UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date of Report (Date earliest event reported): February 18,1998
------------------
PARKWAY PROPERTIES, INC.
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(Exact name of Registrant as specified in its charter)
Maryland 1-11533 74-2123597
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(State or other (Commission File Number) (IRSEmployer
jurisdiction of Identification
incorporation) Number)
One Jackson Place Suite 1000
188 East Capitol Street
P. O. Box 24647
Jackson, Mississippi 39225-4647
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Registrant's telephone number, including area code: (601) 948-4091
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(Former name or former address, if changed since last report)
FORM 8-K
PARKWAY PROPERTIES, INC.
Item 2. Acquisition or Disposition of Assets.
Proposed Purchase:
On February 17, 1998, Parkway Properties, Inc. ("Parkway")
announced that it has entered into a contract to acquire a 13 building
Southeastern office portfolio ("Southeastern Office Portfolio")
comprising a total of approximately 1,470,000 net rentable square
feet from an Atlanta based real estate investment firm for
$163,014,000 in cash. The total purchase price, including
closing costs, anticipated capital expenditures and leasing
commissions, is expected to be approximately $165,714,000. The
contract, which is subject to customary due diligence procedures,
is expected to close on or about February 25, 1998. The Company
expects to fund the purchase initially with short-term bank
borrowings from two bank groups. The Company recently negotiated
an increase in size and reduction in interest rate on its
existing line of credit with a consortium of banks led by Deposit
Guaranty National Bank to $100,000,000 at a rate of LIBOR plus
140 basis points. In addition, the Company expects to receive a
$75,000,000 unsecured loan from NationsBank, NA, also at a rate
of LIBOR plus 140 basis points.
Item 5. Other Events.
(1) UPREIT Structure.
In January 1998, Parkway completed its reorganization into
an umbrella partnership REIT ("UPREIT") structure under which all
of Parkway's office building real estate assets are owned by an
operating partnership, Parkway Properties, LP (the
"Partnership"). The Company anticipates that the UPREIT
structure will enable it to pursue new investment opportunities
by having the ability to offer tax advantaged units in the
Partnership to property owners in exchange for office properties.
Presently, all interests in the Partnership are owned by wholly-
owned subsidiaries of Parkway.
(2) 1997 Year-End Results.
Parkway reported total revenue of $48.1 million for the year
ended December 31, 1997, compared to $24.1 million for the year
ended December 31, 1996. The Company reported net income and
funds from operations ("FFO") for the year ended December 31,
1997, of $14.5 million and $17.6 million, respectively, compared
to $14.4 million and $6.4 million, respectively, for the year
ended December 31, 1996. Parkway defines FFO, consistent with
NAREIT's definition, as net income (loss) (computed in accordance
with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of
property, plus real estate related depreciation and amortization
and after adjustments for unconsolidated partnerships and joint
ventures. The Company believes FFO is helpful to investors as a
measure of the performance of an equity REIT because, along with
cash flows from operating activities, financing activities and
investing activities, it provides investors with an understanding
of the ability of the Company to incur and service debt and make
capital expenditures. The Company computes FFO in accordance
with standards established by Parkway, which may differ from the
methodology for calculating FFO utilized by other equity REITs,
and, accordingly, may not be comparable to such other REITs.
Further, FFO does not represent amounts available for
management's discretionary use because of needed capital
replacement or expansion, debt service obligations, or other
commitments and uncertainties. FFO should not be considered as an
alternative to net income (determined in accordance with GAAP), as
an indication of the Company's financial performance or to cash
flows from operating activities (determined in accordance with
GAAP) as a measure of the Company's liquidity, nor is it
indicative of funds available to fund the Company's cash needs,
including its ability to make distributions.
(3) Effects of Adoption of Statement of Financial Accounting
Standards No. 128, Earnings per Share.
The earnings per share amounts for the years ended December 31, 1997,
1996 and 1995 and the quarters of 1997 and 1996 have been restated to
comply with Financial Accounting Standards Board's Statement of
Financial Accounting Standard No. 128, "Earning per Share" as follows:
Net Income Weighted Average
Per Share Shares Outstanding
Basic Diluted Basic Diluted
Year Ended:
1995 $ 4.24 $ 4.15 2,786,463 2,847,681
1996 $ 3.92 $ 3.81 3,662,182 3,776,301
1997 $ 2.05 $ 2.01 7,077,769 7,214,253
3 Months Ended:
March 31, 1996 $ .39 $ .38 2,008,135 2,098,208
June 30, 1996 $ 2.00 $ 1.93 3,212,637 3,323,699
September 30, 1996 $ .39 $ .38 4,193,319 4,310,218
December 31, 1996 $ 1.31 $ 1.27 4,222,279 4,360,720
March 31, 1997 $ .62 $ .61 5,717,585 5,847,943
June 30, 1997 $ .43 $ .42 6,287,706 6,405,143
September 30, 1997 $ .34 $ .33 6,531,860 6,674,795
December 31, 1997 $ .62 $ .61 9,735,761 9,890,968
6 Months Ended:
June 30, 1996 $ 2.31 $ 2.24 3,110,572 3,211,140
June 30, 1997 $ 1.04 $ 1.01 6,004,220 6,128,118
9 Months Ended:
September 30, 1996 $ 2.54 $ 2.46 3,474,123 3,580,134
September 30, 1997 $ 1.36 $ 1.33 6,182,032 6,312,275
Item 7. Financial Statements and Exhibits.
(a) Financial Statements
The following audited financial statement of the
Southeastern Office Portfolio for the year ended December 31,
1996 is attached hereto. Also included is the unaudited financial
statement for the nine months ended September 30, 1997.
Page
----
Report of Independent Auditors 6
Combined Statement of Rental Revenue and
Direct Operating Expenses 7
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses 8
(b) Pro Forma Consolidated Financial Statements
The following unaudited Pro Forma Consolidated Financial
Statements are attached hereto.
Page
----
Pro Forma Consolidated Financial Statements (Unaudited) 10
Pro Forma Consolidated Balance Sheet (Unaudited) -
As of September 30, 1997 12
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Year Ended December 31, 1996 13
Pro Forma Consolidated Statement of Income (Unaudited) -
For the Nine Months Ended September 30, 1997 14
Notes to Pro Forma Consolidated Financial
Statements (Unaudited) 15
(c) Exhibits
(10) Sale Agreement and Amendments between Brookdale
Investors, L.P., a Delaware limited partnership, and
Parkway Properties LP, a Delaware limited partnership.
Parkway agrees to furnish supplementally to the
Securities and Exchange Commission on request a copy of
any omitted schedule or exhibit to this agreement.
(99) Amended and Restated Agreement of Limited Partnership
of Parkway Properties, LP dated January 1, 1998.
Report of Independent Auditors
The Board of Directors
Parkway Properties, Inc.
We have audited the accompanying combined statement of rental
revenue and direct operating expenses of the Southeastern Office
Portfolio for the year ended December 31, 1996. This statement is
the responsibility of management. Our responsibility is to
express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted
audit2ing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the combined statement of rental revenue and direct operating
expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying statement was prepared for the purpose of
complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K of Parkway
Properties, Inc., as described in Note 2, and is not intended to
be a complete presentation of the Southeastern Office Portfolio
revenue and expenses.
In our opinion, the combined statement of rental revenue and
direct operating expenses referred to above presents fairly, in
all material respects, the rental revenue and direct operating
expenses described in Note 2 of the Southeastern Office Portfolio
for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
We have compiled the accompanying combined statement of rental
revenue and direct operating expenses of the Southeastern Office
Portfolio for the nine months ended September 30, 1997 in
accordance with the Statement on Standards for Accounting and
Review Services issued by the American Institute of Certified
Public Accountants. A compilation is limited to presenting in the
form of a financial statement information that is the
representation of management. We have not audited or reviewed
the combined statement of rental revenue and direct operating
expenses of the Southeastern Portfolio for the nine months ended
September 30, 1997 and, accordingly, do not express an opinion or
any other form of assurance on the statement.
Jackson, Mississippi /s/ Ernst & Young LLP
February 14, 1998
The Southeastern Office Portfolio
Combined Statement of Rental Revenue
and Direct Operating Expenses
Year Ended Nine Months Ended
December 31, 1996 September 30,1997
------------------ ------------------
(unaudited)
Rental revenue (Note 1):
Minimum rents ...............$17,717,506 $13,969,950
Reimbursed charges and
other income............... 2,030,707 1,437,019
----------- -----------
19,748,213 15,406,969
Direct operating expenses
(Note 2):
Utilities................... 2,347,855 1,755,320
Real estate taxes........... 1,995,497 1,564,505
Maintenance services
and supplies.............. 1,746,849 1,220,625
Janitorial services
and supplies.............. 1,145,433 912,760
Management fees............. 494,481 391,786
Insurance................... 155,184 122,245
Security service............ 335,613 242,321
Administrative and
miscellaneous expenses.... 983,414 621,838
----------- -----------
9,204,326 6,831,400
----------- -----------
Excess of rental revenue over
direct operating expenses...$10,543,887 $8,575,5693
=========== ===========
See accompanying notes.
The Southeastern Office Portfolio
Notes to Combined Statement of Rental Revenue
and Direct Operating Expenses
December 31, 1996
1. Organization and Significant Accounting Policies
Description of Properties
Parkway Properties, Inc. (the "Company") expects to acquire
thirteen office properties (collectively the "Southeastern Office
Portfolio") on or about February 25, 1998. The Southeastern
Office Portfolio includes the following office properties:
Office Property Location
One Commerce Green Houston, TX
One Sugar Creek Houston, TX
The Belvedere Dallas, TX
Atrium at Bent Tree Dallas, TX
Hillsboro Center I-IV Ft. Lauderdale, FL
Hillsboro Center V Ft. Lauderdale, FL
Glen Forest Building Richmond, VA
Moorefield II Richmond, VA
Moorefield III Richmond, VA
Lynnwood Plaza Virginia Beach, VA
Loudoun Plaza Sterling, VA
Executive Tower Knoxville, TN
Healthsource Building Greenville, SC
The office properties included in the Southeastern Office
Portfolio have common ownership; accordingly, the accompanying
financial statement has been prepared on a combined basis.
Intercompany transactions have been eliminated in the
combination.
I. Rental Revenue
Minimum rents from leases are accounted for ratably over the
term of each lease. Tenant reimbursements are recognized as
revenue as the applicable services are rendered or expenses
incurred.
The future minimum rents on noncancelable operating leases at
December 31, 1996 are as follows:
Year Amount
--------------------------------
1997 $ 13,410,000
1998 12,021,000
1999 10,349,000
2000 7,942,000
2001 6,184,000
Thereafter 10,397,000
-----------
$ 60,303,000
===========
The above amounts do not include tenant reimbursements for
utilities, taxes, insurance and common area maintenance.
2. Basis of Accounting
The accompanying combined statement of rental revenue and
direct operating expenses is presented on the accrual basis. The
statement has been prepared in accordance with the applicable
rules and regulations of the Securities and Exchange Commission
for real estate properties acquired. Accordingly, the statement
excludes certain expenses not comparable to the proposed future
operations of the Southeastern Office Portfolio such as
depreciation and mortgage interest expense. Management is not
aware of any material factors relating to the Southeastern Office
Portfolio that would cause the reported financial information not
be necessarily indicative of future operating results.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements
(Unaudited)
The following unaudited pro forma consolidated balance sheet
as of September 30, 1997 and pro forma consolidated statements of
income of Parkway Properties, Inc. ("Parkway") for the year ended
December 31, 1996 and nine months ended September 30, 1997 give
effect to the recent purchases of Parkway for the periods stated
and the proposed purchase of the Southeastern Office Portfolio.
The pro forma consolidated financial statements have been
prepared by management of Parkway based upon the historical
financial statements of Parkway and the adjustments and
assumptions in the accompanying notes to the pro forma
consolidated financial statements.
The pro forma consolidated balance sheet sets forth the
effect of Parkway's purchases since September 30, 1997 (listed
below), the proposed purchase of the Southeastern Office
Portfolio and the placement of non-recourse mortgage debt on BB&T
and First Tennessee Plaza as if they had been consummated on
September 30, 1997.
The pro forma consolidated statements of income sets forth
the effects of Parkway's purchases of the following buildings and
the proposed purchase of the Southeastern Office Portfolio as if
they had been consummated on January 1, 1996.
PARKWAY PROPERTIES, INC.
Pro Forma Consolidated Financial Statements (continued)
(Unaudited)
BUILDING DATE OF PURCHASE
Veritas Technology Center 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
In addition to the purchases listed above, the pro forma
consolidated statements of income set forth the effect of the May
31, 1996 sale of 157 mortgage loans, the placement of non-
recourse
mortgage debt on certain properties acquired during 1995 and 1996
or assumed in the purchases, the December 24, 1996 sale of the
Virginia Beach mortgage loan, the sale of 2,012,500 shares of
common stock on January 22, 1997, the sale of 3,000,000 shares of
common stock on September 24, 1997, and the sale of 450,000
shares of common stock on October 6, 1997 as if all the
transactions had occurred January 1, 1996.
These pro forma consolidated financial statements may not be
indicative of the results that actually would have occurred if
the purchases, sales and/or financings had been in effect on the
dates indicated or which may be obtained in the future. The pro
forma consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
of Parkway included in its annual report on Form 1O-KSB for the
year ended December 31, 1996.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
Assets (1-8)
Real estate related investments:
Office buildings.............$310,130 $224,094 $534,224
Land held for development.... 1,721 - 1,721
Accumulated depreciation..... (12,073) - (12,073)
-------- -------- --------
299,778 224,094 523,872
Real estate held for sale:
Land....................... 4,687 - 4,687
Operating properties....... 1,497 - 1,497
Other non-core
real estate assets......... 58 - 58
Mortgage loans............... 307 - 307
Real estate partnership...... 322 - 322
-------- -------- --------
306,649 224,094 530,743
Interest, rents receivable
and other assets............. 7,365 - 7,365
Cash and cash equivalents...... 486 (486) -
-------- -------- --------
$314,500 $223,608 $538,108
======== ======== ========
Liabilities
Notes payable to banks..........$ 8,200 $171,287
$179,487
Mortgage notes payable
without recourse.............. 67,960 37,958 105,918
Accounts payable and other
liabilities................... 10,692 - 10,692
-------- -------- --------
86,852 209,245 296,097
-------- -------- --------
Stockholders' Equity
Common stock, $.001 par value,
70,000,000 shares authorized,
9,307,988 shares issued in
1997.......................... 9 - 9
Additional paid-in capital...... 199,018 14,363(10) 213,381
Retained earnings............... 28,621 - 28,621
-------- -------- --------
227,648 14,363 242,011
-------- -------- --------
$314,500 $223,608 $538,108
======== ======== ========
See accompanying notes
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(9) ProForma
---------- -------------- ---------
(In thousands, except per share data)
Revenues
Income from office properties...$18,840 $65,282 (a) $84,122
Income from other real estate
properties.................... 1,773 - 1,773
Interest on mortgage loans...... 1,740 (1,384)(d) 356
Management company income....... 784 - 784
Interest on investments......... 500 - 500
Dividend income................. 118 - 118
Deferred gains and other income. 324 - 324
Gains on real estate held
for sale and mortgage loans... 9,909 - 9,909
Gain on securities.............. 549 - 549
------- ------- -------
34,537 63,898 98,435
------- ------- -------
Expenses
Office properties
Operating expense............. 8,466 30,612 (a) 39,078
Interest expense.............. 3,526 4,975 (c) 8,501
Depreciation and amortization. 2,444 9,933 (a) 12,377
Minority interest............. (28) - (28)
Other real estate properties
Operating expense............. 1,379 - 1,379
Interest expense
Notes payable to banks........ 281 12,900 (e) 13,181
Notes payable on wrap
mortgages................... 340 (340)(f) -
Management company expense...... 673 - 673
General and administrative...... 2,982 - 2,982
------- ------- -------
20,063 58,080 78,143
------- ------- -------
Income before income taxes...... 14,474 5,818 20,292
Income tax expense.............. 103 - 103
------- ------- -------
Net income......................$14,371 $ 5,818 $20,189
======= ======= =======
Basic Net income per share......$ 3.92 $2.21(10)
======= =======
Basic Weighted average shares
outstanding................... 3,662 9,124
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
Parkway Pro Forma Parkway
Historical Adjustments(9) Pro Forma
---------- -------------- ---------
(In thousands, except per share
data)
Revenues
Income from office properties...$29,939 $36,376 (b) $66,315
Income from other real estate
properties.................... 564 - 564
Interest on mortgage loans...... 47 - 47
Management company income....... 398 - 398
Interest on investments......... 363 - 363
Dividend income................. 323 - 323
Deferred gains and other income. 100 - 100
------- ------- -------
31,734 36,376 68,110
------- ------- -------
Expenses
Office properties
Operating expense............. 12,678 16,206 (b) 28,884
Interest expense:
Contractual................. 3,856 2,407 (c) 6,263
Amortization of loan cost... 68 - 68
Depreciation and amortization. 3,795 5,630 (b) 9,425
Minority interest............. 59 - 59
Other real estate properties
Operating expense............. 361 - 361
Interest expense on bank notes:
Contractual................... 657 9,675 (e) 10,332
Amortization of loan costs.... 126 - 126
Interest expense on wrap
mortgages................... - - -
Management company expense...... 260 - 260
General and administrative...... 2,540 - 2,540
------- ------- -------
24,400 33,918 58,318
------- ------- -------
Income before gains............. 7,334 2,458 9,792
------- ------- -------
Gain on sales
Gain on real estate held for
Sale and mortgage loans....... 1,091 - 1,091
------- ------- -------
Net income......................$ 8,425 $ 2,458 $10,883
======= ======= =======
Basic Net income per share......$ 1.36 $ 1.14(9)
======= =======
Basic Weighted average shares
outstanding................... 6,182 9,566
======= =======
See accompanying notes.
PARKWAY PROPERTIES, INC.
Notes to Pro Forma Consolidated Financial Statements
(Unaudited)
1. On October 1, 1997, the Company purchased Hightower Centre
in Atlanta, Georgia for $6,700,000 from an unrelated party.
Hightower Centre consists of two multi-story buildings containing
78,199 rentable square feet with 332 parking spaces.
2. On November 7, 1997, the Company purchased First Little Rock
Plaza in Little Rock, Arkansas for $10,200,000. First Little
Rock is a five-story building containing approximately 117,000
square feet.
3. On November 12, 1997, the Company received funds totaling
$15,000,000 from the placement of non-recourse mortgage debt on
the BB&T office building in Winston-Salem, North Carolina. The
loan fully amortizes over a 15-year period at an interest rate of
7.3%.
4. On November 17, 1997, the Company purchased the Raytheon
Building in Houston, Texas for $15,980,000, which included the
assumption of an existing $7,958,000 first mortgage, from an
unrelated party. Raytheon is an eight-story building constructed
in 1983 containing approximately 148,000 net rentable square feet
with 736 parking spaces with 494 spaces located within a six-
story parking garage.
5. On November 25, 1997, the Company purchased Greenbrier
Towers in Chesapeake, Virginia for $16,000,000. Greenbrier
Towers consist of two six-story buildings containing
approximately 173,000 square feet and encompassing approximately
11.4 acres of Greenbrier Business Park.
6. On December 15, 1997, the Company received funds totaling
$15,000,000 from the placement of non-recourse mortgage debt on
First Tennessee Plaza in Knoxville, Tennessee. The loan fully
amortizes over a 15-year period at an interest rate of 7.17%.
7. On January 21, 1998, the Company purchased the Veritas
Technology Center (Veritas) in Houston, Texas for $12,200,000.
Veritas is a five-story office building comprising approximately
155,000 square feet located in the Energy Corridor submarket of
West Houston.
8. On February 17, 1998, the Company announced the proposed
purchase of the 13 building Southeastern Office Portfolio
for $163,014,000. The portfolio consist of approximately
1,470,000 square feet in five states and is expected to close
on or about February 25, 1998.
9. The pro forma adjustments to the Consolidated Statement of
Income for the year ended December 31, 1996 and nine months
ended September 30, 1997 set forth the effects of Parkway's
purchase of the following buildings as well as the proposed
purchase of the Southeastern Office Portfolio as if they had
been consummated on January 1, 1996.
BUILDING DATE OF PURCHASE
Veritas Technology Center 01/21/98
Greenbrier Towers 11/25/97
Raytheon Building 11/17/97
First Little Rock Plaza 11/07/97
Hightower Centre 10/01/97
Morgan Keegan Tower 09/30/97
First Tennessee Plaza 09/18/97
Fairway Plaza 08/12/97
NationsBank Tower 07/31/97
Lakewood II 07/10/97
Sugar Grove 05/01/97
Vestavia Centre 04/04/97
Meridian 03/31/97
Charlotte Park Executive Center 03/18/97
Courtyard at Arapaho 03/06/97
Ashford II 01/28/97
Forum II & III 01/07/97
Tensor 10/31/96
BB&T Financial Center 09/30/96
Falls Pointe 08/09/96
Roswell North 08/09/96
Cherokee 07/09/96
Courthouse 07/09/96
400 Northbelt 04/15/96
Woodbranch 04/15/96
One Park 10 Plaza 03/07/96
In addition to the purchases listed above, the adjustments
on the pro forma consolidated statements of income set forth
the effect of the May 31, 1996 sale of 157 mortgage loans,
the December 24, 1996 sale of the Virginia Beach mortgage
loan and the placement of non-recourse mortgage debt on
certain properties acquired from 1995 to 1997 or assumed in
the purchases as if the transactions occurred January 1,
1996. These pro forma adjustments are detailed below by
property for the year ended December 31, 1996 and nine
months ended September 30, 1997.
