2003. On or after such date, the Partnership
shall have the right to redeem the Series C Preferred Units, in whole or in
part, at any time or from time to time, upon not less than 30 nor more than 60
days' written notice, at a redemption price, payable in cash (a "Redemption"),
equal to the Capital Account balance of the holder of Series C Preferred Units
(the "Redemption Price"); provided, however, that no redemption pursuant to this
Section 16.5 will be permitted if the Redemption Price does not equal or exceed
the original Capital Contribution of such holder plus the cumulative Series C
Priority Return to the redemption date to the extent not previously distributed.
If fewer than all of the outstanding Series C Preferred
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Units are to be redeemed, the Series C Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).
B. Limitation on Redemption. (i) The Redemption Price of
the Series C Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB which will be contributed by AMB to the Operating
Partnership and the General Partner, and which in turn will be contributed by
the Operating Partnership and the General Partner to the Partnership as an
additional capital contribution, or out of the sale of limited partner interests
in the Partnership or the Operating Partnership and from no other source. For
purposes of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter)), depository shares, interests, 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) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
C. Procedures for Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
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 C Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series C Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Redemption Price, (c) the aggregate number of
Series C Preferred Units to be redeemed and if fewer than all of the outstanding
Series C Preferred Units are to be redeemed, the number of Series C Preferred
Units to be redeemed held by such holder, which number shall equal such holder's
pro rata share (based on the percentage of the aggregate number of outstanding
Series C Preferred Units that the total number of Series C Preferred Units held
by such holder represents) of the aggregate number of Series C Preferred Units
to be redeemed, (d) the place or places where such Series C Preferred Units are
to be surrendered for payment of the Redemption Price, (e) that distributions on
the Series C Preferred Units to be redeemed will cease to accumulate on such
redemption date and (f) that payment of the Redemption Price will be made upon
presentation and surrender of such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series C Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Partnership will
deposit irrevocably in trust for the benefit of the Series C Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price and will
give irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series C Preferred Units upon surrender of the Series C Preferred
Units by such holders at the place designated in the notice of redemption. On
and after the date of redemption, distributions
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will cease to accumulate on the Series C Preferred Units or portions thereof
called for redemption, unless the Partnership defaults in the payment thereof.
If any date fixed for redemption of Series C Preferred Units is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid by the Partnership, distributions on
such Series C Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
Section 16.6. Voting Rights
A. General. Holders of the Series C Preferred Units will
not have any voting rights or right to consent to any matter requiring the
consent or approval of the Limited Partners, except as set forth below and in
Section 7.3.E.
B. Certain Voting Rights. So long as any Series C
Preferred Units remains outstanding, the Partnership shall not, without the
affirmative vote of the holders of at least two-thirds of the Series C Preferred
Units outstanding at the time (i) authorize or create, or increase the
authorized or issued amount of, any class or series of Partnership Interests
ranking prior to the Series C Preferred Units with respect to payment of
distributions or rights upon liquidation, dissolution or winding-up or
reclassify any Partnership Interests of the Partnership into any such
Partnership Interest, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests, (ii) authorize or create, or increase the authorized or issued amount
of any Parity Preferred Units or reclassify any Partnership Interest of the
Partnership into any such Partnership Interest or create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any
such Partnership Interests but only to the extent such Parity Preferred Units
are issued to an affiliate of the Partnership, other than AMB or the Operating
Partnership to the extent the issuance of such interests was to allow AMB or the
Operating Partnership to issue corresponding preferred stock or preferred
interests to persons who are not affiliates of the Partnership (other than AMB
to the extent AMB issues corresponding preferred stock to persons who are not
affiliates of the Partnership or the Operating Partnership) or (iii) either
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or amend, alter
or repeal the provisions of the Partnership Agreement (including, without
limitation, this Article 16 and Section 11.2), whether by merger, consolidation
or otherwise, in each case in a manner that would materially and adversely
affect the powers, special rights, preferences, privileges or voting power of
the Series C Preferred Units or the holders thereof; provided, however, that
with respect to the occurrence of any event set forth in (iii) above, so long as
(a) the Partnership is the surviving entity and the Series C Preferred Units
remain outstanding with the terms thereof unchanged, or (b) the resulting,
surviving or transferee entity is a partnership, limited liability company or
other pass-through entity organized under the laws of any state and substitutes
the Series C Preferred Units for other interests in such entity having
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<PAGE> 69
substantially the same terms and rights as the Series C Preferred Units,
including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series C Preferred Units; and provided
further, that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests
represented by Junior Units or Parity Preferred Units that are not issued to an
affiliate of the Partnership, other than the General Partner or the Operating
Partnership to the extent the issuance of such interests was to allow the
General Partner or the Operating Partnership to issue corresponding preferred
stock to persons who are not affiliates of the Partnership (other than AMB to
the extent AMB issues corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership or the Operating Partnership),
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
C. So long as any Series C Preferred Units remain
outstanding, the Operating Partnership shall not, without the affirmative vote
of the holders of at least two-thirds of the Series C Preferred Units
outstanding at the time, take any action which would result in the termination
of the right of the holders of such units to effect an exchange pursuant to
Section 16.8; provided however, no such vote shall be required so long as the
Series C Preferred Units (or any interests substituted therefore pursuant to
Section 16.6.B) remain outstanding and are exchangeable for Series C Preferred
Shares or stock in another entity having substantially the same terms and rights
as the Series C Preferred Shares.
