<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) OCTOBER 22, 1998
KOGER EQUITY, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State of incorporation or organization)
1-9997 2898045
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(Commission File Number) (IRS Employer Identification No.)
8880 FREEDOM CROSSING TRAIL
JACKSONVILLE, FLORIDA 32256
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904)732-1000
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N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On October 22, 1998, Koger Equity, Inc. (the "Company") completed the
acquisition of the Vanguard Office Centre, a suburban office park located in
Charlotte, North Carolina, for a total purchase price of $52.3 million. This
office park consists of 13 buildings, containing approximately 548,000 gross
square feet, on approximately 40 acres of land. This transaction was structured
as a contribution of the property to a down-REIT partnership to be called
Koger-Vanguard Partners, L.P., whose general partner is the Company. The
purchase price was paid by the assumption of approximately $22.2 million of
debt, the issuance of 999,710 partnership operating units (valued at
approximately $22.95 million) and the balance in cash. The partnership
operating units carry with them the right to redeem the units for common shares
of the Company on a one-operating-unit-for-one-share basis or, at the option of
the Company, the units may be redeemed for cash. The funds required for this
acquisition were drawn from the Company?s secured revolving credit facility.
The Company considered various factors in determining the price to be
paid for this acquisition. Factors considered include nature of the tenants and
terms of leases in place, opportunities for alternative and new tenancies,
historical and expected cash flow, occupancy rates, current operating costs on
the properties and anticipated changes therein under Company ownership, the
physical condition and location of the properties, need for capital
improvements, the anticipated effect on the Company?s financial results, and
other factors. The Company takes into consideration capitalization rates at
which it believes other comparable properties have recently sold. However, the
Company determines the price it is willing to pay primarily on the factors
discussed above relating to the properties themselves and their fit into the
Company?s existing operations. No separate independent appraisals were obtained
in connection with this acquisition. The Company, after investigation, is not
aware of any material factors, other than those discussed above, which would
cause the financial information reported not to be necessarily indicative of
future operating results.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Listed below are the financial statements, pro forma financial
information and exhibits, if any, filed as part of this report.
(a) Financial Statements of Real Estate Acquired.
Statement of Revenues and Certain Expenses of Vanguard Office
Centre for the year ended December 31, 1997.
1
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Koger Equity, Inc.
Jacksonville, Florida
We have audited the accompanying statement of revenues and certain expenses of
the properties known as The Vanguard Office Centre - Charlotte, North Carolina
for the year ended December 31, 1997. This financial statement is the
responsibility of management. Our responsibility is to express an opinion on
the financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K of Koger Equity,
Inc. as a result of the acquisition of these properties). Material amounts,
described in Note 1 to the statement of revenues and certain expenses, that
would not be comparable to those resulting from future operations of the
acquired properties are excluded and the statement is not intended to be a
complete presentation of the acquired properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of The Vanguard Office
Centre - Charlotte, North Carolina for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
August 21, 1998
2
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THE VANGUARD OFFICE CENTRE - CHARLOTTE, NORTH CAROLINA
STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<S> <C>
REVENUES:
Rental income $6,875,065
Recoverable expenses 224,869
Other income 25,449
----------
Total revenues 7,125,383
----------
CERTAIN EXPENSES:
Property operations 1,898,685
Real estate taxes 458,912
Management costs and fees 681,365
----------
Total certain expenses 3,038,962
----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $4,086,421
==========
</TABLE>
See notes to statement of revenues and certain expenses.
3
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THE VANGUARD OFFICE CENTRE - CHARLOTTE, NORTH CAROLINA
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1997
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Vanguard Office Centre, an office development located in Charlotte,
North Carolina, will be acquired by Koger Equity, Inc. on or about October 1,
1998. The statement of revenues and certain expenses includes information
related to the operations of The Vanguard Office Centre for the period from
January 1, 1997 through December 31, 1997 as recorded by the properties'
previous owners, 77 Center Investors Limited Partnership and 77 Center
Investors II Limited Partnership, Maryland limited partnerships.
The accompanying historical financial statement information is presented
in conformity with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, the financial statement is not representative of the
actual operations for the year ended December 31, 1997 as certain expenses,
which may not be comparable to the expenses expected to be incurred in the
future operations of the acquired properties, have been excluded. Expenses
excluded consist of interest, depreciation and amortization, and other costs
not directly related to the future operations of the acquired properties.
MANAGEMENT'S USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
RENTAL INCOME - Rental income is recognized on a straight-line basis over
the terms of the related leases.
PROPERTY OPERATIONS EXPENSES - Property operations expenses consist
primarily of utilities, insurance, repairs and maintenance, security and
safety, cleaning and other administrative expenses.
MANAGEMENT COSTS AND FEES - The properties were managed by an affiliate of
the previous owner for a property management fee of 5% of rental and other
revenues plus reimbursement of personnel and other costs related to management
of the properties.
2. OPERATING LEASES
Operating revenue is principally obtained from business tenant rentals
under operating leases. Certain leases in force at December 31, 1997 included
early termination provisions. Future minimum rentals under all operating leases
(including those with early termination provisions) of business tenants as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1998 $ 7,224,583
1999 6,373,036
2000 5,678,656
2001 4,516,993
2002 3,668,419
Thereafter 1,543,038
-----------
Total $29,004,725
===========
</TABLE>
For the year ended December 31, 1997, two tenants each contributed more
than ten percent of rental revenues and, collectively, represented
approximately 34% of rental revenues.
(b) Pro Forma Financial Statements
The following unaudited pro forma financial statements set forth (i) the
pro forma balance sheet as of September 30, 1998, as if the acquisition
occurred on September 30, 1998, and (ii) the pro forma statements of operations
for the year ended
4
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December 31, 1997 and the nine months ended September 30, 1998, as if the
acquisition occurred on January 1, 1997. The pro forma financial statements are
based upon assumptions contained in the notes thereto and should be read in
conjunction with such notes.
The following unaudited pro forma financial statements may not necessarily
reflect the results of operations or financial position of the Company which
would have actually resulted had the acquisition occurred as of the date and
for the periods indicated, nor should they be taken as indicative of the future
results of operations or the future financial position of the Company.
Differences would result from various factors, including changes in the amounts
of rents received and rental expenses paid in connection with operating the
office buildings acquired and changes in the interest rates assumed on the
Company?s secured revolving credit facility.
5
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
9/30/98 ADJUSTMENTS 9/30/98
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Operating properties:
Real estate $ 798,166 $ 52,950 (a) $ 851,116
Furniture and equipment 3,316 3,316
Accumulated depreciation (122,515) (122,515)
------------ ----------- -----------
Operating properties - net 678,967 52,950 731,917
Properties under construction 37,920 37,920
Undeveloped land held for investment 17,553 17,553
Undeveloped land held for sale 1,263 1,263
Cash and temporary investments 3,249 445 (a) 3,694
Accounts receivable, net 6,111 6,111
Investment in Koger Realty Services, Inc. 1,103 1,103
Cost in excess of fair value of net assets acquired - net 1,743 1,743
Other assets 13,256 (50) (a) 13,206
----------- ------------ -----------
TOTAL ASSETS $ 761,165 $ 53,345 $ 814,510
=========== ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgages and loans payable $ 260,481 $ 29,420 (a) $ 289,901
Accounts payable 6,596 6,596
Accrued real estate taxes payable 7,896 390 (a) 8,286
Accrued liabilities - other 7,859 314 (a) 8,173
Dividends payable 7,973 7,973
Advance rents and security deposits 4,715 268 (a) 4,983
----------- ----------- -----------
Total Liabilities 295,520 30,392 325,912
----------- ----------- -----------
Minority Interest 22,953 (a) 22,953
----------- ----------- -----------
Shareholders' Equity:
Common stock 286 286
Capital in excess of par value 454,909 454,909
Retained earnings 30,752 30,752
Treasury stock, at cost (20,302) (20,302)
----------- ----------- -----------
Total Shareholders' Equity 465,645 465,645
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 761,165 $ 53,345 $ 814,510
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
6
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
1997 ADJUSTMENTS 1997
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES
Rental and other rental services $ 109,501 $ 7,125 (a) $ 116,626
Management fees 2,637 2,637
Interest 1,274 1,274
Income from Koger Realty Services, Inc. 577 577
----------- ----------- ----------
Total revenues 113,989 7,125 121,114
----------- ----------- ----------
EXPENSES
Property operations 44,453 2,512 (a) 46,965
Depreciation and amortization 24,073 1,226 (b) 25,299
Mortgage and loan interest 16,517 2,321 (c) 18,838
General and administrative 6,374 6,374
Direct cost of management fees 1,896 1,896
Undeveloped land costs 413 413
Recovery of loss on land held for sale (379) (379)
----------- ----------- ----------
Total expenses 93,347 6,059 99,406
----------- ----------- ----------
INCOME BEFORE GAIN ON SALE OR DISPOSITION
OF ASSETS AND MINORITY INTEREST 20,642 1,066 21,708
Gain on sale or disposition of assets 1,955 1,955
Minority interest (1,203) (d) (1,203)
----------- ----------- ----------
INCOME BEFORE INCOME TAXES 22,597 (137) 22,460
Income taxes 935 (16) 919
----------- ----------- ----------
INCOME BEFORE EXTRAORDINARY ITEM $ 21,662 $ (121) $ 21,541
=========== =========== ==========
EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM:
Basic $ 1.01 $ 1.01
=========== ==========
Diluted $ 0.96 $ 0.96
=========== ==========
WEIGHTED AVERAGE SHARES:
Basic 21,374 21,374
=========== ==========
Diluted 22,495 22,495
=========== ==========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
7
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KOGER EQUITY, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA PRO FORMA
9/30/98 ADJUSTMENTS 9/30/98
------------ ----------- -----------
<S> <C> <C> <C>
REVENUES
Rental and other rental services $ 97,195 $ 5,809 (a) $ 103,004
Management fees 1,738 1,738
Interest 392 392
Income from Koger Realty Services, Inc. 1,062 1,062
------------ ----------- -----------
Total revenues 100,387 5,809 106,196
------------ ----------- -----------
EXPENSES
Property operations 39,197 1,864 (a) 41,061
Depreciation and amortization 20,416 920 (b) 21,336
Mortgage and loan interest 11,518 1,740 (c) 13,258
General and administrative 4,877 4,877
Direct cost of management fees 972 972
Undeveloped land costs 280 280
------------ ----------- -----------
Total expenses 77,260 4,524 81,784
------------ ----------- -----------
INCOME BEFORE GAIN ON SALE OR DISPOSITION
OF ASSETS AND MINORITY INTEREST 23,127 1,285 24,412
Gain on sale or disposition of assets 6 6
Minority interest (1,271) (d) (1,271)
------------ ----------- -----------
INCOME BEFORE INCOME TAXES 23,133 14 23,147
Income taxes 770 29 799
------------ ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM $ 22,363 $ (15) $ 22,348
============ =========== ===========
EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM:
Basic $ 0.85 $ 0.85
============ ===========
Diluted $ 0.83 $ 0.83
============ ===========
WEIGHTED AVERAGE SHARES:
Basic 26,199 26,199
============ ===========
Diluted 26,869 26,869
============ ===========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
8
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KOGER EQUITY, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION.
On October 22, 1998, the Company consummated the Vanguard Office Centre
Acquisition. The transaction was structured as a contribution of the property
to a down-REIT partnership to be called Koger - Vanguard Partners, L.P., whose
general partner is the Company. The financial statements of Koger - Vanguard
Partners, L.P. will be consolidated with the Company. This acquisition was
funded by the assumption of approximately $22.2 million of debt, the issuance
of 999,710 partnership operating units (valued at approximately $22.95 million)
and drawing approximately $7.2 million under the Company's secured revolving
credit facility. It is the intent of the Company's management to operate the
office buildings acquired in a manner similar to the Company's existing office
building portfolio.
2. UNAUDITED PRO FORMA BALANCE SHEET.
The unaudited pro forma balance sheet as of September 30, 1998 is based
on the historical balance sheet for the Company presented in the Quarterly
Report on Form 10-Q for the period ended September 30, 1998. The unaudited pro
forma balance sheet includes adjustments assuming this acquisition occurred as
of September 30, 1998. Significant pro forma adjustments in the unaudited pro
forma balance sheet include the following:
(a) The Company acquired the Vanguard Office Centre, which properties are
located in Charlotte, North Carolina, for a purchase price of $52.3
million. This acquisition was funded by the assumption of
approximately $22.2 million of debt, the issuance of 999,710
partnership operating units (valued at approximately $22.95 million)
and a $7.2 million draw on the Company's secured revolving credit
facility.
3. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER
31, 1997.
The unaudited pro forma statement of operations for the year ended
December 31, 1997 is based on the historical statement of operations for the
Company presented in the Annual Report on Form 10-K for the year ended December
31, 1997. The unaudited pro forma statement of operations includes adjustments
assuming that the Vanguard Office Centre Acquisition occurred as of January 1,
1997. Significant pro forma adjustments in the unaudited pro forma statement of
operations include the following:
(a) Adjustment required for the historical rental revenues and operating
expenses for the properties acquired. Operating expenses do not
include historical management fees and administrative salaries for
these properties since the Company plans to manage these properties
with existing staff.
(b) Adjustment required to reflect depreciation on the properties
acquired, based on the total cost of the Vanguard Office Centre
Acquisition. The Company uses the straight-line method for
depreciation and amortization using an estimated life of 39 years for
buildings.
(c) Adjustment required to reflect interest expense related to (i) the
$22.2 million of debt assumed and (ii) the amount drawn on the secured
revolving credit facility ($ 7.2 million) to fund the Vanguard Office
Centre Acquisition. The estimated average interest rate on the secured
revolving credit facility was 7.145 percent. The average interest rate
on the mortgage debt assumed was 8.13 percent.
(d) Adjustment required to reflect the deduction for minority interest of
the limited partners of Koger - Vanguard Partners, L.P. This
adjustment was calculated based on the ownership percentage (76%) of
the limited partners in Koger - Vanguard Partners, L.P.
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4. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998.
The unaudited pro forma statement of operations for the nine months ended
September 30, 1998 is based on the historical statement of operations for the
Company presented in the Quarterly Report on Form 10-Q for the period ended
September 30, 1998. The unaudited pro forma statement of operations includes
adjustments assuming that the Vanguard Office Centre Acquisition occurred as of
January 1, 1997. Significant pro forma adjustments in the unaudited pro forma
statement of operations include the following:
(a) Adjustment required for the historical rental revenues and operating
expenses for the properties acquired. Operating expenses do not
include historical management fees and administrative salaries for
these properties since the Company plans to manage these properties
with existing staff.
(b) Adjustment required to reflect depreciation on the properties
acquired, based on the total cost of the Vanguard Office Centre
Acquisition. The Company uses the straight-line method for
depreciation and amortization using an estimated life of 39 years for
buildings.
(c) Adjustment required to reflect interest expense related to (i) the
$22.2 million of debt assumed and (ii) the amount drawn on the secured
revolving credit facility ($7.2 million) to fund the Vanguard Office
Centre Acquisition. The estimated average interest rate on the secured
revolving credit facility was 7.14 percent. The average interest rate
on the mortgage debt assumed was 8.13 percent.
(d) Adjustment required to reflect the deduction for minority interest of
the limited partners of Koger - Vanguard Partners, L.P. This
adjustment was calculated based on the ownership percentage (76%) of
the limited partners in Koger - Vanguard Partners, L.P.
10
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KOGER EQUITY, INC.
UNAUDITED STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
AND ESTIMATED CASH TO BE MADE AVAILABLE BY OPERATIONS OF
KOGER EQUITY, INC. FOR THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<S> <C>
REVENUES
Rental and other rental services $ 109,521
Management fees 2,637
Interest 1,274
Dividends received from Koger Realty Services, Inc. 364
Share of Koger - Vanguard Partners, L.P. income 461
-----------
Total revenues 114,257
-----------
EXPENSES
Property operations 44,556
Depreciation and amortization 19,510
Mortgage and loan interest 17,034
General and administrative 6,106
Direct cost of management fees 1,866
Other 413
Compensation - exercise of stock options 3,852
-----------
Total expenses 93,337
-----------
Estimated Taxable Operating Income 20,920
Add Back: Depreciation and Amortization 19,510
-----------
Estimated Cash To Be Made Available By Operations $ 40,430
===========
</TABLE>
Note 1: This statement of estimated taxable operating results and
estimated cash to be made available by operations is an
estimate of operating results of the Company for the twelve
month period ended December 31, 1997 assuming that the
Vanguard Office Centre Acquisition occurred on the first day
of the twelve month period. However, this statement does not
purport to reflect actual results for any period.
Note 2: Tax depreciation was determined based upon the actual tax
depreciation for the Company's existing portfolio and based
upon the assumption that the Vanguard Office Centre
Acquisition occurred on the first day of the twelve month
period.
11
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(c) Exhibits.
Exhibit Number Description
12 Amended and Restated Agreement of Limited
Partnership of Koger Vanguard Partners, L.P., dated
as of October 22, 1998, between Koger Equity, Inc.
as General Partner and certain persons as Limited
Partners of Koger - Vanguard Partners, L.P.
23 Consent of Deloitte and Touche LLP
12
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KOGER EQUITY, INC.
Dated: December 29, 1998 By: JAMES L. STEPHENS
--------------------------------
James L. Stephens
Title: Vice President and
Chief Accounting Officer
13
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EXHIBIT 12
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
KOGER-VANGUARD PARTNERS, L.P.