The effect on income and expenses from real estate
properties due to the above purchases are as follows:
(a) For the year ended December 31, 1996:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------- ------------
One Park 10 $ 299,000 $ 160,000 $ 25,000
400 North Belt
& Woodbranch 1,036,000 551,000 92,000
Cherokee &
Courthouse
Road Bldgs. 917,000 480,000 124,000
Falls Pointe &
Roswell North 1,161,000 439,000 191,000
BB&T Financial
Center 3,072,000 1,055,000 413,000
Tensor 810,000 530,000 64,000
Forum II & III 2,749,000 1,331,000 370,000
Charlotte Park 2,616,000 1,180,000 333,000
Ashford II 649,000 441,000 50,000
Courtyard at
Arapaho 2,196,000 948,000 340,000
Meridian 843,000 503,000 236,000
Vestavia 878,000 394,000 105,000
Sugar Grove 1,082,000 643,000 174,000
Lakewood II 1,915,000 839,000 259,000
NationsBank Tower 4,094,000 1,782,000 464,000
Fairway Plaza 1,408,000 682,000 151,000
First Tennessee
Plaza 5,958,000 3,083,000 675,000
Morgan Keegan
Tower 4,633,000 2,093,000 823,000
Hightower Centre 981,000 430,000 151,000
Raytheon Building 2,763,000 1,276,000 360,000
First Little Rock 1,619,000 663,000 230,000
Greenbrier Towers 1,574,000 884,000 360,000
Veritas 2,281,000 1,021,000 275,000
Southeastern Office
Portfolio 19,748,000 9,204,000 3,668,000
----------- ----------- ----------
$65,282,000 $30,612,000 $9,933,000
=========== =========== ==========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(b) For the nine months ended September 30, 1997:
Revenue Expenses
----------- ---------------------------
Income From Real Estate Owned
Real Estate Operating Depreciation
Properties Expense Expense
----------- ------------ ------------
Charlotte Park $ 505,000 $ 208,000 $ 69,000
Ashford II 54,000 37,000 4,000
Courtyard at
Arapaho 366,000 164,000 58,000
Meridian 354,000 123,000 59,000
Vestavia 240,000 91,000 26,000
Sugar Grove 309,000 165,000 43,000
Lakewood II 977,000 447,000 129,000
NationsBank Tower 2,392,000 1,003,000 271,000
Fairway Plaza 859,000 379,000 94,000
First Tennessee
Plaza 4,253,000 2,080,000 477,000
Morgan Keegan
Tower 3,327,000 1,665,000 618,000
Hightower Centre 833,000 333,000 113,000
Raytheon Building 2,072,000 919,000 270,000
First Little Rock 1,168,000 465,000 172,000
Greenbrier Towers 1,565,000 683,000 270,000
Veritas 1,695,000 613,000 206,000
Southeastern Office
Portfolio 15,407,000 6,831,000 2,751,000
----------- ----------- -----------
$36,376,000 $16,206,000 $ 5,630,000
=========== =========== ===========
Depreciation is provided by the straight-line method over
the estimated useful lives of the buildings (40 years).
(c) Pro forma interest expense on real estate owned reflects the
non-recourse debt placed on certain buildings acquired
from 1995 to 1997 and debt assumed upon purchase at the
actual amounts and rates by property as if placed
January 1, 1996 and is detailed below.
Nine
Property/Placement Year Ended Months Ended
Date/Rate Debt 12/31/96 9/30/97
------------------ ----------- ---------- ------------
IBM Building
2/96 7.78% $ 4,800,000 $ 41,000 $ -
Waterstone
6/96 8.00% 5,620,000 185,000 -
One Park 10
7/96 8.35% 4,700,000 196,000 -
400 North Belt &
Woodbranch
7/96 8.25% 10,000,000 412,000 -
Falls Pointe &
Roswell North
12/96 8.375% 9,850,000 766,000 -
Lakewood II*
7/97 8.08% 6,910,000 558,000 294,000
BB&T
11/97 7.3% 15,000,000 1,095,000 821,000
Raytheon Building*
11/97 8.125% 7,958,000 647,000 485,000
First Tennessee
Plaza
12/97 7.17% 15,000,000 1,075,000 807,000
---------- ----------
$4,975,000 $2,407,000
========== ==========
*Assumed in purchase.
(d) The January 1, 1996 pro forma effect of the sale of 157
mortgage loans on May 31, 1996 and the December 24,
1996 sale of the Virginia Beach mortgage loan is as
follows:
Year Ended
12/31/96
------------
Interest Income:
Mortgage loans $(1,384,000)
(e) The pro forma effect of the building purchases, the
proposed purchases, the placement of non-recourse debt
and the sale of stock on interest expense on notes
payable to banks was $12,900,000 for the year ended
December 31, 1996 and $9,675,000 for the nine months
ended September 30, 1997.
(f) The pro forma effect of the sale of the Virginia Beach
mortgage loan on interest expense on notes payable on
wrap mortgages for the year ended December 31, 1996 is
a decrease of $340,000
10. The pro forma earnings per share for the year ended December
31, 1996 and the nine months ended September 30, 1997
reflect the sale of 2,012,500 shares of common stock under
its existing shelf registration on January 22, 1997, the
sale of 3,000,000 shares of common stock on September 24,
1997 and the sale of 450,000 shares of common stock on
October 6, 1997.
11. No additional income tax expenses were provided because of
the Company's net operating loss carryover and status as a
REIT.
12. All per share information for the year ended December 31,
1996 has been restated to reflect a 3 for 2 common stock
split effected as a dividend of one share for every two
shares outstanding on April 30, 1996 as well as the June 14,
1996 private placement of 1,140,000 shares as if both
transactions had occurred January 1, 1996.
13. Diluted net income per share for the year ended December 31,
1996 and nine months ended September 30, 1997 were $3.81 and
$1.34, respectively, based on diluted weighted average
shares outstanding of 3,776,000 and 6,309,000, respectively.
Pro Forma diluted net income per share for the year ended
December 31, 1996 and the nine months ended September 30,
1997 were $2.19 and $1.12, respectively, based on pro forma
diluted weighted average shares oustanding of 9,238,000 and
9,693,000, respectively.
FORM 8-K
PARKWAY PROPERTIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DATE: February 18, 1998 PARKWAY PROPERTIES, INC.
BY: /s/Sarah P. Clark
Sarah P. Clark
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
SALE AGREEMENT
BETWEEN
BROOKDALE INVESTORS, L.P.
a Delaware limited partnership
AS SELLER,
AND
PARKWAY PROPERTIES LP
a Delaware limited partnership
AS PURCHASER
As of January ____, 1998
TABLE OF CONTENTS
Page #
ARTICLE IPURCHASE AND SALE 1
Section 1.1 Agreement of Purchase and Sale. 1
Section 1.2 Property Defined 2
Section 1.3 Purchase Price 2
Section 1.4 Payment of Purchase Price 2
Section 1.5 Deposit 3
Section 1.6 Indepenent Consideration 3
Section 1.7 Escrow Agent 3
ARTICLE IITITLE AND SURVEY 4
Section 2.1 Title Inspection Period 4
Section 2.2 Title Examination 4
Section 2.3 Permitted Exceptions 4
Section 2.4 Conveyance of Title 5
ARTICLE IIIREVIEW OF PROPERTY 5
Section 3.1 Right of Inspection. 5
Section 3.2 Environmental Reports 6
Section 3.3 Right of Termination 6
Section 3.4 Review of Tenant Estoppels 7
ARTICLE IVCLOSING 7
Section 4.1 Time and Place 7
Section 4.2 Seller's Obligations at Closing 8
Section 4.3 Purchaser's Obligations at Closing 10
Section 4.4 Credits and Prorations 10
Section 4.5 Transaction Taxes and Closing
Costs 13
Section 4.6 Conditions Precedent to Obligation
of Purchaser 14
Section 4.7 Conditions Precedent to Obligation
of Seller 15
ARTICLE VREPRESENTATIONS, WARRANTIES AND COVENANTS 15
Section 5.1 Representations and Warranties
of Seller 15
Section 5.2 Knowledge Defined 17
Section 5.3 Survival of Seller's
Representations and Warranties 17
Section 5.4 Payment of Claims 17
Section 5.5 Covenants of Seller 18
Section 5.6 Additional Audits 19
Section 5.7 Representations and Warranties
of Purchaser 19
Section 5.8 Survival of Purchaser's
Representations and Warranties 20
ARTICLE VIDEFAULT 20
Section 6.1 Default by Purchaser 20
Section 6.2 Default by Seller 20
Section 6.3 Recoverable Damages 21
ARTICLE VIIRISK OF LOSS 21
Section 7.1 Minor Damage 21
Section 7.2 Major Damage 21
Section 7.3 Definition of "Major"
Loss or Damage 21
ARTICLE VIIICOMMISSIONS 22
Section 8.1 Brokerage Commissions 22
ARTICLE IXDISCLAIMERS AND WAIVERS 22
Section 9.1 No Reliance on Documents 22
Section 9.2 AS-IS SALE; DISCLAIMERS 23
Section 9.3 Survival of Disclaimers. 24
ARTICLE XMISCELLANEOUS 24
Section 10.1 Confidentiality 24
Section 10.2 Public Disclosure 24
Section 10.3 Assignment 25
Section 10.4 Notices 25
Section 10.5 Modifications 26
Section 10.6 Entire Agreement 26
Section 10.7 Further Assurances 26
Section 10.8 Counterparts 26
Section 10.9 Facsimile Signatures. 26
Section 10.10 Severability 27
Section 10.11 Applicable Law. 27
Section 10.12 No Third-Party Beneficiary 27
Section 10.13 Captions 27
Section 10.14 Construction 27
Section 10.15 Recordation 27
Section 10.16 Attorneys' Fees 27
Section 10.17 Computation of Time Periods 27
A DESCRIPTION OF LAND
B LIST OF PERSONAL PROPERTY
C LIST OF OPERATING AGREEMENTS
D ALLOCATION OF PURCHASE PRICE
E LIST OF ENVIRONMENTAL REPORTS
F TENANT ESTOPPEL FORM
G FORM OF DEED
H FORM OF BILL OF SALE
I FORM OF ASSIGNMENT OF LEASES
J FORM OF ASSIGNMENT OF CONTRACTS
K FORM OF TENANT NOTICE
L FORM OF FIRPTA CERTIFICATE
M LIST OF SPECIFIED LITIGATION
N LIST OF VIOLATION NOTICES
O SCHEDULE OF LEASES
P LEASING AGREEMENTS AND COMMISSION AGREEMENTS
P-1 TENANT INDUCEMENT COSTS AND COMMISSIONS ATTRIBUTED TO SELLER
Q TENANT DEFAULTS
R PROMISSORY NOTE
SALE AGREEMENT
THIS SALE AGREEMENT (this "Agreement") is made as of
_____________ 199_ the "Effective Date"), by and between
BROOKDALE INVESTORS, L.P., a Delaware limited partnership
("Seller" ), and PARKWAY PROPERTIES LP, a Delaware limited
partnership ("Purchaser").
W I T N E S S E T H:
I. ARTICLE
PURCHASE AND SALE
A. Section Agreement of Purchase and Sale. Subject to
the terms and conditions hereinafter set forth, Seller agrees to
sell and convey to Purchaser, and Purchaser agrees to purchase
from Seller, the following:
1. those certain parcels of land situated in Henrico
County, Virginia, Knox County, Tennessee, Ft. Bend County, Texas,
City of Virginia Beach , Virginia, Harris County, Texas, Dallas
County, Texas, Loudoun County, Virginia, Greenville County, South
Carolina, Broward County, Florida, and Chesterfield County,
Virginia, more particularly described in Exhibits A-1 through A-
12, attached hereto and made a part hereof, together with all
rights and appurtenances pertaining to such property, including
any right, title and interest of Seller in and to adjacent
streets, alleys, easements or rights-of-way including
particularly, that certain tract adjacent to the Commerce Green
Improvements consisting of approximately 4.985 acres (the
"Commerce Green Unimproved Land") and that certain tract adjacent
to the Hillsborough Improvements consisting of approximately 2.78
acres (the "Hillsborough Unimproved Land") (the "Commerce Green
Unimproved Land" and "Hillsborough Unimproved Land" being herein
collectively referred to as the "Unimproved Land") (the property
described in clause (a) of this Section 1.1 being herein referred
to collectively as the "Land")
1. the buildings, structures, fixtures, support
systems, surface parking lots, parking streets and garages and
other improvements affixed to or located on the Land, excluding
fixtures owned by tenants (the property described in clause (b)
of this Section 1.1 being herein referred to collectively as the
"Improvements");
1. any and all of Seller's right, title and interest
in and to all tangible personal property located upon the Land or
within the Improvements, including, without limitation, any and
all appliances, furniture, art work, planters, canopies,
carpeting, draperies and curtains, tools and supplies,
inventories, equipment and other items of personal property owned
by Seller (excluding cash and any software), located on and used
exclusively in connection with the operation of the Land and the
Improvements, which personal property includes without limitation
the personal property listed on Exhibit B-1 through B-12 attached
hereto (the property described in clause (c) of this section 1.1
being herein referred to collectively as the "Personal
Property");
1. any and all of Seller's right, title and interest
in and to the leases, licenses and occupancy agreements covering
all or any portion of the Land and Improvements, to the extent
they are in effect on the date of the Closing (as such term is
defined in Section 4.1 hereof) (the property described in clause
(d) of this Section 1.1 being herein referred to collectively as
the "Leases"), together with all rents and other sums due
thereunder (collectively, the "Rents") and any and all security
deposits relating to the leases (collectively, the "Security
Deposits"); and
1. any and all of Seller's right, title and interest
in and to (i) all assignable contracts and agreements
(collectively, the "Operating Agreements") listed and described
on Exhibit C-1 through C-12 attached hereto and made a part
hereof, relating to the upkeep, repair, maintenance or operation
of the Land, Improvements or Personal Property, and (ii) all
assignable existing warranties and guaranties (express or
implied) issued to Seller in connection with the Improvements or
the Personal Property, and (iii) all assignable existing permits,
licenses, approvals and authorizations issued by any governmental
authority in connection with the Property and (iv) the non-
exclusive right to the identifying name, if any, of each of the
Improvements (the property described in clause (e) of this
Section 1.1 being sometimes herein referred to collectively as
the "Intangibles")
A. Section Property Defined. The Land and the
Improvements are hereinafter sometimes referred to collectively
as the "Real Property." The Land, the Improvements, the Personal
Property, the Leases and the Intangibles are hereinafter
sometimes referred to collectively as the "Property." Any
particular portion of the Property comprising a separate office
project is referred to generically as a "Project" and any such
Project's component may sometimes be referred to herein by its
identifying description on each of Exhibit A-1 through A-12, B-1
through B-12 or C-1 through C-12, e.g. the "Sugar Creek Project"
or the "Belvedere Leases".
A. Section Purchase Price. Seller agrees to sell and
Purchaser agrees to purchase the Property for the amount of ONE
HUNDRED SIXTY FIVE MILLION DOLLARS ($165,000,000.00) (the
"Purchase Price"). The Purchase Price is allocated to each
Project comprising the Property in the manner set forth on
Exhibit D attached hereto and made a part hereof.
A. Section Payment of Purchase Price. The Purchase
Price, as increased or decreased by prorations and adjustments as
herein provided, shall be payable in full at Closing as follows:
(i) $163,300,000 shall be payable in cash by wire transfer of
immediately available funds to a bank account designated by
Seller in writing to Purchaser prior to the Closing with value to
be received in such account no later than 2:00 p.m. Atlanta,
Georgia time and (ii) $1,700,000 (allocable to the Unimproved
Land) shall be payable by the execution and delivery by Purchaser
to Seller of a promissory note (the "Promissory Note") in the
form attached hereto as Exhibit R.
A. Section Deposit. On the next business day after the
execution and delivery of this Agreement, Purchaser shall deposit
with Chicago Title Insurance Co. (the "Escrow Agent"), having its
office at Attention: ____________________________ the sum of One
Hundred Thousand Dollars ($100,000) (the "Deposit"), in good
funds, by federal wire transfer. In addition, on or before
February 8, 1998, unless Purchaser shall have earlier terminated
this Agreement pursuant to Section 3.3 hereof, Purchaser shall
deposit with Escrow Agent the further sum of Two Million Four
Hundred Thousand Dollars ($2,400,000) by federal wire transfer,
which shall be treated as part of the Deposit for all purposes
hereunder. The Escrow Agent shall hold the Deposit in an
interest-bearing account reasonably acceptable to Seller and
Purchaser, in accordance with the terms and conditions of this
Agreement. All interest on such sum shall be deemed income of
Purchaser until disbursement, and Purchaser shall be responsible
for the payment of all costs and fees imposed on the Deposit
account. The Deposit shall be distributed in accordance with the
terms of this Agreement and any and all interest accrued against
the Deposit shall be disbursed to the payee of the Deposit. The
failure of Purchaser to timely deliver either installment of the
Deposit hereunder shall be a material default, and shall entitle
Seller, at Seller's sole option, to terminate this Agreement
immediately.
A. Section Independent Consideration. Seller and
Purchaser acknowledge and agree that One Thousand Dollars
($1,000) of the Deposit shall be paid to Seller if this Agreement
is terminated for any reason (the "Independent Contract
Consideration"), in addition to any other rights Seller may have
hereunder. Moreover, Seller and Purchaser acknowledge and agree
that the Independent Contract Consideration has been bargained
for and agreed to as additional consideration for Seller's
execution and delivery of this Agreement. At Closing, the
Independent Contract Consideration shall be applied to the
Purchase Price.
A. Section Escrow Agent.
Escrow Agent shall hold and dispose of the Deposit in
accordance with the terms of this Agreement. Seller and
Purchaser agree that the duties of the Escrow Agent hereunder are
purely ministerial in nature and shall be expressly limited to
the safekeeping and disposition of the Deposit in accordance with
this Agreement. Escrow Agent shall incur no liability in
connection with the safekeeping or disposition of the Deposit for
any reason other than Escrow Agent's willful misconduct or gross
negligence. In the event that Escrow Agent shall be in doubt as
to its duties or obligations with regard to the Deposit, or in
the event that Escrow Agent receives conflicting instructions
from Purchaser and Seller with respect to the Deposit, Escrow
Agent shall not be required to disburse the Deposit and may, at
its option, continue to hold the Deposit, until both Purchaser
and Seller agree as to its disposition, or until a final judgment
is entered by a court of competent jurisdiction directing its
disposition, or Escrow Agent may interplead the Deposit in
accordance with the laws of the State of Georgia.
Escrow Agent shall not be responsible for any interest
on the Deposit except as is actually earned, or for the loss of
any interest resulting from the withdrawal of the Deposit prior
to the date interest is posted thereon.
Escrow Agent shall execute this Agreement solely for
the purpose of being bound by the provisions of Sections 1.5 and
1.6 hereof.
I. ARTICLE
TITLE AND SURVEY
A. Section Title Inspection Period. During the
Inspection Period, Purchaser shall have the right to review (a) a
current preliminary title report or title insurance commitment
(the "Title Commitment") on the Real Property, accompanied by
copies of all documents referred to in the report, which has been
furnished to Purchaser by Seller at or prior to the Effective
Date; and (b) the most recent survey of the Real Property
prepared by a licensed surveyor or engineer hired by Seller.
Purchaser may elect to update or obtain a substitute or different
title insurance commitment for the Title Commitment (or any
portion thereof) and/or update or obtain a substitute survey for
the surveys furnished by Seller (or any portion thereof).
A. Section Title Examination. Purchaser shall notify
Seller in writing (the "Title Notice") prior to the expiration of
the Inspection Period which exceptions to title (including survey
matters), if any, will not be accepted by Purchaser. If
Purchaser fails to notify Seller in writing of its disapproval of
any exceptions to title by the expiration of the Inspection
Period, Purchaser shall be deemed to have approved all title
matters, other than undisputed monetary liens, mortgages or deeds
of trust. Seller agrees to pay in full all amounts owing under
any mortgage, deed of trust or other undisputed monetary lien
identified in the Title Commitment at Closing from the proceeds
of sale of the Property, but Seller shall not be obligated to
cure or remove any other exceptions to title.
B. Section Permitted Exceptions. Subject to Purchaser's
right to accept or reject title to the Property under Sections
2.1 and 2.2 above, the Property shall be conveyed subject to the
following matters, which are hereinafter referred to as the
"Permitted Exceptions":
1. those matters identified in the Title Commitment
furnished to Purchaser by Seller pursuant to Section 2.1 hereof
(other than standard permitted exceptions shown in each Schedule
B thereto); provided, however, Seller will pay in full at or
prior to Closing all indebtedness secured by any mortgage, deed
of trust or other similar security instrument identified in such
title report or title insurance commitment;
1. those matters that either are not objected to in
writing within the time periods provided in Section 2.2 hereof,
or if objected to in writing by Purchaser, are those which Seller
has elected not to remove or cure, or has been unable to remove
or cure, and subject to which Purchaser has elected or is deemed
to have elected to accept the conveyance of the Property;
1. the rights of tenants under the Leases;
1. the lien of all ad valorem real estate taxes and
assessments not yet due and payable as of the date of Closing,
subject to adjustment as herein provided;
1. local, state and federal laws, ordinances or
governmental regulations, including but not limited to, building
and zoning laws, ordinances and regulations, now or hereafter in
effect relating to the Property; and
1. items shown on the surveys and not objected to by
Purchaser or waived or deemed waived by Purchaser in accordance
with Section 2.2 hereof.
A. Section Conveyance of Title. At Closing, Seller
shall convey and transfer to Purchaser fee simple title to the
Land and Improvements, by execution and delivery of the Deeds (as
defined in Section 4.2(a) hereof) . Evidence of delivery of such
title shall be the issuance by Chicago Title Insurance Co. (the
"Title Company"), of an Owner's Policy of Title Insurance (the
"Title Policy") covering the Real Property, in the full amount of
the Purchase Price, subject only to the Permitted Exceptions.
I. ARTICLE
REVIEW OF PROPERTY
A. Section Right of Inspection. During the period
beginning upon the Effective Date and ending at 3:00 pm. Jackson,
Mississippi time on February 16, 1998 (hereinafter referred to as
the "Inspection Period"), Purchaser shall have the right to make
a physical inspection of the Real Property, including an
inspection of the environmental condition thereof pursuant to the
terms and conditions of this Agreement, and to examine at each
Project or at Seller's headquarters in Atlanta, Georgia documents
and files concerning the leasing, maintenance, operation and
financial performance of the Property, including without
limitation, copies of Seller's environmental reports with respect
to each Project, but excluding Seller's partnership and company
records, internal memoranda, financial projections, budgets,
appraisals, accounting and income tax records and similar
proprietary, confidential or privileged information
(collectively, the "Confidential Documents") and to interview
tenants of each Project and to conduct such non-invasive physical
engineering and other studies and tests on or of each of the
Projects as Purchaser deems appropriate in its sole discretion.
Purchaser understands and agrees that any on-site
inspections of the Property shall occur during normal business
hours after reasonable prior notice to Seller (which notice may
be telephonic) and shall be conducted so as not to interfere
unreasonably with the use of the Property by Seller or its
tenants or with the management of each Project by its respective
property manager. Seller reserves the right to have a
representative present during any such inspections and tenant
interviews. If Purchaser desires to do any invasive testing at
the Property, Purchaser shall do so only after notifying Seller
and obtaining Seller's prior written consent thereto, which
consent may be subject to any reasonable terms and conditions
imposed by Seller, including without limitation the prompt
restoration of the Property to its condition prior to any such
inspections or tests, at Purchaser's sole cost and expense. At
Seller's option, Purchaser will furnish to Seller copies of any
reports received by Purchaser relating to any inspections of the
Property. Purchaser agrees to protect, indemnify, defend and
hold Seller harmless from and against any claim for liabilities,
losses, costs, expenses (including reasonable attorneys' fees),
damages or injuries arising out of or resulting from the
inspection of the Property by Purchaser or its agents or
consultants, and notwithstanding anything to the contrary in this
Agreement, such obligation to indemnify and hold harmless Seller
shall survive Closing or any termination of this Agreement.