Section 16.7. Transfer Restrictions
The Series C Preferred Units shall be subject to the
provisions of Article 11 hereof. No transfer of Series C Preferred Units, or
other action by the holder or holders of such Units, is permitted, without the
consent of the General Partner which consent may be given or withheld in its
sole and absolute discretion, if such transfer or other action would result in
more than four partners holding all outstanding Series C Preferred Units within
the meaning of Treasury Regulation Section 1.7704-1(h)(3)(i); provided, however,
that the General Partner's consent may not be unreasonably withheld if (a) such
transfer or other action would not result in more than ten partners holding all
outstanding Series C Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(3)(i) and (b) the General Partner is relying on a provision
other than Treasury Regulation Section 1.7704-1(h) to avoid classification of
Operating Partnership as a "publicly traded partnership" within the meaning of
Code Section 7704 (a "PTP"). In addition, no transfer may be made to any person
if such transfer would cause the exchange of the Series C Preferred Units for
Series C Preferred Shares, as provided herein, to be required to be registered
under the Securities Act of 1933, as amended, or any state securities laws.
Section 16.8. Exchange Rights
A. Right to Exchange.
(i) Series C Preferred Units will be exchangeable in
whole but not in part unless expressly otherwise provided herein at anytime on
or after November 24, 2008, at the option of
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51% of the holders of all outstanding Series C Preferred Units, for authorized
but previously unissued Series C Preferred Shares at an exchange rate of one
Series C Preferred Share from AMB for one Series C Preferred Unit, subject to
adjustment as described below (the "Exchange Price"), provided that the Series C
Preferred Units will become exchangeable at any time, in whole but not in part
unless expressly otherwise provided herein, at the option of 51% of the holders
of all outstanding Series C Preferred Units for Series C Preferred Shares if at
any time full distributions shall not have been timely made on any Series C
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in respect of
Series C Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Preferred Unit Distribution Payment Date if
at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series C Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of 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 PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series C 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 C
Preferred Units may be exchanged for Series C Preferred Shares, in whole but not
in part unless expressly otherwise provided herein, at the option of 51% of the
holders of all outstanding Series C Preferred Units after November 24, 2001 and
prior to November 24, 2008 if such holders of a Series C Preferred Units shall
deliver to the General Partner either (i) a private letter ruling addressed to
such holder of Series C Preferred Units or (ii) an opinion of independent
counsel reasonably acceptable to the General Partner based on the enactment of
temporary or final Treasury Regulations or the publication of a Revenue Ruling,
in either case to the effect that an exchange of the Series C Preferred Units at
such earlier time would not cause the Series C Preferred Units to be considered
"stock and securities" within the meaning of section 351(e) of the Code for
purposes of determining whether the holder of such Series C 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 C Preferred Units, if
Contributors holding 51% of all outstanding Series C Preferred Units determine,
may be exchanged in whole but not in part (regardless of whether held by
Contributors) for Series C Preferred Shares (but only if the exchange in whole
may be accomplished consistently with the ownership limitations set forth under
the Series C Articles Supplementary (as defined herein), taking into account
exceptions thereto) if at any time, excluding the effect of the "Loan" (as
defined below) for purposes of the 5% test of Section 856(c)(4)(B) of the Code,
(i) the Partnership reasonably determines that the assets and income of the
Partnership for a taxable year after 1998 would not satisfy the income and
assets tests of Section 856 of the Code for such taxable year if the Partnership
were a real estate investment trust within the meaning of the Code or (ii) any
holder of Series C Preferred Units shall deliver to the Partnership and the
Company an opinion of independent counsel reasonably acceptable to the Company
to the effect that, based on the assets and income of the Partnership for a
taxable year after 1998, the Partnership would not satisfy the income and assets
tests of Section 856 of the Code for such taxable year if the Partnership were a
real estate investment trust within the meaning of the Code and that such
failure would create a meaningful
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<PAGE> 71
risk that a holder of the Series C Preferred Units would fail to maintain
qualification as a real estate investment trust.