a Delaware limited partnership
-------------------------
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE
PARTNERSHIP AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE
PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
Dated as of October 22, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINED TERMS...........................................................................................1
ARTICLE 2 ORGANIZATIONAL MATTERS.................................................................................17
SECTION 2.1 Continuation of Partnership.......................................................17
SECTION 2.2 Name..............................................................................18
SECTION 2.3 Registered Office and Agent; Principal Office.....................................18
SECTION 2.4 Power of Attorney.................................................................18
SECTION 2.5 Term..............................................................................19
ARTICLE 3 PURPOSE................................................................................................20
SECTION 3.1 Purpose and Business..............................................................20
SECTION 3.2 Powers............................................................................20
SECTION 3.3 Partnership Only for Purpose Specified............................................20
SECTION 3.4 Representations and Warranties by the Limited Partners............................21
ARTICLE 4 CAPITAL CONTRIBUTIONS..................................................................................23
SECTION 4.1 Capital Contributions of the Initial Partners.....................................23
SECTION 4.2 Additional Limited Partners.......................................................23
SECTION 4.3 Loans by Third Parties............................................................24
SECTION 4.4 Additional Funding and Capital Contributions......................................24
A. General................................................................................24
B. General Partner Loans..................................................................24
C. Additional Contributions; Additional Limited Partners..................................24
D. Additional Contributions Required to be Made by General Partner........................25
SECTION 4.5 No Interest; No Return............................................................25
SECTION 4.6 No Preemptive Rights..............................................................25
ARTICLE 5 DISTRIBUTIONS..........................................................................................25
SECTION 5.1 Requirement and Characterization of Distributions.................................25
SECTION 5.2 Distributions in Kind.............................................................26
SECTION 5.3 Amounts Withheld..................................................................26
SECTION 5.4 Distributions upon Liquidation....................................................26
SECTION 5.5 REIT Distribution Requirement.....................................................26
SECTION 5.6 Restricted Distributions..........................................................27
ARTICLE 6 ALLOCATIONS............................................................................................27
SECTION 6.1 Timing and Amount of Allocations of Net Income and Net Loss.......................27
SECTION 6.2 General Allocations...............................................................27
SECTION 6.3 Additional Allocation Provisions..................................................29
A. Regulatory Allocations.................................................................29
B. Depreciation...........................................................................31
C. Allocation of Excess Nonrecourse Liabilities...........................................31
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.4 Tax Allocations...................................................................31
A. In General.............................................................................31
B. Allocations Respecting Section 704(c) Revaluations.....................................31
SECTION 6.5 Other Provisions..................................................................32
A. Other Allocations upon Change in Law...................................................32
B. Consistent Tax Reporting...............................................................32
C. Substantial Economic Effect............................................................32
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS..................................................................32
SECTION 7.1 Management........................................................................32
A. Powers of General Partner..............................................................32
B. No Approval Required for Above Powers..................................................36
C. Reserves...............................................................................36
D. No Obligations to Consider Tax Consequences to Limited Partners........................36
SECTION 7.2 Certificate of Limited Partnership................................................36
SECTION 7.3 Restrictions on General Partner's Authority.......................................37
SECTION 7.4 Responsibility for Expenses.......................................................39
A. No Compensation........................................................................39
B. Responsibility for Partnership Expenses; Reimbursement of the General Partner..........39
C. Responsibility for Organizational or Issuance Expenses.................................39
SECTION 7.5 Other Business of General Partner.................................................40
SECTION 7.6 Contracts with General Partner....................................................40
SECTION 7.7 Indemnification...................................................................41
A. General................................................................................41
B. In Advance of Final Disposition........................................................41
C. No Effect on Other Rights..............................................................41
D. Insurance..............................................................................42
E. Employee Benefit Plans.................................................................42
F. No Personal Liability of Partners......................................................42
G. Interested Transactions................................................................42
H. Binding Effect; Amendments.............................................................42
SECTION 7.8 Liability of Indemnitees..........................................................43
A. General................................................................................43
B. No Obligation to Consider Interests of Limited Partners................................43
C. Performance of General Partner's Duties................................................43
D. Amendments.............................................................................43
E. Duties of General Partner..............................................................43
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 7.9 Other Matters Concerning the General Partner......................................44
A. Reliance on Documents..................................................................44
B. Reliance on Consultants and Advisers...................................................44
C. Action Through Officers and Attorneys..................................................44
D. Actions to Maintain REIT Status or Avoid Taxation of the General Partner...............44
SECTION 7.10 Title to Partnership Assets.......................................................44
SECTION 7.11 Reliance by Third Parties.........................................................45
SECTION 7.12 Treatment of and Limitation on Payments to General Partner........................45
A. Reimbursement and Indemnification Payments.............................................45
B. Limitation on Payments to General Partner..............................................46
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.............................................................47
SECTION 8.1 Limitation of Liability...........................................................47
SECTION 8.2 Management of Business............................................................47
SECTION 8.3 Outside Activities of Limited Partners............................................47
SECTION 8.4 Return of Capital; Priority among Limited Partners................................48
SECTION 8.5 Rights of Limited Partners Relating to the Partnership............................48
A. Copies of Business Records.............................................................48
B. Notification of Adjustment Factor, Etc.................................................49
SECTION 8.6 Redemption Rights of Qualifying Parties...........................................49
A. General................................................................................49
B. General Partner's Assumption of Redemption Obligation..................................49
C. General Partner's Determination Not to Purchase Tendered Units.........................50
D. Limitations Imposed by Charter.........................................................51
E. Additional Provisions Applicable to Redemptions and Purchases
Pursuant to Section 8.6....................................................................51
F. Documents and Information to Be Submitted by Tendering Party...........................52
SECTION 8.7 Partnership Right to Call Limited Partner Interests...............................53
A. Call Right in the Event Outstanding Units of Class Fall Below Ten
Percent of Original Level..................................................................53
B. Call Right Exercisable On or After January 1, 2003 or Following
Permitted Repayment of Designated Indebtedness.............................................53
C. Mechanics..............................................................................54
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS.................................................................54
SECTION 9.1 Records and Accounting............................................................54
A. Maintenance of Records.................................................................54
B. Accounting Method......................................................................54
SECTION 9.2 Fiscal Year.......................................................................54
SECTION 9.3 Reports...........................................................................55
A. Annual Reports.........................................................................55
B. Quarterly Reports......................................................................55
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ARTICLE 10 TAX MATTERS............................................................................................55
SECTION 10.1 Preparation of Tax Returns........................................................55
SECTION 10.2 Tax Elections.....................................................................55
SECTION 10.3 Tax Matters Partner...............................................................56
A. General.................................................................................56
B. Authority of Tax Matters Partner........................................................56
SECTION 10.4 Withholding.......................................................................57
SECTION 10.5 Electing Large Partnership........................................................58
SECTION 10.6 Organization Expenses.............................................................58
ARTICLE 11 TRANSFERS AND WITHDRAWALS..............................................................................59
SECTION 11.1 Transfer..........................................................................59
SECTION 11.2 Transfer of General Partner's Partnership Interest................................59
SECTION 11.3 Limited Partners' Rights to Transfer..............................................59
A. General.................................................................................59
B. Transfer Restrictions Applicable Except in the Case of Permitted
Transfers...................................................................................60
C. Generally Applicable Restrictions on Transfers and Other
Dispositions (Including Redemptions and Sales to the General Partner).......................61
D. Assumption of Obligations................................................................62
E. Incapacity..............................................................................63
SECTION 11.4 Substituted Limited Partners......................................................63
A. Consent of General Partner Required.....................................................63
B. Rights and Duties of Substituted Limited Partners.......................................63
C. Amendment of Exhibit A; New Partner Schedule............................................63
SECTION 11.5 Assignees.........................................................................64
SECTION 11.6 General Provisions................................................................64
A. Withdrawal of Limited Partner...........................................................64
B. Transfer of All Partnership Units by Limited Partner....................................64
C. Allocation of Income and Distributions..................................................64
ARTICLE 12 ADMISSION OF PARTNERS..................................................................................65
SECTION 12.1 Admission of Successor General Partner............................................65
SECTION 12.2 Admission of Additional Limited Partners..........................................65
A. General.................................................................................65
B. Consent of General Partner Required.....................................................66
C. Allocation of Income and Distributions..................................................66
SECTION 12.3 Amendment of Agreement and Certificate of Limited
Partnership.....................................................................................66
SECTION 12.4 Admission of Initial Limited Partners.............................................66
SECTION 12.5 Limit on Number of Partners.......................................................67
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ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION...............................................................67
SECTION 13.1 Dissolution.......................................................................67
SECTION 13.2 Winding up........................................................................67
A. General.................................................................................67
B. Where Immediate Sale of Partnership's Assets Impractical................................68
C. Compliance with Timing Requirements of Regulations; Allowance for
Contingent or Unforseen Liabilities or Obligations..........................................69
SECTION 13.3 Deemed Liquidation................................................................69
SECTION 13.4 Rights of Limited Partners........................................................70
SECTION 13.5 Notice of Dissolution.............................................................70
SECTION 13.6 Cancellation of Certificate of Limited Partnership................................70
SECTION 13.7 Reasonable Time for Winding-up....................................................70
ARTICLE 14 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS;
AMENDMENTS; MEETINGS.....................................................................................71
SECTION 14.1 Procedures for Actions and Consents of Partners...................................71
SECTION 14.2 Amendments........................................................................71
SECTION 14.3 Meetings of the Partners..........................................................71
A. General.................................................................................71
B. Action by Written Consent...............................................................71
C. Proxies.................................................................................72
D. Conduct of Meeting......................................................................72
ARTICLE 15 GENERAL PROVISIONS.....................................................................................72
SECTION 15.1 Addresses and Notice..............................................................72
SECTION 15.2 Titles and Captions...............................................................72
SECTION 15.3 Pronouns and Plurals..............................................................73
SECTION 15.4 Further Action....................................................................73
SECTION 15.5 Binding Effect....................................................................73
SECTION 15.6 Waiver............................................................................73
SECTION 15.7 Counterparts......................................................................74
SECTION 15.8 Applicable Law....................................................................74
SECTION 15.9 Entire Agreement..................................................................74
SECTION 15.10 Invalidity of Provisions..........................................................74
SECTION 15.11 No Partition......................................................................74
SECTION 15.12 No Third-Party Rights Created Hereby..............................................75
</TABLE>
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AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
KOGER-VANGUARD PARTNERS, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
KOGER-VANGUARD PARTNERS, L.P., dated as of October 22, 1998 (the "Effective
Date"), is entered into by and among Koger Equity, Inc., a Florida corporation,
as the General Partner, and the Persons whose names are set forth on Exhibit A
attached hereto, as the Limited Partners.
ARTICLE 1
DEFINED TERMS
The following definitions shall be applied to the terms used in this
Agreement for all purposes, unless otherwise clearly indicated to the contrary.
"Accrual Period" has the meaning specified in Section 5.1.
"Accrued and Unpaid Preferred Return Amount" means (i) in respect of
one or more Tendered Units exchanged exclusively for cash pursuant to Section
8.6.A, 8.6.B or 8.6.C, the excess of (a) the aggregate Preferred Return Per
Unit accrued in respect of such Tendered Units from the issuance of such Units
through the Specified Redemption Date over (b) the aggregate amount
distributed, or to be distributed, in respect of such Tendered Units pursuant
to Section 5.1.A from the issuance of such Units through the later of (w) the
Specified Redemption Date or (x) if the distributions to be made pursuant to
Section 5.1 to the Partners of record as of the last Partnership Record Date to
fall prior to the Specified Redemption Date have not been made on or prior to
such Specified Redemption Date, but are to be made following such date, the
date on which such distributions are to be made, and (ii) in respect of one or
more Tendered Units exchanged for REIT Shares (determined without regard to
whether the Accrued and Unpaid Preferred Return Amount of such Tendered Units
is paid for in cash or REIT Shares), the excess of (a) the aggregate Preferred
Return Per Unit accrued in respect of such Tendered Units from the issuance of
such Units through the last Partnership Record Date to fall prior to the
Specified Redemption Date over (b) the aggregate amount distributed, or to be
distributed, in respect of such Tendered Units pursuant to Section 5.1.A from
the issuance of such Units through the later of (y) the Specified Redemption
Date or (z) if the distributions to be made pursuant to Section 5.1 to the
Partners of record as of the last Partnership Record Date to fall prior to the
Specified Redemption Date have not been made on or prior to such Specified
Redemption Date, but are to be made following such date, the date on which such
distributions are to be made.
"Act" means the Delaware Revised Uniform Limited Partnership Act, C.
6 Del. 17-101, et seq., as it may be amended from time to time, and any
successor to such statute.
<PAGE> 8
"Actions" has the meaning set forth in Section 7.7.A.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2 and
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) increase such Partner's Capital Account balance by any
amounts that such Partner is obligated to restore pursuant to this
Agreement or by operation of law upon liquidation of such Partner's
Partnership Interest or is deemed to be obligated to restore pursuant
to the penultimate sentence of each of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(b) reduce such Partnership's Capital Account 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 Factor" means 1.0; provided, however, that in the event
that the General Partner (i) declares or pays a dividend on its outstanding
REIT Shares in REIT Shares or makes a distribution to all holders of its
outstanding REIT Shares in REIT Shares, (ii) splits or subdivides its
outstanding REIT Shares or (iii) effects a reverse split or otherwise combines
its outstanding REIT Shares into a smaller number of REIT Shares, the
Adjustment Factor shall be adjusted by multiplying the Adjustment Factor
previously in effect by a fraction, (1) the numerator of which shall be the
number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and (2)
the denominator of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on the record date for
such dividend, distribution, split, subdivision, reverse split or combination.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect
to any Person means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
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<PAGE> 9
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Agreement of Limited Partnership of
Koger-Vanguard Partners, L.P., as it may be amended, supplemented or restated
from time to time.
"Applicable Percentage" has the meaning set forth in Section 8.6.B.
"Appraisal" means, with respect to any assets, the written 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 11.5.
"Available Cash" means with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership
from whatever source (excluding the proceeds of any Terminating
Capital Transaction) plus the amount of any reduction (including,
without limitation, a reduction resulting because the General Partner
determines such amounts are no longer necessary) in reserves, working
capital accounts or other cash or similar balances of the Partnership
referred to in clause (b)(iv) below;
(b) less the sum of the following:
(i) all interest, principal and other debt payments
made during such period by the Partnership, but
excluding New Construction Costs paid during such
period which would otherwise fall within this
clause (b)(i);
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such
period, but excluding New Construction Costs paid
during such period which would otherwise fall
within this clause (b)(ii);
(iii) investments in any entity (including loans made to
the entity) to the extent that such investments
are not otherwise described in clauses (b)(i) or
(ii), but excluding New Construction Costs paid
during such period which would otherwise fall
within this clause (b)(iii);
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<PAGE> 10
(iv) the amount of any increase during such period in
reserves, working capital accounts or other cash
or similar balances that the General Partner
determines is necessary or appropriate to meet the
needs of the Partnership in its sole and absolute
discretion, but excluding any increase in
reserves, working capital accounts or other cash
or similar balances for New Construction Costs
made during such period which would otherwise fall
within this clause (b)(iv);
(v) the lesser of (A) New Construction Costs paid
during such period and (B) that amount equal to
the excess of (x) that amount equal to the
difference between (I) the amount determined
pursuant to clause (a) above for such period minus
(II) the sum of the amounts determined pursuant to
clauses (b)(i) through b(iv) for such period, over
(y) the aggregate amount of accrued and unpaid
Preferred Return Per Unit for all Partnership
Units outstanding as of the end of such period;
provided, however, that in no event shall the
amount determined pursuant to this clause (b)(v)
be less than zero (0).
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, working capital accounts or other cash or
similar balances, or take into account any disbursements made or reserves
established, after dissolution and the commencement of the winding up 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 or Jacksonville, Florida are
authorized or required by law to close.
"Capital Account" means, with respect to any Partner, the Capital
Account maintained by the General Partner for such Partner on the Partnership's
books and records in accordance with the following provisions:
(a) To each Partner's Capital Account, there shall be added
(I) such Partner's Capital Contributions and (II) such Partner's share
of Net Income and any items in the nature of income or gain that are
specially allocated pursuant to Section 6.3.
(b) From each Partner's Capital Account, there shall be
subtracted (I) the amount of cash and the Gross Asset Value of any
other property distributed to such Partner pursuant to any provision
of this Agreement (net of all liabilities secured by such distributed
property or subject to which the Partner is considered to assume or
take the
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<PAGE> 11
property, pursuant to Code Section 752) and (II) such Partner's share
of Net Losses and any items in the nature of expenses, deductions or
losses that are specially allocated pursuant to Section 6.3.
(c) In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to
the extent that it relates to the Transferred interest.
(d) In determining the principal amount of any liability for
purposes of subsections (a) and (b), there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code
and Regulations.
(e) The 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.
"Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any Contributed Property that
such Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or 4.4
(net of all liabilities secured by such property or subject to which the
Partnership is considered to assume or take the property, pursuant to Code
Section 752).
"Cash Amount" means an amount of cash equal to the product of (i) the
Value of a REIT Share and (ii) the REIT Shares Amount, determined as of the
applicable Valuation Date.
"Certificate" means the Certificate of Limited Partnership of the
Partnership filed in the office of the Secretary of State of the State of
Delaware on March 10, 1998, as amended from time to time in accordance with the
terms of this Agreement and the Act.
"Charter" means the Amended and Restated Articles of Incorporation of
the General Partner filed with the Secretary of State of the State of Florida
on May 19, 1994, as amended, supplemented or restated from time to time.
"Class" shall mean a group of Partnership Units issued to Limited
Partners, all of which are issued in the same transaction or a series of
related transactions and have the same terms and conditions. Each separate
Class of Partnership Units may be given a designation, such as "Class A",
"Class B", "Class C", etc.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference in this Agreement to a
specific section or sections of the Code shall be deemed to include a reference
to any corresponding provision of future law.
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"Consent" means the consent to, approval of, or vote in favor of a
proposed action by a Partner given in accordance with Article 14.
"Consent of the Limited Partners" means the Consent of Ninety-Six
Percent 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, except as otherwise provided in this Agreement, may be given or withheld
by a Ninety-Six Percent in Interest of the Limited Partners in their sole and
absolute discretion.
"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.
"Cut-Off Date" means the thirtieth (30th) calendar day (or, if such
day is not a Business Day, then the next following Business Day) after the
General Partner's receipt of a Notice of Redemption.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such
Person that, in accordance with generally accepted accounting principles,
should be capitalized.
"Declination" has the meaning set forth in Section 8.6.C.
"Depreciation" means, for each Fiscal Year or other applicable period,
an amount equal to the federal income tax 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 period, "Depreciation" shall be in an amount that 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 asset for such year or period is zero, "Depreciation" shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the General Partner.
"Designated Indebtedness" means, (i) as to any Limited Partner (other
than a Substituted Limited Partner), (A) indebtedness which is secured by a
Designated Property contributed by such Partner and which is designated as
"Designated Indebtedness" on the Partner Schedule for
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<PAGE> 13
the contributing Partner and (B) any indebtedness incurred by the Partnership
in a first or subsequent refinancing of the original Designated Indebtedness to
the extent that such subsequent indebtedness is secured by property that is
Designated Property of such Limited Partner and (ii) as to any Substituted
Limited Partner or Assignee, (C) indebtedness which is secured by a Designated
Property contributed by a prior holder of the Partnership Units held by such
Substituted Limited Partner or Assignee and which was designated as "Designated
Indebtedness" on the Partner Schedule for such original holder, if (and only
if) the federal income tax basis of the Substituted Limited Partner or Assignee
in his Partnership Units is determined, directly or indirectly, by reference to
the federal income tax basis of such original holder in such Units and (D) any
indebtedness incurred by the Partnership in a first or subsequent refinancing
of the original Designated Indebtedness to the extent such indebtedness is
secured by property that is Designated Property of such Substituted Limited
Partner or Assignee.
"Designated Party" means as to any Limited Partner, a Person
designated as such on such Limited Partner's Partner Schedule then in effect.
"Designated Property" means (i) as to any Limited Partner (other than
a Substituted Limited Partner), (A) real property contributed to the
Partnership by such Partner (whether individually or together with other
Partners) in exchange for Partnership Units and designated as "Designated
Property" on the Partner Schedule for such Partner and (B) any property
subsequently acquired by the Partnership the federal income tax basis of which
is determined, directly or indirectly, by reference to the federal income tax
basis of such originally contributed Designated Property and (ii) as to any
Substituted Limited Partner or Assignee, (C) real property contributed (whether
individually or together with other Partners) to the Partnership by any prior
holder of the Partnership Units held by such Substituted Limited Partner or
Assignee and designated as "Designated Property" on the Partner Schedule for
such original holder, if (and only if) the federal income tax basis of the
Substituted Limited Partner or Assignee in his Partnership Units is determined,
directly or indirectly, by reference to the federal income tax basis of such
original holder in such Units and (D) any property subsequently acquired by the
Partnership the federal income tax basis of which is determined, directly or
indirectly, by reference to the federal income tax basis of the Designated
Property contributed by the original holder.
"Effective Date" has the meaning set forth in the preamble to this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Dissolution" has the meaning set forth in Section 13.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Fiscal Year" means the fiscal year of the Partnership, which shall be
the calendar year.
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<PAGE> 14
"General Partner" means Koger Equity, Inc., a Florida corporation, and
its successors and assigns, in their capacities as general partner of the
Partnership.
"General Partner Interest" means the Partnership Interest held by the
General Partner, which Partnership Interest is an interest as a general partner
under the Act. A General Partner Interest may be expressed as a number of
Partnership Units.
"GP Payment" has the meaning specified in Section 7.12.B.
"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 Limited Partner to the Partnership shall be its gross fair market
value, as set forth on the Partner Schedule with respect to such
Limited Partner.
(b) The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such
asset on the date of distribution as determined by the distributee and
the General Partner, provided that, if the distributee is the General
Partner or if the distributee and the General Partner cannot agree on
such a determination, such gross fair market value shall be determined
by Appraisal.
(c) 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 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).
(d) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subsection (a) or subsection (c)
above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations promulgated thereunder.
"Incapacity" or "Incapacitated" means, (i) as to any Partner or
Assignee who is an individual, death, total physical disability, as reasonably
determined by the General Partner, or entry by a court of competent
jurisdiction adjudicating such Partner or Assignee incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation,
the filing of a certificate of dissolution, or its equivalent, for the
corporation or the revocation of its charter; (iii) as to any Partner that is a
partnership or limited liability company, the dissolution and commencement of
winding up of the partnership or limited liability company; (iv) as to any
Partner that is an estate, the distribution by the fiduciary of the estate's
entire interest in the
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<PAGE> 15
Partnership; (v) as to any trustee of a trust that 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 of or against such Partner 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 involuntary proceeding seeking liquidation, reorganization
or other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after its commencement, (g) the appointment without the Partner's consent or
acquiescence of a trustee, receiver or liquidator has not been vacated or
stayed within ninety (90) days of such appointment, or (h) an appointment
referred to in clause (g) above is not vacated within ninety (90) days after
the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of its status as (A) the General Partner or (B) a director of the
General Partner or an officer or employee 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 (whether before or after the event giving rise to potential liability), in
its sole and absolute discretion.
"Initial Limited Partner" means each of 77 Center Investors Limited
Partnership and 77 Center Investors II Limited Partnership, each a North
Carolina partnership.
"IRS" means the Internal Revenue Service.
"Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached to this Agreement, as such Exhibit A 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 Partner Interest" means a Partnership Interest of a Limited
Partner representing a fractional part of the Partnership Interests of all
Limited Partners and including any and all benefits to which the holder of such
a Partnership Interest may be entitled as provided in this Agreement and the
Limited Partner's Partner Schedule, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. A Limited
Partner Interest may be expressed as a number of Partnership Units. Partnership
Units issued to Limited Partners in the same transaction or a series of related
transactions and having the same terms and
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<PAGE> 16
conditions may be treated as a Class of Partnership Units separate from all
other Partnership Units and may be given a designation, such as "Class A",
"Class B", "Class C", etc.