A. Section Environmental Reports. PURCHASER
ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED COPIES OF THE
ENVIRONMENTAL REPORTS LISTED ON EXHIBIT E ATTACHED HERETO, (2) IF
SELLER DELIVERS ANY ADDITIONAL ENVIRONMENTAL REPORTS TO
PURCHASER, PURCHASER WILL ACKNOWLEDGE IN WRITING THAT IT HAS
RECEIVED SUCH REPORTS PROMPTLY UPON RECEIPT THEREOF, AND (3) ANY
ENVIRONMENTAL REPORTS DELIVERED OR TO BE DELIVERED BY SELLER OR
ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING MADE AVAILABLE
SOLELY AS AN ACCOMMODATION TO PURCHASER AND MAY NOT BE RELIED
UPON BY PURCHASER IN CONNECTION WITH THE PURCHASE OF THE
PROPERTY. PURCHASER AGREES THAT SELLER SHALL HAVE NO LIABILITY
OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR OMISSION FROM
ANY ENVIRONMENTAL REPORT. PURCHASER HAS CONDUCTED, OR WILL
CONDUCT PRIOR TO THE EXPIRATION OF THE INSPECTION PERIOD, ITS OWN
INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE PROPERTY TO
THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY
OR APPROPRIATE.
A. Section Right of Termination. If for any reason
whatsoever Purchaser determines that the Property, any Project or
any aspect thereof, is unsuitable for Purchaser's acquisition,
Purchaser shall have the right to terminate this Agreement by
giving written notice thereof to Seller prior to the expiration
of the Inspection Period, and if Purchaser gives such notice of
termination within the Inspection Period, this Agreement shall
terminate. If this Agreement is terminated pursuant to the
foregoing provisions of this paragraph, then neither party shall
have any further rights or obligations hereunder (except for any
indemnity obligations of either party pursuant to other
provisions of this Agreement), the Deposit shall be returned to
Purchaser (less the Independent Contract Consideration to be
retained by Seller) and each party shall bear its own costs
incurred hereunder. If Purchaser fails to give Seller a notice
of termination prior to the expiration of the Inspection Period,
Purchaser shall be deemed to have elected to proceed with the
purchase of the Property pursuant to the terms hereof. Further,
Purchaser's Deposit shall be non-refundable following the
expiration of the Inspection Period, except to the extent
expressly provided otherwise in this Agreement. Purchaser
acknowledges that Purchaser's right of termination under this
Section 3.3 relates to the entire Property and Purchaser may not
terminate this Agreement as to any individual Project(s) while
electing to proceed with the acquisition of other Projects within
the Property.
A. Section Review of Tenant Estoppels. Within six (6)
business days following the Effective Date, Seller shall deliver
to Purchaser the completed forms of estoppel certificate for
ninety percent (90%) of the tenants of the Property in
substantially the form of Exhibit F attached hereto (the "Tenant
Estoppels"). Seller shall send the remainder of such completed
Tenant Estoppels as soon as they are available but in no event
later than nine (9) business days following the Effective Date.
Purchaser shall have five (5) business days in which to correct
any errors in such forms based upon the Leases and any such forms
not corrected or otherwise modified with the approval of Seller
within such five (5) business day period shall be deemed complete
and approved by Purchaser. Within three (3) business days
following Purchaser's approval (or deemed approval) of the Tenant
Estoppels, Seller shall submit the approved forms of Tenant
Estoppels to the applicable tenants and request that the tenants
complete and sign the Tenant Estoppels and return them to Seller.
Seller shall deliver copies of the completed Tenant Estoppels to
Purchaser as Seller receives them. Purchaser shall notify Seller
within three (3) days of receipt of any Tenant Estoppel in the
event Purchaser determines such Tenant Estoppel is not acceptable
to Purchaser along with the reasons for such determination;
provided that each such Tenant Estoppel shall be deemed
satisfactory if executed by a tenant in the form submitted. In
the event Purchaser fails to give such notice within such three
(3) day period then any such Tenant Estoppel shall be deemed to
be acceptable to Purchaser. Seller will make diligent efforts to
obtain all of the Tenant Estoppels from tenants, however, in the
event that Seller fails to obtain the Tenant Estoppels with
respect to eighty percent (80%) of the leased space within each
Project that are satisfactory or deemed satisfactory to Purchaser
on or before the expiration of the Inspection Period, Purchaser
shall have the right to terminate this Agreement by written
notice to Seller. If this Agreement is terminated pursuant to
the foregoing provisions of this paragraph, then neither party
shall have any further rights or obligations hereunder (except
for any indemnity obligations of either party pursuant to the
other provisions of this Agreement), the Deposit shall be
returned to Purchaser (less the Independent Contract
Consideration to be retained by Seller), and each party shall
bear its own costs incurred hereunder. If Purchaser fails to
give Seller a notice of termination as set forth above, Purchaser
shall be deemed to have approved the Tenant Estoppels.
I. ARTICLE
CLOSING
A. Section Time and Place. The consummation of the
transaction contemplated hereby (the "Closing") shall be held at
the offices of King & Spalding, Atlanta, Georgia on February 19,
1998, or such earlier date as the parties shall mutually agree.
At the Closing, Seller and Purchaser shall perform the
obligations set forth in, respectively, Section 4.2 and Section
4.3 hereof, the performance of which obligations shall be
concurrent conditions; provided that the Deeds shall not be
recorded until Seller receives confirmation that the Escrow Agent
has authority to transfer the full amount of the Purchase Price,
adjusted by prorations as set forth herein to Seller upon receipt
of Seller's instruction to record the Deeds. The Closing shall
be consummated through an escrow administered by Escrow Agent and
the Purchase Price and all documents shall be deposited with the
Escrow Agent as escrowee.
A. Section Seller's Obligations at Closing. At
Closing, Seller shall:
1. deliver to Purchaser a duly executed limited or
special warranty deed, depending upon the practice in each state
in which a Project is located (the "Deeds") in the form attached
hereto as Exhibit G, conveying the Land and Improvements, subject
only to the Permitted Exceptions; the warranty of title in each
Deed will be only as to claims made by, through or under Seller
and not otherwise;
1. deliver to Purchaser a duly executed bill of sale
(the "Bill of Sale") conveying the Personal Property without
warranty of title or use and without warranty, express or
implied, as to merchantability and fitness for any purpose and in
the form attached hereto as Exhibit H except for a special
warranty of title to those items specifically listed on Exhibits
B-1 - B-12 attached hereto;
1. assign to Purchaser, and Purchaser shall assume,
the landlord/lessor interest in and to the Leases, Rents and
Security Deposits, and any and all obligations to pay leasing
commissions and finder's fees with respect to the Leases and
amendments, renewals and expansions thereof, only to the extent
provided in Section 4.4(b)(iii) hereof, by duly executed
assignment and assumption agreement (the "Assignment of Leases")
in the form attached hereto as Exhibit "I" pursuant to which (i)
Seller shall indemnify Purchaser and hold Purchaser harmless from
and against any and all claims pertaining thereto arising during
Seller's ownership of the Property prior to Closing and (ii)
Purchaser shall indemnify Seller and hold Seller harmless from
and against any and all claims pertaining thereto arising from
and after the Closing, including without limitation, claims made
by tenants with respect to tenants' Security Deposits to the
extent paid, credited or assigned to Purchaser;
1. to the extent assignable, assign to Purchaser, and
Purchaser shall assume, Seller's interest in the Operating
Agreements which have not been terminated as of the Closing Date
and the other Intangibles by duly executed assignment and
assumption agreement (the "Assignment of Contracts") in the form
attached hereto as Exhibit J pursuant to which (i) Seller shall
indemnify Purchaser and hold Purchaser harmless from and against
any and all claims pertaining thereto arising prior to Closing
and (ii) Purchaser shall indemnify Seller and hold Seller
harmless from and against any and all claims pertaining thereto
arising from and after the Closing;
1. join with Purchaser to execute a notice (the
"Tenant Notice") in the form attached hereto as Exhibit K) which
Purchaser shall send to each tenant under each of the Leases
promptly after the Closing, informing such tenant of the sale of
the Property and of the assignment to Purchaser of Seller's
interest in, and obligations under, the Leases (including, if
applicable, any Security Deposits), and directing that all Rent
and other sums payable after the Closing under each such Lease be
paid as set forth in the notice;
1. In the event that any representation or warranty
of Seller set forth in Section 5.1 hereof needs to be modified
due to changes since the Effective Date, deliver to Purchaser a
certificate, dated as of the date of Closing and executed on
behalf of Seller by a duly authorized officer thereof,
identifying any representation or warranty which is not, or no
longer is, true and correct and explaining the state of facts
giving rise to the change. In no event shall Seller be liable to
Purchaser for, or be deemed to be in default hereunder by reason
of, any breach of representation or warranty which results from
any change that (i) occurs between the Effective Date and the
date of Closing and (ii) is expressly permitted under the terms
of this Agreement or is beyond the reasonable control of Seller
to prevent; provided, however, that the occurrence of a change
which is not permitted hereunder or is beyond the reasonable
control of Seller to prevent shall, if materially adverse to
Purchaser, constitute the non-fulfillment of the condition set
forth in Section 4.6(b) hereof; if, despite changes or other
matters described in such certificate, the Closing occurs,
Seller's representations and warranties set forth in this
Agreement shall be deemed to have been modified by all statements
made in such certificate;
1. deliver to Purchaser such evidence as the Title
Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Seller;
1. deliver to Purchaser a certificate in the form
attached hereto as Exhibit L duly executed by Seller stating that
Seller is not a "foreign person" as defined in the Federal
Foreign Investment in Real Property Tax Act of 1980;
1. make available to Purchaser for pick-up the Leases
and the Operating Agreements, together with such leasing and
property files and records located in Atlanta, Georgia or the
property manager's office at each Project which relate to the
continued operation, leasing and maintenance of the Property, but
excluding any Confidential Documents;
1. deliver such affidavits as may be customarily and
reasonably required by the Title Company for each state in which
any Project is located, in order to issue its Title Policy as to
such Project, in a form reasonably acceptable to Seller;
1. deliver to Purchaser possession and occupancy of
the Property, subject to the Permitted Exceptions;
1. execute a closing statement acceptable to Seller;
1. terminate all Operating Agreements, including
Leasing Agreements (as defined in Section 5.1(h) herein) and
property management agreements, except those which may only be
terminated upon more than thirty (30) days advance written
notice; and
1. deliver such additional documents as shall be
reasonably required to consummate the transaction contemplated by
this Agreement.
A. Section Purchaser's Obligations at Closing. At
Closing, Purchaser shall:
1. pay to Seller the full amount of the Purchase
Price (which amount shall include the Deposit, with all accrued
interest thereon), as increased or decreased by prorations and
adjustments as herein provided, in immediately available wire
transferred funds pursuant to Section 1.4 hereof;
1. join Seller in execution of the Assignment of
Leases, Assignment of Contracts and Tenant Notices;
1. In the event that any representation or warranty
of Purchaser set forth in Sections 5.5(a) or (b) hereof needs to
be modified due to changes since the Effective Date, deliver to
Seller a certificate, dated as of the date of Closing and
executed on behalf of Purchaser by a duly authorized
representative thereof, identifying any such representation or
warranty which is not, or no longer is, true and correct and
explaining the state of facts giving rise to the change. In no
event shall Purchaser be liable to Seller for, or be deemed to be
in default hereunder by reason of, any breach of representation
or warranty set forth in Sections 5.5(a) or (b) hereof which
results from any change that (i) occurs between the Effective
Date and the date of Closing and (ii) is expressly permitted
under the terms of this Agreement or is beyond the reasonable
control of Purchaser to prevent; provided, however, that the
occurrence of a change which is not permitted hereunder or is
beyond the reasonable control of Purchaser to prevent shall, if
materially adverse to Seller, constitute the non-fulfillment of
the condition set forth in Section 4.7(c) hereof; if, despite
changes or other matters described in such certificate, the
Closing occurs, Purchaser's representations and warranties set
forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate;
1. deliver to Seller such evidence as the Title
Company may reasonably require as to the authority of the person
or persons executing documents on behalf of Purchaser;
1. deliver such affidavits as may be customarily and
reasonably required by the Title Company, in a form reasonably
acceptable to Purchaser;
1. execute a closing statement acceptable to
Purchaser;
1. execute and deliver the Promissory Note, together
with evidence of the legal power and authority of Purchaser and
the signatories thereto, to execute and deliver same; and
1. deliver such additional documents as shall be
reasonably required to consummate the transaction contemplated by
this Agreement.
A.
Section Credits and Prorations.
1. All income and expenses of the Property shall be
apportioned as of 11:59 p.m., on the day prior to the day of
Closing, as if Purchaser were vested with title to the Property
during the entire day upon which Closing occurs. Such prorated
items shall include without limitation the following:
a) all Rents, if any;
a) taxes and assessments (including personal property
taxes on the Personal Property) levied against the Property;
a) utility charges for which Seller is liable, if
any, such charges to be apportioned at Closing on the basis of
the most recent meter reading occurring prior to Closing (dated
not more than fifteen (15) days prior to Closing) or, if
unmetered, on the basis of a current bill for each such utility;
a) all amounts payable under Operating Agreements;
and
a) any other operating expenses or other items
pertaining to the Property which are customarily prorated between
a purchaser and a seller in the county in which each Project is
located.
1. Notwithstanding anything contained in Section
4.4(a) hereof:
a) At Closing, (A) Seller shall credit to the account
of Purchaser the amount of all Security Deposits (to the extent
such Security Deposits have not been applied against delinquent
Rents or otherwise as provided in the Leases), and (B) Seller
shall be entitled to receive and retain such refundable cash and
deposits;
a) Any taxes paid at or prior to Closing shall be
prorated based upon the amounts actually paid. If taxes and
assessments due and payable during the year of Closing for any
Project have not been paid before Closing, Seller shall be
charged at Closing an amount equal to that portion of such taxes
and assessments which relates to the period before Closing and
Purchaser shall pay the taxes and assessments prior to their
becoming delinquent. Any such apportionment made with respect to
a tax year for which the tax rate or assessed valuation, or both,
have not yet been fixed shall be based upon the tax rate and/or
assessed valuation last fixed. To the extent that the actual
taxes and assessments for the current year for any Project differ
from the amount apportioned at Closing, the parties shall make
all necessary adjustments by appropriate payments between
themselves within thirty (30) days after such amounts are
determined following Closing, subject to the provisions of
Section 4.4(d) hereof;
a) From and after Closing, Purchaser shall be
responsible for the payment of (A) all Tenant Inducement Costs
(as hereinafter defined) and leasing commissions which become due
and payable (whether before or after Closing) as a result of any
new Leases, or any renewals, amendments or expansions of existing
Leases, signed by Seller and approved by Purchaser from and after
the Effective Date; (B) all Tenant Inducement Costs and leasing
commissions with respect to new Leases, or renewals, amendments
or expansions of existing Leases, signed or entered into from and
after the date of Closing, including, without limitation, any
such commissions arising out of continuing obligations under the
Leasing Agreements (notwithstanding the termination thereof) set
forth on Exhibit "P"; and (C) except for (X) the items set forth
on Exhibit P-1 attached hereto and (Y) any other Tenant
Inducement Costs or leasing commissions which are due and
payable, but not yet paid, as of the Effective Date as a result
of any existing Lease or amendment, renewal or expansion thereof
which is fully executed as of the Effective Date and which such
Tenant Inducement Costs or leasing commissions are identified in
writing by Purchaser to Seller during the Inspection Period, for
which items described in clauses (X) and (Y) Seller shall be
responsible (either by Seller's satisfaction thereof prior to
Closing or by a credit to Purchaser at Closing), all Tenant
Inducement Costs and leasing commissions which become due and
payable after Closing, if any, for all existing Leases. For
avoidance of doubt, Seller shall have no obligation for any such
costs attributable to the refurbishment allowance owed pursuant
to the DHL Lease at the One Comerce Green Project or the
refurbish allowance owed pursuant to the Comerica Bank Lease at
the One Sugar Creek Project. Seller may add to the items
described on but not delete from Exhibit P-1 during the five (5)
business day period following the Effective Date. If, as of the
date of Closing, Seller shall have paid any Tenant Inducement
Costs or leasing commissions for which Purchaser is responsible
pursuant to the foregoing provisions, Purchaser shall reimburse
Seller therefor at Closing. For purposes hereof, the term
"Tenant Inducement Costs" shall mean any out-of-pocket payments
required under a Lease to be paid by the landlord thereunder to
or for the benefit of the tenant thereunder which is in the
nature of a tenant inducement, including specifically, without
limitation, tenant improvement costs, lease buy out costs, and
moving, design, refurbishment and club membership allowances.
The term "Tenant Inducement Costs" shall not include loss of
income resulting from any free rental period, it being agreed
that Seller shall bear the loss resulting from any free rental
period until the date of Closing and that Purchaser shall bear
such loss from and after the date of Closing.
a) Unpaid and delinquent Rent collected by Seller and
Purchaser after the date of Closing shall be delivered as
follows: (a) if Seller collects any unpaid or delinquent Rent for
the Property, Seller shall, within fifteen (15) days after the
receipt thereof, deliver to Purchaser any such Rent which
Purchaser is entitled to hereunder relating to any period after
the date of Closing, and (b) if Purchaser collects any unpaid or
delinquent Rent from the Property, Purchaser shall, within
fifteen (15) days after the receipt thereof, deliver to Seller
any such Rent which Seller is entitled to hereunder relating to
the period prior to and including the date of Closing. Seller
and Purchaser agree that all Rent received by Seller or Purchaser
from the date of Closing shall be applied first to current Rent
and then to delinquent Rent, if any, in the inverse order of
maturity. Purchaser will make a good faith effort after Closing
to collect all Rents in the usual course of Purchaser' s
operation of the Property, but Purchaser will not be obligated to
institute any lawsuit or other collection procedures to collect
delinquent Rents. Seller may attempt to collect any delinquent
Rents owed Seller and may institute any lawsuit or collection
procedures, but may not evict any tenant. In the event that
there shall be any Rents or other charges under any Leases which,
although relating to a period prior to Closing, do not become due
and payable until after Closing or are paid prior to Closing but
are subject to adjustment after Closing (such as year end common
area expense reimbursements and the like), then any Rents or
charges of such type received by Purchaser or its agents or
Seller or its agents subsequent to Closing shall, to the extent
applicable to a period extending through the Closing, be prorated
between Seller and Purchaser as of Closing and Seller's portion
thereof shall be remitted promptly to Seller by Purchaser.
1. Except as otherwise provided herein, any revenue
or expense amount which cannot be ascertained with certainty as
of Closing shall be prorated on the basis of the parties'
reasonable estimates of such amount, and shall be the subject of
a final proration sixty (60) days after Closing, or as soon
thereafter as the precise amounts can be ascertained. Purchaser
shall promptly notify Seller when it becomes aware that any such
estimated amount has been ascertained. Once all revenue and
expense amounts have been ascertained, Purchaser shall prepare,
and certify as correct, a final proration statement which shall
be subject to Seller's approval. Upon Seller's acceptance and
approval of any final proration statement submitted by Purchaser,
such statement shall be conclusively deemed to be accurate and
final.
1. Subject to the final sentence of Section 4.4(c)
hereof, the provisions of this Section 4.4 shall survive Closing.
A. Section Transaction Taxes and Closing Costs.
1. Seller and Purchaser shall execute such returns,
questionnaires and other documents as shall be required with
regard to all applicable real property transaction taxes imposed
by applicable federal, state or local law or ordinance;
1. Seller shall pay the lesser of one-half of the
actual premium or $202,000.00 (in the aggregate) for the Title
Policy to be issued to Purchaser (but not including any extra
costs for special endorsements other than for deletion of the
survey exceptions in Texas and Florida), one-half the cost of all
recording fees and transfer and documentary stamp taxes assessed
against the Deeds to the Property and the fees of any counsel
representing Seller in connection with this transaction and any
fees payable to Eastdil Realty Company, LLC ("Broker");
1. Purchaser shall pay the fees of any counsel
representing Purchaser in connection with this transaction.
Purchaser shall also pay the following costs and expenses:
a) the escrow fee, if any, which may be charged by
the Escrow Agent or Title Company;
a) the fee for the title examination and the Title
Commitment and the premium for the Title Policy to be issued to
Purchaser by the Title Company at Closing, and all endorsements
thereto in excess of those amounts for which Seller has agreed to
be responsible;
a) the cost of any updated survey;
a) one-half of any transfer tax, documentary stamp
tax or similar tax which becomes payable by reason of the
transfer of the Property; and
a) one-half of the fees for recording the Deeds.
1. All costs and expenses incident to this
transaction and the closing thereof, and not specifically
described above, shall be paid by the party incurring same; and
1. The provisions of this Section 4.5 shall survive
the Closing.
A. Section Conditions Precedent to Obligation of
Purchaser. The obligation of Purchaser to consummate the
transaction hereunder shall be subject to the fulfillment on or
before the date of Closing of all of the following conditions,
any or all of which may be waived by Purchaser in its sole
discretion:
1. Seller shall have delivered to Purchaser all of
the items required to be delivered to Purchaser pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.2 hereof;
1. All of the representations and warranties of
Seller contained in this Agreement shall be true and correct in
all material respects as of the date of Closing (with appropriate
modifications permitted under this Agreement); and
1. Seller shall have performed and observed, in all
material respects, all covenants and agreements of this Agreement
to be performed and observed by Seller as of the date of Closing.
A. Section Conditions Precedent to Obligation of Seller.
The obligation of Seller to consummate the transaction hereunder
shall be subject to the fulfillment on or before the date of
Closing of all of the following conditions, any or all of which
may be waived by Seller in its sole discretion:
1. Escrow Agent shall have received the Purchase
Price as adjusted as provided herein with unconditional
instructions to disburse same in accordance with the agreed-upon
settlement statement simultaneously with Seller's authorization
to release its Deeds for recordation, all pursuant to and payable
in the manner provided for in this Agreement;
1. Purchaser shall have delivered to Seller all of
the items required to be delivered to Seller pursuant to the
terms of this Agreement, including but not limited to, those
provided for in Section 4.3 hereof;
1. All of the representations and warranties of
Purchaser contained in this Agreement shall be true and correct
in all material respects as of the date of Closing (with
appropriate modifications permitted under this Agreement); and
1. Purchaser shall have performed and observed, in
all material respects, all covenants and agreements of this
Agreement to be performed and observed by Purchaser as of the
date of Closing.