(ii) Notwithstanding anything to the contrary set forth in
Section 16.8.A(i), if an Exchange Notice (as defined herein) has been delivered
to AMB and the General Partner, then the General Partner may, at its 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 C
Preferred Units for cash in an amount equal to the original Capital Contribution
per Series C Preferred Unit and all accrued and unpaid distributions thereon to
the date of redemption. If the General Partner elects to redeem fewer than all
of the outstanding Series C Preferred Units, the number of Series C 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 C
Preferred Units that the total number of Series C Preferred Units held by such
holder represents) of the aggregate number of Series C Preferred Units being
redeemed.
(iii) In the event an exchange of all Series C Preferred
Units pursuant to Section 16.8.A would violate the provisions on ownership
limitation of AMB set forth in Section 7 of Article Third of the Articles
Supplementary to the REIT Charter with respect to Series C Preferred Shares (the
"Series C Articles Supplementary"), each holder of Series C Preferred Units
shall be entitled to exchange, pursuant to the provisions of Section 16.8.B, a
number of Series C Preferred Units which would comply with the provisions on the
ownership limitation of AMB set forth in such Section 7 of Article Third of the
Series C Articles Supplementary, with respect to such holder, and any Series C
Preferred Units not so exchanged (the "Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Excess Unit, plus any accrued and unpaid distributions thereon to the date of
redemption subject to any restriction thereon contained in any debt instrument
or agreement of the Partnership. In the event an exchange would result in Excess
Units, as a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by AMB relating to
(i) the widely held nature of the interests in such holder, sufficient to assure
AMB that the Holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Excess Units under this Section 16.8.A(iii), the "Ownership Limit" set
forth in the Series C Articles Supplementary shall be deemed to be 9.0%. To the
extent the Partnership would not be able to pay the cash set forth above in
exchange for the Excess Units, and to the extent consistent with the REIT
Charter, AMB agrees that it will grant to the holders of the Series C Preferred
Units exceptions to the Ownership Limit set forth in the Series C Articles
Supplementary sufficient to allow such Holders to exchange all of their Series C
Preferred Units for Series C Preferred Shares, provided such holders furnish to
AMB representations acceptable to AMB in its sole and absolute discretion which
assure AMB that such exceptions will not jeopardize AMB's tax status as a REIT
for purposes of federal and applicable state law. Notwithstanding any provision
of this Agreement to the contrary, no Series C Limited Partner shall be entitled
to effect an exchange of Series C Preferred Units for Series C Preferred Shares
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<PAGE> 72
to the extent that ownership or right to acquire such shares would cause the
Partner or any other Person or, in the opinion of counsel selected by AMB, may
cause the Partner or any other Person, to violate the restrictions on ownership
and transfer of Series C Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series C Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series C
Limited Partner shall not acquire any rights or economic interest in the Series
C Preferred Shares otherwise issuable upon such exchange.
(iv) The redemption of Series C Preferred Units described
in Section 16.8.A(ii) and (iii) shall be subject to the provisions of Section
16.5.B(i) and Section 16.5.C(ii); provided, however, that the term "Redemption
Price" in such Sections 16.5.B(i) and 16.5.C(ii) shall be read to mean the
original Capital Contribution per Series C Preferred Unit being redeemed as set
forth on Exhibit A plus all accrued and unpaid distributions to the redemption
date.
B. Procedure for Exchange and/or Redemption of Series C
Preferred Units.
(i) Any exchange shall be exercised pursuant to a notice
of exchange (the "Exchange Notice") delivered to AMB and the General Partner by
the Partners representing at least 51% of the outstanding Series C Preferred
Units (or by Contributors in the case of an exchange pursuant to the last
sentence of Section 16.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series C Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series C Preferred Units for cash pursuant to Section 16.8.A(ii)
or redeem Excess Units pursuant to Section 16.8.A(iii), by delivering to each
holder of record of Series C Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (a) if the General Partner elects to
cause the Partnership to acquire any of the Series C Preferred Units then
outstanding, (1) certificates representing the Series C Preferred Shares being
issued in exchange for the Series C Preferred Units of such holder being
exchanged and (2) a written notice (a "Redemption Notice") stating (A) the
redemption date, which may be the date of such Redemption Notice or any other
date which is not later than sixty (60) days following the receipt of the
Exchange Notice, (B) the redemption price, (C) the place or places where the
Series C Preferred Units are to be surrendered and (D) that distributions on the
Series C Preferred Units will cease to accrue on such redemption date, or (b) if
the General Partner elects to cause the Partnership to redeem all of the Series
C Preferred Units then outstanding in exchange for cash, a Redemption Notice.