"Liquidator" has the meaning set forth in Section 13.2.A.
"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 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 (or subtracted from, as the case may be)
such taxable income (or loss);
(b) Any expenditure of the Partnership described in Code
Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B)
expenditure 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 (or added to, as the case may be) such taxable income
(or loss);
(c) In the event that the Gross Asset Value of any
Partnership asset is adjusted pursuant to subsection (b) 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;
(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) To the extent that an adjustment to the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or
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
(f) Notwithstanding any other provision of this definition of
"Net Income" or "Net Loss," any item that is specially allocated
pursuant to Section 6.3 (including but not limited to Depreciation
specifically allocated under Section 6.3.B hereof) shall not be taken
into account in computing Net Income or Net Loss. The amounts of the
items of
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Partnership income, gain, loss or deduction available to be specially
allocated pursuant to Section 6.3 shall be determined by applying
rules analogous to those set forth in this definition of "Net Income"
or "Net Loss."
"New Construction Costs" shall mean all costs of construction
(including debt service and tenant installation and tenant inducement costs) of
any new buildings or new improvements constructed on any undeveloped portion of
any Designated Property and all operating shortfalls relating to any such new
buildings and new improvements as were completed no more than one year prior to
the incurrence of the operating shortfall.
"Ninety-Six Percent in Interest" of the Limited Partners, or of a
group thereof, means those Limited Partners (other than any Limited Partner
fifty percent (50%) or more of whose equity is owned, directly or indirectly,
by the General Partner) holding in the aggregate at least ninety-six percent
(96%) of the aggregate Partnership Units of all Limited Partners, or such group
of Limited Partners, (other than any Limited Partner fifty percent (50%) or
more of whose equity is owned, directly or indirectly, by the General Partner).
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Fiscal
Year shall be determined in accordance with the rules of Regulations Section
1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially in
the form of Exhibit B attached to this Agreement.
"Ownership Limit" means the applicable restriction on ownership of
shares of the General Partner imposed under the Charter.
"Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations
Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a
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Partner Nonrecourse Debt for a Fiscal Year shall be determined in accordance
with the rules of Regulations Section 1.704-2(i)(2).
"Partner Schedule" means a schedule, substantially in the form
attached hereto as Exhibit C and executed by the General Partner and a Limited
Partner that acquires a Limited Partner Interest, that sets forth, among other
things, (a) the Gross Asset Values, as determined by the General Partner and
agreed to by the contributing Limited Partner, for any Contributed Properties
contributed by such contributing Limited Partner (or, in the case of a
Substituted Limited Partner, such Partner's predecessor in interest), (b) the
amount of Debt secured by such Contributed Property, (c) the number of
Partnership Units issued or transferred to such Limited Partner and (d) the
Preferred Return Per Unit.
"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, and any successor to such limited partnership.
"Partnership Interest" means an ownership interest in the Partnership
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 Partnership Interest may be expressed as a number of Partnership
Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Fiscal Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1.
"Partnership Unit" means a fractional share of the Partnership
Interest of a Partner issued pursuant to Section 4.1, 4.2 or 4.4, provided,
however, that Partnership Units representing the General Partner Interest and
the various Classes of Limited Partner Interests shall have differences in
rights and privileges as specified in this Agreement and the relevant Partner
Schedules. The ownership of Partnership Units may (but need not, in the sole
and absolute discretion of the General Partner) be evidenced by the form of
certificate for Partnership Units attached hereto as Exhibit D.
"Permitted Repayment Date" means with respect to a Designated
Indebtedness, the earlier of (i)(A) if the Designated Indebtedness is secured
by Designated Property contributed to the Partnership in exchange for
Partnership Units by one or more Limited Partners, the date specified as the
Permitted Repayment Date for such Designated Indebtedness in the Partner
Schedule(s) of the Partner(s) that contributed, directly or indirectly, such
underlying property and (B) if the Designated Indebtedness was incurred by the
Partnership in a first or subsequent refinancing of
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such original Designated Indebtedness, the date specified as the Permitted
Repayment Date for the original Designated Indebtedness in the Partner
Schedule(s) of the Limited Partners that contributed, directly or indirectly,
the property underlying the original Designated Indebtedness and (ii) the
earliest date on which none of the Limited Partners or Assignees for which the
indebtedness is Designated Indebtedness continue to hold any Partnership Units.
"Permitted Sale Date" means with respect to a Designated Property, the
earlier of (i)(A) if the Designated Property was contributed to the Partnership
in exchange for Partnership Units by one or more Limited Partners, any date on
or after the date specified as the Permitted Sale Date for such Designated
Property in the Partner Schedule(s) of the Partner(s) that contributed,
directly on indirectly, such property, provided, that, the Permitted Sale Date
for Designated Property contributed by more than one Partner shall be the same
for each Partner and (B) if the Designated Property was acquired by the
Partnership, through one or a series of transactions, in exchange for
Designated Property originally contributed to the Partnership by one or more
Limited Partner(s), any date on or after the date specified as the Permitted
Sale Date for such originally contributed Designated Property in the Partner
Schedule(s) of the original contributing Partner(s), and (ii) the earliest date
on which none of the Limited Partners or Assignees for which the Property is a
Designated Property continues to hold any Partnership Units.
"Permitted Tender Date" means for a Limited Partner, the date
specified as the "Permitted Tender Date" in the Partnership Schedule of such
Limited Partner, and for an Assignee, the date specified as the "Permitted
Tender Date" in the Partnership Schedule of the Limited Partner the Partnership
Units of which were Transferred, in one or a succession of Transfers, to such
Assignee.
"Permitted Transfer" has the meaning set forth in Section 11.3.A.
"Person" means an individual or a corporation, partnership, trust,
estate, unincorporated organization, association, limited liability company or
other entity.
"Preferred Return Per Unit" means as to a Limited Partner or an
Assignee, the amount specified on the Partner Schedule of such Limited Partner
(or in the case of an Assignee, the Partner Schedule of the Limited Partner
whose Partnership Units were transferred to such Assignee, whether directly or
by another Assignee) as the Preferred Return Per Unit for such Limited Partner,
which amount is distributable quarterly from Available Cash as provided in
Section 5.1. The Preferred Return Per Unit need not be the same amount for each
Limited Partner or Assignee or with respect to each Partnership Unit.
"Properties" means any assets and property of the Partnership such as,
but not limited to, interests in real property and personal property,
including, without limitation, fee interests, interests in ground leases,
interests in limited liability companies, joint ventures or partnerships,
interests in mortgages, and Debt instruments as the Partnership may hold from
time to time.
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"Purchase Consideration" has the meaning specified in Section 8.6.B.
"Qualified Descendant" means as to any Limited Partner who is an
individual, any one of those Persons listed as Qualified Descendants on such
Limited Partner's Partner Schedule then in effect.
"Redemption" has the meaning set forth in Section 8.6.A.
"Redemption Consideration" has the meaning specified in Section 8.6.A.
"Regulations" means the applicable income tax regulations under the
Code, whether such regulations are in proposed, temporary or final form, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Regulatory Allocations" has the meaning set forth in Section
6.3.A(8).
"REIT" means a real estate investment trust qualifying under Code
Section 856.
"REIT Requirements" has the meaning set forth in Section 5.5.
"REIT Share" means a share of the General Partner's Common Stock, par
value $.01 per share.
"REIT Shares Amount" means a number of REIT Shares equal to the
product of (a) the number of Tendered Units and (b) the Adjustment Factor;
provided, however, that, in the event that the General Partner issues to all
holders of REIT Shares rights, options, warrants or convertible or exchangeable
securities entitling the General Partner's shareholders to subscribe for or
purchase REIT Shares, or any other securities or property (collectively, the
"Rights") and such Rights do not expire or lapse prior to the relevant
Specified Redemption Date, then the REIT Shares Amount as of such Specified
Redemption Date shall also include such Rights that a holder of that number of
REIT Shares would be entitled to receive.
"Related Party" means, with respect to any Person, any other Person
whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).
"Required Redemption Percentage" shall have the meaning set forth in
Section 8.6.C.
"Rights" has the meaning set forth in the definition of "REIT Shares
Amount."
"SEC" means the Securities and Exchange Commission.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Southeast Transfer" shall have the meaning set forth in Section
11.3.A.
"Specified Redemption Date" means the fortieth (40th) calendar day
(or, if such day is not a Business Day, the next following Business Day) after
the receipt by the General Partner of a Notice of Redemption; provided,
however, that the Specified Redemption Date, as well as the closing of a
Redemption, or an acquisition of Tendered Units by the General Partner pursuant
to Section 8.6.B, on any Specified Redemption Date, may be deferred for such
time as may reasonably be required to effect compliance with the Securities
Act, the HSR Act, or other applicable laws (including, but not limited to,
state "blue sky" or other securities laws) and the requirements of the American
Stock Exchange, provided that the General Partner shall limit the period of
deferral to no more than the minimum period reasonably required to effect such
compliance.
"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; provided, however, that, with respect to the
Partnership, "Subsidiary" means solely a partnership or limited liability
company (taxed, for federal income tax purposes, as a partnership and not as an
association or publicly traded partnership taxable as a corporation) of which
the Partnership is a member unless the General Partner has received an
unqualified opinion from independent counsel of recognized standing, or a
ruling from the IRS, that the ownership of shares of stock of a corporation or
other entity will not jeopardize the General Partner's status as a REIT, in
which event the term "Subsidiary" shall include the corporation or other entity
which is the subject of such opinion or ruling.
"Substituted Limited Partner" means an Assignee who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4. The term
"Substituted Limited Partner" shall not include any Additional Limited Partner.
"Tax Items" has the meaning set forth in Section 6.4.A.
"Tendered Units" has the meaning set forth in Section 8.6.A.
"Tendering Party" has the meaning set forth in Section 8.6.A.
"Terminating Capital Transaction" means any sale or other disposition
of all or substantially all of the assets of the Partnership or a related
series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.
"Transfer," when used with respect to a Partnership Unit or all or any
portion of a Partnership Interest, means any direct or indirect sale,
assignment, bequest, conveyance, devise,
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gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage,
exchange, transfer or any other disposition or act of alienation, whether
voluntary or involuntary or by operation of law, including, without limitation,
any direct or indirect sale, assignment, bequest, conveyance, devise, gift
(outright or in trust), pledge, encumbrance, or hypothecation, mortgage,
exchange, transfer or other act of alienation or disposition, whether
voluntary, involuntary or by operation of law, of any interest in any Person
holding such Partnership Unit or Partnership Interest; provided, however, that,
when the term is used in Article 11 (except Section 11.3), Transfer does not
include any Redemption of Partnership Units by the Partnership, or acquisition
of Tendered Units from the Limited Partners by the General Partner, pursuant to
Section 8.6 or Section 8.7. The terms "Transferred" and "Transferring", as well
as the term "Transfer" when used as a verb or an adjective, have correlative
meanings.
"Unitholder" means (a) the General Partner, (b) a Limited Partner, or
(c) an Assignee owning one or more Partnership Units that is treated as a
member of the Partnership for federal income tax purposes.
"Valuation Date" means (a) in the case of a tender of Partnership
Units for Redemption, the date of receipt by the General Partner of a Notice of
Redemption or, if such date is not a Business Day, the immediately preceding
Business Day or (b) in any other case, the date specified in this Agreement.
"Value of a REIT Share" means on any Valuation Date with respect to a
REIT Share, the average of the daily market prices for the ten (10) consecutive
trading days immediately preceding the Valuation Date; provided, however, that
in the event that the Partnership exercises its right under Section 8.7.B to
treat all (but not less than all) of the Limited Partners and Assignees as
Tendering Parties who have each delivered a Notice of Redemption pursuant to
Section 8.6 for all of their Partnership Units, then, for purposes of any
Redemption or purchase by the General Partner in connection with the exercise
of such right for which the General Partner elects to pay cash, the words "ten
(10) consecutive trading days" in the foregoing portion of this sentence shall
be replaced with the words "ninety (90) consecutive trading days." The market
price for any such trading day shall be:
(a) if the REIT Shares are listed or admitted to trading on
any securities exchange or the Nasdaq Stock Market's National Market
System, the closing price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked
prices on such day, in either case as reported in the principal
consolidated transaction reporting system,
(b) if the REIT Shares are not listed or admitted to trading
on any securities exchange or the Nasdaq Stock Market's National
Market System, the last reported sale price on such day or, if no sale
takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source
designated by the General Partner, or
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(c) if the REIT Shares are not listed or admitted to trading
on any securities exchange or the Nasdaq Stock Market's National
Market System and no such last reported sale price or closing bid and
asked prices are available, the average of the reported high bid and
low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid
and asked prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not more than
ten (10) days prior to the date in question) for which prices have
been so reported;
provided, however, that, if there are no bid and asked prices reported during
the applicable period prior to the date in question, the Value of a REIT Share
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.
ARTICLE 2
ORGANIZATIONAL MATTERS
Continuation of Partnership.
The General Partner and the Limited Partners hereby agree to continue
the Partnership as a limited partnership pursuant to the provisions of the Act
and upon the terms and subject to the conditions set forth in this Agreement.
Except as expressly provided in this Agreement to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. No Partner has any interest in any
Partnership property, and the Partnership Interest of each Partner shall be
personal property for all purposes.
Name.
The name of the Partnership is "Koger-Vanguard Partners, L.P." The
Partnership's business may be conducted under that name and/or any other name
or names deemed advisable by the General Partner, including the name of the
General Partner or any Affiliate of the General Partner. 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.
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Registered Office and Agent; Principal Office.
The registered office of the Partnership in the State of Delaware is
located at c/o The Corporation Trust Company, 1209 Orange Street, County of New
Castle, Wilmington, Delaware 19801, and the registered agent for service of
process on the Partnership in the State of Delaware at such registered office
is The Corporation Trust Company. The principal office of the Partnership shall
be located at 8880 Freedom Crossing Trail, Jacksonville, Florida 32256, or such
other place as the General Partner may from time to time designate by notice to
the Limited Partners. The Partnership may maintain offices at such other place
or places within or outside the State of Delaware as the General Partner deems
advisable.
Power of Attorney.
A. Scope. Each Limited Partner and each Assignee hereby irrevocably
constitutes and appoints the General Partner, any Liquidator, and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in
each case with full power of substitution, as its true and lawful agent and
attorney-in-fact, with full power and authority in its name, place and stead
to:
(1) execute, swear to, seal, 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, supplements 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 deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments
or documents that the General Partner or the Liquidator deems
appropriate or necessary to reflect the dissolution and liquidation of
the Partnership pursuant to the terms of this Agreement, including,
without limitation, a certificate of cancellation; (d) all conveyances
and other instruments or documents that the General Partner or the
Liquidator deems appropriate or necessary to reflect the distribution
or exchange of assets of the Partnership pursuant to the terms of this
Agreement; and (e) all instruments relating to the admission,
withdrawal, removal or substitution of any Partner pursuant to, or
other events described in, Article 11, 12 or 13 or the Capital
Contribution of any Partner; and
(2) execute, swear to, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner, to evidence or confirm any vote, consent, approval,
agreement or other action that is made or given by the Limited Partner
under this Agreement or is consistent with the terms of this
Agreement.
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<PAGE> 25
Nothing contained in this Section 2.4 shall be construed as authorizing the
General Partner to amend this Agreement except in accordance with Article 14 or
as may be otherwise expressly provided for in this Agreement.
B. Irrevocability. The foregoing power of attorney is hereby declared
to be irrevocable and a special power coupled with an interest, in recognition
of the fact that each of the Limited Partners will be relying upon the power of
the General Partner 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 Limited Partner
or Assignee shall execute and deliver to the General Partner or the Liquidator,
within fifteen (15) days after receipt of the General Partner's or the
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.
Term.
The term of the Partnership commenced as of March 10, 1998, the date
that the Certificate was filed in the office of the Secretary of State of
Delaware in accordance with the Act, and shall continue until December 31, 2097
unless the Partnership is dissolved sooner pursuant to the provisions of
Article 13 or as otherwise provided by law.
ARTICLE 3
PURPOSE
Purpose and Business.
The purpose and nature of the Partnership is to conduct any business,
enterprise or activity permitted by or under the Act, including, without
limitation, (i) owning, constructing, developing and operating office buildings
or other real estate rental properties, (ii) entering into any partnership,
joint venture, business trust arrangement, limited liability company or other
similar arrangement to engage in any business permitted by or under the Act, or
owning interests in any entity engaged in any business permitted by or under
the Act, and (iii) doing anything necessary or incidental to the foregoing;
provided, however, that such businesses, enterprises and activities shall be
limited and conducted in such a manner as to permit the General Partner at all
times to be classified as a REIT, unless the General Partner provides notice to
the Partnership that it intends to cease or has ceased to qualify as a REIT.
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Powers.
The Partnership shall be 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 in this
Agreement and for the protection and benefit of the Partnership; provided that
the Partnership shall not take any action that could, and shall not refrain
from taking any action if failure to take such action could, in the judgment of
the General Partner, in its sole and absolute discretion (i) adversely affect
the ability of the General Partner to continue to qualify as a REIT, (ii)
subject the General Partner to any additional taxes under Code Section 857 or
Code Section 4981 or (iii) violate any law or regulation of any governmental
body or agency having jurisdiction over the General Partner, its securities or
the Partnership, unless such action (or failure to act) shall have been
specifically consented to by the General Partner in writing.
Partnership Only for Purpose Specified.
The Partnership shall be a limited partnership only for the purpose
specified in Section 3.1, and this Agreement shall not be deemed to create a
company, venture or partnership between or among the Partners with respect to
any activities whatsoever other than the activities within the purpose of the
Partnership as specified in Section 3.1. Except as otherwise provided in this
Agreement, no Partner shall have any authority to act for, bind, commit or
assume any obligation or responsibility on behalf of the Partnership, its
properties or any other Partner. No Partner, in its capacity as a Partner under
this Agreement, shall be responsible or liable for any indebtedness or
obligation of another Partner, nor shall the Partnership be responsible or
liable for any indebtedness or obligation of any Partner, incurred either
before or after the execution and delivery of this Agreement by such Partner,
except as to those responsibilities, liabilities, indebtedness or obligations
incurred pursuant to and as limited by the terms of this Agreement and the Act.
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Representations and Warranties by the Limited Partners.
A. Individual Limited Partners. Each Limited Partner that is an
individual (including, without limitation, each Additional Limited Partner and
Substituted Limited Partner as a condition to becoming an Additional Limited
Partner or a Substituted Limited Partner) represents and warrants to the
Partnership, the General Partner and each other Limited Partner that (i) the
consummation of the transactions contemplated by this Agreement to be performed
by such Limited Partner will not result in a breach or violation of, or a
default under, any agreement by which such Limited Partner or any of such
Limited Partner's property is bound, or any statute, regulation, order or other
law to which such Limited Partner is subject, (ii) such Limited Partner is not
a "foreign person" within the meaning of Code Section 1445(f), (iii) such
Limited Partner does not and will not, without the prior written consent of the
General Partner, actually own or constructively own (under the attribution
rules of Code Section 318, as modified by Code Section 856(d)(5)) (a) stock
representing nine and eight-tenths percent (9.8%) or more of the total combined
voting power of all classes of stock entitled to vote, or nine and eight-tenths
percent (9.8%) or more of the total number of shares of all classes of stock,
of any corporation that is a tenant of any of (I) the General Partner, (II) the
Partnership or (III) any partnership, venture or limited liability company of
which the General Partner or the Partnership is a member or (b) an interest of
nine and eight-tenths percent (9.8%) or more in the assets or net profits of
any tenant (other than a corporation) of any of (I) the General Partner, (II)
the Partnership or (III) any partnership, venture or limited liability company
of which the General Partner or the Partnership is a member, and (iv) this
Agreement is binding upon, and enforceable against, such Limited Partner in
accordance with its terms.