I. ARTICLE
REPRESENTATIONS, WARRANTIES AND COVENANTS
A. Section Representations and Warranties of Seller.
Seller hereby makes the following representations and warranties
to Purchaser as of the Effective Date, which representations and
warranties shall be deemed to have been made again as of the
Closing, subject to Section 4.2(f) hereof:
1. Organization and Authority. Seller has been duly
organized and is validly existing under the laws of the State of
Delaware. Seller has the full right and authority to enter into
this Agreement and to transfer all of the Property and to
consummate or cause to be consummated the transaction
contemplated by this Agreement. The person signing this
Agreement on behalf of Seller is authorized to do so.
1. Pending Actions. To Seller's knowledge, except as
set forth on Exhibit M, Seller has not received written notice of
any action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending against Seller
which, if adversely determined, could individually or in the
aggregate materially interfere with the consummation of the
transaction contemplated by this Agreement or have a material
adverse effect on any Project.
1. Operating Agreements. To Seller's knowledge, the
Operating Agreements listed on Exhibit C are all of the
agreements concerning the operation and maintenance of the
Property entered into by Seller and affecting the Property, and
Seller has delivered to Purchaser a true, correct and complete
copy of each Operating Agreement. Except those Operating
Agreements that require more than thirty (30) days written notice
to terminate, all of such agreements, including all property
management agreements and Leasing Agreements, shall be terminated
by Seller as of Closing, and as to those Operating Agreements
which terminate upon more than thirty (30) days written notice,
Seller agrees to give such notice (contingent upon the occurrence
of Closing) at least thirty (30) days prior to Closing.
1. Condemnation. To Seller's knowledge, except as
set forth on Exhibit M, Seller has received no written notice of
any condemnation proceedings relating to any Project.
1. Litigation. To Seller's knowledge, except as set
forth on Exhibit M attached hereto, and except tenant eviction
proceedings, tenant bankruptcies, proceedings for the collection
of delinquent rentals from tenants and proceedings related to
claims for personal injury or damage to property due to events
occurring at the Property, Seller has not received written notice
of any litigation which has been filed against Seller that arises
out of the ownership of any of the Projects or would materially
affect any of the Projects or use thereof, or Seller's ability to
perform hereunder;
1. Violations. To Seller's knowledge, except as set
forth on Exhibit N attached hereto, Seller has not received
written notice of any uncured violation of any federal, state or
local law relating to the use or operation of any Project which
would materially adversely affect any Project or use thereof;
1. Leases. The description of the Leases attached
hereto as Exhibit O is accurate in all material respects, and
lists all of the leases currently affecting the Property and
Seller has delivered to Purchaser a true, correct and complete
copy of all the Leases. Except as identified on Exhibit Q, to
Seller's knowledge, no tenant is delinquent in the payment of
rent for more than thirty (30) days nor has Seller delivered
written notice of any other default which remains uncured; and
(h) Leasing Agreements and Commission Agreements. To
Seller's knowledge, Exhibit P attached hereto includes (i) all
agreements entered into by Seller with leasing agents for the
purpose of leasing any Project (collectively, the "Leasing
Agreements") and (ii) all agreements entered into by Seller or
any predecessor in title to Seller with leasing brokers for the
payment of leasing commissions with respect to any existing Lease
(collectively, the "Commission Agreements"). Seller has
delivered or will deliver within five (5) business days after the
Effective Date true and correct copies of all Leasing Agreements
and Commission Agreements listed on Exhibit P to Purchaser.
Purchaser and Seller acknowledge that Seller shall have five (5)
business days following the Effective Date to add to but not
delete from Exhibit P to this Agreement. Seller will terminate
all Leasing Agreements at Closing, however, Purchaser shall pay
any commissions which are payable under the Leasing Agreements
(notwithstanding the termination thereof) with respect to any
lease signed by Purchaser after the Closing.
A. Section Knowledge Defined. References to the
"knowledge" of Seller shall refer only to the current actual
knowledge of the Designated Representatives (as hereinafter
defined) of Seller, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate
of Seller, to any property manager, or to any other officer,
agent, manager, representative or employee of Seller or any
affiliate thereof or to impose upon such Designated
Representatives any duty to investigate the matter to which such
actual knowledge, or the absence thereof, pertains. As used
herein, the term "Designated Representatives" shall refer to C.L.
Davidson, III, Fred H. Henritze, Seabie W Hickson, III and David
M. Hendrickson. Purchaser agrees that none of the Designated
Representatives shall have any personal liability hereunder by
reason of their designation as Designated Representatives.
A. Section Survival of Seller's Representations and
Warranties. The representations and warranties of Seller set
forth in Section 5.1 hereof as updated as of the Closing in
accordance with the terms of this Agreement, shall survive
Closing for a period of two hundred seventy (270) days. No claim
asserted after Closing for a breach of any representation or
warranty of Seller shall be actionable or payable if the breach
in question results from or is based on a condition, state of
facts or other matter which was known to Purchaser prior to
Closing. Seller shall have no liability to Purchaser for a
breach of any representation or warranty (a) unless the valid
claims for all such breaches collectively aggregate more than
Twenty-Five Thousand Dollars ($25,000), in which event the full
amount of such valid claims shall be actionable, up to the Cap
(as defined in this Section), and (b) unless written notice
containing a description of the specific nature of such breach
shall have been given by Purchaser to Seller prior to the
expiration of said two hundred seventy (270) day period and an
action shall have been commenced by Purchaser against Seller
within three hundred sixty-five (365) days of Closing. As used
herein, the term "Cap" shall mean the total aggregate amount of
Three Million and No/100 Dollars ($3,000,000); except there shall
be no Cap applicable to any recovery from Seller as a result of
the fraudulent acts of Seller.
A. Section Payment of Claims. To ensure that Seller is
able to pay any Valid Claim (as hereinafter defined) under
Section 5.3 above, Seller shall implement, at Seller's option,
one of the following options at Closing:
1. Seller shall obtain an amendment to its
partnership agreement from all of the current partners of Seller
substantially to the effect that: (i) at the request of Brookdale
Partners, LLC, the general partner of Seller ("GP"), all of the
partners of Seller shall be unconditionally obligated to
contribute additional capital to Seller in proportion to the
amount of the net sales proceeds received by each partner from
the sale of Property in the event Purchaser asserts a Valid
Claim under Section 5.3 above; and (ii) all of the partners shall
consent to a collateral assignment by GP to Purchaser of the
right to call for such additional capital which right may be
exercised by Purchaser under such collateral assignment if a
Valid Claim is not paid within thirty (30) days (the "Collateral
Assignment"). At Closing, GP shall execute and deliver to
Purchaser the Collateral Assignment in a form reasonably
satisfactory to Purchaser and Seller. The Collateral Assignment
and the obligation of the partners to contribute additional
capital shall terminate on the Termination Date (as defined
below); or
1. At Closing, Seller shall establish a reserve
account (the "Reserve Account") in the initial amount of
$1,300,000.00 to be owned and maintained by Seller. The Reserve
Account shall be maintained by Seller until the "Termination
Date" which, for purposes herein, means the earlier of: (i)
expiration of the 270-day period following Closing without the
assertion of a written claim by Purchaser of a breach of a
representation or warranty by Seller; (ii) after the timely
assertion of such a claim by Purchaser, the expiration of the 365-
day period following Closing without the filing of an action by
Purchaser in a court of competent jurisdiction; or (iii) final
resolution of any claim timely asserted under Section 5.3 and the
payment of all Valid Claims. In addition, upon Purchaser's
payment of the Promissory Note, all of the proceeds (less any
Profits as defined in the Promissory Note) of the Promissory Note
shall also be deposited in the Reserve Account. Seller shall be
entitled to pay all Valid Claims from the Reserve Account and in
its sole judgement, any other claims properly asserted by
Purchaser under Section 5.3. Seller shall not expend any funds
from the Reserve Account except as provided above.
For purposes of this Section 5.4, the term "Valid
Claim" means any final judgement entered against Seller by a
court of competent jurisdiction holding that a breach of Seller's
representations and warranties under Section 5.3 above has
occurred and stating damages at a sum certain; provided that
Seller shall have no liability to pay any amount, including Valid
Claims, for breach of Seller's representations and warranties
under Section 5.3 above in an aggregate amount in excess of the
Cap.
A. Section Covenants of Seller. Seller hereby
covenants with Purchaser as follows:
1. From the Effective Date hereof until the Closing
or earlier termination of this Agreement, Seller shall use
reasonable efforts to operate and maintain the Property in a
manner generally consistent with the manner in which Seller has
operated and maintained the Property prior to the date hereof
including, without limitation, the continuation of ongoing
leasing and marketing activities at each Project;
1. Except as provided hereinbelow, a copy of any
amendment, renewal or expansion of an existing Lease or of any
new Lease which Seller wishes to execute between the Effective
Date and the date of Closing will be submitted to Purchaser prior
to execution by Seller. For any such amendment, renewal or
expansion of an existing Lease or for any new Lease which Seller
proposes to execute after the Effective Date, Purchaser agrees
to notify Seller in writing within five (5) business days after
its receipt thereof of either its approval or disapproval
thereof, including all Tenant Inducement Costs and leasing
commissions to be incurred in connection therewith. In the event
Purchaser informs Seller within such five (5) business day period
that Purchaser does not approve the amendment, renewal or
expansion of the existing Lease or the new Lease, which approval
shall not be unreasonably withheld, Seller shall not execute such
disapproved instrument. In the event Purchaser fails to notify
Seller in writing of its approval or disapproval within the five
(5) business day period set forth above, Purchaser shall be
deemed to have approved such new Lease, amendment, renewal or
expansion. At Closing, Purchaser shall reimburse Seller for any
Tenant Inducement Costs, leasing commissions or other expenses,
including reasonable legal fees, incurred by Seller pursuant to
an amendment, a renewal, an expansion or a new Lease executed by
Seller after the Effective Date and approved (or deemed approved)
by Purchaser.
A. Section Additional Audits. Purchaser shall have, in
addition to any inspection or audit rights contained elsewhere in
this Agreement, the right to conduct a full audit of the books
and records of Seller relating to the operations and financial
results of each Project (excluding any Confidential Documents),
in such form and at such time, including up to 270 days after
Closing as Purchaser may reasonably determine is necessary to
comply with applicable securities laws requirements, including,
without limitation, Regulation 210-3-14 promulgated under the
Securities Exchange Act of 1934, as amended. All costs incurred
as a result of Purchaser undertaking such audit, including any
costs incurred by Seller in complying with its obligation
hereunder, shall be borne exclusively by Purchaser; provided,
however, Seller shall make available such books, records and
materials as may be reasonably requested by Purchaser or its
accountants in order to conduct such audit (excluding any
Confidential Documents). All such audit activities shall be
conducted at Seller's or its agent's place of business in a
commercially reasonable fashion during normal business hours and
upon ten (10) days prior notice from Purchaser to Seller. The
terms and provisions of this Section 5.6 shall survive the
Closing.
A. Section Representations and Warranties of Purchaser.
Purchaser hereby makes the following representations and
warranties to Seller as of the Effective Date, which
representations and warranties shall be deemed to have been made
again as of the Closing, subject to Section 4.3(c) hereof:
1. Organization and Authority. Purchaser has been
duly organized and is validly existing under the laws of the
State of Delaware. Purchaser has the full right and authority to
enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement. The
person signing this Agreement on behalf of Purchaser is
authorized to do so;
1. Pending Actions. To Purchaser's knowledge, there
is no action, suit, arbitration, unsatisfied order or judgment,
government investigation or proceeding pending against Purchaser
which, if adversely determined, could individually or in the
aggregate materially interfere with the consummation of the
transaction contemplated by this Agreement.
1. ERISA. As of the Closing, (1) Purchaser will not
be an employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is subject to title I of ERISA, nor a plan as
defined in Section 4975(e) (1) of the Internal Revenue Code of
1986, as amended (each of the foregoing hereinafter referred to
collectively a "Plan"), and (2) the assets of the Purchaser will
not constitute "plan assets" of one or more such Plans within the
meaning of Department of Labor ("DOL") Regulation Section 2510 .3-
101. As of the Closing, if Purchaser is a "governmental plan" as
defined in Section 3(32) of ERISA, the closing of the sale of the
Property will not constitute or result in a violation of state or
local statutes regulating investments of and fiduciary
obligations with respect to governmental plans. As of the
Closing, Purchaser will be acting on its own behalf and not on
account of or for the benefit of any Plan. Purchaser has no
present intent to transfer the Property to any entity, person or
Plan which will cause a violation of ERISA. Purchaser shall not
assign its interest under this contract of sale to any entity,
person, or Plan which will cause a violation of ERISA.
A. Section Survival of Purchaser's Representations and
Warranties. The representations and warranties of Purchaser set
forth in Section 5.5 hereof as updated as of the Closing in
accordance with the terms of this Agreement, shall survive
Closing for a period of two hundred seventy (270) days.
Purchaser shall have no liability to Seller for a breach of any
representation or warranty unless written notice containing a
description of the specific nature of such breach shall have been
given by Seller to Purchaser prior to the expiration of said
270-day period and an action shall have been commenced by Seller
against Purchaser within three hundred sixty five (365) days of
Closing.
II. ARTICLE
DEFAULT
A. Section Default by Purchaser. In the event the sale
of the Property as contemplated hereunder is not consummated due
to Purchaser's default hereunder, Seller shall be entitled, as
its sole remedy, to terminate this Agreement and receive the
Deposit as liquidated damages for the breach of this Agreement,
it being agreed between the parties hereto that the actual
damages to Seller in the event of such breach are impractical to
ascertain and the amount of the Deposit is a reasonable estimate
thereof.
A. Section Default by Seller. In the event the sale of
the Property as contemplated hereunder is not consummated due to
Seller's default hereunder, and Purchaser is not in default under
this Agreement, Purchaser shall be entitled, as its sole remedy,
either (a) to receive the return of the Deposit plus payment by
Seller of Purchaser's actual, third-party out-of-pocket costs and
expenses in connection with this transaction not to exceed One
Hundred Thousand Dollars ($100,000), which return and payment
shall operate to terminate this Agreement and release Seller from
any and all liability hereunder, or (b) to enforce specific
performance of Seller's obligation to convey title to the
Property to Purchaser in accordance with Section 2.3 of this
Agreement, it being understood and agreed that the remedy of
specific performance shall not be available to enforce any other
obligation of Seller hereunder. Purchaser expressly waives its
rights to seek damages in the event of Seller's default
hereunder. Purchaser shall be deemed to have elected to
terminate this Agreement and receive back the Deposit plus
payment of its out-of-pocket expenses as provided above if
Purchaser fails to file suit for specific performance against
Seller in a court having jurisdiction in the county and state in
which the Property is located, on or before thirty (30) days
following the date upon which Closing was to have occurred. If
Purchaser elects to seek specific performance hereunder, Seller
agrees that any final judgment obtained by Purchaser from a court
of competent jurisdiction in the State of Georgia may be
domesticated in each state in which any Project is located for
the purpose of enforcing such judgment therein.
A. Section Recoverable Damages. Notwithstanding
Sections 6.1 and 6.2 hereof, in no event shall the provisions of
Sections 6.1 and 6.2 limit the damages recoverable by either
party against the other party due to the other party's obligation
to indemnify such party in accordance with this Agreement.
I. ARTICLE
RISK OF LOSS
A. Section Minor Damage. In the event of loss or damage
to or any condemnation of any Project, or any portion thereof,
which is not "Major" (as hereinafter defined), this Agreement
shall remain in full force and effect provided that Seller shall
assign to Purchaser all of Seller's right, title and interest in
and to any claims and proceeds Seller may have with respect to
any casualty insurance policies or condemnation awards relating
to the premises in question and the Purchase Price shall be
reduced by an amount equal to the lesser of the deductible amount
under Seller's insurance policy or the cost of such repairs as
determined in accordance with Section 7.3 hereof. Upon Closing,
full risk of loss with respect to each Project shall pass to
Purchaser.
A. Section Major Damage. In the event of a "Major" loss
or damage, Purchaser may terminate this Agreement as to the
affected Project only by written notice to the other party, in
which event the Purchase Price shall be reduced by the amount
thereof allocated to such Project as shown on Exhibit D. If
Purchaser does not elect to terminate this Agreement as to the
affected Project within ten (10) days after Seller sends
Purchaser written notice of the occurrence of such Major loss or
damage (which notice shall state the cost of repair or
restoration thereof as opined by an architect in accordance with
Section 7.3 hereof ), then Purchaser shall be deemed to have
elected to proceed with the purchase and sale of such affected
Project, in which event Seller shall assign to Purchaser all of
Seller's right, title and interest in and to any claims and
proceeds Seller may have with respect to any casualty insurance
policies or condemnation awards relating to the affected Project
and the Purchase Price shall be reduced by an amount equal to the
lesser of the deductible amount under Seller's insurance policy
or the cost of such repairs as determined in accordance with
Section 7.3 hereof.
A. Section Definition of "Major" Loss or Damage. For
purposes of Sections 7.1 and 7.2, "Major" loss or damage refers
to the following: (a) loss or damage to any Project hereof such
that the cost of repairing or restoring the premises in question
to substantially the same condition which existed prior to the
event of damage would be, in the opinion of an architect selected
by Seller and reasonably approved by Purchaser, equal to or
greater than seven percent (7%) of the value of such Project as
set forth on Exhibit "D" attached hereto, and (b) any loss due to
a condemnation which permanently and materially impairs the
current use of the Project. If Purchaser does not give written
notice to Seller of Purchaser's reasons for disapproving an
architect within five (5) business days after receipt of notice
of the proposed architect, Purchaser shall be deemed to have
approved the architect selected by Seller.
I. ARTICLE
COMMISSIONS
A. Section Brokerage Commissions. Seller acknowledges
that Broker has been engaged by Seller to assist with this
transaction and Seller shall be fully responsible for any
compensation owed Broker in connection with this transaction.
Each of Purchaser and Seller represent and warrant to the other
that it has not dealt with any broker or agent in the negotiation
of this transaction other than Broker. Each party hereto agrees
that if any person or entity makes a claim for brokerage
commissions or finder's fees related to the sale of the Property
by Seller to Purchaser, and such claim is made by, through or on
account of any acts or alleged acts of said party or its
representatives, said party will protect, indemnify, defend and
hold the other party free and harmless from and against any and
all loss, liability, cost, damage and expense (including
reasonable attorneys' fees) in connection therewith. The
provisions of this paragraph shall survive Closing or any
termination of this Agreement.
I. ARTICLE
DISCLAIMERS AND WAIVERS
A. Section NO RELIANCE ON DOCUMENTS. EXCEPT AS
EXPRESSLY STATED HEREIN, SELLER MAKES NO REPRESENTATION OR
WARRANTY AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF ANY
MATERIALS, DATA OR INFORMATION DELIVERED BY SELLER OR ITS BROKERS
OR AGENTS TO PURCHASER IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED HEREBY. PURCHASER ACKNOWLEDGES AND AGREES THAT ALL
MATERIALS, DATA AND INFORMATION DELIVERED BY SELLER TO PURCHASER
IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY ARE
PROVIDED TO PURCHASER AS A CONVENIENCE ONLY AND THAT ANY RELIANCE
ON OR USE OF SUCH MATERIALS, DATA OR INFORMATION BY PURCHASER
SHALL BE AT THE SOLE RISK OF PURCHASER, EXCEPT AS OTHERWISE
EXPRESSLY STATED HEREIN. NEITHER SELLER, NOR ANY AFFILIATE OF
SELLER, NOR THE PERSON OR ENTITY WHICH PREPARED ANY REPORT OR
REPORTS DELIVERED BY SELLER TO PURCHASER SHALL HAVE ANY LIABILITY
TO PURCHASER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH
REPORTS.
A. Section AS-IS SALE; DISCLAIMERS. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT
SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES
OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTIES OR REPRESENTATIONS AS TO A PARTICULAR PURPOSE.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING
SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO
THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT OR IN
ANY OTHER DOCUMENT EXECUTED BY SELLER AND DELIVERED TO PURCHASER
AT CLOSING. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND
SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING PACKAGES
DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY
SELLER, THE MANAGERS OF THE PROPERTY, OR ANY REAL ESTATE BROKER
OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO
WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN
WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT.
PURCHASER ALSO ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND
TAKES INTO ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS
OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY OR
DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY
AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN
WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR
DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND
NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR
ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, PURCHASER
SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT
LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER'S INVESTIGATIONS, AND EXCEPT WITH RESPECT TO MATTERS
WHICH BY THE EXPRESS TERMS OF THIS AGREEMENT SURVIVE CLOSING AND
EXCEPT FOR ANY CLAIMS ARISING OUT OF THE FRAUDULENT ACTIONS OF
SELLER, PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST
ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES
OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY
KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY
REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION
DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OR ANY APPLICABLE LAWS
AND ANY AND ALL OTHER FACTS, OMISSIONS, EVENTS CIRCUMSTANCES OR
MATTERS REGARDING THE PROPERTY.
A. Section SURVIVAL OF DISCLAIMERS. THE PROVISIONS OF
THIS ARTICLE IX SHALL SURVIVE CLOSING OR ANY TERMINATION OF THIS
AGREEMENT.
I. ARTICLE
MISCELLANEOUS
A. Section Confidentiality. Except as required by law,
Purchaser and its representatives shall hold in strictest
confidence all data and information obtained with respect to
Seller or its business, whether obtained before or after the
execution and delivery of this Agreement, and shall not disclose
the same to others; provided, however, that it is understood and
agreed that Purchaser may disclose such data and information to
the employees, lenders, consultants, accountants and attorneys of
Purchaser provided that such persons agree in writing to treat
such data and information confidentially. Notwithstanding the
foregoing, Purchaser shall have no obligation to maintain the
confidentiality of any information which is available to the
public or which has been obtained from sources not subject to the
provisions hereof. In the event this Agreement is terminated or
Purchaser fails to perform hereunder, Purchaser shall promptly
return to Seller any statements, documents, schedules, exhibits
or other written information obtained from Seller in connection
with this Agreement or the transaction contemplated herein. In
the event of a breach or threatened breach by Purchaser or its
agents or representatives of this Section 10.1, Seller shall be
entitled to an injunction restraining Purchaser or its agents or
representatives from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as
prohibiting Seller from pursuing any other available remedy at
law or in equity for such breach or threatened breach. The
provisions of this Section 10.1 shall survive any termination of
this Agreement.
A. Section Public Disclosure. Except as required by
law, prior to the Closing, any release to the public of
information with respect to the sale contemplated herein or any
matters set forth in this Agreement will be made only in the form
reasonably approved by Purchaser and Seller. The provisions of
this Section 10.2 shall survive any termination of this
Agreement.