Series C Preferred Units shall be deemed canceled (and any corresponding
Partnership Interest represented thereby deemed terminated) simultaneously with
the delivery of shares of Series C Preferred Shares (with respect to Series C
Preferred Units exchanged) or simultaneously with the redemption date (with
respect to Series C Preferred Units redeemed). Holders of Series C Preferred
Units shall deliver any canceled certificates representing Series C Preferred
Units which have been exchanged or redeemed to the office of General Partner
(which currently is located at 505 Montgomery Street, San Francisco, California
94111) within ten (10) Business Days of the exchange or redemption with respect
thereto. Notwithstanding anything to the contrary contained herein, any and all
Series C Preferred Units to be exchanged for Series C Preferred Stock pursuant
to this Section 16.8 shall be so exchanged in a single transaction at one time.
As a condition to exchange, AMB may require the holders of Series C Preferred
Units to make such representations as may be reasonably necessary for the
General Partner to establish
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that the issuance of Series C Preferred Shares pursuant to the exchange shall
not be required to be registered under the Securities Act or any state
securities laws. Any Series C Preferred Shares issued pursuant to this Section
16.8 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 REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.
The certificates representing the Series C Preferred Shares
issued upon exchange of the Series C 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"), AND STATE SECURITIES LAWS 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 STATE SECURITIES LAWS AND THE RULES AND REGULATIONS
THEREUNDER.
(ii) In the event of an exchange of Series C Preferred
Units for Series C Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series C Preferred Units tendered
for exchange shall (i) accrue on the Series C Preferred Shares into which such
Series C Preferred Units are exchanged, and (ii) continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such REIT Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series C Preferred Unit that was validly exchanged for
Series C Preferred Shares pursuant to this section (other than the General
Partner holding such Series C Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
C Preferred Shares for which such Series C Preferred Unit was exchanged or
redeemed. Further for purposes of the foregoing, in the event of an exchange of
Series C Preferred Units for Series C Preferred Shares, if the accrued and
unpaid distributions per Series C Preferred Unit is not the same for each Series
C Preferred Unit, the accrued and unpaid distributions per Series C Preferred
Unit for each such Series C Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series C Preferred Unit on any such
unit.
(iii) Fractional Series C Preferred Shares are not to be
issued upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market
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value of the Series C Preferred Shares on the day prior to the exchange date as
determined in good faith by the Board of Directors.
C. Adjustment of Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series C 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 C
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 Series C Preferred Shares or fraction thereof into
which one Series C Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series C Preferred Units shall be exchangeable pursuant to this Section 16.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which the 8 5/8% Series B Cumulative Redeemable Partnership
Units of the Operating Partnership (the "Series B Preferred Units") are then
exchangeable (or, if the Series B Preferred Units have previously been redeemed
in full, would have been then exchangeable if then still outstanding).
Section 16.9. No Conversion Rights
The Series C Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.
Section 16.10. No Sinking Fund
No sinking fund shall be established for the retirement or
redemption of Series C Preferred Units.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GENERAL PARTNER:
AMB PROPERTY HOLDING CORPORATION,
a Maryland corporation
By: /s/ John T. Roberts
--------------------------------
John T. Roberts
Vice President
COMMON LIMITED PARTNER:
AMB PROPERTY, L.P., a Delaware
limited partnership
By: AMB Property Corporation,
its general partner
By: /s/ John T. Roberts
---------------------------
John T. Roberts
Vice President and Director
of Capital Markets
GENERAL PARTNER OF COMMON LIMITED
PARTNER:
AMB PROPERTY CORPORATION,
a Maryland corporation
By: /s/ John T. Roberts
--------------------------------
John T. Roberts
Vice President and Director
of Capital Markets
S-1
<PAGE> 76
SERIES C LIMITED PARTNERS:
BELCREST REALTY CORPORATION,
a Delaware corporation
By: /s/ Thomas E. Faust, Jr.
--------------------------------
Thomas E. Faust, Jr.
Executive Vice President
BELAIR REAL ESTATE CORPORATION,
a Delaware corproation
By: /s/ Thomas E. Faust, Jr.
--------------------------------
Thomas E. Faust, Jr.