B. Limited Partners That Are Entities. Each Limited Partner that is
not an individual (including, without limitation, each Initial Limited Partner,
Additional Limited Partner and Substituted Limited Partner as a condition to
becoming an Initial Limited Partner, Additional Limited Partner or a
Substituted Limited Partner) represents and warrants to the Partnership, the
General Partner and each other Limited Partner that (i) 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
shareholder(s), as the case may be, as required, (ii) the consummation of such
transactions shall not result in a breach or violation of, or a default under,
its partnership or operating agreement, trust agreement, charter or bylaws, as
the case may be, any agreement by which such Limited Partner or any of such
Limited Partner's properties or any of its partners, members, beneficiaries,
trustees or shareholders, as the case may be, is or are bound, or any statute,
regulation, order or other law to which such Limited Partner or any of its
partners, members, trustees, beneficiaries or shareholders, as the case may be,
is or are subject, (iii) such Limited Partner is not a "foreign person" within
the meaning of Code Section 1445(f), (iv) such Limited Partner does not and
will not, without the prior written consent of the General Partner, actually
own or constructively own (under the attribution rules of Code Section 318, as
modified by Code Section 856(d)(5)) (a) stock representing nine and
eight-tenths
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percent (9.8%) or more of the total combined voting power of all classes of
stock entitled to vote, or nine and eight-tenths percent (9.8%) or more of the
total number of shares of all classes of stock, of any corporation that is a
tenant of any of (I) the General Partner, (II) the Partnership or (III) any
partnership, venture or limited liability company of which the General Partner
or the Partnership is a member or (b) an interest of nine and eight-tenths
percent (9.8%) or more in the assets or net profits of any tenant (other than a
corporation) of any of (I) the General Partner, (II) the Partnership or (III)
any partnership, venture or limited liability company of which the General
Partner or the Partnership is a member, and (v) this Agreement is binding upon,
and enforceable against, such Limited Partner in accordance with its terms.
C. Disclosure of Interests Owned. Upon the request of the General
Partner from time to time, each Limited Partner (including, without limitation,
each Initial Limited Partner, Additional Limited Partner and Substituted
Limited Partner) will disclose in writing to the General Partner (i) the amount
of REIT Shares or other shares of capital stock of the General Partner that it
actually owns or constructively owns and (ii) any ownership in the stock,
assets or net profits of any corporation or other entity from which the General
Partner or the Partnership, directly or indirectly, derives rental income from
real property.
D. Securities Law Representations. Each Partner (including, without
limitation, each Initial Limited Partner, Additional Limited Partner and
Substituted Limited Partner as a condition to becoming an Initial Limited
Partner, Additional Limited Partner or Substituted Limited Partner) represents,
warrants and agrees that (i) it is an "accredited investor" as defined in Rule
501 promulgated under the Securities Act, (ii) it has acquired 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, (iii) it has sufficient knowledge and experience in investing in
companies similar to the Partnership so as to be able to evaluate the risks and
merits of its investment in the Partnership, (iv) it has made an investigation
of the Partnership and its business and has had an opportunity to discuss the
Partnership's business, management and financial affairs with the General
Partner, (v) it is able financially to bear the risks of an investment in the
Partnership, (vi) it was not organized for the specific purpose of acquiring
Partnership Units, and (vii) it understands that the Partnership Units issued
to it have not been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements of such
Act, that such Partnership Units must be held indefinitely unless a subsequent
disposition of such Units is registered under the Securities Act or is exempt
from such registration, and that such Partnership Units, if certificated, will
bear a legend to such effect.
E. Survival of Representations and Warranties. The representations and
warranties contained in this Section 3.4 shall survive the execution and
delivery of this Agreement by each Limited Partner (and, in the case of an
Additional Limited Partner or a Substituted Limited Partner, the admission of
such Additional Limited Partner or Substituted Limited Partner as a Limited
Partner in the Partnership) and the dissolution, liquidation and termination of
the Partnership. The General Partner may, in its sole and absolute discretion
on behalf of the Partnership and its Partners, grant waivers and exceptions to
the representations and warranties
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contained in this Section 3.4, but any such waiver or exception must be in
writing, must refer to this Section 3.4.E and must describe with particularity
the representation or warranty as to which such waiver or exception shall
apply.
F. No Reliance. Each Limited Partner, as a condition to becoming a
Limited Partner hereby acknowledges that no representations as to potential
profit, tax consequences of any sort (including, without limitation, the tax
consequences resulting from making a Capital Contribution, being admitted to
the Partnership or being allocated Tax Items), 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, that may have been in any manner submitted to such Limited
Partner shall not constitute a representation or warranty of any kind or
nature, express or implied.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Capital Contributions of the Initial Partners.
At the time of the execution of this Agreement, each Initial Limited
Partner shall make the Capital Contributions set forth in the Partner Schedule
for such Partner, and the General Partner shall make a Capital Contribution in
an amount sufficient to cause the aggregate of the Capital Contributions made
by the General Partner through the date hereof and not previously distributed
to equal the amount shown on Exhibit A attached hereto. Each Limited Partner
shall own Partnership Units in the amount set forth for such Partner in the
Partner Schedule with respect to such Partner, as the same may be amended from
time to time. The General Partner shall initially own Partnership Units in the
amount set forth for the General Partner on Exhibit A attached hereto. Except
as provided in a particular Partner Schedule, by law or in Section 4.3, 4.4,
8.6.C or 10.4, the Partners shall have no obligation or right to make any
additional Capital Contributions or loans to the Partnership.
Additional Limited Partners.
Only with the Consent of the Limited Partners, the General Partner may
admit one or more Additional Limited Partners to the Partnership from time to
time, on such terms and conditions and for such Capital Contributions as may be
established by the General Partner. Capital Contributions by Additional Limited
Partners shall be set forth in one or more Partner Schedules. Each Person
making such a Capital Contribution and executing a Partner Schedule shall be
admitted to the Partnership as an Additional Limited Partner, with such number
of Partnership Units and such Preferred Return Per Unit as may be set forth in
such Partner Schedule.
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Loans by Third Parties.
Subject to Section 7.3.C and any additional restrictions set forth in
the Partner Schedule of any Limited Partner, the Partnership may incur or
assume 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 from any Person, to make
distributions pursuant to Section 5.1, or to effect a Redemption), upon such
terms as the General Partner determines appropriate; provided, however, that
any Debt shall be nonrecourse to the General Partner unless the General Partner
otherwise agrees.
Additional Funding and Capital Contributions.
(4) General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds for
the acquisition or development of additional Properties or for such
other purposes as the General Partner may determine or that property
held by the General Partner should be contributed to the Partnership.
Additional funds required by the Partnership may be raised by the
Partnership, at the election of the General Partner, in any manner
provided in, and in accordance with, the terms of this Section 4.4
or, alternatively, the terms of Section 4.3. Subject to any
restrictions or limitations set forth in the Partner Schedule of any
Limited Partner, additional Capital Contributions of non-cash
property may be made by the General Partner in accordance with
Section 4.4.C. The Limited Partners shall have no obligation to make
further Capital Contributions to the Partnership, except as required
by the Act.
(5) General Partner Loans. The General Partner may loan all or a
portion of any required additional funds to the Partnership on terms
and conditions no less favorable to the Partnership than would be
available to the Partnership from any third party.
(6) Additional Contributions; Additional Limited Partners. The
General Partner on behalf of the Partnership may raise all or any
portion of any required additional funds by making additional Capital
Contributions and/or, with the Consent of the Limited Partners, by
accepting additional Capital Contributions from any other Partners
and/or third parties, and either (a) in the case of Partners
(including the General Partner), increasing the number of such
Partner's Partnership Units or (b) in the case of a third party,
admitting such third party as an Additional Limited Partner pursuant
to Section 4.2 of this Agreement. Additionally, subject to any
restrictions or limitations set forth in the Partner Schedule of any
Limited Partner, the General Partner may contribute non-cash property
to the Partnership in exchange for additional Partnership Units.
Subject to the terms of this Section 4.4 and to the definition of
"Gross Asset Value," the General Partner shall determine in good
faith the amount, terms and conditions of such additional Capital
Contributions; provided, however, that, in the case of an additional
Capital Contribution by the General Partner, the Partnership shall
issue to the General Partner the number of
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Partnership Units determined by dividing (1) the Gross Asset Value of
the additional Capital Contribution by (2) the Value of a REIT Share
determined as of the date of such Capital Contribution.
(7) Additional Contributions Required to be Made by General
Partner. If, at the time that a distribution from Available Cash is
to be made for a calendar quarter to the Unitholders pursuant to
Section 5.1.A, the amount of cash available for distribution is less
than Available Cash, then to the extent (but only to the extent) that
such shortfall is due to the incurrence by the Partnership during
such calendar quarter of New Construction Costs, the General Partner
shall contribute funds to the capital of the Partnership in an amount
equal to the amount of such shortfall as is attributable to the
incurrence of New Construction Costs during such calendar quarter and
shall be issued in exchange therefor a number of Partnership Units
determined by dividing (1) the Gross Asset Value of the additional
Capital Contribution by (2) the Value of a REIT Share determined as
of the day of such Capital Contribution.
No Interest; No Return.
No Partner shall be entitled to interest on its Capital Contribution
or on such Partner's Capital Account. Except as provided herein or by law, no
Partner shall have any right to demand or receive the return of its Capital
Contribution from the Partnership.
No Preemptive Rights.
Except to the extent expressly granted by the General Partner
pursuant to a written agreement, no person shall have any preemptive,
preferential or other similar right with respect to (a) additional Capital
Contributions or loans to the Partnership, or (b) issuance or sale of any
Partnership Units.
ARTICLE 5
DISTRIBUTIONS
Requirement and Characterization of Distributions.
The General Partner shall cause the Partnership to distribute
quarterly all of the Partnership's Available Cash to the Unitholders who are
Unitholders on the Partnership Record Date with respect to such quarter (the
"Accrual Period") as follows:
A. First, to such Unitholders, an amount equal to the
aggregate Preferred Return Per Unit accrued during the current and all
prior Accrual Periods in respect of all Units outstanding as of such
Partnership Record Date and not previously distributed pursuant to
this Section 5.1.A, which amount shall be distributed in proportion to
the Unitholders'
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respective shares, as of such Partnership Record Date, of the
aggregate accrued and unpaid Preferred Return for all such
outstanding Units; and
B. Second, the balance, one hundred percent (100%) to the
General Partner.
The General Partner in its sole and absolute discretion may distribute to the
Unitholders Available Cash in accordance with the foregoing priorities on a
more frequent basis and provide for an appropriate record date. Notwithstanding
anything to the contrary contained herein, in no event may a Unitholder receive
a distribution of Available Cash with respect to a Partnership Unit if such
Unitholder is entitled to receive a distribution from the General Partner with
respect to a REIT Share for which such Partnership Unit has been exchanged.
Distributions in Kind.
No Unitholder has any right 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 Unitholders of Property, and such
Property shall be distributed in such a fashion as to ensure that the fair
market value is distributed and allocated in accordance with Articles 5 and 6.
Amounts Withheld.
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.4 with respect to any allocation, payment
or distribution to any Unitholder shall be treated as amounts paid or
distributed to such Unitholder pursuant to Section 5.1 for all purposes under
this Agreement.
Distributions upon Liquidation.
Notwithstanding the other provisions of this Article 5, net proceeds
from a Terminating Capital Transaction, and any other cash received, or
reductions in reserves, working capital accounts or other cash or similar
balances of the Partnership made, after commencement of the liquidation of the
Partnership, shall be distributed to the Unitholders in accordance with Section
13.2.
REIT Distribution Requirement.
The General Partner shall make such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with the General
Partner's qualification as a REIT, to cause the Partnership to distribute
amounts sufficient to enable the General Partner to pay shareholder dividends
that will (a) satisfy the requirements for qualifying as a REIT under the Code
and Regulations (the "REIT Requirements") and (b) avoid any federal income or
excise tax liability imposed by the Code.
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Restricted Distributions.
Notwithstanding any provision to the contrary contained in this
Agreement, neither the Partnership nor the General Partner, on behalf of the
Partnership, shall make a distribution to any Unitholder on account of its
Partnership Interest or interest in Partnership Units if such distribution
would violate Section 17-607 of the Act or other applicable law.
ARTICLE 6
ALLOCATIONS
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. Except as otherwise provided in this Article 6, and subject to
Sections 11.6.C and 12.2.C, an allocation to a Unitholder 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.
General Allocations.
A. Net Income. Except as otherwise provided in this Article 6 and
subject to Sections 11.6.C and 12.2.C, Net Income for a Fiscal Year shall be
allocated as follows:
(1) First, to the General Partner, to the extent of any negative
balance in its Capital Account (for purposes of this
allocation, the General Partner's share of Partnership
Minimum Gain and Partner Minimum Gain as of the end of the
Fiscal Year shall be added to the balance of its Capital
Account);
(2) Second, to each Limited Partner and Assignee, an amount equal
to the excess, if any, of (a) the aggregate amount of Net
Loss and Depreciation allocated for all prior Fiscal Years
pursuant to Section 6.2.B(4) and Section 6.3.B hereof in
respect of all Partnership Units held by such Limited Partner
or Assignee at any time during the subject Fiscal Year over
(b) the aggregate amount of Net Income allocated for all
prior Fiscal Years pursuant to this Section 6.2.A(2) in
respect of such Partnership Units;
(3) Third, to each Limited Partner and Assignee, an amount equal
to the excess, if any, of (a) the aggregate Preferred Return
Per Unit accrued during all Accrual Periods ending prior to
or in the subject Fiscal Year in respect of all Partnership
Units held by such Limited Partner or Assignee at any time
during the subject Fiscal Year (whether or not actually
distributed) over (b) the aggregate of the amounts allocated
for all prior Fiscal Years pursuant to this Section 6.2.A(3)
in
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respect of such Partnership Units (and not previously
reversed by allocations pursuant to Section 6.2.B(3));
(4) Fourth, to the General Partner, an amount equal to the
excess, if any, of (a) the aggregate amount of Net Loss
allocated to the General Partner pursuant to Section 6.2.B(2)
for all prior Fiscal Years over (b) the aggregate amount of
Net Income allocated to the General Partner pursuant to this
Section 6.2.A(4) for all prior Fiscal Years; and
(5) Fifth, the balance, one hundred percent (100%), to the General
Partner.
B. Net Loss. Except as otherwise provided in this Article 6 and
subject to Sections 11.6.C and 12.2.C, Net Loss for a Fiscal Year shall be
allocated as follows:
(1) First, to the General Partner, an amount equal to the excess,
if any, of (a) the aggregate amount of Net Income allocated
to the General Partner pursuant to Section 6.2.A(5) for all
prior Fiscal Years over (b) the sum of (I) the aggregate
amount of Net Loss allocated to the General Partner pursuant
to this Section 6.2.B(1) for all prior Fiscal Years and (II)
the aggregate amount distributed to the General Partner
pursuant to Section 5.1.B;
(2) Second, to the General Partner, until its Capital Account is
reduced to zero (for purposes of this allocation, the General
Partner's share of Partnership Minimum Gain and Partner
Minimum Gain as of the end of the Fiscal Year shall be added
to the balance of its Capital Account);
(3) Third, to each Limited Partner and Assignee, an amount equal
to the excess, if any, of (a) the aggregate amount of Net
Income allocated for all prior Fiscal Years pursuant to
Section 6.2.A(3) in respect of all Partnership Units held by
such Limited Partner or Assignee at any time during the
subject Fiscal Year over (b) the sum of (I) the aggregate
amount of Net Loss allocated for all prior Fiscal Years
pursuant to this Section 6.2.B(3) in respect of such
Partnership Units and (II) the aggregate amount distributed
in respect of such Partnership Units pursuant to Section
5.1.A;
(4) Fourth, to the Limited Partners and Assignees, in proportion
to their respective Capital Accounts until such Capital
Accounts are reduced to zero (for purposes of this
allocation, each Limited Partner's and Assignee's share of
Partnership Minimum Gain and Partner Minimum Gain as of the
end of the Fiscal Year shall be added to the balance of its
Capital Account); and
(5) Fifth, the balance, one hundred percent (100%), to the General
Partner.
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Additional Allocation Provisions.
Notwithstanding the foregoing provisions of this Article 6:
(8) Regulatory Allocations.
(1) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f), if there is a net decrease in
Partnership Minimum Gain during any Fiscal Year, each Unitholder shall
be specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) in an amount equal to such
Unitholder'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 Unitholder pursuant thereto.
The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
6.3.A(1) is intended to qualify as a "minimum gain chargeback" within
the meaning of Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
(2) Partner Minimum Gain Chargeback. Except as otherwise
provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.A(1),
if there is a net decrease in Partner Minimum Gain attributable to a
Partner Nonrecourse Debt during any Fiscal Year, each Unitholder 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 Unitholder'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, Limited Partner and other Unitholder pursuant
thereto. The items to be allocated shall be determined in accordance
with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 6.3.A(2) is intended to qualify as a "chargeback of partner
nonrecourse debt minimum gain" within the meaning of Regulations
Section 1.704-2(i) and shall be interpreted consistently therewith.
(3) Nonrecourse Deductions and Partner Nonrecourse
Deductions. Any Nonrecourse Deductions for any Fiscal Year shall be
allocated to the General Partner. Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Unitholder(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 Section 1.704-2(i).
(4) Qualified Income Offset. If any Unitholder unexpectedly
receives in any Fiscal Year an adjustment, allocation or distribution
described in Regulations
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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 such Unitholder for such taxable
year (and, if necessary, subsequent taxable years) in an amount and
manner sufficient to eliminate, to the extent required by such
Regulations, the Adjusted Capital Account Deficit of such Unitholder
as quickly as possible, provided that an allocation pursuant to this
Section 6.3.A(4) shall be made if and only to the extent that such
Unitholder would have an Adjusted Capital Account Deficit after all
other allocations provided in this Article 6 have been tentatively
made as if this Section 6.3.A(4) were not in the Agreement. It is
intended that this Section 6.3.A(4) qualify and be construed as a
"qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d) and it shall be interpreted consistently
therewith.
(5) Gross Income Allocation. In the event that any Unitholder
has a deficit Capital Account at the end of any Fiscal Year that is in
excess of the sum of (i) the amount (if any) that such Unitholder is
obligated to restore to the Partnership upon complete liquidation of
such Unitholder's Partnership Interest and (ii) the amount that such
Unitholder is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Unitholder shall be specially allocated items
of Partnership income and gain in the amount of such excess to
eliminate such deficit as quickly as possible, provided that an
allocation pursuant to this Section 6.3.A(5) shall be made if and only
to the extent that such Unitholder would have a deficit Capital
Account in excess of such sum after all other allocations provided in
this Article 6 have been tentatively made as if Sections 6.3.A(4) and
6.3.A(5) were not in the Agreement.
(6) Limitation on Allocation of Net Loss. To the extent that
any allocation of Net Loss or Depreciation would cause or increase an
Adjusted Capital Account Deficit as to any Unitholder, such allocation
of Net Loss shall be reallocated among the other Unitholders in
accordance with their respective Partnership Units, subject to the
limitations of this Section 6.3.A(6).
(7) Section 754 Adjustment. To the extent that an adjustment
to the adjusted tax basis of any Partnership asset pursuant to Code
Section 734(b) or 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 Unitholder in
complete liquidation of its 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 Unitholders in accordance with their
Partnership Units in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Unitholders to whom such
distribution was made in the event that Regulations Section
1.704-1(b)(2)(iv)(m)(4) applies.
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(8) Curative Allocations. The allocations set forth in Sections
6.3.A(1), (2), (3), (4), (5), (6) and (7) (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 Section 6.2, the Regulatory Allocations
shall be taken into account in allocating other items of income, gain,
loss and deduction among the Unitholders so that, to the extent possible
without violating the requirements giving rise to the Regulatory
Allocations, the net amount of such allocations of other items and the
Regulatory Allocations to each Unitholder shall be equal to the net
amount that would have been allocated to each such Unitholder if the
Regulatory Allocations had not occurred. In applying this Section
6.3.A(8), there shall be taken into account future Regulatory Allocations
under Sections 6.3.A(1) and (2) that, although not yet made, are likely
to offset other Regulatory Allocations previously made under Section
6.3.A(3).
(9) Depreciation. To the extent not classified as a Nonrecourse
Deduction and allocated to the General Partner under Section 6.3.A(3)
hereof, Depreciation for each Fiscal Year shall be allocated solely
to the General Partner.
(10) Allocation of Excess Nonrecourse Liabilities. Any "excess
nonrecourse liabilities" of the Partnership, within the meaning of
Regulations Section 1.752-3(a)(3), shall be allocated to the General
Partner and the Limited Partners in proportion to the respective number
of Partnership Units held by each such Partner immediately following the
Capital Contributions made pursuant to Section 4.1 hereof.
Tax Allocations.
(11) In General. Except as otherwise provided in this Section
6.4, for federal income tax purposes, each item of Partnership income,
gain, loss and deduction (collectively, "Tax Items") shall be allocated
among the Unitholders in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Sections
6.2 and 6.3.
(12) Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from
its basis in the hands of the contributing Partner immediately preceding
the date of contribution shall be allocated among the Unitholders for
income tax purposes pursuant to Regulations promulgated under Code
Section 704(c) so as to take into account such variation. The Partnership
shall account for such variation using the "traditional method," as
described in Regulations Section 1.704-3(b).
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Other Provisions.