A. Section Assignment. Subject to the provisions of
this Section 10.3, the terms and provisions of this Agreement are
to apply to and bind the permitted successors and assigns of the
parties hereto. Except with respect to an assignment to a wholly-
owned subsidiary, Purchaser may not assign its rights under this
Agreement without first obtaining Seller's written approval,
which approval may be given or withheld in Seller's sole
discretion. In the event Purchaser intends to assign its rights
hereunder, (a) Purchaser shall send Seller written notice of its
request at least five (5) business days prior to Closing, which
request shall include the legal name and structure of the
proposed assignee, as well as any other information that Seller
may reasonably request, and (b) Purchaser and the proposed
assignee shall execute an assignment and assumption of this
Agreement in form and substance satisfactory to Seller, and (c)
in no event shall any assignment of this Agreement release or
discharge Purchaser from any liability or obligation hereunder.
Notwithstanding the foregoing, under no circumstances shall
Purchaser have the right to assign this Agreement to any person
or entity owned or controlled by an employee benefit plan if
Seller's sale of the Property to such person or entity would, in
the reasonable opinion of Seller's ERISA advisor, create or
otherwise cause a "prohibited transaction" under ERISA. Any
transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall
constitute an assignment of this Agreement. The provisions of
this Section 10.3 shall survive the Closing or any termination of
this Agreement.
A. Section Notices. Any notice pursuant to this
Agreement shall be given in writing by (a) personal delivery, (b)
reputable overnight delivery service with proof of delivery, (c)
United States Mail, postage prepaid, registered or certified
mail, return receipt requested, or (d) legible facsimile
transmission, sent to the intended addressee at the address set
forth below, or to such other address or to the attention of such
other person as the addressee shall have designated by written
notice sent in accordance herewith, and shall be deemed to have
been given upon receipt or refusal to accept delivery, or, in the
case of facsimile transmission, as of the date of the facsimile
transmission provided that an original of such facsimile is also
sent to the intended addressee by means described in clauses (a),
(b) or (c) above. Unless changed in accordance with the preceding
sentence, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to Seller: Brookdale Investors, L.P.
3343 Peachtree Road, N.E.
Suite 510
Atlanta, GA 30326
Attention: C.L. Davidson, III and
Seabie W Hickson, III
Telephone No. 404/364-8080
Telecopy No. 404/364-8099
with a copy to: King & Spalding
191 Peachtree Street, N.E.
Atlanta, GA 30303-1763
Attention: Scott J. Arnold
Telephone No.: 404/572-4908
Telecopy No.: 404/572-5148
If to Purchaser: Parkway Properties, L.P.
Suite 1000, One Jackson Place
188 E. Capitol Street
Jackson, Mississippi 39201
Attention: Steven G. Rogers
and James M. Ingram
Telephone No.: 601/948-4091
Telecopy No. : 601/949-4077
with a copy to: Forman Perry Watkins Krutz & Tardy, PLLC
1200 One Jackson Place
188 E. Capitol Street
Jackson, Mississippi 39201
Attention: Steven M. Hendrix
Telephone No.: 601/960-8600
Telecopy No.: 601/960-8609
A. Section Modifications. This Agreement cannot be
changed orally, and no executory Agreement shall be effective to
waive, change, modify or discharge it in whole or in part unless
such executory Agreement is in writing and is signed by the
parties against whom enforcement of any waiver, change,
modification or discharge is sought
A. Section Entire Agreement. This Agreement, including
the exhibits and schedules hereto, contains the entire Agreement
between the parties hereto pertaining to the subject matter
hereof and fully supersedes all prior written or oral agreements
and understandings between the parties pertaining to such subject
matter.
A. Section Further Assurances. Each party agrees that
it will execute and deliver such other documents and take such
other action, whether prior or subsequent to Closing, as may be
reasonably requested by the other party to consummate the
transaction contemplated by this Agreement. The provisions of
this Section 10.7 shall survive Closing.
A. Section Counterparts. This Agreement may be executed
in counterparts, all such executed counterparts shall constitute
the same Agreement, and the signature of any party to any
counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
A. Section Facsimile Signatures. In order to expedite
the transaction contemplated herein, telecopied signatures may be
used in place of original signatures on this Agreement. Seller
and Purchaser intend to be bound by the signatures on the
telecopied document, are aware that the other party will rely on
the telecopied signatures, and hereby waive any defenses to the
enforcement of the terms of this Agreement based on the form of
signature.
A. Section Severability. If any provision of this
Agreement is determined by a court of competent jurisdiction to
be invalid or unenforceable, the remainder of this Agreement
shall nonetheless remain in full force and effect; provided that
the invalidity or unenforceability of such provision does not
materially adversely affect the benefits accruing to any party
hereunder.
A. Section Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Georgia. Purchaser and Seller agree that the provisions
of this Section 10.11 shall survive the Closing or any
termination of this Agreement.
A. Section No Third-Party Beneficiary. The provisions
of this Agreement and of the documents to be executed and
delivered at Closing are and will be for the benefit of Seller
and Purchaser only and are not for the benefit of any third
party, and accordingly, no third party shall have the right to
enforce the provisions of this Agreement or of the documents to
be executed and delivered at Closing.
A. Section Captions. The section headings appearing in
this Agreement are for convenience of reference only and are not
intended, to any extent and for any purpose, to limit or define
the text of any section or any subsection hereof.
A. Section Construction. The parties acknowledge that
the parties and their counsel have reviewed and revised this
Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement or any exhibits or amendments hereto.
A. Section Recordation. This Agreement may not be
recorded by any party hereto without the prior written consent of
the other party hereto. The provisions of this Section 10.15
shall survive the Closing or any termination of this Agreement.
A. Section Attorneys' Fees. If either party commences
legal proceedings for any relief against the other party arising
out of this Agreement or any documents, agreements, exhibits or
certificates contemplated hereby, the losing party shall pay the
prevailing party's reasonable attorney's fees upon final
settlement, judgment or appeal thereof.
A. Section Computation of Time Periods. All periods of
time referred to in this Agreement shall include all Saturdays,
Sundays and state or national holidays, unless the period of time
specifies business days, provided that if the date or last date
to perform any act or give any notice or approval shall fall on a
Saturday, Sunday or national holiday, such act or notice may be
timely performed or given on the next succeeding day which is not
a Saturday, Sunday or national holiday.
[Signatures commence on following page]
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the Effective Date.
SELLER:
BROOKDALE INVESTORS, L.P.
a Delaware limited partnership, by its
sole general partner
By: Brookdale Partners, LLC
By: ____________________________
Name: C.L. Davidson, III
Title: Manager
PURCHASER:
PARKWAY PROPERTIES, LP,
a Delaware limited partnership
By: Parkway Properties General
Partners, Inc., a Delaware corporation, its
sole general partner
By: _____________________________
Name: __________________________
Title: _________________________
By: _____________________________
Name: __________________________
Title: _________________________
[Signatures continue on next page]
Escrow Agent executes this Agreement below solely for the
purpose of acknowledging that it agrees to be bound by the
provisions of Sections 1.5 and 1.7 hereof.
ESCROW AGENT:
________________________________
a ______________________________
By: ____________________________
Name: __________________________
Title: _________________________
EXHIBIT A-1/A-12
DESCRIPTION OF LAND
EXHIBIT B-1/B-12
LIST OF PERSONAL PROPERTY
EXHIBIT C-1/C-12
LIST OF OPERATING AGREEMENTS
VENDOR AGREEMENT PURPOSE TERM CANCELLATION
NAME DATE CLAUSE
EXHIBIT D
ALLOCATION OF PURCHASE PRICE
EXHIBIT E
LIST OF ENVIRONMENTAL REPORTS
[e.g. Phase I Environmental Report dated ____ prepared by XYZ
Consultants]
EXHIBIT F
TENANT ESTOPPEL FORM
Parkway Properties LP
Suite 1000, One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
RE: ________________________
Gentlemen:
The undersigned as Tenant hereby certifies to Parkway
Properties LP and its successors or assigns ("Purchaser") and any
applicable lender of Purchaser that:
(a) It is a Tenant of a portion of the captioned
property under a certain lease (the "Lease") as
follows:
Landlord: ______________________
Tenant: ________________________
Lease Dated: ____________________
Amendment(s) Dated (if any): __________________
Current Annual Base Rent: _____________________
Current CAM or Operating Expense Charges:
______________
Square Footage: ____________________
Original term (or current option period, if applicable)
expires: ___________
Security Deposit and/or Lease Deposit (if any): $
______________
Outstanding Tenant Improvement Allowance (if any): $
____________
Outstanding Leasing Commissions (if any): $
________________
(b) All rentals payable under the Lease have been paid
through _______, 19__; and except for
_________________, no rent has been paid more than one
month in advance of its due date.
(c) That attached hereto as Exhibit A is a true and
complete copy of the Lease and all amendments thereto.
(d) The Lease sets forth the entire agreement between
the Landlord and Tenant, is in full force and effect in
accordance with its terms and has not, in any way, been
amended or modified in any manner.
(e) Tenant has unconditionally accepted and occupied
the leased premises, is paying rent under the Lease
without claim or right of set-off, or claim of any
default by the Landlord, and is now conducting business
on the premises.
(f) To Tenant's knowledge there exists no default by
either party to the Lease, or other grounds for ceasing
or reducing the payment of rental, or for cancellation
or termination of the Lease in any manner.
(g) All requirements of the Lease have been complied
with and no charges, set-offs or other credits exist
against the rentals.
(h) Tenant has no outstanding options to purchase or
right of first refusal to purchase the leased premises
nor any part of the real property of which the leased
premises are a part.
(i) Tenant has not assigned, pledged, mortgaged,
sublet, encumbered or otherwise transferred any of its
interest under the Lease.
Tenant understands that Purchaser is relying on the above
representations in connection with the purchase of the
above-referenced building and does hereby warrant and affirm to
and for the benefit of Purchaser, its successors and assigns, and
any lender thereof, that each of the foregoing representations is
true, correct and complete as of the date hereof.
___________________________
Date: ___________________ By: _______________________
Name: _____________________
Title: ____________________
EXHIBIT G
FORM OF DEED
[a deed form is not included as it is a State specific document.
The deed will be a limited or special warranty type deed in which
the Project will be conveyed subject to the Permitted Exceptions
(as described in Section 2.4 of this Sale Agreement) with a
warranty of title by Seller as to the claims of all persons
claiming by, through or under Seller, but against none other.]
EXHIBIT H
FORM OF BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that BROOKDALE INVESTORS,
L.P., a Delaware limited partnership (the "Seller"), for and in
consideration of the sum of Ten Dollars and other valuable
consideration to it in hand paid by _________________________, a
(the "Purchaser") , the receipt and sufficiency of which are
hereby acknowledged, hereby sells, assigns, transfers and conveys
unto said Purchaser any and all of Seller's right, title and
interest in and to all tangible personal property located upon
the land described in Exhibit "A" attached hereto and hereby made
a part hereof (the "Land") or within the improvements located
thereon, including, without limitation, any and all appliances,
furniture, artwork, planters, canopies, carpeting, draperies and
curtains, tools and supplies, inventories, equipment and other
items of personal property owned by Seller (excluding cash and
any software), used exclusively in the operation of the Land and
improvements, as is, where is, and without warranty of title or
use, and without warranty, express or implied, of merchantability
or fitness for a particular purpose, except as expressly provided
herein. Such personal property shall specifically include those
items set forth on Exhibit "B" attached hereto and herein
incorporated by reference. With respect only to those items
specifically listed on Exhibit "B", Seller warrants its title to
those items against claims arising by, through or under Seller,
but not otherwise.
TO HAVE AND TO HOLD all of said personal property unto
Purchaser, its successors and assigns, to its own use forever.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as
of the _____ day of _________, 199__
BROOKDALE INVESTORS, L.P.,
a Delaware limited partnership, by
its sole general partner
By: Brookdale Partners, LLC
By: ______________________
C.L. Davidson, III
Manager
[ACKNOWLEDGMENT AND/OR WITNESSES TO BE ADDED IF REQUIRED
UNDER APPLICABLE STATE LAW]
SCHEDULE "1"
LEGAL DESCRIPTION
[To be attached]
EXHIBIT I
FORM OF ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES (the "Assignment") is made as of
this ______ day of __________, 1998 between BROOKDALE INVESTORS,
L.P., a Delaware limited partnership, ("Assignor") and
___________ a _________________ ("Assignee")
For and in consideration of the sum of Ten Dollars ($10.00)
and other valuable consideration to it in hand paid by Assignee
to Assignor, the conveyance by Assignor to Assignee of all that
certain real property being particularly described on Exhibit "A"
attached hereto and incorporated herein by this reference (the
"Property"), and the mutual covenants herein contained, the
receipt and sufficiency of the foregoing consideration being
hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and conveys to Assignee all of
Assignor's right, title and interest in, to and under any and all
existing and outstanding leases, licenses and occupancy
agreements of the improvements comprising a part of the Property
as described on Exhibit "B" attached hereto and incorporated
herein by this reference (collectively, the "Leases"), together
with all security deposits tendered under the Leases remaining in
the possession of Assignor.
Assignee does hereby assume and agree to perform all of
Assignor's obligations under or with respect to the Leases
accruing from and after the date hereof, including without
limitation, any and all obligations to pay leasing commissions
and finder's fees which are due or payable after the date hereof
with respect to the Leases, and claims made by tenants with
respect to the tenants' security deposits to the extent paid,
credited or assigned to Assignee by Assignor. Assignee agrees to
indemnify, protect, defend and hold Assignor harmless from and
against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in
Assignee's obligations hereunder. Assignor shall remain liable
for all of Assignor's obligations under or with respect to the
Leases accruing prior to the date hereof. Assignor agrees to
indemnify, protect, defend and hold Assignee harmless from and
against any and all liabilities, losses, costs, damages and
expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in
Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee and their respective heirs,
executors, administrators, successors and assigns.
This Assignment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed
this Assignment as of the date first written above.
ASSIGNOR:
BROOKDALE INVESTORS, L.P.,
a Delaware limited partnership, by
its sole general partner
By: Brookdale Partners, LLC
By:
C.L. Davidson, III
Manager
ASSIGNEE:
___________________________
a__________________________
By: ___________________________
Name:
Title:
[ADD STATE SPECIFIC ACKNOWLEDGMENTS AND/OR WITNESSES
FOR ASSIGNOR AND ASSIGNEE]
SCHEDULE "1"
LEGAL DESCRIPTION
SCHEDULE "2"
LEASES
[To be attached]
EXHIBIT J
FORM OF ASSIGNMENT OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES
(the "Assignment") is made as of the _______ day of ______, 1998
between BROOKDALE INVESTORS, L.P., a Delaware limited partnership
("Assignor") and ______________________________ a
________________________________ ("Assignee")
For and in consideration of the sum of Ten Dollars ($10.00)
and other valuable consideration to it in hand paid by Assignee
to Assignor, the conveyance by Assignor to Assignee of all that
certain real property being particularly described on Exhibit "A"
attached hereto and incorporated herein by this reference, (the
"Property"), and the mutual covenants herein contained, the
receipt and sufficiency of the foregoing consideration being
hereby acknowledged by the parties hereto, Assignor hereby
assigns, transfers, sets over and convey to Assignee all of
Assignor's right, title and interest, to the extent assignable,
in, to and under any and all of the following, to wit:
(i) the contracts and agreements listed and described on
Exhibit "B" attached hereto and incorporated herein by
this reference (the "Contracts")
(ii) all existing warranties and guaranties (express or
implied) issued to Assignor in connection with the
improvements or the personal property being conveyed to
Assignee by Bill of Sale on the date hereof,
(iii) all existing permits, licenses, approvals and
authorizations issued by any governmental authority in
connection with the Property, and
(iv) the non-exclusive right to the name ______________
All items described in (ii), (iii) and (iv) above are hereinafter
collectively referred to as "Intangible Property."
Assignee does hereby assume and agree to perform all of
Assignor's obligations under the Contracts and Intangible
Property accruing from and after the date hereof. Assignee
agrees to indemnify, protect, defend and hold Assignor harmless
from and against any and all liabilities, losses, costs, damages
and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in
Assignee's obligations hereunder. Assignor shall remain liable
for all of Assignor's obligations under the Contracts and
Intangible Property accruing prior to the date hereof. Assignor
agrees to indemnify, protect, defend and hold Assignee harmless
from and against any and all liabilities, losses, costs, damages
and expenses (including reasonable attorneys' fees) directly or
indirectly arising out of or related to any breach or default in
Assignor's obligations hereunder.
This Assignment shall be binding upon and inure to the
benefit of Assignor and Assignee and their respective heirs,
executors, administrators, successors and assigns.
This Assignment may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have each executed
this Assignment as of the date first written above.
ASSIGNOR:
BROOKDALE INVESTORS, L.P.,
a Delaware limited partnership, by
its sole general partner
By: Brookdale Partners, LLC
By:
C.L. Davidson, III
Manager
ASSIGNEE:
___________________________
a__________________________
By: _______________________
Name:
Title:
[ADD STATE SPECIFIC ACKNOWLEDGMENTS AND/OR WITNESSES FOR
ASSIGNOR AND ASSIGNEE]
SCHEDULE "1"
LEGAL DESCRIPTION
SCHEDULE "2"
CONTRACTS
[To be attached]
EXHIBIT K
FORM OF TENANT NOTICE
TENANT NOTIFICATION LETTER
[DATE OF SALE CLOSING]
HAND DELIVERED
TO: All Tenants at [NAME AND AI)DRESS OF PROPERTY]
RE: [Name of Property]
Notification Regarding Change of Ownership
This letter is to notify you as a Tenant at _____________________
(the "Property"), that the Property has been sold by Brookdale
Investors, L.P., a Delaware limited partnership ("Seller"), to
___ a _______________________________ ("Purchaser"). As of the
date hereof, your Lease has been assigned by Seller to Purchaser.
From the date of this letter, any and all unpaid rent as well as
all future rent, or any other amounts due under the terms of your
Lease, shall be directed as follows:
TO:_____________________________
ATTN:___________________________
AT: ____________________________
As part of the sale, all refundable tenant deposits, if any,
actually held by Seller with respect to the Property have been
transferred to, and Seller's obligations with respect to such
deposits have been assumed by, Purchaser as of the date of this
letter. Any and all payments of rent (or other sums due under
your Lease) hereafter paid to any party other than Purchaser
shall not relieve you of the obligation of making said payment to
Purchaser.
Seller: BROOKDALE INVESTORS, L.P.
a Delaware limited partnership
By: __________________________
Name:
Title:
Purchaser:_____________________
a _____________________________
By: ___________________________
Name:
Title:
EXHIBIT L
FORM OF FIRPTA CERTIFICATE
CERTIFICATE REGARDING FOREIGN INVESTMENT
IN REAL PROPERTY TAX ACT
(ENTITY TRANSFEROR)
Section 1445 of the Internal Revenue Code provides that a
transferee (purchaser) of a U.S. real property interest must
withhold tax if the transferor (seller) is a foreign person. To
inform the transferee (purchaser) that withholding of tax is not
required upon the disposition of a U.S. real property interest by
BROOKDALE INVESTORS, L.P., a Delaware limited partnership
("Transferor") Transferor hereby certifies:
1. Transferor is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations).
2. Transferor's Federal Employer Identification Number is
___________.
3. Transferor's office address is:
3343 Peachtree Road, NE
Suite 510
Atlanta, Georgia 30326
4. The address or description of the property which is the
subject matter of the disposition is ___________________________.
Transferor understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that
any false statement contained herein could be punished by fine,
imprisonment, or both.
Transferor declares that it has examined this certification
and to the best of its knowledge and belief, it is true, correct
and complete, and further declares that the individual executing
this certification on behalf of Transferor has full authority to
do so.
BROOKDALE INVESTORS, L.P.,
a Delaware limited partnership
By: ____________________________
Dated: _______________ Name:
Title:
EXHIBIT M
LIST OF SPECIFIED LITIGATION
[e.g. XYZ v. Brookdale Investors, L.P., action filed on
________in ___________ court]
EXHIBIT N
LIST OF VIOLATION NOTICES
EXHIBIT O
SCHEDULE OF LEASES
EXHIBIT P
Leasing Agreements and Commission Agreements
EXHIBIT P-1
Tenant Inducement Costs and Leasing Commissions Attributed to
Seller
EXHIBIT Q
TENANT DEFAULTS
EXHIBIT R
{Form of Promissory Note]
AMENDMENT TO SALE AGREEMENT
This Amendment, made and entered into as of this 13th day of
February, 1998 by and between Brookdale Investors, L.P.
("Seller") and Parkway Properties LP ("Purchaser").
WHEREAS, Purchaser and Seller entered into that certain Sale
Agreement dated January 9, 1998, which was amended by that
certain Amendment to Sale Agreement dated as of February 4, 1998
(as amended, the "Contract"); and
WHEREAS, Purchaser and Seller desire to further amend and
modify the Contract as hereinafter set forth.
NOW THEREFORE, for and in consideration of the Premises,
$10.00 and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged by the parties,
Purchaser and Seller, intending to be legally bound, do hereby
agree as follows:
1. Defined Terms. All capitalized terms used in this
Amendment shall have the same meaning as in the Contract unless
otherwise stated herein.
1. Inspection Period. The Inspection Period shall end at
5:00 p.m. Jackson, Mississippi time, Friday, February 20, 1998
with respect to receipt and approval by Purchaser of: (i) the
required minimum percentage of estoppel certificates for
Executive Tower One, Moorefield III and One Commerce Green; (ii)
information regarding the identified environmental issues
relating to Sugar Creek Plaza; (iii) receipt of updated CC&R
estoppels from the applicable associations; (iv) responses from
Chicago Title regarding Executive Tower One and the Provident
Building (Healthsource Building); (v) information regarding the
height of the Belvedere building; and (vi) revised surveys for
Belvedere and Loudoun Plaza. Purchaser shall have a right to
terminate the Contract prior to the expiration of the extended
Inspection Period for any of the above referenced reasons and
upon such termination shall receive a return of the Deposit. The
Inspection Period for all other purposes shall expire upon
execution of this Amendment and the Deposit shall be non-
refundable for all such other purposes.
1. Closing. The Closing shall be held at the offices of
King & Spalding, Atlanta, Georgia on February 26, 1998.
1. Miscellaneous. In all other respects the Contract
shall remain in full force and effect. This Amendment may be
executed in counterparts, all such executed counterparts shall
constitute the same agreement and the signature of any party to
any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart. In order to expedite
execution and delivery of this Amendment, telecopy signatures may
be used in place of original signatures on this Amendment.
Seller and Purchaser intend to be bound by the signatures on the
telecopy document, are aware that the other parties will rely on
the telecopy signatures and hereby waive any defenses to the
enforcement of the terms of this Amendment based on the form of
signature. This Amendment shall be governed by and construed in
accordance with the laws of the State of Georgia.
IN WITNESS HEREOF, the parties hereto have duly executed
this Amendment as of the date here first above written.