Executive Vice President
2
<PAGE> 77
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
I. COMMON UNITS
<TABLE>
<CAPTION>
Agreed Value
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- ----------------------------------- ------------ ------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
GENERAL PARTNER:
AMB Property Holding Corporation 11/26/97 -- 3,626,023 3,626,023 172,668 .99725%
LIMITED PARTNERS:
AMB Property, L.P. 11/26/97 -- 358,976,301 358,976,301 17,094,110 98.72782%
06/30/98 -- 1,161,489 1,161,489 47,602 .27493%
============= ============== ============ ============= ===========
TOTAL COMMON UNITS -- 363,763,813 363,763,813 17,314,380 100.00000%
============= ============== ============ ============= ===========
</TABLE>
A-1
<PAGE> 78
EXHIBIT A
PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS
II. SERIES C PREFERRED UNITS
<TABLE>
<CAPTION>
Agreed Value Series C
Contribution Cash of Contributed Total Partnership Percentage
Name of Partner Date Contributions Property Contributions Units Interest
- -------------------------------- ------------ ------------- --------------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
LIMITED PARTNER:
Belcrest Realty Corporation 11/24/98 $24,000,000 -- $24,000,000 480,000 21.8182%
Belair Real Estate Corporation 11/24/98 $86,000,000 -- $86,000,000 1,720,000 78.1818%
============ =============== ============= ========== ===========
TOTAL SERIES C PREFERRED $110,000,000 -- $110,000,000 2,200,000 100.0000%
UNITS
============ =============== ============= ========== ===========
</TABLE>
A-2
<PAGE> 79
EXHIBIT B
NOTICE OF REDEMPTION
The undersigned hereby [irrevocably] (i) exchanges
____________ Limited Partnership Units in AMB Property II, L.P. in accordance
with the terms of the Limited Partnership Agreement of AMB Property II, L.P.
dated as of _________________, as amended, and the rights of Redemption referred
to therein, (ii) surrenders such Limited Partnership Units and all right, title
and interest therein and (iii) directs that the cash (or, if applicable,
Preferred Stock) deliverable upon Redemption or exchange be delivered to the
address specified below, and if applicable, that such Preferred Stock be
registered or placed in the name(s) and at the address(es) specified below.
Dated: ________________________
Name of Limited Partner:
---------------------------------
(Signature of Limited Partner)
---------------------------------
(Street Address)
---------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
---------------------------------
Issue Shares in the name of:
Please insert social security or identifying number:
Address (if different than above):
B-1
<PAGE> 80
EXHIBIT C
CONSTRUCTIVE OWNERSHIP DEFINITION
The term "Constructively Owns" means ownership determined
through the application of the constructive ownership rules of Section 318 of
the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules
provide the following:
a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;
b. an Ownership Interest that is owned, actually or constructively, by
or for a partnership, limited liability company or estate is considered as owned
proportionately by its partners, members or beneficiaries;
c. an Ownership Interest that is owned, actually or constructively, by
or for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);
d. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;
e. an Ownership Interest that is owned, actually or constructively, by
or for a partner or member which actually or constructively owns a 25% or
greater capital interest or profits interest in a partnership or limited
liability company, or by or for a beneficiary of an estate or trust, shall be
considered as owned by the partnership, limited liability company, estate, or
trust (or, in the case of a grantor trust, the grantors);
f. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such corporation
shall be considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;
g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;
h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under
paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g) and (iv) for purposes of the above described rules, an S corporation shall
be treated as a partnership and any stockholder of the S corporation shall be
treated as a partner of such partnership except that this rule shall not apply
for purposes of determining whether stock in the S corporation is constructively
owned by any person.
i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.
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EXHIBIT D-1
FORM OF PARTNERSHIP UNIT CERTIFICATE
CERTIFICATE FOR PARTNERSHIP UNITS OF
AMB PROPERTY II, L.P.
No. _______________ ____________ UNITS
AMB Property Holding Corporation as the General Partner of AMB
Property II, L.P., a Delaware limited partnership (the "Operating Partnership"),
hereby certifies that is a Limited Partner of the Operating Partnership whose
Partnership Interests therein, as set forth in the Agreement of Limited
Partnership of AMB Property II, L.P., dated as of ______________, 199_ (as it
may be amended, modified or supplemented from time to time in accordance with
its terms, (the "Partnership Agreement"), under which the Operating Partnership
is existing and as filed in the office of the Delaware [State Department of
Assessments and Taxation] (copies of which are on file at the Operating
Partnership's principal office at
__________________________________________________, represent units of limited
partnership interest in the Operating Partnership (the "Partnership Units").
THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
PARTNERSHIP AGREEMENT (A COPY OF WHICH IS ON FILE WITH THE OPERATING
PARTNERSHIP). EXCEPT AS OTHERWISE PROVIDED IN THE PARTNERSHIP AGREEMENT, NO
TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE
PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER OF THE
PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE 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 IN EFFECT
THEREUNDER.
DATED: ____________________, 199_.
AMB PROPERTY HOLDING CORPORATION
General Partner of AMB
Property II, L.P.