(13) Other Allocations upon Change in Law. In the event that the
Code or any Regulations require allocations of items of income, gain,
loss, deduction or credit different from those set forth in this
Article 6, the General Partner is hereby authorized to make new
allocations in reliance on the Code and such Regulations, and no such
new allocation shall give rise to any claim or cause of action by any
Partner.
(14) Consistent Tax Reporting. The Partners acknowledge and are
aware of the income tax consequences of the allocations made by this
Article 6 and hereby agree to be bound by the provisions of this Article
6 in reporting their shares of Net Income, Net Losses and other items of
income, gain, loss, deduction and credit for federal, state and local
income tax purposes.
(15) Substantial Economic Effect. It is the intent of the
Partners that the allocations of Net Income and Net Loss under the
Agreement have substantial economic effect (or be consistent with the
Partners' interests in the Partnership in the case of the allocation of
losses attributable to nonrecourse debt) within the meaning of Code
Section 704(b). Article 6 and other relevant provisions of this
Agreement shall be interpreted in a manner consistent with the intent.
In furtherance of the foregoing, the General Partner is hereby directed
to resolve any ambiguity in the provisions of this Agreement in a manner
that will preserve and protect allocations provided for in this Article
6 for federal income tax purposes and, subject to the last sentence
hereof, to adopt such curative provisions to this Article 6 as the
General Partner may deem necessary. Notwithstanding the foregoing, no
Partner shall have the right to require or compel any distribution of
cash or property not authorized or provided for by the provisions of
this Agreement, and the General Partner shall not have the right to
alter any distribution of cash or property provided for by the
provisions of this Agreement on the ground that such action is necessary
to cause the provisions hereof to conform to the Regulations under Code
Section 704(b).
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ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Management.
(16) Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and
affairs of the Partnership are and shall be exclusively vested in the
General Partner, and no Limited Partner shall have any right to
participate in or exercise control or management power over the business
and affairs of the Partnership. Notwithstanding anything in this
Agreement to the contrary, the General Partner may not be removed by the
Limited Partners with or without cause. In addition to the powers now or
hereafter granted to a general partner of a limited partnership under
applicable law or that are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to the
other provisions of this Agreement, including Section 7.3 and the
Partner Schedule of any Limited Partner, shall have full power and
authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set
forth in Section 3.2 and to effectuate the purposes set forth in Section
3.1, including, without limitation:
(1) the making of any expenditures, the lending or borrowing
of money (including, without limitation, making prepayments on loans
and borrowing money to permit the Partnership to make distributions to
its Partners in such amounts as will permit the General Partner (so
long as the General Partner qualifies as a REIT) to avoid the payment
of any federal income tax (including, for this purpose, any excise tax
pursuant to Code Section 4981) and to make distributions to its
shareholders sufficient to permit the General Partner to maintain REIT
status or otherwise to satisfy the REIT Requirements), 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 deed to secure debt, mortgage, deed of trust or
other lien or encumbrance on the Partnership's assets), the incurring
of any obligations that it deems necessary for the conduct of the
activities of the Partnership, and the satisfaction of any such
indebtedness, liabilities or obligations;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other
agencies having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, sale, conveyance, mortgage, pledge,
encumbrance, hypothecation, contribution, transfer, exchange or other
disposition of any assets of the Partnership (including, but not
limited to, the exercise or grant of any conversion, option, privilege
or subscription right or any other right available in connection with
any assets at any time held by the Partnership) or the merger,
consolidation, reorganization or other combination of the Partnership
with or into another entity on such terms as the General Partner deems
proper.
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose and on any terms
that it sees fit, consistent with and subject to the terms of this
Agreement, including, without limitation, the financing of the
operations
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and activities of the General Partner, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other Persons
(including, without limitation, the Partnership's Subsidiaries) and the
repayment of obligations of the Partnership, its Subsidiaries and any
other Person in which it has an equity investment, and the making of
capital contributions to and equity investments in the Partnership's
Subsidiaries, the holding of any real, personal and mixed property of
the Partnership in the name of the Partnership or in the name of a
nominee or trustee (subject to Section 7.10), the creation, by grant or
otherwise, of easements or servitudes, and the performance of any and
all acts necessary or appropriate to the operation of the Partnership
assets including, without limitation, applications for rezoning,
objections to rezoning, constructing, altering, improving, repairing,
renovating, rehabilitating, razing, demolishing or condemning any
improvements or property of the Partnership;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition, replacement or improvement of any Property,
including, without limitation, any Contributed Property, or other
asset of the Partnership or any Subsidiary; provided, however, that
any Contributed Property shall be managed and operated in a manner
generally consistent with similar suburban office properties owned
directly by the General Partner, unless and until demolished or
replaced;
(6) the negotiation, execution and performance of any
contracts, leases, conveyances or other instruments (including with
Affiliates of the Partnership on an arm's-length basis) that the
General Partner considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General
Partner's powers under this Agreement, including contracting with
property managers (including, without limitation, as to any
Contributed Property or other Property, contracting on an arm's-length
basis with the contributing or any other Limited Partner or its
Affiliates, or the General Partner or its Affiliates, for property
management services), contractors, developers, consultants,
accountants, legal counsel, other professional advisors and other
agents and the payment of their expenses and compensation out of the
Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement, the holding, management,
investment and reinvestment of cash and other assets of the
Partnership, and the collection and receipt of revenues, rents and
income of the Partnership;
(8) the selection and dismissal of employees of the
Partnership or the General Partner (including, without limitation,
employees having titles such as "president," "vice president,"
"secretary" and "treasurer"), and the engagement and dismissal of
agents, outside attorneys, accountants, engineers, appraisers,
consultants, contractors and other professionals on behalf of the
Partnership or the General Partner and the determination of their
compensation and other terms of employment or hiring;
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(9) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(10) the formation of, or acquisition of an interest in, and
the contribution of property to, any limited or general partnerships,
limited liability companies, joint ventures, corporations, 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);
(11) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise,
submission to arbitration or any other form of dispute resolution, or
abandonment, of any claim, cause of action, liability, debt or
damages, due or owing to or from the Partnership, the commencement or
defense of suits, legal proceedings, administrative proceedings,
arbitrations or other forms of dispute resolution, and the
representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, and the indemnification of
any Person against liabilities and contingencies to the extent
permitted by law;
(12) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any Subsidiary or any
other Person (including, without limitation, the contribution or loan
of funds by the Partnership to such Persons);
(13) the determination of the fair market value of any
Property distributed in kind using such reasonable method of valuation
as it may adopt;
(14) the enforcement of any rights against any Partner
pursuant to representations, warranties, covenants and indemnities
relating to such Partner's contribution of property or assets to the
Partnership;
(15) 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;
(16) 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;
(17) 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
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in writing necessary or appropriate in the judgment of the General
Partner for the accomplishment of any of the powers of the General
Partner enumerated in this Agreement; and
(18) subject to the terms of Sections 4.2 and 4.4.C, the
issuance of additional Partnership Units, in connection with Capital
Contributions by Additional Limited Partners and additional Capital
Contributions by Partners pursuant to Article 4.
(17) No Approval Required for Above Powers. Each of the Limited
Partners agrees that the General Partner is authorized to execute,
deliver, perform and take the above-mentioned agreements, transactions
and actions on behalf of the Partnership without any further act,
approval or vote of the Partners (except where the consent of one or
more Limited Partners is expressly required by this Agreement). The
execution, delivery or performance by the General Partner or the
Partnership of any agreement, transaction or action 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.
(18) Reserves. At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and maintain
working capital and other reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
(19) No Obligations to Consider Tax Consequences to Limited
Partners. Subject to Section 7.3.C, 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 Limited
Partner of any action taken (or not taken) by it. Subject to Section
7.3.C, the General Partner and the Partnership shall not have liability
to a Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such Limited
Partner in connection with any decision or action of the General Partner
which could affect the tax liability of any Limited Partner, provided
that the General Partner has acted pursuant to its authority under this
Agreement.
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 any other
jurisdiction in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(3), the General Partner shall not be
required, before or after filing, to deliver or mail a copy
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of the Certificate or any amendment thereto to any Limited Partner. The General
Partner shall use all reasonable efforts to cause to be filed such other
certificates or documents as may be reasonable and necessary or appropriate for
the formation, continuation, qualification and operation of a limited
partnership (or a partnership in which the limited partners have limited
liability) in the State of Delaware and any other state, or the District of
Columbia or other jurisdiction in which the Partnership may elect to do
business or own property.
Restrictions on General Partner's Authority.
(20) General. The General Partner shall not, without the prior
Consent of the Limited Partners:
(1) take any action that would make it impossible to carry on
the ordinary business of the Partnership, except as otherwise
permitted by or provided in this Agreement; or
(2) possess Partnership property or assign any rights in
specific Partnership property, for other than a Partnership purpose
except as otherwise provided in this Agreement.
(21) Permitted Amendments. The General Partner shall have the
power, without the Consent of the Limited Partners, to amend this
Agreement as may be required to facilitate or implement any of the
following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the Limited
Partners;
(2) to reflect the admissions, substitutions, terminations or
withdrawals of Partners made in accordance with this Agreement or the
termination of the Partnership in accordance with this Agreement, and
to amend Exhibit A in connection with any such admission,
substitution, termination or withdrawal;
(3) 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 the provisions of this
Agreement;
(4) to satisfy any requirements, conditions or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state governmental agency or contained in federal or state
law;
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(5) to reflect such changes as are reasonably necessary for
the General Partner to maintain its status as a REIT or to satisfy the
REIT Requirements;
(6) to modify the manner in which Capital Accounts are
computed (but only to the extent set forth in the definition of
"Capital Account"); and
(7) to make such changes as are reasonably necessary for the
Partnership to maintain its status as a partnership for federal income
tax purposes.
(22) Actions Requiring the Consent of Ninety-Six Percent in
Interest of Adversely Affected Partners and Assignees. Except as
provided in Section 7.3.B, none of the following actions shall be taken
without the Consent of a Ninety-Six Percent in Interest of those Limited
Partners and Assignees that would be adversely affected by such action:
(1) any action or amendment of this Agreement that would:
(a) alter rights of the Partner or Assignee to receive
distributions pursuant to Article 5, Section
13.2.A(4) or the relevant Partner Schedule, or the
allocations specified in Article 6 (except in any
case as permitted pursuant to Article 4),
(b) alter or modify the Redemption rights, Cash Amount
or REIT Shares Amount as set forth in Section 8.6,
or amend or modify any related definitions, or
(c) amend this Section 7.3.C;
(2) any sale, or other disposition of Property that as to any
Limited Partner(s) or Assignee(s) is a Designated Property,
prior to the Permitted Sale Date for such Property (as
specified in the relevant Partner Schedule(s)), other than in
a transaction that would not cause such Limited Partner(s) or
Assignee(s) to recognize taxable income or gain for federal
income tax purposes by reason of the disposition of such
Property;
(3) the repayment or refinancing of Designated Indebtedness prior
to the Permitted Repayment Date for such Designated
Indebtedness (as specified in the relevant Partner
Schedule(s)), provided that notwithstanding the foregoing,
(x) the Partnership may repay any Designated Indebtedness in
accordance with the schedule of required payments of such
indebtedness or to the extent otherwise required under the
applicable loan documents of such indebtedness, and (y) the
Partnership may repay or refinance any Designated
Indebtedness (I) in the event a casualty or taking occurs in
respect of the Property securing such indebtedness or (II) if
and to the extent that such repayment or such refinancing
would not cause
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any Partner or Assignee for which such indebtedness is
Designated Indebtedness to recognize taxable income or
gain for federal income tax purposes;
(4) the registration of Partnership Units under the Securities
Act or the taking of other steps to facilitate the existence
of a public market for Partnership Units; and
(5) any amendment to clause (b)(v) of the definition of Available
Cash.
Further, no amendment may alter the restrictions on the General Partner's
authority set forth elsewhere in this Section 7.3 without the consent specified
therein. Any such amendment or action consented to by any Partner shall be
effective as to that Partner, notwithstanding the absence of such consent by
any other Partner.
Responsibility for Expenses.
(23) No Compensation. The General Partner shall not be
compensated for its services as general partner of the Partnership
except as provided in this Section 7.4 and elsewhere in this Agreement
(including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled in its capacity as
the General Partner).
(24) Responsibility for Partnership Expenses; Reimbursement of
the General Partner. Subject to Section 7.12 and to the proviso of
Section 7.1.A(5), the Partnership shall be responsible for and shall pay
all expenses relating to the Partnership's ownership of its assets and
the operations of, or for the benefit of, the Partnership (including
without limitation any expenses incurred in connection with winding up
the affairs of and liquidating the Partnership pursuant to Section
13.2), and 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
Partnership's ownership of its assets and the operations of, or for the
benefit of, the Partnership, including, without limitation, the actual
cost of goods, materials and services related to (i) Partnership
operations, (ii) Partnership accounting, (iii) communications with
Partners, (iv) legal services, (v) tax services, (vi) computer services,
(vii) risk management, (viii) mileage and travel expenses and (ix) such
other operational and administrative expenses as are necessary for the
prudent organization and operation of the Partnership. "Actual cost of
goods and materials" means the actual cost to the General Partner or any
of its Affiliates of goods and materials used for or by the Partnership
obtained from entities not affiliated with the General Partner, and
"actual cost of administrative services" means the pro rata cost of
personnel (as if such persons were employees of the Partnership)
providing administrative services to the Partnership. Any reimbursements
pursuant to this Section 7.4.B. shall be in addition to any
reimbursement of the General Partner as a result of indemnification
pursuant to Section 7.7.
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(25) Responsibility for Organizational or Issuance Expenses.
Except as provided in Section 7.12, the Partnership shall be responsible
for and shall pay (or shall reimburse the General Partner for) all
expenses incurred relating to the organization of the Partnership
(including expenses relating to the issuance of Partnership Units), as
well as other costs of capital raising or acquisition incurred by the
Partnership or General Partner with respect to funds or properties
acquired by the Partnership or by the General Partner and immediately
contributed to or agreed at the option of the Partnership to be
contributed to the Partnership, all of which expenses are considered by
the Partners to constitute expenses of, and for the benefit of, the
Partnership.
Other Business of General Partner.
The General Partner may engage independently or with others in other
business ventures of every nature and description, including, without
limitation, the ownership of other properties, the making or management of
other investments and the participation as a partner in other partnerships.
Nothing in this Agreement shall be deemed to prohibit the General Partner or
any employee or Affiliate of the General Partner from dealing with, or
otherwise engaging in business with, Persons transacting business with the
Partnership, or from providing services related to the purchase, sale,
financing, management, development or operation of real or personal property
and receiving compensation therefor. Neither the Partnership nor any Partner
shall have any right by virtue of this Agreement or the Partnership
relationship created hereby in or to such other ventures or activities or to
the income or proceeds derived therefrom, and the pursuit of such ventures,
even if competitive with the business of the Partnership, shall not be deemed
wrongful or improper. Notwithstanding and without limiting the foregoing, the
General Partner may directly or indirectly through an affiliate or subsidiary
in the ordinary course of its business, for its own account or for the account
of others, acquire, own, develop, manage, operate, lease and otherwise deal
with any property including property adjacent to or near the Properties and in
connection therewith the General Partner may actively solicit tenants for such
other property even if such tenants are existing tenants or prospective tenants
of the Properties without violating any duty to the Partners of this
Partnership and without any obligation to make any lease offer to such tenants
with respect to the Properties, any or all of which conflicts (actual or
apparent) and any issues of self dealing or neglect of the General Partner's
fiduciary duty which might otherwise be implicated thereby being knowingly and
expressly waived by all of the Partners of this Partnership.
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Contracts with General Partner.
Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly, or
enter into any agreement, for the provision of services to the Partnership or
otherwise, except pursuant to transactions or agreements that are determined by
the General Partner in good faith to be fair and reasonable and to have terms
that are comparable to or more favorable to the Partnership than those
available from third parties on an arm's-length basis.
Indemnification
(26) General. Except as otherwise provided in Section 7.12, to
the fullest extent permitted by applicable law, the Partnership shall
indemnify each Indemnitee from and against any and all losses, claims,
damages, liabilities, joint or several, expenses (including, without
limitation, attorney's fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, whether civil,
criminal, administrative or investigative, that relate to the operations
of the Partnership ("Actions") as set forth in this Agreement in which
such Indemnitee may be involved, or is threatened to be involved, as a
party or otherwise; provided, however, that the Partnership shall not
indemnify an Indemnitee for willful misconduct, bad faith, or a knowing
violation of the law. Without limitation, the foregoing indemnity shall
extend to any liability of any Indemnitee, pursuant to a loan guaranty,
indemnity, or otherwise, for or related to any indebtedness of the
Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the
Partnership, to enter into one or more indemnity agreements consistent
with the provisions of this Section 7.7 in favor of any Indemnitee
having or potentially having liability for any such indebtedness. The
termination of any proceeding by judgment, order or settlement does not
create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of
any proceeding by conviction of an Indemnitee or upon a plea of nolo
contendere or its equivalent by an Indemnitee, or an entry of an order
of probation against an Indemnitee prior to judgment, does not create a
presumption that such Indemnitee acted in a manner contrary to that
specified in this Section 7.7.A with respect to the subject matter of
such proceeding. Any indemnification pursuant to this Section 7.7 shall
be made only out of the assets of the Partnership, and neither the
General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds
to enable the Partnership to fund its obligations under this Section
7.7.
(27) In Advance of Final Disposition. Except as otherwise
provided in Section 7.12, to the fullest extent permitted by law,
expenses incurred by an Indemnitee
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who is a party to a proceeding or otherwise subject to or the focus of
or is involved in any Action may be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final
disposition of the Action upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith
belief that the standard of conduct necessary for indemnification by the
Partnership as authorized in Section 7.7.A has been met, and (ii) a
written undertaking by or on behalf of the Indemnitee to repay the
amount if it shall ultimately be determined that the standard of conduct
was not met.
(28) No Effect on Other Rights. The indemnification provided by
this Section 7.7 shall be in addition to any other rights to which an
Indemnitee or any other Person may be entitled under any agreement,
pursuant to any vote of the Partners, as a matter of law or otherwise,
and shall continue as to an Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors,
assigns and administrators of the Indemnitee unless otherwise provided
in a written agreement with such Indemnitee or in a writing pursuant to
which such Indemnitee is indemnified.
(29) Insurance. The Partnership may, but shall not be obligated
to, purchase and maintain insurance, on behalf of any of the Indemnitees
and such other Persons as the General Partner shall in its sole and
absolute discretion 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 or under applicable
law.
(30) Employee Benefit Plans. Any liabilities which an Indemnitee
incurs as a result of acting on behalf of the Partnership or, to the
extent such actions relate to the Partnership or persons performing
services for the Partnership, the General Partner (whether as a
fiduciary or otherwise) in connection with the operation, administration
or maintenance of an employee benefit plan or any related trust or
funding mechanism (whether such liabilities are in the form of excise
taxes assessed by the IRS, penalties assessed by the Department of
Labor, restitutions to such a plan or trust or other funding mechanism
or to a participant or beneficiary of such plan, trust or other funding
mechanism, or otherwise) shall be treated as liabilities or judgments or
fines under this Section 7.7, unless such liabilities arise as a result
of such Indemnitee's willful misconduct, bad faith, or a knowing
violation of the law.
(31) No Personal Liability of Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason
of the indemnification provisions set forth in this Agreement.
(32) Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an
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interest in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of this
Agreement.
(33) Binding Effect; Amendments. The provisions of this Section
7.7 are for the benefit of the Indemnitees, their heirs, successors,
assigns and administrators and shall not be deemed to create any rights
for the benefit of any other Persons. Any amendment, modification or
repeal of this Section 7.7 or any provision hereof shall be prospective
only and shall not in any way affect the rights of an Indemnitee under
this Section 7.7 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
Liability of Indemnitees.
(34) General. Notwithstanding anything to the contrary set forth
in this Agreement, no Indemnitee 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 of any act or
omission, except in the case of willful misconduct, bad faith, or a
knowing violation of the law by such Indemnitee.
(35) No Obligation to Consider Interests of Limited Partners. The
Limited Partners expressly acknowledge that the General Partner is
acting for the benefit of the Partnership and the General Partner's
shareholders and the Limited Partners collectively, and that the General
Partner is under no obligation, subject to the General Partner's
obligations under Section 7.3.C, to give priority to the separate
interests of the Limited Partners (including, without limitation, the
tax consequences to Limited Partners or Assignees) in deciding whether
to cause the Partnership to take (or decline to take) any actions,
including, except to the extent expressly provided in Section 7.3.C(2),
the disposition of Properties of the Partnership, and that the General
Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in
connection with such decisions, provided that the General Partner does
not violate the terms of any written agreement between the Partnership
and one or more Limited Partners.