SELLER:
BROOKDALE INVESTORS, L.P., a Delaware
limited partnership, by its sole general
partner
By: Brookdale Partners, LLC
By:___________________________________
Name:_________________________________
Title: Manager
PURCHASER:
PARKWAY PROPERTIES LP, a Delaware
limited partnership
By: Parkway Properties General
Partners, Inc., a Delaware
corporation, its sole general
partner
By:________________________
Steven G. Rogers
President & CEO
By:________________________
James M. Ingram,
SR. Vice President
AMENDMENT TO SALE AGREEMENT
This Amendment, made and entered into as of this 13th day of
February, 1998 by and between Brookdale Investors, L.P.
("Seller") and Parkway Properties LP ("Purchaser").
WHEREAS, Purchaser and Seller entered into that certain Sale
Agreement dated January 9, 1998, which was amended by that
certain Amendment to Sale Agreement dated as of February 4, 1998
(as amended, the "Contract"); and
WHEREAS, Purchaser and Seller desire to further amend and
modify the Contract as hereinafter set forth.
NOW THEREFORE, for and in consideration of the Premises,
$10.00 and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged by the parties,
Purchaser and Seller, intending to be legally bound, do hereby
agree as follows:
1. Defined Terms. All capitalized terms used in this
Amendment shall have the same meaning as in the Contract unless
otherwise stated herein.
2. Inspection Period. The Inspection Period shall expire as of
February 13, 1998, except only that if the following items are
not received by Purchaser on or before 3:00 p.m., Jackson,
Mississippi time, February 20, 1998, then Purchaser may terminate
the Contract as otherwise provided in Section 3.3 of the Contract
on or before such date and time:
(i) If Purchaser approves, on or before the end of business on
February 16, 1998, the proposed lease expansion of Nabors
Industries, Inc. at One Commerce Green which was transmitted to
Purchaser for approval on February 10, 1998, then the estoppel
certificate currently outstanding from such tenant shall be
executed and delivered, provided, however, if Purchaser declines
to approve such proposed lease expansion by such deadline, then
Purchaser waives receipt of such estoppel certificate confirms
that the condition respecting receipt of satisfactory estoppel
certificates under Section 3.4 of the Contract shall be deemed
satisfied;
(ii) Receipt of updated CC&R estoppels from the
applicable associates with respect to the following
Projects: Loudoun Plaza, Moorefield II, Lynwood
Plaza, Glen Forest, Provident and One Commerce
Green;
(iii) A certificate from the City of Addison, Texas
addressed to Purchaser in substantially the same
form as that obtained by Seller attached hereto as
Exhibit 1; and
(iv) Revised surveys for Belvedere and Loudoun Plaza.
3. Additional Right of Termination. If Purchaser's
environmental consultant, acting on Purchaser's behalf within the
scope of the engagement agreement attached hereto as Exhibit-2,
finds that soil or ground water contamination exists at the One
Sugar Creek Project which is in excess of the applicable
standards established by the Texas Natural Resources Conservation
Commission, then Purchaser may deliver a notice of termination of
the Contract on or before 3:00 p.m. Jackson, Mississippi time,
February 20, 1998. If Purchaser does not deliver any such notice
on or prior to such deadline, then Purchaser shall be deemed to
have accepted the One Sugar Creek Project and unless Purchaser
shall have previously terminated the Contract pursuant to Section
2 above, the transaction shall proceed to Closing as otherwise
contemplated by the Contract. If Purchaser elects to terminate
the Contract hereunder on a timely basis, the Contract grants to
Purchaser the right to conduct the environmental testing at the
One Sugar Creek Project as described in the attached Exhibit 2,
which testing must be completed on or before the end of business
on Thursday, February 19, 1998.
4. Closing. The Closing shall be held at the offices of
King & Spalding, Atlanta, Georgia on February 26, 1998.
5. Miscellaneous. In all other respects the Contract shall
remain in full force and effect. This Amendment may be executed
in counterparts, all such executed counterparts shall constitute
the same agreement and the signature of any party to any
counterpart shall be deemed a signature to, and may be appended
to, any other counterpart. In order to expedite execution and
delivery of this Amendment, telecopy signatures may be used in
place of original signatures on this Amendment. Seller and
Purchaser intend to be bound by the signatures on the telecopy
document, are aware that the other parties will rely on the
telecopy signatures and hereby waive any defenses to the
enforcement of the terms of this Amendment based on the form of
signature.
This Amendment shall be governed by and construed in
accordance with the laws of the State of Georgia.
IN WITNESS HEREOF, the parties hereto have duly executed
this Amendment as of the date here first above written.
SELLER:
BROOKDALE INVESTORS, L.P., a Delaware
limited partnership, by its sole general
partner
By: BROOKDATE PARTNERS, LLC
By:___________________________________
Name:_________________________________
Title: Manager
PURCHASER:
PARKWAY PROPERTIES LP, a Delaware
limited partnership
By: PARKWAY PROPERTIES GENERAL
PARTNERS, INC., a Delaware
corporation, its sole general
partner
By:________________________
Steven G. Rogers
President & CEO
By:________________________
James M. Ingram,
SR. Vice President
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
January 1, 1998
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINED TERMS 1
Section 1.1 DEFINITIONS 1
ARTICLE 2
ORGANIZATIONAL MATTERS 16
Section 2.1 ORGANIZATION 16
Section 2.2 NAME 16
Section 2.3 RESIDENT AGENT; PRINCIPAL OFFICE 16
Section 2.4 POWER OF ATTORNEY 17
Section 2.5 TERM 18
ARTICLE 3
PURPOSE 18
Section 3.1 PURPOSE AND BUSINESS 18
Section 3.2 POWERS 18
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES
SPECIFIED 19
Section 3.4 REPRESENTATIONS AND WARRANTIES
BY THE PARTIES 19
ARTICLE 4
CAPITAL CONTRIBUTIONS 21
Section 4.1 CAPITAL CONTRIBUTIONS OF THE
PARTNERS 21
Section 4.2 LOANS BY THIRD PARTIES 22
Section 4.3 ADDITIONAL FUNDING AND CAPITAL
CONTRIBUTIONS 22
(a) GENERAL 22
(b) GENERAL PARTNER LOANS 22
(c) ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS 22
(d) ISSUANCE OF REIT SHARES OR
OTHER SECURITIES BY THE COMPANY 23
(e) PERCENTAGE INTEREST ADJUSTMENTS
IN THE CASE OF CAPITAL
CONTRIBUTIONS FOR PARTNERSHIP
UNITS 23
Section 4.4 STOCK PLAN 24
Section 4.5 NO THIRD PARTY BENEFICIARY 24
Section 4.6 OTHER CONTRIBUTION PROVISIONS 24
ARTICLE 5
DISTRIBUTIONS 25
Section 5.1 REQUIREMENT AND
CHARACTERIZATION OF
DISTRIBUTIONS 25
Section 5.2 DISTRIBUTIONS IN KIND 25
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION 25
Section 5.4 DISTRIBUTIONS TO REFLECT
ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS 26
ARTICLE 6
ALLOCATIONS 26
Section 6.1 TIMING AND AMOUNT OF
ALLOCATIONS OF NET
INCOME AND NET LOSS 26
Section 6.2 GENERAL ALLOCATIONS 26
(a) IN GENERAL 26
(b) ALLOCATIONS TO REFLECT
ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS 26
Section 6.3 ADDITIONAL ALLOCATION PROVISIONS26
(a) REGULATORY ALLOCATIONS 26
Section 6.4 TAX ALLOCATIONS 29
(a) IN
GENERAL 29
(b)ALLOCATIONS RESPECTING SECTION 704(C) REVALUATIONS 29
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS 29
Section 7.1 MANAGEMENT 29
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 36
Section 7.5 CONTRACTS WITH AFFILIATES 36
Section 7.6 INDEMNIFICATION 37
Section 7.7 LIABILITY OF THE GENERAL PARTNER 39
Section 7.8 OTHER MATTERS
CONCERNING THE GENERAL PARTNER 40
Section 7.9 TITLE TO PARTNERSHIP ASSETS 40
Section 7.10 RELIANCE BY THIRD
PARTIES 41
ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNER 41
Section 8.1 LIMITATION OF LIABILITY 41
Section 8.2 MANAGEMENT OF BUSINESS 42
Section 8.3 OUTSIDE ACTIVITIES OF LIMITED PARTNERS 42
Section 8.4 RETURN OF CAPITAL 42
Section 8.5 RIGHTS OF LIMITED PARTNERS RELATING
TO THE PARTNERSHIP 43
Section 8.6 REDEMPTION RIGHTS 43
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS 46
Section 9.1 RECORDS AND ACCOUNTING 46
Section 9.2 FISCAL YEAR 46
Section 9.3 REPORTS 47
ARTICLE 10
TAX MATTERS 47
Section 10.1 PREPARATION OF TAX RETURNS 47
Section 10.2 TAX ELECTIONS 47
Section 10.3 TAX MATTERS PARTNER 47
Section 10.4 ORGANIZATIONAL EXPENSES 49
Section 10.5 WITHHOLDING 49
ARTICLE 11
TRANSFERS AND WITHDRAWALS 50
Section 11.1 TRANSFER 50
Section 11.2TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST
50
Section 11.3LIMITED PARTNERS' RIGHTS TO TRANSFER 52
(i)
GENERAL PARTNER RIGHT OF FIRST
REFUSAL 52
(ii)
QUALIFIED TRANSFEREE 53
Section 11.4 SUBSTITUTED LIMITED PARTNERS 54
Section 11.5 ASSIGNEES 55
Section 11.6 GENERAL PROVISIONS 55
ARTICLE 12
ADMISSION OF PARTNERS 57
Section 12.1 ADMISSION OF SUCCESSOR GENERAL PARTNER 57
Section 12.2ADMISSION OF ADDITIONAL LIMITED PARTNERS 57
Section 12.3AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED
PARTNERSHIP 58
ARTICLE 13
DISSOLUTION AND LIQUIDATION 58
Section 13.1 DISSOLUTION 58
Section 13.2 WINDING UP 59
Section 13.3COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
60
Section 13.4 RIGHTS OF LIMITED PARTNERS 61
Section 13.5 NOTICE OF DISSOLUTION 61
Section 13.6CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP
61
Section 13.7 REASONABLE TIME FOR WINDING UP 61
Section 13.8 WAIVER OF PARTITION 62
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS 62
Section 14.1 AMENDMENTS 62
Section 14.2 ACTION BY THE PARTNERS 62
ARTICLE 15
GENERAL PROVISIONS 63
Section 15.1 ADDRESSES AND NOTICE 63
Section 15.2 TITLES AND CAPTIONS 63
Section 15.3 PRONOUNS AND PLURALS 63
Section 15.4 FURTHER ACTION 64
Section 15.5 BINDING EFFECT 64
Section 15.6 CREDITORS 64
Section 15.7 WAIVER 64
Section 15.8 COUNTERPARTS 64
Section 15.9 APPLICABLE LAW 64
Section 15.10 INVALIDITY OF PROVISIONS 64
Section 15.11 LIMITATION TO PRESERVE REIT STATUS 65
Section 15.12 ENTIRE AGREEMENT 65
Section 15.13 NO RIGHTS AS STOCKHOLDERS 66
EXHIBIT A
Partners, Contributions and Partnership Interests 67
EXHIBIT B
Notice of Redemption 68
EXHIBIT C
Schedule of Partners' Ownership with Respect to Tenants 69
EXHIBIT D
Schedule of REIT Shares Actually or
Constructively Owned by Limited Partners Other
than those Acquired Pursuant to an Exchange 70
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
PARKWAY PROPERTIES LP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of January 1, 1998, is entered into by and
among Parkway Properties Inc., a Maryland corporation (the
"Company"), Parkway Properties General Partners Inc. ("PPGP"),
together with any other Persons who become Partners in the
Partnership as provided herein.
WHEREAS, the limited partnership was formed pursuant to
the Revised Uniform Limited Partnership Act of the State of
Delaware by filing a certificate of limited partnership on
January 6, 1997;
WHEREAS, the Agreement of Limited Partnership of
Parkway Properties LP was executed on January 3, 1997 with PPGP
as the original general partner and the Company as the original
Limited Partner, and amended on November 1, 1997;
WHEREAS, the Company proposes to restructure its
operations by contributing substantially all of its assets and
properties to the Partnership in exchange for additional Limited
Partnership interests;
NOW, THEREFORE, BE IT RESOLVED, that for good and
adequate consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
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 0.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to
the Partnership as a Limited Partner pursuant to Section 0 hereof
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:
(a) decrease such deficit by any amounts which such
Partner is obligated, or is treated as 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)(1); and
(b) 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" means, with respect to any Capital
Contribution, the close of business on the Business Day last
preceding the date of the Capital Contribution, PROVIDED THAT, if
such Capital Contribution is being made by the Company in respect
of the proceeds from the issuance of REIT Shares (or the issuance
of the Company's securities exercisable for, convertible into or
exchangeable for REIT Shares), then the Adjustment Date shall be
as of the close of business on the Business Day last preceding
the date of the issuance of such securities.
"AFFILIATE" means, with respect to any Person, any
Person directly or indirectly controlling, controlled by or under
common control with such Person.
"AGENT" shall have the meaning set forth in Section 0.
"AGREED VALUE" means (i) in the case of any Contributed
Property set forth in Exhibit 0 and as of the time of its
contribution to the Partnership, the Agreed Value of such
property as set forth in Exhibit 0; (ii) in the case of any
Contributed Property not set forth in Exhibit 0 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, the fair
market value of such property as determined by the General
Partner at the time such property is distributed, reduced by any
liabilities 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 Amended and Restated Agreement
of Limited Partnership, as it may be amended, 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 property or 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 0.
"AVAILABLE CASH" means, with respect to any period for
which such calculation is being made,
(a) the sum of:
(i) the Partnership's Net Income or Net Loss (as
the case may be) for such period,
(ii) Depreciation and all other noncash charges
deducted in determining Net Income or Net Loss for such period,
(iii) the amount of any reduction in reserves
of the Partnership referred to in clause (b)(vi) below
(including, without limitation, reductions resulting because the
General Partner determines such amounts are no longer necessary),
(iv) 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
(v) all other cash received by the Partnership
for such period that was not included in determining Net Income
or Net Loss for such period;
(b) less the sum of:
(vi) all principal debt payments made during such
period by the Partnership,
(vii) capital expenditures made by the
Partnership during such period,
(viii) investments in any entity (including
loans made thereto) to the extent that such investments are not
otherwise described in clause (vi) or (vii),
(ix) all other expenditures and payments not
deducted in determining Net Income or Net Loss for such period,
(x) any amount included in determining Net Income
or Net Loss for such period that was not received by the
Partnership during such period,
(xi) 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
(xii) 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.
"BUSINESS DAY" means any day except a Saturday, Sunday
or other day on which commercial banks in New York, New York are
authorized or required by law to be closed.
"CAPITAL ACCOUNT" means, with respect to any Partner,
the Capital Account maintained for such Partner in accordance
with the following provisions:
(a) 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 0 hereof, and the
amount of any Partnership liabilities assumed by such Partner or
which are secured by any property distributed to such Partner.
(b) 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 0 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.
(c) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement (which
does not result in a termination of the Partnership for federal
income tax purposes), the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the
transferred interest.
(d) In determining the amount of any liability for
purposes of subsections (a) and (b) hereof, there shall be taken
into account Code section 752(c) and any other applicable
provisions of the Code and Regulations.
(e) 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 0 of the Agreement upon the dissolution of the
Partnership. The General Partner also shall (i) make any
adjustments that are necessary or appropriate to maintain
equality between the Capital Accounts of the Partners and the
amount of Partnership capital reflected on the Partnership's
balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any
appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations
Section 1.704-1(b) 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 Articles of Incorporation of the
Company filed with the Maryland State Department of Assessments
and Taxation on May 17, 1996, as 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.
"CONSENT" means the consent to, approval of, or vote on
a proposed action by a Partner given in accordance with Article 0
hereof.
"CONSENT OF THE LIMITED PARTNERS" means the Consent of
a Majority In Interest of the 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
holding Percentage Interests that, in the aggregate are equal to
or greater than 66 2/3% of the aggregate Percentage Interests of
all 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.
"CONSENT OF THE SUPER MAJORITY LIMITED PARTNERS" means
the consent of 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) holding
Percentage Interests that, in the aggregate are equal to or
greater than 66 2/3% 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), 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
Limited Partners, in their sole and absolute discretion.
"CONSTRUCTIVELY OWN" means ownership under the
constructive ownership rules of Section 856(d)(5) of the Code.
"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 to 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 to 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 of Partnership Interests,
(i) the total number of shares of capital stock of the Company
corresponding to the Percentage Interest of the Company in such
class of Partnership Interests issued and outstanding as of the
close of business on such date (excluding any treasury shares)
multiplied by the Fair Market Value of a share of such capital
stock on such date; (ii) DIVIDED BY the Percentage Interest of
the General Partner in such class of Partnership Interests on
such date.
"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 upon which
contributions set forth on Exhibit 0 shall become completed.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"FAIR MARKET VALUE" means, with respect to any share of
capital stock of the Company, 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 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 Company, 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 Company, 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 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 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; and PROVIDED FURTHER 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
Company, the Fair Market Value of such shares shall be the public
offering price per share of such class of capital stock sold.
"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 Parkway Properties General
Partners, Inc. 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 0.
"GENERAL PARTNER PAYMENT" shall have the meaning set
forth in Section 0.
"GROSS ASSET VALUE" means, with respect to any asset,
the asset's adjusted basis for federal income tax purposes,
except as follows:
(a) 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 0 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 0, 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 the price paid by the General
Partner if the asset is acquired by the General Partner
contemporaneously with its contribution to the Partnership.
(b) As of 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:
(i) 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;
(ii) 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;
(iii) the liquidation of the Partnership
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
and
(iv) 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.
(c) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of
such asset (taking Section 7701(g) of the Code into account),
without reduction for liabilities, on the date of distribution as
determined by the distributee and the General Partner, or if the
distributee and the General Partner cannot agree on such a
determination, by Appraisal.
(d) 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 (d) to the extent that the General Partner
reasonably determines that an adjustment pursuant to subparagraph
(b) is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this
subparagraph (d).
(e) If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subparagraph (a), (b)
or (d), 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,
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 current 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 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 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 90 days of such appointment, or (h) an appointment
referred to in clause (g) is not vacated within 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, a proceeding by reason of his or
her status as (A) the General Partner or (B) a director or
officer 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.
"INDEPENDENT TRUST MANAGER" means a member of the
General Partner's or the Company's Board of Directors who is not
an officer of the General Partner or the Company.
"IRS" means the Internal Revenue Service, which
administers the internal revenue laws of the United States.
"LIMITED PARTNER" means any Person named as a Limited
Partner in Exhibit 0 attached hereto, as such Exhibit may be
amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a
Limited Partner in the Partnership.
"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 0.
"LIQUIDATOR" shall have the meaning set forth in
Section 0.
"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) 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).
"MAJORITY OF REMAINING PARTNERS" means Partners other
than the General Partner owning (i) greater than fifty percent
(50%) of the profits interests in the Partnership held by all
Partners other than the General Partner, determined and allocated
based on any reasonable estimate of profits from the relevant
date to the projected termination of the Partnership and taking
into account present and future allocations of profits under this
Agreement as it is in effect on the relevant date, and (ii)
greater than fifty percent (50%) of the capital interests in the
Partnership, determined as of the relevant date under this
Agreement, owned by all the Partners other than the General
Partner.
"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:
(a) 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;
(b) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to 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;
(c) In the event the Gross Asset Value of any
Partnership asset is adjusted pursuant to subparagraph (b) or
subparagraph (c) 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;
(d) 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;
(e) 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;
(f) 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
(g) Notwithstanding any other provision of this
definition of Net Income or Net Loss, any items which are
specially allocated pursuant to Section 0 hereof 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
0 hereof shall be 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 Company, excluding grants under any Stock
Plan, or (ii) any Debt issued by the Company 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 0 to this Agreement.
"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).
"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 0. 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.
"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 pursuant to Section 0 hereof which record date
shall be the same as the record date established by the General
Partner for a distribution to its stockholders of some or all of
its portion of such distribution.
"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 0 and 0. The
ownership of Partnership Units may be evidenced by a certificate
for units substantially as the General Partner may determine with
respect to any class of Partnership Units issued from time to
time under Sections 0 and 0.
"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 0 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 0 hereof.
"PERSON" means an individual or a corporation,
partnership, limited liability company, trust, unincorporated
organization, association or other entity.
"PLEDGE" shall have the meaning set forth in Section 0.
"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
Company 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 0.
"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 0 of this Agreement.
"REIT" means a real estate investment trust under
Section 856 of the Code.
"REIT REQUIREMENTS" shall have the meaning set forth in
Section 0.
"REIT SHARE" means a share of common stock of the
Company.
"REIT SHARES AMOUNT" means, as of any date, (i) with
respect to Tendered Units, an aggregate number of REIT Shares
equal to the number of such Tendered Units, as adjusted pursuant
to Section 0 (in the event the Company acquires material assets,
other 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
received by the Company pursuant to a distribution by the
Partnership other than a pro rata distribution to all Partners
based on their respective Percentage Interests, and (ii) with
respect to Partnership Units in any other context, the amount of
REIT Shares determined in accordance with clause (i) assuming for
such purpose that all such Partnership Units are Tendered Units.
"SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
"SECURITIES EXCHANGE ACT" means the Securities Act of
1934, as amended, and the rules and regulations of the Securities
and Exchange Commission promulgated thereunder.
"SPECIFIED REDEMPTION DATE" means the day of receipt by
the General Partner of a Notice of Redemption.
"STOCK PLAN" means any stock incentive, stock option,
stock ownership or employee benefits plan of the Company.
"SUBSIDIARY" means, with respect to any Person, any
corporation or other entity of which a majority of (i) the voting
power of the voting equity securities or (ii) the outstanding
equity interests is owned, directly or indirectly, by such
Person.
"SUBSIDIARY PARTNERSHIP" means any partnership that is
a Subsidiary of the Partnership.
"SUBSTITUTE GENERAL PARTNER" means a Person who is
admitted as a successor General Partner to the Partnership
pursuant to Section 0.
"SUBSTITUTED LIMITED PARTNER" means a Person who is
admitted as a Limited Partner to the Partnership pursuant to
Section 0.
"TAX ITEMS" shall have the meaning set forth in Section
0.
"TENANT" means any tenant from which the Company
derives rent either directly or indirectly through partnerships,
including the Partnership.
"TENDERED UNITS" shall have the meaning set forth in
Section 0.
"TENDERING PARTNER" shall have the meaning set forth in
Section 0.
"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.
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 Parkway Properties LP.