ATTEST:
By:_________________________ By:_________________________
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EXHIBIT E
SCHEDULE OF PARTNERS' OWNERSHIP
WITH RESPECT TO TENANTS
None
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EXHIBIT F
SCHEDULE OF REIT SHARES
ACTUALLY OR CONSTRUCTIVELY OWNED BY 25% LIMITED PARTNERS
OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE
None
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EXHIBIT G
SCHEDULE OF CERTAIN AGREEMENTS RELATING TO
PROPERTIES WITH RESTRICTIONS ON DISPOSITION
PURSUANT TO SECTION 7.3.F
1. APLP II Contribution Agreement dated as of May 21, 1998, by and between
Hayes Realty Company, an Illinois general partnership and AMB Property
II, L.P., a Delaware limited partnership.
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EXHIBIT H
SCHEDULE OF CERTAIN AGREEMENTS CONTAINING
LIMITATIONS ON GENERAL PARTNERS GENERAL AUTHORITY
1. APLP II Contribution Agreement dated as of May 21, 1998, by and between
Hayes Realty Company, an Illinois general partnership and AMB Property
II, L.P., a Delaware limited partnership.
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EXHIBIT I
RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT
(a) Definitions. for the purposes of this Exhibit I, the following
terms shall have the following meanings:
"Charitable Beneficiary" shall mean one or more
beneficiaries of a Trust, as determined pursuant to subsection
(c)(vi), each of which shall be an organization described in
Sections 170(b)(1)(A), 170(c)(2) and 501(c)(3) of the Code.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Constructive Ownership" shall mean ownership of
Partnership Units by a Person who is or would be treated as an
owner of such Partnership Units either actually or
constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and
"Constructively Owned" shall have the correlative meanings.
"Exempted Person" shall mean any Person exempted from
time to time by the General Partner in its sole and absolute
discretion. The Operating Partnership shall be considered an
Exempted Person.
"Market Price" shall mean the market price of the
Partnership Units on the relevant date as determined in good
faith by the General Partner; provided, however, if AMB has
outstanding shares of capital stock which correspond to such
Partnership Units (i.e., the Series C Preferred Shares), the
Market Price of each such Partnership Unit shall be equal to
the Value of a share of such capital stock, subject to
adjustment if the right to exchange such Partnership Units for
such stock is other than one to one.
"Ownership Limit" shall mean 24.9% of the capital or
profits interests of the Partnership.
"Person" shall mean an individual, corporation,
partnership, limited liability company, estate, trust
(including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set
aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation
within the meaning of Section 509(a) of the Code, joint stock
company or other entity.
"Purported Beneficial Transferee" shall mean, with
respect to any purported Transfer (or other event) which
results in a transfer to a Trust, as provided in subsection
(b)(ii), the Purported Record Transferee, unless the Purported
Record Transferee would have acquired or owned Partnership
Units for another Person who
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is the beneficial transferee or owner of such Partnership
Units, in which case the Purported Beneficial Transferee shall
be such Person.
"Purported Record Transferee" shall mean, with
respect to any purported Transfer (or other event) which
results in a transfer to a Trust, as provided in subsection
(b)(ii), the holder of the Partnership Units as set forth or
to be set forth in Exhibit A to the Partnership Agreement, and
any Assignee of such Partnership Units, if such Transfer or
ownership had been valid under subsection (b)(i).
"Restriction Termination Date" shall mean the first
day after the date hereof on which the General Partner
determines, in its sole and absolute discretion, that
compliance with subsection (b)(i) is no longer necessary or
advisable.
"Transfer" shall mean any sale, transfer, gift,
assignment, devise or other disposition of Partnership Units,
(including (i) the granting of any option or entering into any
agreement for the sale, transfer or other disposition of
Partnership Units or (ii) the sale, transfer, assignment or
other disposition of any securities (or rights convertible
into or exchangeable for Partnership Units)), whether
voluntary or involuntary, whether such transfer has occurred
of record or beneficially or Constructively (including but not
limited to transfers of interests in other entities which
results in changes in Constructive Ownership of Partnership
Units), and whether such transfer has occurred by operation of
law or otherwise.
"Trust" shall mean each of the trusts provided for in
subsection (c).
"Trustee" shall mean any Person unaffiliated with the
Partnership, or a Purported Beneficial Transferee, or a
Purported Record Transferee, that is appointed by the
Partnership to serve as trustee of a Trust.
Capitalized terms used and not defined herein shall have the meanings ascribed
to them in the Third Amended and Restated Agreement of Limited Partnership of
AMB Property II, L.P. (the "Partnership Agreement"), as such agreement may be
amended from time to time. All references to "Section" refer to the Partnership
Agreement.
(b) Restriction on Ownership and Transfers.
(i) Prior to the Restriction Termination Date, no Person,
other than an Exempted Person, shall at any time Constructively Own Partnership
Units in excess of the Ownership Limit if the representations contained in
Section 3.4.D are not at such time true and correct.