(36) Performance of General Partner's Duties. Subject to its
obligations and duties as General Partner set forth in Section 7.1.A,
the General Partner may exercise any of the powers granted to it by this
Agreement and perform any of the duties imposed upon it under this
Agreement either directly or indirectly or by or through its employees
or agents. The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed and
supervised by it in good faith.
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(37) Amendments. Any amendment, modification or repeal of this
Section 7.8 or any provision hereof shall be prospective only and shall
not in any way affect the limitations on any Indemnitee's liability to
the Partnership and the Limited Partners under this Section 7.8 as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
(38) Duties of General Partner. To the extent that, at law or in
equity, the General Partner has duties (including fiduciary duties) and
liabilities relating thereto to the Partnership or the Limited Partners,
the General Partner shall not be liable to the Partnership or to any
other Partner for its good faith reliance on the provisions of this
Agreement.
Other Matters Concerning the General Partner.
(39) Reliance on Documents. The General Partner may rely and
shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, debenture or other paper or document
believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties.
(40) Reliance on Consultants and Advisers. The General Partner
may consult with legal counsel, accountants, appraisers, management
consultants, investment bankers, architects, engineers, environmental
consultants and other consultants and advisers selected by it, and any
act taken or omitted to be taken in reliance in good faith upon the
opinion of such Persons as to matters that the General Partner
reasonably believes to be within such Person's professional or expert
competence shall be conclusively presumed to have been done or omitted
in good faith and in accordance with such opinion.
(41) Action Through Officers and Attorneys. The General Partner
shall have the right, in respect of any of its powers or obligations
under this Agreement, 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 that is permitted or required to be done by the General
Partner under this Agreement.
(42) Actions to Maintain REIT Status or Avoid Taxation of the
General Partner. Notwithstanding any other provisions of this Agreement
or the Act, but subject to the limitations set forth in Section 7.3.C,
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
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necessary or advisable in order (i) to protect the ability of the
General Partner to continue to qualify as a REIT, (ii) for the General
Partner otherwise to satisfy the REIT Requirements or (iii) to avoid the
General Partner incurring any taxes under Code Section 857 or Code
Section 4981, is expressly authorized under this Agreement and is deemed
approved by all of the Limited Partners.
Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively with other Partners
or Persons, shall have any ownership interest in such Partnership assets or any
portion thereof. Title to any or all of the Partnership assets may be held in
the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby declares and warrants that any Partnership assets
for which legal title is held in the name of the General Partner or any nominee
or Affiliate of the General Partner shall be held by the General Partner 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.
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Reliance by Third Parties.
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without the consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership and to enter into any contracts on behalf of
the Partnership, and take any and all actions on behalf of the Partnership
unless and until such Person shall be notified in writing that the General
Partner does not have such authority under the Agreement, and, unless and until
such Person shall have been so notified, 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 that may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any action taken by such Person prior to the receipt by such Person of
written notice that the General Partner did not have the requisite authority to
authorize such action. 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
expediency 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, unless and until such Person shall be notified otherwise
in writing, 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.
Treatment of and Limitation on Payments to General Partner.
(43) Reimbursement and Indemnification Payments. If and to the
extent that any payments to the General Partner pursuant to Section 7.4
or 7.7 would constitute gross income to the General Partner (as opposed
to a repayment of advances made on behalf of the Partnership), those
amounts shall constitute guaranteed payments within the meaning of Code
Section 707(c), and shall be so treated by the Partnership and all
Partners, and shall not be treated as distributions for purposes of
computing the Partners' Capital Accounts.
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(44) Limitation on Payments to General Partner. To the extent
that any amount paid or credited to the General Partner or its officers,
directors, employees or agents pursuant to Section 7.4 or 7.7 would
constitute gross income of the General Partner that is not described in
Code Section 856(c)(2) or 856(c)(3) (a "GP Payment") then,
notwithstanding any other provisions of this Agreement, the amount of
such GP Payment for any fiscal year shall not exceed the lesser of:
(i) an amount equal to the excess, if any, of
(1) four and eight tenths percent (4.8%) of the
General Partner's total gross income (not including
any GP Payments or gross income from prohibited
transactions) for the fiscal year over
(2) the amount of gross income derived by the
General Partner from sources other than those
described in subsections (A) through (H) of Code
Section 856(c)(2), but not including the amount of
any GP Payments or gross income from prohibited
transactions); or
(ii) an amount equal to the excess, if any, of
(1) twenty-four and eight tenths percent (24.8%)
of the General Partner's total gross income (not
including any GP Payments or gross income from
prohibited transactions) for the fiscal year over
(2) the amount of gross income derived by the
General Partner from sources other than those
described in subsections (A) through (I) of Code
Section 856(c)(3) (but not including the amount of
any GP Payments or gross income from prohibited
transactions);
Notwithstanding the foregoing, GP Payments in excess of the amounts set forth
in paragraphs (i) and (ii) may be made if and to the extent that the General
Partner, as a condition precedent, obtains an opinion of tax counsel that the
receipt of such excess amounts would not adversely affect the General Partner's
ability to qualify as a REIT. To the extent that GP Payments may not be made in
a Fiscal Year due to the above limitations, such GP Payments shall carry over
and be treated as arising in the following Fiscal Year(s) (subject again to
limitation as set forth above in those years), for a maximum of seven years
(treating amounts payable as first being paid from the earliest year such
amounts were carried over, and the next succeeding years in chronological
order). If any GP Payment is carried over for such seven-year period and not
paid, such amount shall no longer be an obligation of the Partnership. If a GP
Payment is inadvertently made in an amount in excess of the limitations in this
Section 7.12.B, such excess payments shall be treated as a permitted loan from
the Partnership to the General Partner, to be repaid as soon as practicable
following discovery of the overpayment.
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ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Limitation of Liability.
Except as otherwise provided by the Act, no Limited Partner, in its
capacity as such, shall be obligated for any debt, obligation or other
liability of the Partnership, whether arising in contract, tort or otherwise.
Management of Business.
No Limited Partner or Assignee (other than any of the General
Partner's Affiliates or any officer, director, employee, partner, member,
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, member, 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 under this Agreement.
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Outside Activities of Limited Partners.
Subject to any agreements entered into by a Limited Partner or its
Affiliates with the General Partner, the Partnership or a Subsidiary
(including, without limitation, any employment agreement), any Limited Partner
and any Assignee, and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner may engage independently or
with others in other business ventures of every nature and description,
including, without limitation, the ownership of other properties, the making or
management of other investments and the participation as a partner in other
partnerships. Nothing in this Agreement shall be deemed to prohibit any Limited
Partner or any employee or Affiliate of a Limited Partner from dealing with, or
otherwise engaging in business with, Persons transacting business with the
Partnership, or from providing services related to the purchase, sale,
financing, management, development or operation of real or personal property
and receiving compensation therefor. Neither the Partnership nor any Partner
shall have any right by virtue of this Agreement or the partnership
relationship created hereby in any business ventures or activities of any
Limited Partner or Assignee or to the income or proceeds derived therefrom, and
the pursuit of such ventures, even if competitive with the business of the
Partnership, shall not be deemed wrongful or improper. Subject to such
agreements, none of the Limited Partners nor any other Person shall have any
right by virtue of this Agreement or the partnership relationship established
by this Agreement in any business ventures or activities of any other Person or
to the income or proceeds derived therefrom, and such Person shall have no
obligation pursuant to this Agreement, subject to any agreements entered into
by a Limited Partner or its Affiliates with the General Partner, the
Partnership or a Subsidiary, 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 that, if presented to the Partnership,
any Limited Partner or such other Person, could be taken by such Person.
Return of Capital; Priority among Limited Partners.
Except pursuant to the rights of Redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except to
the extent provided in Article 5, 6, or 13, or as otherwise expressly provided
in this Agreement or a Partner Schedule, no Limited Partner or Assignee shall
have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions.
Rights of Limited Partners Relating to the Partnership.
(45) Copies of Business Records. In addition to other rights
provided by this Agreement or by the Act, and except as limited by
Section 8.5.C, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's interest as a limited
partner in the Partnership, upon written demand with a statement of the
purpose of such demand and at such Limited Partner's own expense:
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(1) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Fiscal Year;
(2) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(3) to obtain a copy of this Agreement and the Certificate
and all amendments hereto and thereto, together with executed copies
of all powers of attorney pursuant to which this Agreement, the
Certificate and all amendments hereto and thereto have been executed;
(4) 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 that each Partner has agreed
to contribute in the future, and the date on which each became a
Partner; and
(5) to obtain a copy of (i) the most recent annual and
quarterly reports filed with the SEC by the General Partner pursuant
to the Exchange Act and (ii) each report or other written
communication sent to the shareholders of the General Partner.
(46) Notification of Adjustment Factor, Etc. On written request,
the Partnership shall notify any Limited Partner of the then current
Adjustment Factor or any change made to the Adjustment Factor or the
REIT Shares Amount or the Preferred Return Per Unit applicable to such
Limited Partner.
(47) Confidential Information. Notwithstanding any other
provision of this Section 8.5, the General Partner may keep confidential
from the Limited Partners, for such period of time as the General
Partner determines in its sole and absolute discretion to be reasonable,
any information with respect to the Partnership that the Partnership or
the General Partner is required by law or by agreements with
unaffiliated third parties to keep confidential.
Redemption Rights of Qualifying Parties.
(48) General. Each Limited Partner and each Assignee shall have
the right, on or after the Permitted Tender Date for such Limited
Partner or Assignee, as the case may be, subject to the terms and
conditions set forth in Sections 8.6 and 11.3.C, to require the
Partnership to redeem all or a portion of the Partnership Units held by
such Limited Partner or Assignee (such Partnership Units being hereafter
called the "Tendered Units") in exchange (a "Redemption") for an amount,
payable on the Specified Redemption Date, equal to the sum of the Cash
Amount and the Accrued and Unpaid Preferred Return Amount (the
"Redemption Consideration"). Any Redemption shall be exercised pursuant
to a Notice of Redemption delivered to the General Partner by the
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Limited Partner or Assignee when exercising the Redemption right (the
"Tendering Party"). The Partnership's obligation to effect a Redemption,
however, shall not arise or be binding against the Partnership before
the first Business Day following the Cut-Off Date. In the event of a
Redemption, an amount equal to the Redemption Consideration shall be
delivered to the Tendering Party in immediately available funds.
(49) General Partner's Assumption of Redemption Obligation.
Notwithstanding the provisions of Section 8.6.A, at or before the close
of business on the Cut-Off Date, the General Partner may, in its sole
and absolute discretion but subject to the Ownership Limit and the
transfer restrictions and other limitations of the Charter, elect to
acquire some or all (such percentage being referred to as the
"Applicable Percentage") of the Tendered Units from the Tendering Party
in exchange for REIT Shares or a payment in immediately available funds.
The General Partner shall make such election by giving written notice to
the Tendering Party at or before the close of business on the Cut-Off
Date of its intention to acquire some or all of the Tendered Units,
which notice shall specify the Applicable Percentage of Tendered Units
to be acquired by the General Partner. If the General Partner so elects,
on the Specified Redemption Date the Tendering Party shall sell such
number of the Tendered Units to the General Partner in exchange for
aggregate consideration (the "Purchase Consideration") comprised of both
(i) either, at the election of the General Partner, (x) a number of REIT
Shares equal to the product of the REIT Shares Amount and the Applicable
Percentage or (y) an amount equal to the product of the Cash Amount and
the Applicable Percentage and (ii) an amount equal to the product of the
Accrued and Unpaid Preferred Return Amount and the Applicable
Percentage, provided that the amount specified in this clause (ii) shall
be paid in immediately available funds unless the General Partner will
issue REIT Shares pursuant to clause (i), in which case the General
Partner may, in its sole discretion, pay the amount specified in this
clause (ii) by delivering a number of REIT Shares equal to the product
of the Accrued and Unpaid Preferred Amount and the Applicable Percentage
divided by the Value of a REIT Share as of the Valuation Date. In the
event of a purchase of the Tendered Units pursuant to this Section
8.6.B, the Tendering Party shall no longer have the right to cause the
Partnership to effect a Redemption of such Tendered Units, and, upon
notice to the Tendering Party by the General Partner, given on or before
the close of business on the Cut-Off Date, that the General Partner has
elected to acquire some or all of the Tendered Units pursuant to this
Section 8.6.B, the obligation of the Partnership to effect a Redemption
of the Tendered Units as to which the General Partner's notice relates
shall not accrue or arise. The cash portion of the Purchase
Consideration, if any, shall be delivered to the Tendering Party in
immediately available funds. The portion of the Purchase Consideration
to be paid in REIT Shares, if any, shall be delivered by the General
Partner as duly authorized, validly issued, fully paid and nonassessable
REIT Shares and, if applicable, Rights, free of any pledge, lien,
encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of the General Partner,
the Securities Act and relevant state securities or "blue sky" laws.
Notwithstanding any delay in the delivery of certificates of any REIT
Shares or Rights,
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the Tendering Party shall be deemed the owner of such REIT Shares and
Rights for all purposes, including, without limitation, rights to vote
or consent, receive dividends, and exercise rights, as of the Specified
Redemption Date. Neither any Tendering Party all or a portion of whose
Tendered Units are acquired by the General Partner pursuant to this
Section 8.6.B, any other Partner, any Assignee nor any other interested
Person shall have any right to require or cause the General Partner to
register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section
8.6.B, with the SEC, with any state securities commissioner, department
or agency, under the Securities Act or the Exchange Act or with any
stock exchange; provided, however, that this limitation shall not be in
derogation of any registration or similar rights granted pursuant to any
other written agreement between the General Partner and any such Person.
REIT Shares issued upon an acquisition of the Tendered Units by the
General Partner pursuant to this Section 8.6.B may contain such legends
regarding restrictions under the Securities Act, applicable state
securities laws and the Charter as the General Partner in good faith
determines to be necessary or advisable in order to ensure compliance
with such laws.
(50) General Partner's Determination Not to Purchase Tendered
Units. In the event that the General Partner declines or fails to
exercise its purchase rights pursuant to Section 8.6.B following receipt
of a Notice of Redemption (such event, a "Declination"): (4)
(1) The General Partner shall give notice of such Declination
to the Tendering Party on or before the close of business on the
Cut-Off Date; provided, that, if the General Partner does not give
either notice of its intention to acquire some or all of the Tendered
Units pursuant to Section 8.6.B or notice of its Declination at or
prior to the close of business on the Cut-Off Date, the General
Partner shall be deemed to have given notice of a Declination.
(2) The Partnership shall be required to redeem from the
Tendering Partner that percentage (the "Required Redemption
Percentage") of the Tendered Units which the General Partner does not
elect to purchase pursuant to Section 8.6.B, in exchange for an
amount, payable in immediately available funds on the Specified
Redemption Date, equal to the product of (i) the Required Redemption
Percentage and (ii) the sum of the Cash Amount and the Accrued and
Unpaid Preferred Return Amount. In the event that the Partnership has
insufficient liquid assets to permit it to effect such Redemption, the
Partnership may elect to raise funds for the payment of the product of
(x) the Required Redemption Percentage and (y) the sum of the Cash
Amount and any Accrued and Unpaid Preferred Return Amount from any
sources available to the Partnership (including, but not limited to,
the sale of any Property and the incurrence of additional Debt,
subject to Section 7.3.C(2) and any restrictions on the sale of
Property or incurrence of additional Debt contained in any Limited
Partner's Partner Schedule); provided, that, the General Partner shall
be required to contribute to the Partnership in
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accordance with Section 4.4 any funds required for such Redemption not
otherwise raised by the Partnership.
(51) Limitations Imposed by Charter. Notwithstanding the
provisions of Section 8.6.B, the General Partner shall not, under any
circumstances, elect to acquire Tendered Units in exchange for REIT
Shares if such exchange would be prohibited under the Charter.
(52) Additional Provisions Applicable to Redemptions and
Purchases Pursuant to Section 8.6. Notwithstanding anything herein to
the contrary, with respect to any Redemption (or any tender of
Partnership Units for Redemption if the Tendered Units are acquired by
the General Partner pursuant to Section 8.6.B) pursuant to this Section
8.6:
(1) All Partnership Units acquired by the General Partner
pursuant to Section 8.6.B shall automatically, and without further
action required, be converted into and deemed to be General Partner
Interests comprised of the same number of Partnership Units.
(2) Subject to the proviso to Section 11.3.C(2), no Tendering
Party may transfer to the Partnership or to the General Partner
pursuant to this Section 8.6 a number of Partnership Units less than
the lesser of (i) the number of whole Partnership Units having a
value, as of the date of the Notice of Redemption, of more than
$250,000 or (ii) all of the remaining Partnership Units owned by such
Tendering Party.
(3) Each Tendering Party may effect a Redemption no more than
four times in each twelve-month period, with the initial twelve-month
period beginning on the Permitted Tender Date for such Tendering Party
and each subsequent twelve-month period beginning on each successive
annual anniversary of such Permitted Tender Date, unless the
restriction contained in this Section 8.6.E(3) is waived by the
General Partner in its sole and absolute discretion.
(4) The consummation of such Redemption (or an acquisition of
Tendered Units by the General Partner pursuant to Section 8.6.B, as
the case may be) shall be subject to compliance with the applicable
requirements, if any, under the HSR Act.
(5) The Tendering Party shall continue to own (subject, in
the case of an Assignee, to the provisions of Section 11.5) all
Partnership Units subject to any Redemption, and be treated as a
Limited Partner or an Assignee, as applicable, with respect such
Partnership Units for all purposes of this Agreement, until such
Partnership Units are either paid for by the Partnership pursuant to
Section 8.6.A or Section 8.6.C or transferred to the General Partner
and paid for, either by the transfer of the REIT Shares and Rights, if
applicable, to the Tendering Party on the books and records of the
General
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Partner or by the delivery of immediately available funds to the
Tendering Party, pursuant to Section 8.6.B, on the Specified Redemption
Date. Until a Specified Redemption Date and an acquisition of the
Tendered Units by the General Partner in exchange for REIT Shares
pursuant to Section 8.6.B, the Tendering Party shall have no rights as
a shareholder of the General Partner with respect to the REIT Shares
issuable in connection with such acquisition.
(53) Documents and Information to Be Submitted by Tendering
Party. In connection with and as a condition to an exercise of
Redemption rights pursuant to this Section 8.6, the Tendering Party
shall submit the following to the General Partner, in addition to the
Notice of Redemption:
(1) A written affidavit, dated the same date as, and
accompanying, the Notice of Redemption, (a) disclosing the actual and
constructive ownership, as determined for purposes of Code Sections
856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and
(ii) any Related Party and (b) representing that, after giving effect
to the Redemption or an acquisition of the Tendered Units by the
General Partner pursuant to Section 8.6.B, neither the Tendering Party
nor any Related Party will own REIT Shares in excess of the Ownership
Limit; provided, however, that if the Tendering Party is unable to
make the representation specified in Section 8.6.F(1)(b) as of the
date of the Notice of Redemption due solely to an amendment to the
Charter made on or after the date of this Agreement (other than an
amendment to the Charter made to ensure compliance of the General
Partner with the requirements of the Code for qualifying for taxation
as a REIT), then the Tendering Party shall notify the General Partner
of its inability to make such representation and, to the extent (but
only to the extent) that an exchange of the Tendered Units for REIT
Shares pursuant to Section 8.6.B would violate the Ownership Limit as
then in effect, but would not have violated the Ownership Limit as in
effect on the date of this Agreement (as reduced by any amendment to
the Charter made to ensure compliance of the General Partner with the
requirements of the Code for qualifying for taxation as a REIT), such
Tendering Party shall be entitled to receive cash in exchange for its
Partnership Units.
(2) An undertaking, dated the same date as, and accompanying,
the Notice of Redemption, to certify, at and as a condition to the
closing of (i) the Redemption or (ii) the acquisition of the Tendered
Units by the General Partner pursuant to Section 8.6.B on the
Specified Redemption Date, that either (a) the actual and constructive
ownership of REIT Shares by the Tendering Party and any Related Party
remain unchanged from that disclosed in the affidavit required by
Section 8.6.F(1) or (b) after giving effect to the Redemption or an
acquisition of the Tendered Units by the General Partner pursuant to
Section 8.6.B, neither the Tendering Party nor any Related Party shall
own REIT Shares in violation of the Ownership Limit; and
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(3) Such written representations, investment letters, legal
opinions or other instruments necessary, in the General Partner's
view, to effect compliance with the Securities Act or the HSR Act.
Partnership Right to Call Limited Partner Interests.