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 shall be United Corporate
Services, Inc., 15 Corporation Trust Center, 1209 Charge Street,
Wilmington, New Castle County, Delaware 19801 or such other
person as the General Partner may select in its sole discretion.
The registered office of the Partnership in the State of Delaware
shall be United Corporate Services, Inc. at such address or such
other location as the General Partner may select in its sole
discretion. 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, Article 0, 0 or 0
hereof or the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of
Partnership 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 0 hereof 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 and in accordance with the provisions of this
Agreement. Each Limited Partner or Assignee shall execute and
deliver to the General Partner or any Liquidator, within 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 January 6,
1997 and shall continue until December 31, 2057 unless it is
dissolved sooner pursuant to the provisions of Article 0 or as
otherwise provided by law.
ARTICLE 3
PURPOSE
Section 3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted
by the Partnership is (i) to conduct any business that may be
lawfully conducted by a limited partnership organized pursuant to
the Act, PROVIDED, HOWEVER, that such business shall be limited
to and conducted in such a manner as to permit the Company at all
times to be classified as a REIT for federal income tax purposes,
unless the Company 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 business described in the foregoing
clause (i) or to own interests in any entity engaged, directly or
indirectly, in any such business and (iii) to do anything
necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the Company's right in its sole
discretion to cease qualifying as a REIT, the Partners
acknowledge that the Company's current status as a REIT inures to
the benefit of all the Partners and not solely the Company.
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,
that the Partnership shall not take, or refrain from taking, any
action which, in the judgment of the General Partner, in its sole
and absolute discretion, (i) could adversely affect the ability
of the Company to continue to qualify as a REIT, (ii) could
subject the Company 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
Company or its securities, unless any such action (or inaction)
under (i), (ii) or (iii) shall have been specifically consented
to by the Company in writing.
Section 3.3 PARTNERSHIP ONLY FOR PURPOSES
SPECIFIED
The Partnership shall be a partnership only for the
purposes specified in Section 0 hereof, 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 0
hereof. 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 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) it has the requisite
corporate or other power and authority to enter into this
Agreement, (ii) its execution and delivery of this Agreement, and
performance of 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, (iii) 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, by-laws or other
organizational documents, 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, (iv) 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
(v) 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 0, 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;
PROVIDED, HOWEVER, that so long as there are fewer than 20
Partners, each partner may own or Constructively Own (x) with
respect to any Tenant that is a corporation, stock of such Tenant
possessing up to, but not more than, one-half of one percent
(0.5%) of the total combined voting power of all classes of stock
entitled to vote and one-half of one percent (0.5%) of the total
number of shares of all classes of stock of such Tenant and (y)
with respect to any Tenant that is not a corporation, interests
in such Tenant representing up to, but not more than, one-half of
one percent (0.5%) of the assets and one-half of one percent
(0.5%) of the net profits of such Tenant, so long as such actual
or Constructive Ownership otherwise permitted under clause (x) or
(y) would not cause the General Partner to receive amounts
described in Section 856(d)(2)(B) of the Code.
(ii) Except as provided in Exhibit 0, 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 Company, other than any REIT Shares or other shares
of capital stock of the Company such Partner may acquire (a) as a
result of an exchange of Tendered Units pursuant to Section 0 or
(b) upon the exercise of options granted or delivery of REIT
Shares pursuant to any Stock Plan, or (c) in open market
transactions, in each case subject to the ownership limitations
set forth in the 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 Company that it actually
owns or Constructively Owns.
(iv) It understands that if, for any reason, (a)
the representations, warranties or agreements set forth in d(i)
or (ii) above are violated, or (b) the Partner's actual or
Constructive ownership of REIT Shares or other shares of capital
stock of the Company violates the limitations set forth in the
Charter, then (1) some or all of the Redemption rights of the
Partners may become non-exercisable, and (2) some or all of the
REIT Shares owned by the Partners may be automatically converted
to Excess Shares, as provided in the Charter.
(e) The representations and warranties contained in
Sections 0 - 0 hereof shall survive the execution and delivery of
this Agreement by each Partner and the dissolution and windup 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.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1 CAPITAL CONTRIBUTIONS OF THE
PARTNERS
The Partners confirm that they have made the Capital
Contributions as set forth in Exhibit 0 to this Agreement. The
Partners shall own Partnership Units of the class and in the
amounts set forth in Exhibit 0 and shall have a Percentage
Interest in the Partnership as set forth in Exhibit 0, which
Percentage Interest shall be adjusted in Exhibit 0 from time to
time by the General Partner to the extent necessary to reflect
accurately 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 0, 0 and 0, 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 0, 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.
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 0. No Person shall have any preemptive,
preferential or similar right or rights to subscribe for or
acquire any Partnership Interest.
(b) GENERAL PARTNER LOANS. The General Partner or an
Affiliate may enter into a Funding Debt, including, without
limitation, a Funding Debt that is convertible into REIT shares,
and lend the Additional Funds to the Partnership (a "General
Partner Loan"). 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 principal amount, interest rate,
repayment schedule and costs and expenses, as shall be applicable
with respect to or incurred in connection with such Funding Debt.
(c) ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS. The
General Partner, in its sole and absolute discretion, may raise
all or any portion of the Additional Funds by accepting
additional Capital Contributions, including, without limitation,
the issuance of Partnership Units for interests in real property.
In connection with any such additional Capital Contributions (of
cash or property), the General Partner is hereby authorized to
cause the Partnership from time to time to issue to Partners
(including the General Partner or the Company) 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 in an 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; PROVIDED THAT no such
additional Partnership Units or other Partnership Interests shall
be issued to the Company 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 0 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 Company in
accordance with this Section 0, (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 or (c) pursuant to Section 0;
PROVIDED FURTHER, that no such additional Partnership Units or
Partnership Interests shall be issued if such issuance would
cause, or in the opinion of counsel selected by the General
Partner, could cause (i) the Partnership to become, with respect
to any employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, a "party in interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e) of the Code); and (ii) any portion of the assets
of the Partnership to constitute assets of any employee benefit
plan pursuant to Section 2510.3-101 of the regulations of the
United States Department of Labor. In the event that the
Partnership issues additional Partnership Units or Partnership
Interests pursuant to this Section 0, the General Partner shall
make such revisions to this Agreement (including but not limited
to the revisions described in Section 0, Section 0, and Section
0) as it determines are necessary to reflect the issuance of such
additional Partnership Interests.
(d) ISSUANCE OF REIT SHARES OR OTHER SECURITIES BY THE
COMPANY. Except as contemplated by Section 0, the Company shall
not issue any additional REIT Shares (other than REIT Shares
issued pursuant to Section 0 hereof or pursuant to a dividend or
distribution (including any stock split) of REIT Shares to all of
its stockholders), other shares of capital stock of the Company
or New Securities unless the Company shall make a Capital
Contribution of the net proceeds 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 Company's Capital Account shall be increased by the
amount of cash so contributed.
(e) 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 to such Partnership Units
shall be equal to a fraction, the numerator of which is equal to
the amount of cash and the Agreed Value of the Property
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 (computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the aggregate amount of additional
Capital Contributions contributed to the Partnership on such
Adjustment Date in respect of such class of Partnership
Interests. The Percentage Interest of each other Partner holding
Partnership Interests of such class 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 of such class
(computed as of the Business Day immediately preceding the
Adjustment Date) and (ii) the amount of additional Capital
Contributions made by such Partner to the Partnership in respect
of such class of Partnership Interests as of such Adjustment
Date, and the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership Interests of such class (computed
as of the Business Day immediately preceding the Adjustment
Date), and (ii) the aggregate amount of additional Capital
Contributions contributed to the Partnership on such Adjustment
Date in respect of such class. Notwithstanding the foregoing,
solely for purposes of calculating a Partner's Percentage
Interest pursuant to this Section 0, cash Capital Contributions
by the Company will be deemed to equal the cash contributed by
the Company plus, in the case of cash contributions funded by an
offering of any capital stock of the Company, the offering costs
attributable to the cash contributed to the Partnership.
Section 4.4 STOCK PLAN
If at any time or from time to time the Company sells
or issues REIT Shares pursuant to any Stock Plan, the Company
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 Company's Capital Account shall be
increased by the amount of cash so contributed.
Section 4.5 NO THIRD PARTY BENEFICIARY
No creditor or other third party having dealings with
the Partnership shall have the right to enforce the right or
obligation of any Partner to make Capital Contributions or loans
or to pursue any other right or remedy hereunder or at law or in
equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans
to the Partnership shall be deemed an asset of the Partnership
for any purpose by any creditor or other third party, nor may
such rights or obligations be sold, transferred or assigned by
the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or of any
of the Partners.
Section 4.6 OTHER CONTRIBUTION PROVISIONS
In the event that any Partner is admitted to the
Partnership and is given a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be
treated by the Partnership and the affected Partner as if the
Partnership had compensated such Partner in cash, and the Partner
had contributed such cash to the capital of the Partnership. In
addition, with the consent of the General Partner, 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 quarterly all, or such portion as the General Partner
may in its discretion determine, of Available Cash generated by
the Partnership during such quarter to the Partners who are
Partners on the Partnership Record Date with respect to such
quarter, (1) first, 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 such Partnership Record Date), and, (2)
second, with respect to Partnership Interests that are not
entitled to any preference in distribution, pro rata to each such
class in accordance with the terms of such class (and within each
such class, pro rata in proportion with the respective Percentage
Interests on such Partnership Record Date). Unless otherwise
expressly provided for herein or in an agreement at the time a
new class of Partnership Interests is created in accordance with
Article 0 hereof, 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 the qualification of the Company as a REIT, to
cause the Partnership to distribute sufficient amounts to enable
the Company to pay stockholder dividends that will (a) satisfy
the requirements for qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and (b) avoid any federal
income or excise tax liability of the Company.
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 0,
0 and 0.
Section 5.3 DISTRIBUTIONS UPON LIQUIDATION
Proceeds from a Terminating Capital Transaction shall
be distributed to the Partners in accordance with Section 0.
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, the Company, or any
Additional Limited Partner pursuant to Section 0 or 0 hereof, the
General Partner shall make such revisions to this Article 0 as it
determines are necessary to reflect the issuance of such
additional Partnership Interests.
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 0, 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 0, Net Income and Net Loss shall be allocated to each of
the Partners holding the same class of Partnership Interests in
accordance with their respective Percentage Interest of such
class.
(b) ALLOCATIONS TO REFLECT ISSUANCE OF ADDITIONAL
PARTNERSHIP INTERESTS. In the event that the Partnership issues
additional Partnership Interests to the General Partner, the
Company, or any Additional Limited Partner pursuant to Section 0
or 0 hereof, the General Partner shall make such revisions to
this Section 0 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.
Section 6.3 ADDITIONAL ALLOCATION
PROVISIONS
Notwithstanding the foregoing provisions of this
Article 0:
(a) REGULATORY ALLOCATIONS.
(i) MINIMUM GAIN CHARGEBACK. Except as otherwise
provided in Regulations Section 1.704-2(f), notwithstanding the
provisions of Section 0 of the Agreement, or any other provision
of this Article 0, 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 0 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 0.
(ii) PARTNER MINIMUM GAIN CHARGEBACK. Except as
otherwise provided in Regulations Section 1.704-2(i)(4), and
notwithstanding the provisions of Section 0 of the Agreement, or
any other provision of this Article 0 (except Section 0), 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 0 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 0.
(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 Percentage Interests. 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 0 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 0 have been tentatively made as if this Section 0 were
not in the Agreement. It is intended that this Section 0 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 0.
(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 (1) the amount (if any)
such Partner is obligated to restore to the Partnership, and (2)
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 0 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 0 have
been tentatively made as if this Section 0 and Section 0 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, subject to the limitations of this Section 0.
(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 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 0, (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 0 and 0, 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.
Section 6.4 TAX ALLOCATIONS
(a) IN GENERAL. Except as otherwise provided in this
Section 0, 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 0 and 0.
(b) ALLOCATIONS RESPECTING SECTION 704(C)
REVALUATIONS. Notwithstanding Section 0, 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 0, such variation between basis and
initial Gross Asset Value shall be taken into account under the
"traditional without curative allocations method" of Regulations
Section 1.704-3. 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 (b) of the definition
of Gross Asset Value (provided in Article 0 of this Agreement),
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. 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 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 0, 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 0
hereof and to effectuate the purposes set forth in Section 0
hereof, 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 Company (so long as the Company 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 Company 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) 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, the Company, or the
Partnership, the lending of funds to other Persons (including,
without limitation, the General Partner or the Company (if
necessary to permit the financing or capitalization of a
subsidiary of the General Partner, the Company, or the
Partnership) or any Subsidiaries of the Partnership) and the
repayment of obligations of the Partnership, the Company, 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 Company 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 Company 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, conveyances,
contracts, guarantees, warranties, indemnities, waivers, releases
or legal instruments or agreements in writing necessary or
appropriate in the judgment of the General Partner for the
accomplishment of any of the powers of the General Partner
enumerated in this Agreement.
(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 0), 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 on the properties of
the Partnership and (ii) liability insurance for the Indemnitees
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 it sole and absolute discretion, deems
appropriate and reasonable from time to time.
(e) Other than as set forth in the following sentence,
and subject to Section 0, in exercising its authority under this
Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any
Partner (including the General Partner or the Company) of any
action taken by it. 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 repayment, refinancing, replacement or
restructuring of Debt, or any sale, exchange or any other
disposition of assets, of the Partnership, including, without
limitation, amending this Agreement to provide obligations on the
part of any affected Partner to restore deficit balances in their
Capital Accounts as of the time of liquidation of the Partnership
and to maintain a corresponding level of recourse debt to match
such obligations or maintaining a level of non-recourse debt that
can be allocated to, and included in the Partnership tax basis
of, such Partners, pursuant to the regulations under Section 752
of the Code. 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 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 0 hereof, the
General Partner shall not be required, before or after filing, to
deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. 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, any other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business
or own property.
Section 7.3 RESTRICTIONS ON GENERAL
PARTNER'S AUTHORITY
(a) The General Partner may not take any action in
contravention of an
express prohibition or limitation 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) enter into any contract, mortgage, loan or
other agreement that expressly prohibits or restricts, or has the
effect of limiting 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, undertake, on behalf of the Partnership,
any of the following actions or enter into any transaction which
would have the effect of such actions:
(i) except as provided in Section 0, amend,
modify or terminate this Agreement other than to reflect the
admission, substitution, termination or withdrawal of partners
pursuant to Article 0 hereof;
(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 substantially all of
the assets of the Partnership;
(iii) institute any proceeding for bankruptcy
on behalf of the Partnership; or
(iv) confess a judgment against the Partnership.
(c) The General Partner shall not, without the prior
Consent of the Super Majority Limited Partners, undertake, on
behalf of the Partnership, any of the following actions or enter
into any transaction which would have the effect of such actions:
(i) approve or acquiesce to the transfer of the
Partnership Interest of the General Partner to any Person other
than the Partnership or an Affiliate of the General Partner; or
(ii) admit into the Partnership any Additional or
Substitute General Partners, other than Affiliates of the General
Partner.
(d) Notwithstanding Sections 0, and 0 hereof, the
General Partner shall have the exclusive power 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 0 or 0 or the
admission, substitution, termination, or withdrawal of Partners
in accordance with this Agreement;
(iii) to reflect a change that is of an
inconsequential nature and does not adversely affect the Limited
Partners in any material respect, or to cure any ambiguity,
correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement that
will not be inconsistent with law or with the provisions of this
Agreement;
(iv) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in federal
or state law;
(v) to reflect such changes as are reasonably
necessary for the Company to maintain 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
(vi) 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 0 is taken.
(e) Notwithstanding Sections 0, 0 and 0 hereof, this
Agreement shall not be amended with respect to any Partner
adversely affected, and no action may be taken by the General
Partner, without the Consent of such 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 0 or Section 0, or the
allocations specified in Article 0 (except as permitted pursuant
to Section 0 and Section 0 hereof), (iv) materially alter or
modify the rights to a Redemption or the REIT Shares Amount as
set forth in Section 0, and related definitions hereof or (v)
amend this Section 0. Further, no amendment may alter the
restrictions on the General Partner's authority set forth
elsewhere in this Section 0 without the Consent specified in such
section. In addition, notwithstanding Sections 0, 0 and 0
hereof, Section 0 of this Agreement shall not be amended, and no
action in contravention of Section 0 hereof shall be taken,
without the Consent of the Limited Partners. This Section 7.3(e)
does not require unanimous consent of all Partners adversely
affected unless the amendment is to be effective against all
Partners adversely affected.
Section 7.4 REIMBURSEMENT OF THE GENERAL
PARTNER
(a) Except as provided in this Section 0 and elsewhere
in this Agreement (including the provisions of Articles 0 and 0
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 0, 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
General Partner shall not, however, be reimbursed for expenses it
incurs relating to the organization of the Partnership or any
public offerings of REIT Shares, other shares of capital stock or
Funding Debt by the General Partner, but shall be reimbursed for
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 0 hereof.
(c) If and to the extent any reimbursements to the
General Partner pursuant
to this Section 0 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 CONTRACTS WITH AFFILIATES
(a) The Partnership may lend or contribute to Persons
in which it has an equity investment, and such Persons may borrow
funds from the Partnership, on terms and conditions established
in the sole and absolute discretion of the General Partner. The
foregoing authority shall not create any right or benefit or
favor of any Person.
(b) Except as provided in Section 0, the Partnership
may transfer assets to joint ventures, other partnerships,
corporations, limited liability companies or other business
entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions consistent with this
Agreement and applicable law.
(c) 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 Company pursuant to
any Stock Plan or any similar or successor plan and to repurchase
such Partnership Units from the Company to the extent necessary
to permit the General Partner to repurchase such REIT Shares in
accordance with such plan.
(d) The General Partner is expressly authorized to
enter into, in the name and on behalf of the Partnership, a right
of first opportunity arrangement and other conflict avoidance
agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its
sole and absolute discretion, believes are advisable.
Section 7.6 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, including, without
limitation, reasonable attorneys' fees and expenses, 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. Except as otherwise specifically provided in writing
to the contrary, 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 0 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 0. 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 0 with respect to
subject matter of such proceeding. Any indemnification pursuant
to this Section 0 shall be made only out of the assets of the
Partnership.
(b) Reasonable expenses incurred by an Indemnitee in
connection with any proceeding which are otherwise indemnifiable
under this Section 0 may be paid or reimbursed by the Partnership
in advance of the final disposition of the proceeding upon
receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the
standard of conduct necessary for indemnification by the
Partnership as authorized in this Section 0 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 0
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 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 0, 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 0; 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.
(g) An Indemnitee shall not be denied indemnification
in whole or in part under this Section 0 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 0 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 0 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 0 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 0 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 expenses 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 0 shall not be
limited to such Partner's Partnership Interest, but shall be
enforceable against such Partner personally.
Section 7.7 LIABILITY OF THE GENERAL
PARTNER
(a) Notwithstanding anything to the contrary set forth
in this Agreement, neither the General Partner nor any director,
officer, employee or agent of the Partnership or the General
Partner (each, an "Agent") shall be liable or accountable in
damages or otherwise to the Partnership, any Partners or any
Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact
or law or any act or omission if such Person 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 Company's stockholders collectively,
that the General Partner is under no obligation to give priority
to the separate interests of the Limited Partners or the
Company'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 0 hereof, the General Partner may
exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either
directly or by or through its Agents. 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 0 or any provision hereof shall be prospective only and
shall not in any way affect the limitations on the General
Partner's or any Agent's liability to the Partnership and the
Limited Partners under this Section 0 as in effect immediately
prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or
in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
Section 7.8 OTHER MATTERS CONCERNING THE
GENERAL PARTNER
(a) The General Partner and any Agent 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 and any Agent 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
or Agent 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 (i) to
protect the ability of the Company to continue to qualify as a
REIT or (ii) to avoid the Company incurring any taxes under
Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited
Partners.
Section 7.9 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 7.10 RELIANCE BY THIRD PARTIES
Notwithstanding anything to the contrary in this
Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and
authority 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.
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, partner (other than a Limited 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, partner (other than a Limited
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 thereof, 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, or the income or profits
derived therefrom, 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
benefitting from the business conducted by the General Partner,
and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to
the Partnership, any Limited Partner or any such other Person,
even if such opportunity is of a character which, if presented to
the Partnership, any Limited Partner or such other Person, could
be taken by such other Person.
Section 8.4 RETURN OF CAPITAL
Except pursuant to the rights of Redemption set forth
in Section 0, 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 otherwise expressly set forth in this Agreement, no Limited
Partner or Assignee shall have priority over any other Limited
Partner or Assignee either as to the return of Capital
Contributions or as to profits, losses, 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)
hereof, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon written demand with a
statement of the purpose of such demand and at 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 Company pursuant to the Securities Exchange
Act, and each communication sent to the stockholders of the
Company;
(ii) to obtain a copy of the Partnership's
federal, state and local income tax returns for each Partnership
Year;
(iii) 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
(iv) 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 0, 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.
Section 8.6 REDEMPTION RIGHTS
(a) On or after January 1, 2000, each Limited Partner
shall have the right (subject to the terms and conditions set
forth herein), but not the obligation, to require the Partnership
to redeem all or a portion of the Partnership Units held by such
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 Partnership Units
do not provide that such Partnership Units are not entitled to a
right of Redemption. Unless otherwise expressly provided in this
Agreement or in a separate agreement entered into between the
Partnership and the holders of such Partnership Units, all
Partnership Units shall be entitled to a right of Redemption
hereunder. Any Redemption shall be exercised pursuant to a
Notice of Redemption delivered to the General Partner and the
Company, by the 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 0 above, if a Limited
Partner has delivered to the General Partner a Notice of
Redemption, then the Company may, in its sole and absolute
discretion (subject to the limitations on ownership and transfer
of REIT Shares set forth in 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 Company so elects, the Tendering
Partner shall sell the Tendered Units to the Company 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 Company shall promptly give the General
Partner and the Tendering Partner written notice of its election,
and the Tendering Partner may elect by written notice to the
Partnership 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 Company, 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 0), 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. Each
Limited Partner covenants and agrees with the General Partner and
the Company 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 and the Company shall be under no obligation
to acquire the same. Each 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, such Limited
Partner shall assume and pay such transfer tax. Each Limited
Partner further agrees that it shall enter into such
documentation with respect to a Redemption for cash or an
exchange for REIT Shares as the Partnership, the Company, or the
General Partner shall reasonably request.
(d) Each Limited Partner covenants and agrees with the
General Partner and the Company, as the case may be, that all
Tendered Units shall be delivered to the General Partner or the
Company 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 and the Company shall be under no obligation to acquire
the same. Each 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
the Company (or the designee), such Limited Partner shall assume
and pay such transfer tax.