(ii) If, prior to the Restriction Termination Date, any
Transfer or other event occurs that, if effective, would result in any Person
Constructively Owning Partnership Units in violation of subsection (b)(i), (1)
then that number of Partnership Units that otherwise would cause such Person to
violate subsection (b)(i) (rounded up to the nearest whole Partnership Unit)
shall be automatically transferred (provided such Transfer is not in violation
of the restrictions on transfer
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set forth in the Partnership Agreement, except to the extent the General Partner
waives such restrictions) to a Trust for the benefit of a Charitable
Beneficiary, as described in subsection (c), effective as of the close of
business on the business day prior to the date of such Transfer or other event,
and such Purported Beneficial Transferee shall thereafter have no rights in such
Partnership Units or (2) if, for any reason, the transfer to the Trust described
in clause (1) of this sentence is not automatically effective as provided
therein to prevent any Person from Constructively Owning Partnership Units in
violation of subsection (b)(i), then the Transfer of that number of Partnership
Units that otherwise would cause any Person to violate subsection (b)(i) shall
be void ab initio, and the Purported Beneficial Transferee shall have no rights
in such Partnership Units.
(c) Transfers of Partnership Units in Trust.
(i) Upon any purported Transfer or other event described in
subsection (b)(ii), such Partnership Units shall be deemed to have been
transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that results in a
transfer to the Trust pursuant to subsection (b)(ii). The Trustee shall be
appointed by the Partnership and shall be a Person unaffiliated with the
Partnership, any Purported Beneficial Transferee, or any Purported Record
Transferee. Each Charitable Beneficiary shall be designated by the Partnership
as provided in subsection (c)(vi).
(ii) Partnership Units held by the Trustee shall be issued and
outstanding Partnership Units of the Partnership. The Purported Beneficial
Transferee or Purported Record Transferee shall have no rights in the
Partnership Units held by the Trustee. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of any
Partnership Units held in trust by the Trustee, shall have no rights to
distributions or allocations with respect to Partnership Units held in the Trust
and shall not possess any rights to vote or other rights attributable to the
Partnership Units held in the Trust.
(iii) The Trustee shall have all voting rights and rights to
distributions and allocations with respect to Partnership Units held in the
Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any distribution paid prior to the discovery by the
Partnership that Partnership Units have been transferred to the Trustee shall be
paid to the Trustee upon demand, and any distribution with respect to such
Partnership Units shall be paid when due to the Trustee. Any distributions so
paid over to the Trustee shall be held in trust for the Charitable Beneficiary.
The Purported Record Transferee and Purported Beneficial
Transferee shall have no voting rights with respect to the Partnership Units
held in the Trust and, subject to Delaware law, effective as of the date the
Partnership Units has been transferred to the Trustee, the Trustee shall have
the authority (at the Trustee's sole discretion) (i) to rescind as void any vote
cast by a Purported Record Transferee with respect to such Partnership Units
prior to the discovery by the Partnership that the Partnership Units has been
transferred to the Trustee and (ii) to recast such vote in accordance with the
desires of the Trustee acting for the benefit of the Charitable Beneficiary;
provided, however, that if the Partnership has already taken irreversible
action, then the Trustee shall not have the authority to rescind and recast such
vote. Notwithstanding any other provision of
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<PAGE> 89
this Exhibit I to the contrary, until the Partnership has received notification
that the Partnership Units have been transferred into a Trust, the Partnership
shall be entitled to rely on its Partnership Unit transfer and other unitholder
records for purposes of preparing Exhibit A to the Partnership Agreement, lists
of unitholders entitled to vote at meetings, and otherwise conducting votes of
Partners.
(iv) Within 20 days of receiving notice from the Partnership
that Partnership Units have been transferred to the Trust, the Trustee of the
Trust shall, in accordance with the terms of (and subject to the limitations
contained in) the Partnership Agreement, sell the Partnership Units held in the
Trust to a Person, designated by the Trustee, whose ownership of the Partnership
Units will not violate the ownership limitations set forth in subsection (b)(i).