(54) Call Right in the Event Outstanding Units of Class Fall
Below Ten Percent of Original Level. Notwithstanding any other provision
of this Agreement, on any date on which the aggregate outstanding number
of Partnership Units of a particular Class of Partnership Units is less
than ten percent (10%) of the number of Partnership Units of such Class
originally issued, the Partnership shall have the right, but not the
obligation, from time to time and at any time, by notifying in writing
each Limited Partner and Assignee holding Partnership Units of such
Class that the Partnership has elected to exercise its rights under this
Section 8.7.A, to treat the Limited Partners and Assignees holding
Partnership Units of such Class as Tendering Parties who have each
delivered a Notice of Redemption pursuant to Section 8.6 for all of
their respective Partnership Units of such Class.
(55) Call Right Exercisable On or After January 1, 2003 or
Following Permitted Repayment of Designated Indebtedness.
Notwithstanding any other provision of this Agreement, from and after
the earlier of (i) January 1, 2003 or (ii) the repayment of any
indebtedness that is Designated Indebtedness as to any Limited Partner
or Assignee (other than in connection with the refinancing of such
Designated Indebtedness) in a manner consistent with this Agreement, the
Partnership shall have the right, but not the obligation, from time to
time and at any time, by notifying in writing all such Limited Partners
and Assignees that the Partnership has elected to exercise its rights
under this Section 8.7.B, to treat all (but not less than all) of such
Limited Partners and Assignees as Tendering Parties who have each
delivered a Notice of Redemption pursuant to Section 8.6 for all of
their respective Partnership Units.
(56) Mechanics. Notice given by the General Partner to a Limited
Partner or Assignee pursuant to Section 8.7.A or 8.7.B shall be treated
as if it were a Notice of Redemption delivered to the General Partner by
such Limited Partner or Assignee. For purposes of this Section 8.7, (a)
any Limited Partner or Assignee to whom such notice has been given under
Section 8.7.A or 8.7.B shall be treated as a Tendering Party and (b) the
provisions of Sections 8.6.E(2) and 8.6.E(3) shall not apply, but the
remainder of Section 8.6 shall apply with such adjustments as shall be
necessary in the circumstances.
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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Records and Accounting.
(57) Maintenance of Records. 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 8.5.A or 9.3. Any records maintained
by or on behalf of the Partnership in the regular course of its business
may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device,
provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time.
(58) Accounting Method. The books of the Partnership shall be
maintained, for financial reporting purposes, on the same basis as the
books of the General Partner (which, as of the date hereof, is the
accrual basis), or on such other basis as the General Partner determines
to be necessary or appropriate. To the extent permitted by sound
accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles. For federal income tax purposes, the books of
the Partnership shall be maintained on the same basis as the books of
the General Partner (which, as of the date hereof, is the accrual basis)
or on such other basis as the General Partner determines to be necessary
or appropriate.
Fiscal Year.
The Fiscal Year of the Partnership shall be the calendar year.
Reports.
(59) Annual Reports. As soon as practicable, but in no event
later than one hundred five (105) days after the close of each Fiscal
Year, the General Partner shall cause to be mailed to each Limited
Partner, of record as of the close of the Fiscal Year, an annual report
containing the balance sheet of the Partnership as of December 31 of
such Fiscal Year and the related statements of income, cash flows and
Partner's capital for the one-year period ending as of such December 31,
certified by the General Partner, or audited financial statements of the
General Partner for such Fiscal Year if the Partnership's statements are
prepared solely on a consolidated basis with the General Partner.
(60) Quarterly Reports. If the General Partner distributes
quarterly reports to its shareholders, then as soon as practicable, but
in no event later than one hundred five (105) days after the close of
each calendar quarter (except the last calendar quarter of each year),
the General Partner shall cause to be mailed to each Limited Partner, of
record as of the last day of the calendar quarter, a report containing
an unaudited balance sheet of the Partnership as of the end of such
calendar quarter and the related statements of income, cash flows and
Partner's capital for such quarter, or financial statements of the
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General Partner, if the Partnership's financial statements are prepared
solely on a consolidated basis with the General Partner, and such other
information as may be required by applicable law or regulation or as the
General Partner determines to be appropriate.
ARTICLE 10
TAX MATTERS
Preparation of Tax Returns.
The General Partner shall arrange for the preparation and timely
filing of all returns with respect to Partnership income, gains, deductions,
losses and other items required of the Partnership for federal and state income
tax purposes and shall use all reasonable efforts to furnish, within ninety
(90) days of the close of each taxable year, the tax information reasonably
required by Limited Partners for federal and state income tax reporting
purposes. The General Partners shall use all reasonable efforts to provide the
Limited Partners with a copy of any federal or state income tax returns at
least fifteen (15) days prior to filing such returns; it being understood that
the final contents of such returns shall be in the sole and absolute discretion
of the General Partners. The Limited Partners shall promptly provide the
General Partner with such information relating to the Contributed Properties,
including tax basis, a schedule of previous depreciation deductions, and other
relevant information, as may be reasonably requested by the General Partner
from time to time.
Tax Elections.
Except as otherwise provided in this Agreement, the General Partner
shall, in its sole and absolute discretion, determine whether to make any
available election pursuant to the Code, including, but not limited to, the
election under Code Section 754 and the election to use the "recurring item"
method of accounting provided under Code Section 461(h) with respect to
property taxes imposed on the Partnership's Properties; provided, however,
that, if the "recurring item" method of accounting is elected with respect to
such property taxes, the Partnership shall pay the applicable property taxes
prior to the date provided in Code Section 461(h) for purposes of determining
economic performance. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, any election under
Code Sections 461(h) and 754) upon the General Partner's determination in its
sole and absolute discretion that such revocation is in the best interests of
the Partners.
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Tax Matters Partner.
(61) General. The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. The tax
matters partner shall receive no compensation for its services. All
third-party costs and expenses incurred by the tax matters partner in
performing its duties as such (including legal and accounting fees and
expenses) shall be borne by the Partnership in addition to any
reimbursement pursuant to Section 7.4. 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. At the
request of any Limited Partner, the General Partner agrees to consult
with such Limited Partner with respect to any audit of or litigation
relating to any income tax return; provided, however, that the conduct
of any such audit or litigation shall be in the sole and absolute
discretion of the General Partner. Pursuant to Code Section 6223(c),
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 profits
interest of each of the Limited Partners, provided that such information
is provided to the Partnership by the Limited Partners. The Limited
Partners shall provide such information to the Partnership as the
General Partner shall reasonably request.
(62) Authority of Tax Matters Partner. The tax matters partner is
authorized, but not required:
(1) to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for
income tax purposes (such administrative proceedings being referred to
as a "tax audit" and such judicial proceedings being referred to as
"judicial review"), and in the settlement agreement the tax matters
partner may expressly state that such agreement shall bind all
Partners, except that such settlement agreement shall not bind any
Partner (i) who (within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing that the tax
matters partner shall not have the authority to enter into a
settlement agreement on behalf of such Partner or (ii) who is a
"notice partner" (as defined in Code Section 6231) or a member of a
"notice group" (as defined in Code Section 6223(b)(2));
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken
into account by a Partner for tax purposes (a "final adjustment") is
mailed or otherwise delivered to the tax matters partner, to seek
judicial review of such final adjustment, including the filing of a
petition for readjustment with the United States 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;
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(3) to intervene in any action brought by any other Partner
for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition, complaint or other
document) for judicial review with respect to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax that is attributable to any item required
to be taken into account by a Partner for tax purposes, or an item
affected by such item; and
(6) to take any other action on behalf of the Partners in
connection with any tax audit or judicial review proceeding to the
extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required
by law, is a matter in the sole and absolute discretion of the tax matters
partner and the provisions relating to indemnification of the General Partner
set forth in Section 7.7 shall be fully applicable to the tax matters partner
in its capacity as such.
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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 Code Section 1441, 1442, 1445 or 1446. Any amount paid
on behalf of or with respect to a Limited Partner shall constitute a loan by
the Partnership to such Limited Partner, which loan shall be repaid by such
Limited Partner within fifteen (15) days after notice from the General Partner
that such payment must be made unless (i) the Partnership withholds such
payment from a distribution that 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 Cash of the Partnership
that would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clause (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest
in such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant
to this Section 10.4. In the event that a Limited Partner fails to pay any
amounts owed to the Partnership pursuant to this Section 10.4 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 otherwise payable by the Partnership to such
defaulting Limited Partner). Any amounts payable by a Limited Partner under
this Section 10.4 shall bear interest at the base rate on corporate loans at
large United States money center commercial banks, as published from time to
time in the Wall Street Journal, plus four (4) percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created under this
Section 10.4.
Electing Large Partnership.
In the event such election becomes available, the General Partner, in
its sole discretion, may cause the Partnership to elect to be an "electing
large partnership" under Code Section 775. In that case, the General Partner
shall be the person authorized to act on behalf of the Partnership in any
federal or related state income tax proceeding for purposes of Code Section
6255 and shall be authorized to undertake any and all actions on behalf of the
Partnership to the maximum extent contemplated under Code Sections 6240 through
6255 (including, without limitation, to bind the Partnership and all Partners
with respect to any settlement of any proceeding).
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Organization Expenses.
The General Partner may in its sole and absolute discretion cause
the Partnership to elect to deduct expenses, if any, incurred in organizing the
Partnership ratably over a 60-month period as provided in Code Section 709.
ARTICLE 11
TRANSFERS AND WITHDRAWALS
Transfer.
No Partnership Interest shall be Transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article
11. Any Transfer or purported Transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void ab initio. No part of
the interest of a Partner shall be subject to the claims of any creditor, to
any spouse for alimony or support, or to legal process, or may be voluntarily
or involuntarily alienated or encumbered except as may be specifically provided
for in this Agreement.
Transfer of General Partner's Partnership Interest.
The General Partner shall not withdraw as the General Partner from the
Partnership and shall not Transfer all or any portion of its General Partner
Interest in the Partnership (whether by sale, disposition or otherwise) without
the Consent of the Limited Partners, which Consent may be given or withheld in
the sole and absolute discretion of the Limited Partners; provided, however,
that the General Partner may Transfer its General Partner Interest in
connection with a merger or consolidation of the General Partner with or into
any other entity or a sale or exchange of substantially all of its assets. Upon
any Transfer of a General Partner Interest pursuant to the Consent of the
Limited Partners or otherwise in accordance with the provisions of this Section
11.2, the transferee shall become a successor 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 the admission of the transferee
to the Partnership 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 such
Transfer shall relieve the transferor General Partner of its obligations under
this Agreement without the Consent of the Limited Partners. In the event that
the General Partner withdraws from the Partnership, in violation of this
Agreement or otherwise, or otherwise dissolves or terminates, or upon the
bankruptcy of the General Partner, a "majority in interest" (as such phrase is
used in Section 17-801(3) of the Act) of the remaining Partners may elect to
continue the Partnership business by selecting a successor General Partner in
accordance with the Act.
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Limited Partners' Rights to Transfer.
(63) General. No Limited Partner shall Transfer all or any
portion of its Partnership Interest to any transferee without the prior
written consent of the General Partner, which consent may be given or
withheld by the General Partner in its sole and absolute discretion;
provided, however, that, subject to the provisions and requirements of
Sections 11.3.C and 11.3.D, a Limited Partner may, without the prior
written consent of the General Partner, Transfer all or part of such
Partnership Interest to any Designated Party of such Limited Partner or
any Qualified Descendant of such Limited Partner, provided that such
Transfer shall be subject to the provisions and requirements of Sections
11.3.C and 11.3.D, including, without limitation, that the Designated
Party or Qualified Descendant, as the case may be, is an "accredited
investor" as defined in Rule 501 promulgated under the Securities Act
(any such Transfer to a Designated Party or Qualified Descendant is
hereinafter referred to as a "Permitted Transfer"); and provided,
further, that the parties hereto understand and agree that immediately
following the admission of the Initial Limited Partners to the
Partnership, the General Partner shall acquire the entire Limited
Partner Interest held by Southeast Properties Holding Corporation for an
amount equal to the then Capital Account balance of Southeast Properties
Holding Corporation, and such acquired interest shall become part of the
General Partner Interest (the "Southeast Transfer"). In order to effect
any Transfer (including a Permitted Transfer), the Limited Partner must
deliver to the General Partner a duly executed copy of the instrument
making such Transfer, and such instrument must evidence the written
acceptance by the transferee of, and compliance with, all of the terms
and conditions of this Agreement and represent that such assignment was
made in accordance with all applicable laws and regulations, and
reimburse the Partnership for any out-of-pocket costs or expenses
incurred by the Partnership in connection with such Transfer, including,
without limitation, any amounts payable by the Partnership to any holder
of any Designated Indebtedness.
(64) Transfer Restrictions Applicable Except in the Case of
Permitted Transfers. All Transfers pursuant to this Section 11.3, except
Permitted Transfers and the Southeast Transfer, shall be subject to the
following conditions and restrictions:
(1) 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) Business Days within which to give
the Transferring Partner notice of its election to acquire the
Partnership Units on the proposed terms. If the General Partner so
elects, it shall purchase the Partnership Units on such terms within
ten (10) Business Days after giving notice of such election; provided,
however, that in the event that the proposed terms involve a purchase
for cash, the General Partner may at its election
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deliver in lieu of all or any portion of such cash a note payable to
the Transferring Partner at a date as soon as reasonably practicable,
but in no event later than one hundred eighty (180) days after such
purchase, and bearing interest at an annual rate equal to the total
dividends declared with respect to one (1) REIT Share for the four (4)
preceding fiscal quarters of the General Partner, divided by the Value
of a REIT Share as of the closing of such purchase; provided, further,
that such closing may be deferred to the extent necessary to effect
compliance with any applicable requirements of law. If the General
Partner does not so elect, the Transferring Partner may Transfer such
Partnership Units to a third party, on terms no more favorable to the
transferee than the proposed terms, subject to the other conditions of
this Section 11.3, including Section 11.3.A.
(2) Number of Transferees Limited. Any Transfer of a
Partnership Interest shall be made only to a single transferee;
provided, however, that, for such purposes, all transferees that are
Affiliates, or that comprise investment accounts or funds managed by a
single transferee and its Affiliates, shall be considered together to
be a single transferee; provided, further, that each Transfer meeting
the minimum Transfer restriction of Section 11.3.C(2) may be to a
separate transferee.
(65) Generally Applicable Restrictions on Transfers and Other
Dispositions (Including Redemptions and Sales to the General Partner).
In addition to any other restrictions on Transfer contained in this
Agreement, in no event may any Transfer or other assignment or
disposition of a Partnership Interest by any Limited Partner (including
any Permitted Transfer, any Redemption, any acquisition of Partnership
Units by the General Partner or any other acquisition of Partnership
Units by the Partnership), except the Southeast Transfer, be made,
without the consent of the General Partner in its sole and absolute
discretion:
(1) to any Person who lacks the legal right, power or capacity
to own a Partnership Interest;
(2) to any Person, if the number of Partnership Units
transferred to such Person is not at least equal to the lesser of (i)
the number of whole Partnership Units having a value, as of the
effective date of the Transfer, of more than $250,000 or (ii) all of
the remaining Partnership Units owned by such Transferring Partner;
provided, however, that notwithstanding the foregoing clauses (i) and
(ii), each Limited Partner who is an individual and who beneficially
owned as of the date of this Agreement less than fifty thousand
(50,000), but more than zero (0), Partnership Units shall be permitted
to Transfer to each Qualified Descendant of such Limited Partner a
number of Partnership Units at least equal to five thousand (5,000);
(3) in violation of applicable law;
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(4) 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;
(5) in the event that such Transfer would cause the General
Partner to cease to comply with the REIT Requirements or could subject
the General Partner to any additional taxes under Code Section 857 or
4981;
(6) if such Transfer would, in the opinion of counsel to the
Partnership or the General Partner, cause a termination of the
Partnership for federal or state income tax purposes (except as a
result of the Redemption (or acquisition by the General Partner) of
all Partnership Units held by all Limited Partners);
(7) if such Transfer would, in the opinion of legal counsel
to the Partnership, cause the Partnership either (i) to cease to be
classified as a partnership or (ii) to be classified as a publicly
traded partnership, in either case for federal income tax purposes
(except as a result of the Redemption (or acquisition by the General
Partner) of all Partnership Units held by all Limited Partners);
(8) if such Transfer would cause the Partnership to become,
with respect to any employee benefit plan subject to Title I of ERISA,
a "party-in-interest" (as defined in ERISA Section 3(14)) or a
"disqualified person" (as defined in Code Section 4975(e)(2));
(9) if such Transfer would, in the opinion of legal counsel
to the Partnership, cause any portion of the assets of the Partnership
to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101;
(10) if the General Partner shall not have received an
opinion of counsel reasonably satisfactory to it to the effect that
the proposed Transfer may be effected without registration under the
Securities Act or any other applicable federal or state securities
laws and will not otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership
Interests Transferred;
(11) in the case of a Transfer other than a Redemption or an
acquisition by the General Partner of Partnership Units in exchange
for REIT Shares or cash, if the General Partner shall not have
received from the proposed transferee an accredited investor
questionnaire in form and substance reasonably satisfactory to the
General Partner and, in the case of an acquisition by the General
Partner of Partnership Units in exchange for REIT Shares, if the
General Partner shall not have received from the Transferring Limited
Partner an accredited investor questionnaire in form and substance
reasonably satisfactory to the General Partner;
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(12) if such Transfer would cause the Partnership (as opposed
to the General Partner) to become a reporting company under the
Exchange Act;
(13) if such Transfer would subject the Partnership to
regulation under the Investment Company Act of 1940, the Investment
Advisors Act of 1940 or ERISA, each as amended; or
(14) if such Transfer would result in or constitute a breach
(with or without notice or the passage of time or both) of the terms
of any Designated Indebtedness or any of the loan documents evidencing
or securing the same as then in effect.
(66) Assumption of Obligations. It is a condition to any Transfer
otherwise permitted under this Agreement (whether or not such Transfer
is a Permitted Transfer) that the transferee assume 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 in which 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 sole and absolute discretion. Notwithstanding the
foregoing, any transferee of any Transferred Partnership Interest shall
be subject to any and all ownership limitations (including, without
limitation, the Ownership Limit) contained in the Charter that may limit
or restrict such transferee's ability to exercise its Redemption rights.
Any transferee, whether or not admitted as a Substituted Limited
Partner, shall take subject to the obligations of the transferor under
this Agreement. Unless admitted as a Substituted Limited Partner, no
transferee, whether by a voluntary Transfer, by operation of law or
otherwise, shall have any rights under this Agreement, other than the
rights of an Assignee as provided in Section 11.5.
(67) Incapacity. If a Limited Partner is subject to Incapacity
(other than bankruptcy), the executor, administrator, trustee,
committee, guardian, conservator or receiver of such Limited Partner's
estate shall have all the rights of a Limited Partner, but not more
rights than those enjoyed by other Limited Partners, for the purpose of
settling or managing the estate, and such power as the Incapacitated
Limited Partner possessed to Transfer all or any part of its interest in
the Partnership. The Incapacity of a Limited Partner, in and of itself,
shall not dissolve or terminate the Partnership.
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Substituted Limited Partners.
(68) Consent of General Partner Required. No Limited Partner
shall have the right to substitute any transferee (except a Designated
Party) as a Limited Partner in its place. A transferee of the interest
of a Limited Partner may be admitted as a Substituted Limited Partner
only with the consent of the General Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion;
provided, however, that the General Partner shall be deemed to have
consented to the admission as a Substituted Limited Partner of any
transferee that is a Designated Party. Subject to the foregoing, a
transferee (including a Designated Party) shall not be admitted as a
Substituted Limited Partner until and unless it furnishes to the General
Partner (i) evidence of acceptance, in form and substance satisfactory
to the General Partner, of all the terms, conditions and applicable
obligations of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4, (ii) a Partner Schedule executed by
such Assignee and (iii) such other documents and instruments as may be
required or advisable, in the reasonable discretion of the General
Partner, to effect such transferee's admission as a Substituted Limited
Partner.
(69) Rights and Duties of Substituted Limited Partners. A
transferee who has been admitted as a Substituted Limited Partner in
accordance with this Section 11.4 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.
(70) Amendment of Exhibit A; New Partner Schedule. Upon the
admission of a Substituted Limited Partner, the General Partner shall
amend Exhibit A to reflect the name and address of such Substituted
Limited Partner and to eliminate, if necessary, the name and address of
the predecessor of such Substituted Limited Partner. In addition, the
Substituted Limited Partner and the General Partner shall execute a
Partner Schedule with respect to such Substituted Limited Partner, which
Partner Schedule shall supersede, to the extent necessary, the Partner
Schedule for the predecessor of such Substituted Limited Partner.
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Assignees.