(e) Notwithstanding the provisions of Section 0, 0, 0
or any other provision of this Agreement, a 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 another
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 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 0, it shall be null and void AB INITIO and such
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 0), with respect to any Redemption or
exchange for REIT Shares pursuant to this Section 0:
(i) All 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
Partnership Units.
(ii) All Partnership Units acquired by the Company
shall maintain their status as Limited Partnership Interests of
the same number and class as the Partnership Units so acquired.
(iii) Without the consent of the General
Partner, each Limited Partner may not effect a Redemption for
less than 500 Partnership Units or, if the Limited Partner holds
less than 500 Partnership Units, all of the Partnership Units
held by such Limited Partner.
(iv) Without the consent of the General Partner,
each 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
Company for a distribution to its stockholders of some or all of
its portion of such distribution.
(v) 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-Redino Antitrust Improvements Act of 1976, as amended.
(vi) Each Tendering Partner shall continue to own
all Partnership Units subject to any Redemption or exchange for
REIT Shares, and be treated as a Limited Partner with respect to
such Partnership Units for all purposes of this Agreement, until
such Partnership Units are transferred to the General Partner or
the Company, as the case may be, and paid for or exchanged on the
Specified Redemption Date. Until a Specified Redemption Date,
the Tendering Partner shall have no rights as a stockholder of
the Company with respect to such Tendering Partner's Partnership
Units.
(g) In the event that the Partnership issues
additional Partnership Interests to any Additional Limited
Partner pursuant to Section 0 hereof, the General Partner shall
make such revisions to this Section 0 as it determines are
necessary to reflect the issuance of such additional Partnership
Interests.
(h) 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 a Majority in
Interest of the 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.
(i) The Partnership shall notify each Limited Partner
in writing of any adjustment made in the calculation of the REIT
Shares Amount within 10 Business Days of the date such change
becomes effective.
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 0 or 0
hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on,
or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, PROVIDED
THAT the records so maintained are convertible into clearly
legible written form within a reasonable period of time. The
books of the Partnership shall be maintained, for financial and
tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles.
Section 9.2 FISCAL YEAR
The fiscal year of the Partnership shall be the
calendar year.
Section 9.3 REPORTS
As soon as practicable, but in no event later than 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.
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 the Partnership and, to the
extent applicable, Subsidiary 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 90 days of the close of
each taxable year, the tax information reasonably required by
Limited Partners for federal and state income tax reporting
purposes.
Section 10.2 TAX ELECTIONS
Except as otherwise provided herein, the General
Partner shall, in its sole and absolute discretion, determine
whether to make any available election pursuant to the Code,
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 in
the best interests of the Partners.
Section 10.3 TAX MATTERS PARTNER
(a) The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes.
Pursuant to Section 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 agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who (within
the time prescribed pursuant to the Code and Regulations) files a
statement with the IRS providing that the tax matters partner
shall not have the authority to enter into a settlement agreement
on behalf of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231 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 0 of this Agreement shall be fully
applicable to the tax matters partner in its capacity as such.
(c) The tax matters partner shall receive no
compensation for its services. All third party costs and
expenses incurred by the tax matters partner in performing its
duties as such (including legal and accounting fees) 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
60-month period as provided in Section 709 of the Code.
Section 10.5 WITHHOLDING
Each Limited Partner hereby authorizes the Partnership
to withhold from or pay on behalf of or with respect to such
Limited Partner any amount of federal, state, local, or foreign
taxes that the General Partner determines that the Partnership is
required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to
this Agreement, including, without limitation, any taxes required
to be withheld or paid by the Partnership pursuant to Section
1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf
of or with respect to a Limited Partner shall constitute a loan
by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within 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 0. In the event that a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 0 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 0
with respect to a Partnership Interest, shall be deemed to refer
to a transaction by which the General Partner purports to assign
all or any portion of its General Partner Interest to another
person or by which a Limited Partner purports to assign all or
any portion of 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. The term "transfer"
when used in this Article 0 does not include any Redemption or
exchange for REIT Shares pursuant to Section 0. 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 0. Any transfer or
purported transfer of a Partnership Interest not made in
accordance with this Article 0 shall be null and void.
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 or
consolidation, liquidation or otherwise) without the Consent of
the Majority in Interest of the Limited Partners, which may be
given or withheld by each Limited Partner in its sole and
absolute discretion, and only, in the case of a purported
transfer of all of the General Partner's General Partner
Interest, upon the appointment and admission of a successor
General Partner pursuant to Section 0 and 0. Upon any transfer
of all of the General Partner's General Partner Interest in
accordance with the provisions of this Section 0, 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
obligations under this Agreement without the Consent of the Super
Majority Limited Partners, in their reasonable discretion.
Subject to Section 0, in the event the General Partner withdraws
from the Partnership, in violation of this Agreement or
otherwise, 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) Except as otherwise provided in Section 0, the
General Partner shall not engage in any merger, consolidation or
other combination with or into another person, sale of all or
substantially all of its assets or any reclassification,
recapitalization or change of its outstanding equity interests
(each, a "Termination Transaction"), unless the Termination
Transaction has been approved by a Consent of the Partners and in
connection with which all Limited Partners either will receive,
or will have the right to elect to receive, for each Partnership
Unit an amount of cash, securities, or other property equal to
the product of the REIT Shares Amount and the greatest amount of
cash, securities or other property paid to a holder of one REIT
Share in consideration of one REIT Share pursuant to the terms of
the Termination Transaction; PROVIDED THAT, if, in connection
with the Termination Transaction, a purchase, tender or exchange
offer shall have been made to and accepted by the holders of more
than thirty-three and one-third percent (33 1/3%) of the
outstanding REIT Shares, each holder of Partnership Units shall
receive, or shall 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 right to
Redemption (as set forth in Section 0) 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.
(c) Notwithstanding Section 0, the General Partner may
merge, or otherwise combine its assets, with another entity if:
(i) immediately after such merger or other combination,
substantially all of the assets directly or indirectly owned by
the surviving entity, other than Partnership Units held by such
General Partner, are owned 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 Limited Partners own a
percentage interest of the Surviving Partnership based on the
relative fair market value of the net assets of the Partnership
(as determined pursuant to Section 0 and the other net assets of
the Surviving Partnership (as determined pursuant to Section 0)
immediately prior to the consummation of such transaction; (iii)
the rights, preferences and privileges of the Limited Partners in
the Surviving Partnership 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; and (iv) such
rights of the Limited Partners include the right to exchange
their interests in the Surviving Partnership for at least one of:
(a) the consideration available to such Limited Partners pursuant
to Section 0 or (b) if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity
securities, such common equity securities, with an exchange ratio
based on the relative fair market value of such securities (as
determined pursuant to Section 0) and the REIT Shares.
(d) In connection with any transaction permitted by
Section 0 or Section 0 hereof, the General Partner shall use its
commercially reasonable efforts to structure such Termination
Transaction to avoid causing the Limited Partners to recognize
gain for federal income tax purposes by virtue of the occurrence
of or their participation in such Termination Transaction. The
sole remedy for a breach by the General Partner of this Section 0
shall be a claim for damages.
(e) In connection with any transaction permitted by
Section 0 or 0, the relative fair market values shall be
reasonably determined by the General Partner as of the time of
such transaction and, to the extent applicable, shall be no less
favorable to the Limited Partners than the relative values
reflected in the terms of such transaction.
Section 11.3 LIMITED PARTNERS' RIGHTS TO
TRANSFER
(a) Prior to January 1, 2000, no Limited Partner shall
transfer all or any portion of its Partnership Interest to any
transferee without the consent of the General Partner, which
consent is to be exercised by its Independent Trust Managers and
may be withheld in its sole and absolute discretion; PROVIDED,
HOWEVER, that 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 of
such Limited Partner, another original Limited Partner or to an
Immediate Family member, subject to the provisions of Section 0,
(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 0,
and (iv) subject to the provisions of Section 0, pledge (a
"Pledge") all or any portion of its Partnership Interest to a
lending institution, which is not an Affiliate of such Limited
Partner, as collateral or security for a bona fide loan or other
extension of credit, and transfer such pledged Partnership
Interest to such lending institution in connection with the
exercise of remedies under such loan or extension or credit, and
the transfer of such pledged Partnership Interest by the lender
to any transferee. Each Limited Partner or Assignee (resulting
from a transfer made pursuant to clauses (i)-(iv) of the proviso
of the preceding sentence) shall have the right to transfer all
or any portion of its Partnership Interest, subject to the
satisfaction of each of the following conditions (in addition to
the right of each such Limited Partner or Assignee to continue to
make any such transfer permitted by clauses (i)-(iv) of such
proviso without satisfying either of the following conditions):
(i) GENERAL PARTNER RIGHT OF FIRST REFUSAL. The
transferring Partner shall give written notice of the proposed
transfer to the General Partner, which notice shall state (i) the
identity of the proposed transferee, and (ii) the amount and type
of consideration proposed to be received for the transferred
Partnership Units. The General Partner shall have ten (10) days
upon which to give the transferring Partner notice of its
election to acquire the Partnership Units on the proposed terms.
If it so elects, it shall purchase the Partnership Units on such
terms within ten (10) days after giving notice of such election.
If it does not so elect, the transferring Partner may transfer
such Partnership Units to such third party, on economic terms no
more favorable to the transferee than the proposed terms, subject
to the other conditions of this Section 0, for a period of ninety
(90) days, after which such transfer shall again be subject to
compliance herewith.
(ii) 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 and the representations in
Section 0. 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
rights hereunder, other than the rights of an Assignee as
provided in Section 0.
(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 Section 0 by a Limited Partner of such
Limited Partner's 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 Units.
(d) No transfer by a Limited Partner of such Limited
Partner's Partnership Units (including any Redemption or exchange
for REIT Shares pursuant to Section 0) may be made to any person
if (i) in the opinion of legal counsel for the Partnership, it
would result in the Partnership being treated as an association
taxable as a corporation, or (ii) such transfer is effectuated
through an "established securities market" or a "secondary market
(or the substantial equivalent thereof)" 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, 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 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) In addition to any other restrictions on transfer
contained in this Agreement, in no event may any transfer of any
Partnership Units by any Partner be made if such transfer would
cause, or in the opinion of counsel selected by the General
Partner, could cause (i) the Partnership to become, with respect
to any employee benefit plan subject to Title I of ERISA or
Section 4975 of the Code, 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); or (ii) any portion of the assets
of the Partnership to constitute assets of any employee benefit
plan pursuant to Section 2510.3-101 of the regulations of the
United States Department of Labor.
Section 11.4 SUBSTITUTED LIMITED PARTNERS
(a) No Limited Partner shall have the right to
substitute a transferee as a Limited Partner in such Limited
Partner's place (including any transferee permitted by Section
0). The General Partner shall, however, have the right to
consent to the admission of a transferee permitted under Section
0 of the interest of a Limited Partner as a Substituted Limited
Partner pursuant to this Section 0, 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 0
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 0 and such other documents or
instruments as may be required in the discretion of the General
Partner 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 0 hereof are true and correct with respect
to such transferee as of the date of the transfer of the
Partnership Interest to such transferee.
(c) Upon the admission of a Substituted Limited
Partner, the General Partner shall amend Exhibit 0 to reflect the
name, address, number of Partnership Units, and Percentage
Interest of such Substituted Limited Partner and to eliminate or
adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.
Section 11.5 ASSIGNEES
If the General Partner, in its sole and absolute
discretion, does not consent to the admission of any permitted
transferee under Section 0 as a Substituted Limited Partner, as
described in Section 0, 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 0, and the right of
Redemption provided in Section 0, 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 0 to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of Partnership
Units.
Section 11.6 GENERAL PROVISIONS
(a) No Limited Partner may withdraw from the
Partnership other than as a result of (i) a permitted transfer of
all of such Limited Partner's Partnership Units in accordance
with this Article 0 and the transferee(s) of such Units being
admitted to the Partnership as a Substituted Limited Partner or
(ii) pursuant to a Redemption or exchange for REIT Shares of all
of such Limited Partner's Partnership Units under Section 0.
(b) Any Limited Partner who shall transfer all of such
Limited Partner's Partnership Units in a transfer permitted
pursuant to this Article 0 where such transferee was admitted as
a Substituted Limited Partner or pursuant to a Redemption or
exchange for REIT Shares of all of such Limited Partner's
Partnership Units under Section 0 shall cease to be a Limited
Partner.
(c) Transfers pursuant to this Article 0 may only be
made on the first day of a fiscal quarter of the Partnership,
unless the General Partner otherwise agrees.
(d) If any Partnership Interest is transferred or
assigned during any quarterly segment of the Partnership's fiscal
year in compliance with the provisions of this Article 0 or
transferred or redeemed pursuant to Section 0, 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 pro-ration of items method. Except as otherwise required by
Section 706(d) of the Code, solely for purposes of making such
allocations, each of such items for the calendar quarter in which
the transfer, assignment or redemption occurs shall be allocated
to the Person who is a Partner as of midnight on the Partnership
Record Date and none of such items for the calendar quarter in
which a redemption occurs will be allocated to the redeeming
Partner. All distributions of Available Cash with respect to
which the Partnership Record Date is before the date of such
transfer, assignment or redemption shall be made to the
transferor Partner, and all distributions of Available Cash
thereafter, in the case of a transfer or assignment other than a
redemption, shall be made to the transferee Partner.
(e) In addition to any other restrictions on transfer
herein contained, including without limitation the provisions of
this Article 0, in no event may any transfer or assignment of a
Partnership Interest by any Partner (including by way of a
Redemption) 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) of any component
portion of a Partnership Interest, such as the Capital Account,
or rights to distributions, separate and apart from all other
components of a Partnership Interest; (iv) if in the opinion of
legal counsel to the Partnership such transfer would cause a
termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption or exchange for
REIT Shares of all Partnership Units held by all Limited Partners
or pursuant to a Termination Transaction expressly permitted
under Section 0); (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 of all Partnership Units held by all Limited
Partners); (vi) if such transfer requires the registration of
such Partnership Interest pursuant to any applicable federal or
state securities laws; (vii) 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;
(viii) 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; (ix) if the transferee or assignee of such
Partnership Interest is unable to make the representations set
forth in Section 0 or such transfer could otherwise adversely
affect the ability of the Company to remain qualified as a REIT;
or (x) if in the opinion of legal counsel for the Partnership
such transfer would adversely affect the ability of the Company
to continue to qualify as a REIT or subject the Company 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 to determine (i) if such interests
are being traded on an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within
the meaning of Section 7704 of the Code, and (ii) whether
additional transfers of interests would result in the Partnership
being unable to qualify for at least one of the "safe harbors"
set forth in regulations Section 1.7704-1 (or such other guidance
subsequently published by the IRS setting forth safe harbors
under which interests will not be treated as "readily tradable on
a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe
Harbors"). The General Partner shall take all steps reasonably
necessary or appropriate to prevent any trading of interests or
any recognition by the Partnership of transfers made on such
markets and, except as otherwise provided herein, to insure that
at least one of the Safe Harbors is met.
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 0 hereof who is proposed to
be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and
delivering to the Partnership an acceptance of all of the terms
and conditions of this Agreement and such other documents or
instruments as may be required to effect the admission. In the
case of such admission on any day other than the first day of a
Partnership Year, all items attributable to the General Partner's
Partnership Interest for such Partnership Year shall be allocated
between the transferring General Partner and such successor as
provided in Article 0 hereof.
Section 12.2 ADMISSION OF ADDITIONAL
LIMITED PARTNERS
(a) After the admission to the Partnership of the
Limited Partner on the date hereof, 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 0 hereof and
(ii) such other documents or instruments as may be required in
the discretion of the General Partner in order to effect such
Person's admission as an Additional Limited Partner.
(b) Notwithstanding anything to the contrary in this
Section 0, 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
and instruments described in Section 0 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 Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during
the Partnership Year in accordance with Section 706(d) of the
Code, using the interim closing of the books method unless the
General Partner, in its sole and absolute discretion, elects to
adopt another reasonable method permitted by law. 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. All
distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission
shall be made solely to Partners and Assignees other than the
Additional Limited Partner (other than in its capacity as an
Assignee) and, except as otherwise agreed to by the Additional
Limited Partners and the General Partner, all distributions of
Available Cash thereafter shall be made to all Partners and
Assignees including such Additional Limited Partner.
Section 12.3 AMENDMENT OF AGREEMENT AND
CERTIFICATE OF LIMITED PARTNERSHIP
For the admission to the Partnership of any Partner,
the General Partner shall take all steps necessary and
appropriate under the Act to amend the records of the Partnership
and, if necessary, to prepare as soon as practical an amendment
of this Agreement (including an amendment of Exhibit 0) 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 0 hereof.
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 0 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
0 hereof;
(b) an event of withdrawal of the General Partner, as
defined in the Act, unless, within 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 successor General Partner;
(c) an election to dissolve the Partnership made by
the General Partner;
(d) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(e) the sale of all or substantially all of the assets
and properties of the Partnership for cash or marketable
securities;
(f) the Incapacity of the General Partner, unless all
of the remaining Partners in their sole and absolute discretion
agree in writing to continue the business of the Partnership and
to the appointment, effective as of a date prior to the date of
such Incapacity, of a substitute General Partner; or
(g) the Redemption or exchange for REIT Shares of all
Partnership Units (other than those of the 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 General Partner
and Limited Partners in accordance with their positive Capital
Account balances, determined 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
0).
The General Partner shall not receive any additional
compensation for any services performed pursuant to this Article
0 other than reimbursement of its expenses as provided in Section
0.
(b) Notwithstanding the provisions of Section 0
hereof, 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 0 hereof,
undivided interests in such Partnership assets as the Liquidator
deems not suitable for liquidation. Any such distributions in
kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest
of the Partners, and shall be subject to such conditions relating
to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreements
governing the operation of such properties at such time. The
Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as
it may adopt.
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 0 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.
In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this Article 0 may be:
(a) distributed to a trust established for the benefit
of the 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 Partners from time to time, in the
reasonable discretion of the Liquidator, 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 provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect
the unrealized portion of any installment obligations owed to the
Partnership, PROVIDED THAT when the Liquidator determines that
the withheld amounts are no longer appropriate such withheld
amounts shall be distributed to the Partners as soon as
practicable in the manner and order of priority set forth in
Section 0.
Section 13.4 RIGHTS OF LIMITED PARTNERS
Except as otherwise provided in this Agreement, each
Limited Partner shall look solely to the assets of the
Partnership for the return of such Limited Partner's Capital
Contribution and shall have no right or power to demand or
receive property from the General Partner. Except as otherwise
provided in this Agreement, no Limited Partner shall have
priority over any other Limited Partner as to the return of his
Capital Contributions, distributions or allocations.
Section 13.5 NOTICE OF DISSOLUTION
In the event a Liquidating Event occurs or an event
occurs that would, but for provisions of Section 0, result in a
dissolution of the Partnership, the General Partner shall, within
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 13.6 CANCELLATION OF CERTIFICATE OF
LIMITED PARTNERSHIP
Upon the completion of the liquidation of the
Partnership cash and property as provided in Section 0 hereof,
the Partnership shall be terminated and the Certificate and all
qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of Delaware
shall be canceled and such other actions as may be necessary to
terminate the Partnership shall be taken.
Section 13.7 REASONABLE TIME FOR WINDING UP
A reasonable time shall be allowed for the orderly
winding up of the business and affairs of the Partnership and the
liquidation of its assets pursuant to Section 0 hereof, in order
to minimize any losses otherwise attendant upon such winding up,
and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
Section 13.8 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 0, or otherwise pursuant to applicable law, are
subject to the procedures in this Article 0.
(b) Amendments to this Agreement requiring the consent
or approval of Limited Partners may be proposed by the General
Partner or by Limited Partners who hold 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 the Limited Partners, as applicable. The
General Partner shall seek the written consent or approval of the
Partners or 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 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) with respect to the proposal;
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 Limited Partners. 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 30
days prior to the date of such meeting. Partners may vote in
person or by proxy at such meeting. Whenever the vote or consent
of the Limited Partners or of the 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 0 hereof.
(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 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 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.
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 0 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.
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 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 0 or Section 0 would constitute gross income
to the Company 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:
(a) an amount equal to the excess, if any, of (a)
5.00% 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
(b) 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 Company's ability to qualify as a
REIT. To the extent General Partner Payments may not be made in
a year due to the foregoing limitations, such General Partner
Payments shall carry over and be treated as arising in the
following year, PROVIDED, HOWEVER, that such amounts shall not
carry over for more than five years, and if not paid within such
five-year period, shall expire; PROVIDED FURTHER, that (i) as
General Partner Payments are made, such payments shall be applied
first to carryover amounts outstanding, if any, and (ii) with
respect to carryover 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 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
Nothing contained in this Agreement shall be construed
as conferring upon the holders of Partnership Units any rights
whatsoever as stockholders of the Company including without
limitation any right to receive dividends or other distributions
made to stockholders of the Company 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 Company or any
other matter.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first written above.
PARKWAY PROPERTIES, INC.
By:
Name:
Title:
PARKWAY PROPERTIES GENERAL PARTNERS, INC.
By:
Name:
Title:
EXHIBIT A
Partners, Contributions and Partnership Interests
Partner Initial Contribution Partnership Interest
Parkway Properties, $9,900 99% Limited
Inc. Partnership Interest
consisting of
9,670,080 Units.
Parkway Properties $100 1% General
General Partners, Partnership Interest
Inc. consisting of 97,678
Units.
EXHIBIT B
Notice of Redemption
The undersigned hereby irrevocably (i) redeems
Partnership Units in Parkway Properties LP in accordance with the
terms of the Amended and Restated Limited Partnership Agreement
of Parkway Properties LP and the Redemption Right referred to
therein, (ii) surrenders such Limited Partnership Units and all
right, title and interest therein, and (iii) directs that the
Cash Amount or REIT Shares Amount (as determined by the General
Partner and/or the Company) deliverable upon exercise of the
Redemption Right be delivered to the address specified below, and
if REIT Shares are to be delivered, such REIT Shares be
registered or placed in the name(s) and at the address(es)
specified below. The undersigned hereby represents, warrants,
and certifies, that the undersigned (a) has marketable, and
unencumbered title to the Partnership Units, free and clear of
the rights of or interests of any other person or entity; (b) has
the full right, power and authority to redeem and surrender such
Partnership Units as provided herein; and (c) has obtained the
consent or approval of all persons or entities, if any, having
the right to consult or approve such redemption and surrender.
Dated:
Name of Limited Partner:
(Signature of Limited Partner)
(Street Address)
(City) (State) (Zip Code)
Signature Guaranteed by:
If REIT Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
EXHIBIT C
Schedule of Partners' Ownership with Respect to Tenants
NONE
EXHIBIT D
Schedule of REIT Shares Actually or
Constructively Owned by Limited Partners Other
than those Acquired Pursuant to an Exchange
NONE
_______________________________