Upon such sale, the interest of the Charitable Beneficiary in the Partnership
Units sold shall terminate and the Trustee shall distribute the net proceeds of
the sale to the Purported Record Transferee and to the Charitable Beneficiary as
provided in this subsection (c)(iv). The Purported Record Transferee shall
receive the lesser of (1) the price paid by the Purported Record Transferee for
the Partnership Units in the transaction that resulted in such transfer to the
Trust (or, if the event which resulted in the transfer to the Trust did not
involve a purchase of such Partnership Units at Market Price, the Market Price
of such Partnership Units on the day of the event which resulted in the transfer
of such Partnership Units to the Trust) and (2) the price per Partnership Unit
received by the Trustee (net of any commissions and other expenses of sale) from
the sale or other disposition of the Partnership Units held in the Trust. Any
net sales proceeds in excess of the amount payable to the Purported Record
Transferee shall be immediately paid to the Charitable Beneficiary together with
any distributions thereon. If, prior to the discovery by the Partnership that
Partnership Units have been transferred to the Trustee, such Partnership Units
are sold by a Purported Record Transferee then (i) such Partnership Units shall
be deemed to have been sold on behalf of the Trust and (ii) to the extent that
the Purported Record Transferee received an amount for such Partnership Units
that exceeds the amount that such Purported Record Transferee was entitled to
receive pursuant to this subsection (c)(iv), such excess shall be paid to the
Trustee upon demand. The expenses described in item (2) above shall include any
expenses of administering the Trust, any transfer of Partnership Units thereto
or disposition of Partnership Units thereby, which shall be allocated equitably
among the Partnership Units which are transferred to the Trust.
(v) Partnership Units transferred to the Trustee shall be
deemed to have been offered for sale to the Partnership, or its designee, at a
price per Partnership Unit equal to the lesser of (i) the price paid by the
Purported Record Transferee for the Partnership Units in the transaction that
resulted in such transfer to the Trust (or, if the event which resulted in the
transfer to the Trust did not involve a purchase of such Partnership Units at
Market Price, the Market Price of such Partnership Units on the day of the event
which resulted in the transfer of such Partnership Units to the Trust) and (ii)
the Market Price on the date the Partnership, or its designee, accepts such
offer. The Partnership shall have the right to accept such offer until the
Trustee has sold the Partnership Units held in the Trust pursuant to subsection
(c)(iv). Upon such a sale to the Partnership, the interest of the Charitable
Beneficiary in the Partnership Units sold shall terminate and the Trustee shall
distribute the net proceeds of the sale to the Purported Record Transferee and
any distributions held by the Trustee with respect to such Partnership Units
shall thereupon be paid to the Charitable Beneficiary.
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(vi) By written notice to the Trustee, the Partnership shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the Partnership Units held in the Trust
would not violate the restrictions set forth in subsection (b)(i) in the hands
of such Charitable Beneficiary.
(d) Remedies For Breach. If the General Partner shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of subsection (b) or that a Person intends to acquire, has attempted
to acquire or may acquire beneficial ownership (determined without reference to
any rules of attribution) or Constructive Ownership of any Partnership Units of
the Partnership in violation of subsection (b), the General Partner shall take
such action as it deems advisable to refuse to give effect or to prevent such
Transfer, including, but not limited to, causing the Partnership to redeem
Partnership Units, refusing to give effect to such Transfer on the books of the
Partnership or instituting proceedings to enjoin such Transfer; provided,
however, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership) in violation of subsection (b)(i), shall
automatically result in the transfer to a Trust as described in subsection
(b)(ii).
(e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire or own Partnership Units in violation of subsection (b), or any
Person who is a Purported Beneficial Transferee such that an automatic transfer
to a Trust results under subsection (b)(ii), shall immediately give written
notice to the Partnership of such event and shall provide to the Partnership
such other information as the Partnership may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on such Person's
compliance with subsection (b)(i).
(f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Constructive Owner of
Partnership Units and each Person who is holding Partnership Units for a
beneficial owner or Constructive Owner shall provide to the Partnership such
information that the Partnership may request, in good faith, in order to
determine the Partnership's status as a partnership (as opposed to a
corporation) or AMB's status as a REIT for federal income tax purposes.
(g) Remedies Not Limited. Nothing contained in this Exhibit I shall
limit the authority of the General Partner to take such other action as it deems
necessary or advisable to protect the Partnership and the interests of its
Partners by preservation of the Partnership's status as a partnership (as
opposed to a corporation) or AMB's status as a REIT for federal income tax
purposes.
(h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Exhibit I, including any definition contained in
subsection (a), the General Partner shall have the power to determine the
application of the provisions of this Exhibit I with respect to any situation
based on the facts known to it. In the event that a provision of this Exhibit I
requires an action by the General Partner and Exhibit I fails to provide
specific guidance with respect to such action, the General Partner shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Exhibit I. Absent a decision to the contrary by
the General Partner (which the General Partner may make in its sole and absolute
discretion), if a Person would have (but for the remedies set forth in
subsection (b)) acquired Constructive
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Ownership of Partnership Units in violation of subsection (b)(i), such remedies
(as applicable) shall apply first to the Partnership Units which, but for such
remedies, would have been actually owned by such Person, and second to
Partnership Units which, but for such remedies, would have been Constructively
Owned (but not actually owned) by such Person, pro rata among the Persons who
actually own such Partnership Units based upon the relative number of the
Partnership Units held by each such Person.
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