If the General Partner, in its sole and absolute discretion, does not
consent (and is not deemed to consent) pursuant to Section 11.4 to the
admission of any permitted transferee under Section 11.3 as a Substituted
Limited Partner, 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 and other items of income, gain, loss, deduction and credit of the
Partnership attributable to the Partnership Units assigned to such transferee
but not the right to Transfer the Partnership Units as otherwise provided in
this Article 11, and shall not be deemed to be a holder of Partnership Units
for any other purpose under this Agreement, or entitled to effect a Consent or
vote with respect to such Partnership Units on any matter presented to the
Limited Partners for approval. In the event that any such transferee desires to
make a further assignment of any such Partnership Units, such transferee shall
be subject to all the provisions of this Article 11 to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of
Partnership Units.
General Provisions.
(71) Withdrawal of Limited Partner. No Limited Partner may
withdraw from the Partnership other than as a result of a permitted
Transfer of all of such Limited Partner's Partnership Units in
accordance with this Article 11 or pursuant to a Redemption (or
acquisition by the General Partner) of all of its Partnership Units
under Section 8.6.
(72) Transfer of All Partnership Units by Limited Partner. Any
Limited Partner who shall Transfer all of its Partnership Units in a
Transfer (i) permitted pursuant to this Article 11, (ii) pursuant to the
exercise of its rights to effect a Redemption of all of its Partnership
Units under Section 8.6 or (iii) to the General Partner, whether or not
pursuant to Section 8.6.B, shall cease to be a Limited Partner.
(73) Allocation of Income and Distributions. If any Partnership
Unit is Transferred in compliance with the provisions of this Article
11, or is redeemed by the Partnership or acquired by the General Partner
pursuant to Section 8.6, on any day other than the first day of a Fiscal
Year, then Net Income, Net Losses, each item thereof and all other items
of income, gain, loss, deduction and credit attributable to such
Partnership Unit for such Fiscal Year shall be allocated to the
transferor Partner or the Tendering Party, as the case may be, and, in
the case of a Transfer or assignment other than a Redemption, to the
transferee Partner (including, without limitation, the General Partner
in the case of an acquisition of Partnership Units pursuant to Section
8.6) or Assignee, by taking into account their varying interests during
the Fiscal Year in accordance with Code Section 706(d), using the "daily
proration" or "interim closing of the books" method or another
permissible method selected by the General Partner. Solely for purposes
of making such allocations, the General Partner, in its sole and
absolute discretion, may
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determine that each of such items for the calendar month in which a
Transfer, Redemption or assignment occurs shall be allocated to the
transferee Partner or Assignee and none of such items for the calendar
month in which a Transfer or a Redemption occurs shall be allocated to
the transferor Partner or the Tendering Party, as the case may be, if
such Transfer occurs on or before the fifteenth (15th) day of the month;
otherwise such items for such calendar month shall be allocated to the
transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is
before the date of such Transfer or assignment or, in the case of a
Redemption or acquisition by the General Partner pursuant to Section
8.6, before the date of the applicable Specified Redemption Date, shall
be made to the transferor Partner or the Tendering Party, as the case
may be, and, in the case of a Transfer other than a Redemption, all
distributions of Available Cash thereafter attributable to such
Partnership Unit shall be made to the transferee Partner or Assignee.
ARTICLE 12
ADMISSION OF PARTNERS
Admission of Successor General Partner.
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
upon such Transfer. Any such successor 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, conditions and applicable obligations of this
Agreement and such other documents or instruments as may be required to effect
the admission.
Admission of Additional Limited Partners.
(74) General. After the admission to the Partnership of the
Initial Limited Partners on the date hereof, a Person (other than an
existing Partner) who is permitted to make 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 and substance
satisfactory to the General Partner, of all of the terms, conditions and
applicable obligations of this Agreement, including, without limitation,
the power of attorney granted in Section 2.4, (ii) a Partner Schedule
executed by such Person and (iii) such other documents or instruments as
may be required in the sole and absolute discretion of the General
Partner in order to effect such Person's admission as an Additional
Limited Partner.
(75) Consent of General Partner Required. Notwithstanding
anything to the contrary in this Section 12.2, no Person shall be
admitted as an Additional Limited Partner without the consent of the
General Partner and the Consent of the Limited
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Partners, which consents may be given or withheld in the General
Partner's and the Limited Partners' sole and absolute discretion. The
admission of any Person as an Additional Limited Partner shall become
effective on the date upon which the name of such Person is recorded on
the books and records of the Partnership, following the consent of the
General Partner and the Consent of the Limited Partners to such
admission.
(76) Allocation of Income and Distributions. If any Additional
Limited Partner is admitted to the Partnership on any day other than the
first day of a Fiscal Year, then Net Income, Net Losses, each item
thereof and all other items of income, gain, loss, deduction and credit
allocable among Partners and Assignees for such Fiscal Year shall be
allocated among such Additional Limited Partner and all other Partners
and Assignees by taking into account their varying interests during the
Fiscal Year in accordance with Code Section 706(d), using the "daily
proration" or the "interim closing of the books" method or another
permissible method selected by the General Partner. Solely for purposes
of making such allocations, each of such items for the calendar month in
which an admission of any Additional Limited Partner occurs shall be
allocated among all the Partners and Assignees including such Additional
Limited Partner, in accordance with the principles described in Section
11.6.C. All distributions of Available Cash with respect to which the
Partnership Record Date is before the date of such admission shall be
made solely to Partners and Assignees other than the Additional Limited
Partner, and all distributions of Available Cash thereafter shall be
made to all the Partners and Assignees including such Additional Limited
Partner.
Amendment of Agreement and Certificate of Limited Partnership.
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4.
Admission of Initial Limited Partners.
The Persons listed, as of the Effective Date, on Exhibit A as limited
partners of the Partnership shall be admitted to the Partnership as Limited
Partners upon their execution and delivery of this Agreement.
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Limit on Number of Partners.
No Person shall be admitted to the Partnership as a Substituted
Limited Partner or an Additional Limited Partner if the effect of such
admission would be to cause the Partnership to have more than five hundred
(500) Partners, including as Partners for this purpose those Persons indirectly
owning an interest in the Partnership through a partnership, a limited
liability company, a subchapter S corporation or a grantor trust, or otherwise
cause the Partnership to become a reporting company under the Exchange Act.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
Dissolution.
The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or Additional Limited Partners or by the admission of a
successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership without dissolution. The Partnership
shall dissolve, and its affairs shall be wound up, upon the first to occur of
any of the following (an "Event of Dissolution"), but in no other event:
(77) the expiration of its term as provided in Section
2.5;
1 an event of withdrawal, as defined in the Act (including,
without limitation, bankruptcy), of the sole General Partner unless,
within ninety (90) days after the withdrawal, a "majority in interest"
(as such phrase is used in Section 17-801(3) of the Act) 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;
2 entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
3 the occurrence of a Terminating Capital Transaction; or
4 the Redemption (or acquisition by the General Partner) of
all Partnership Units other than Partnership Units held by
the General Partner.
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Winding up.
(78) General. Upon the occurrence of an Event of Dissolution, 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. After the occurrence of an Event
of Dissolution, 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 that there is no remaining General Partner or the General Partner
has dissolved, become bankrupt within the meaning of the Act or ceased
to operate, any Person elected by a majority in interest of the Limited
Partners (the General Partner or such other Person being referred to
herein as the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and property, and the
Partnership property shall be liquidated as promptly as is consistent
with obtaining the fair value thereof, and the proceeds therefrom (which
may, to the extent determined by the General Partner, include shares of
stock in the General Partner) shall be applied and distributed in the
following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the
Partners and their Assignees (whether by payment or the making of
reasonable provision for payment thereof);
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner (whether by
payment or the making of reasonable provision for payment thereof),
including, but not limited to, amounts due as reimbursements under
Section 7.4;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other Partners and any
Assignees (whether by payment or the making of reasonable provision
for payment thereof), pro rata in accordance with amounts owed to each
such Partner and Assignee;
(4) Fourth, to the Partners in proportion to their respective
positive Capital Account balances.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13, other than the reimbursement of
its expenses.
(79) Where Immediate Sale of Partnership's Assets Impractical.
Notwithstanding the provisions of Section 13.2.A that require
liquidation of the assets of the Partnership, but subject to the order
of priorities set forth in such Section, 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
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<PAGE> 78
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 who are creditors) and/or distribute to the Partners, in lieu
of cash, as tenants in common and in accordance with the provisions of
Section 13.2.A, undivided interests in such Partnership assets as the
Liquidator deems not suitable for liquidation. Any such distributions in
kind shall be made only if, in the good faith judgment of the
Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation
of such properties at such time. The Liquidator shall determine the fair
market value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
(80) Compliance with Timing Requirements of Regulations;
Allowance for Contingent or Unforseen Liabilities or Obligations. In the
event that the Partnership is "liquidated," within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made to
the Partners and Assignees in the manner and order of priority specified
in Section 13.2.A by the end of the taxable year in which such
liquidation occurs (or, if later, within 90 days of such liquidation).
If any Partner has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions and allocations for
all taxable years, including the year during which such liquidation
occurs), such Partner shall have no obligation to make any contribution
to the capital of the Partnership with respect to such deficit, and such
deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever. In the sole and absolute
discretion of the General Partner or the Liquidator, a pro rata portion
of the distributions that would otherwise be made to the Partners and
Assignees pursuant to this Article 13 may be: (i) distributed to a
liquidating trust established for the benefit of the Partners and
Assignees for the purpose 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 and Assignees from time
to time, in the reasonable discretion of the General Partner, in the
same proportions as the amount distributed to such trust by the
Partnership would otherwise have been distributed to the Partners and
Assignees pursuant to this Agreement); or (ii) withheld or escrowed to
provide a reasonable reserve for Partnership liabilities (contingent or
otherwise) and to reflect the unrealized portion of any installment
obligations owed to the Partnership, provided that such withheld or
escrowed amounts shall be distributed to the Partners and Assignees in
the manner and order of priority set forth in Section 13.2.A as soon as
practicable.
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Deemed Liquidation.
Notwithstanding any other provision of this Article 13, in the event
that the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Event of Dissolution has occurred, the
Partnership's Property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts, the Partnership shall be deemed to have
contributed the Property, subject to all Partnership liabilities, to a new
partnership in exchange for all of the interests in such new partnership, and
immediately thereafter, the Partnership shall be deemed to have distributed the
interests in such new partnership to the Partners in accordance with their
respective Capital Accounts in the Partnership. Each Partner's capital account
in the new partnership shall equal its Capital Account in the Partnership
immediately prior to such deemed contribution and distribution.
Rights of Limited Partners.
Except as otherwise provided in this Agreement, (i) each Limited
Partner shall look solely to the assets of the Partnership for the return of
its Capital Contribution, (ii) no Limited Partner shall have the right or power
to demand or receive property other than cash from the Partnership and (c) no
Limited Partner shall have priority over any other Limited Partner as to the
return of its Capital Contributions, distributions or allocations.
Notice of Dissolution.
In the event that an Event of Dissolution occurs or an event occurs
that would, but for an election or objection by one or more Partners pursuant
to Section 13.1, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days of such event, provide written notice of
the event to each of the Partners and, in the General Partner's sole and
absolute discretion or as required by the Act, to all other parties with whom
the Partnership regularly conducts business (as determined in the sole and
absolute discretion of the General Partner), and the General Partner may, or,
if required by the Act, shall, publish notice of the event in a newspaper of
general circulation in each place in which the Partnership regularly conducts
business (as determined in the sole and absolute discretion of the General
Partner).
Cancellation of Certificate of Limited Partnership.
Upon the completion of the liquidation of the Partnership as provided
in Section 13.2, the Partnership shall be terminated, a certificate of
cancellation shall be filed with the State of Delaware, all qualifications of
the Partnership as a foreign limited partnership or association in
jurisdictions other than the State of Delaware shall be canceled, and such
other actions as may be necessary to terminate the Partnership shall be taken.
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Reasonable Time for Winding-up.
A reasonable time shall be allowed for the orderly winding-up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 in order to minimize any losses otherwise attendant to
such winding-up, and the provisions of this Agreement shall remain in effect
between the Partners during the period of liquidation.
ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS
Procedures for Actions and Consents of Partners.
The actions requiring consent or approval of Partners pursuant to this
Agreement, including Section 7.3, or otherwise pursuant to applicable law, are
subject to the procedures set forth in this Article 14.
Amendments.
Amendments to this Agreement may be proposed by the General Partner or
by Ninety-Six Percent in Interest of the Limited Partners and, unless otherwise
expressly specified in this Agreement, shall require the written consent of
both the General Partner and a Ninety-Six Percent in Interest of the Limited
Partners. Following the proposal of an amendment, the General Partner shall
submit the proposed amendment to the Limited Partners. The General Partner
shall seek the written consent of the Limited Partners on the proposed
amendment or shall call a meeting to vote on the proposal and to transact any
other business that the General Partner 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 twenty (20) days, and failure to
respond in such time period shall constitute a consent that is consistent with
the General Partner's recommendation with respect to the proposal; provided,
however, that an action shall become effective at such time as requisite
consents are received even if prior to such specified time. This Section 14.2
shall not limit the rights of the General Partner or the Limited Partners under
Section 7.3.
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<PAGE> 81
Meetings of the Partners.
(81) General. Meetings of the Partners may be called by the
General Partner and shall be called upon the receipt by the General
Partner of a written request by a Ninety-Six Percent in Interest of the
Limited Partners. Notice of any such meeting shall be given to all
Partners not less than seven (7) days nor more than thirty (30) days
prior to the date of such meeting. The notice shall state the nature of
the business to be transacted. Partners may vote in person or by proxy
at such meeting. Whenever the vote or Consent of Partners is permitted
or required under this Agreement, such vote or Consent may be given at a
meeting of Partners or may be given in accordance with the procedure
prescribed in Section 14.3.B.
(82) Action by Written Consent. 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
General Partner and by Ninety-Six Percent in Interest of the Limited
Partners (or such other group of Partners 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 General Partner and Ninety-Six Percent in
Interest of the Limited Partners (or such other group of Partners as is
expressly required by this Agreement). Such consent shall be filed with
the General Partner. An action so taken shall be deemed to have been
taken at a meeting held on the effective date so certified.
(83) Proxies. Each Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Limited
Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be
signed by the Limited Partner or his attorney-in-fact. No proxy shall be
valid after the expiration of eleven (11) months from the date of the
proxy unless otherwise provided in the proxy (or there is receipt of a
proxy authorizing a later date). Every proxy shall, unless otherwise
specifically provided in the proxy, be revocable at the pleasure of the
Limited Partner executing it, such revocation to be effective upon the
Partnership's receipt of written notice of such revocation from the
Limited Partner executing such proxy.
(84) Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General
Partner may appoint pursuant to such rules for the conduct of the
meeting as the General Partner or such other Person deems appropriate in
its sole and absolute discretion, including establishment of a
Partnership Record Date for such meeting.
-75-
<PAGE> 82
ARTICLE 15
GENERAL PROVISIONS
Addresses and Notice.
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by
first class United States mail or by other means of written communication
(including by telecopy, facsimile, other wire transmission, or by commercial
courier) (i) in the case of a Partner, to such Partner at the address set forth
in Exhibit A (or, if Exhibit A has not been amended to reflect the address of
any Limited Partner, the Partner Schedule with respect to such Limited Partner)
or such other address of which the Partner shall notify the General Partner in
writing and (ii) in the case of an Assignee, to the address of which such
Assignee shall notify the General Partner in writing.
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 of this
Agreement. Except as specifically provided otherwise, references to "Articles"
or "Sections" are to Articles and Sections of this Agreement.
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.
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.
Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, legal
representatives and permitted successors and assigns.
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<PAGE> 83
Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition. The
restrictions, conditions and other limitations on the rights and benefits of
the Limited Partners contained in this Agreement, and the representations,
duties, covenants and other requirements of performance or notice by the
Limited Partners, are for the benefit of the Partnership and, except for an
obligation to pay money to the Partnership, may be waived or relinquished by
the General Partner, in its sole and absolute discretion, on behalf of the
Partnership in one or more instances from time to time and at any time;
provided, however, that any such waiver or relinquishment may not be made if it
would have the effect of (i) creating liability for any other Limited Partner,
(ii) causing the Partnership to cease to qualify as a limited partnership,
(iii) reducing the amount of cash otherwise distributable to the Limited
Partners, (iv) resulting in the classification of the Partnership as an
association or publicly traded partnership taxable as a corporation or (v)
violating the Securities Act, the Exchange Act or any state "blue sky" or other
securities laws; provided, further, that any waiver relating to compliance with
the Ownership Limit or other restrictions in the Charter shall be made and
shall be effective only as provided in the Charter.
Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties to this Agreement,
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 to this Agreement or upon execution of
a Partner Schedule.
Applicable Law.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law. In the event of a conflict between any provision of this
Agreement and any non-mandatory provision of the Act, the provisions of this
Agreement shall control and take precedence.
Entire Agreement.
This Agreement, together with the Partner Schedules executed by the
Limited Partners, contains all of the understandings and agreements between and
among the Partners with respect to the subject matter of this Agreement and the
rights, interests and obligations of the Partners with respect to the
Partnership.
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<PAGE> 84
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.
No Partition.
The Partners agree that the Partnership properties are not and will
not be suitable for partition. No Partner nor any successor-in-interest to a
Partner shall have the right while this Agreement remains in effect to have any
property of the Partnership partitioned, or to file a complaint or institute
any proceeding at law or in equity to have any property of the Partnership
partitioned, and each Partner, on behalf of itself and its successors and
assigns hereby waives any such right.
It is the intention of the Partners that the rights of the parties
hereto and their successors-in-interest to Partnership property, as among
themselves, shall be governed by the terms of this Agreement, and that the
rights of the Partners and their successors-in-interest shall be subject to the
limitations and restrictions as set forth in this Agreement.
No Third-Party Rights Created Hereby.
The provisions of this Agreement are solely for the purpose of
defining the interests of the Partners, inter se; and no other Person (i.e., a
party who is not a signatory to this Agreement or a permitted successor to such
a signatory) shall have any right, power, title or interest by way of
subrogation or otherwise, in and to the rights, powers, title and provisions of
this Agreement. 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 to the Partnership or to pursue
any other right or remedy hereunder or at law or in equity. 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 any 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 any of the Partners.
Remedies Not Exclusive.
Any remedies contained in this Agreement for breaches of obligations
under this Agreement shall not be deemed to be exclusive and shall not impair
the right of any party to exercise any other right or remedy, whether for
damages, injunction or otherwise.
[The remainder of this page has intentionally been left blank.]
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<PAGE> 85
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
GENERAL PARTNER:
KOGER EQUITY, INC.
By:
-----------------------------------------------
Title: Chairman and Chief Executive Officer
LIMITED PARTNERS:
77 CENTER INVESTORS LIMITED
PARTNERSHIP
By: KSSA-77 ASSOCIATES, a Pennsylvania general
partnership, its general partner
By: /s/
---------------------------------------
Douglas M. Firstenberg
Authorized General Partner
By: LIVE OAK PROPERTIES, INC., a
Delaware corporation, its general partner
By: /s/
----------------------------------------
Douglas M. Firstenberg
Vice President
77 CENTER INVESTORS II LIMITED
PARTNERSHIP
By: KSSA-77 ASSOCIATES, a Pennsylvania
general partnership, its general partner
By: /s/
----------------------------------------
Douglas M. Firstenberg
Authorized General Partner
By: LIVE OAK PROPERTIES, INC., a
Delaware corporation, its general partner
By: /s/
----------------------------------------
Douglas M. Firstenberg
Vice President
SOUTHEAST PROPERTIES HOLDING
CORPORATION
By: /s/
----------------------------------------
W. Lawrence Jenkins
Vice President
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<PAGE> 86
EXHIBIT A
PARTNERS AND ADDRESSES
GENERAL PARTNER:
Koger Equity, Inc. Cash contribution: $6,788,077.76
8880 Freedom Crossing Trail Number of Partnership Units:
Jacksonville, Florida 32256-9920
Attention: President
LIMITED PARTNERS:
77 Center Investors Limited Partnership
c/o Stonebridge Associates, Inc.
4800 Montgomery Lane, Suite 875
Bethesda, MD 20814-5332
Attention: President
77 Center Investors II Limited Partnership
c/o Stonebridge Associates, Inc.
4800 Montgomery Lane, Suite 875
Bethesda, MD 20814-5332
Attention: President
Southeast Properties Holding Corporation Cash contribution: $1
8880 Freedom Crossing Trail Number of Partnership Units:
Jacksonville, Florida 32256-9920
Attention: President
A-1
<PAGE> 87
EXHIBIT B
NOTICE OF REDEMPTION
To: Koger Equity, Inc.
8880 Freedom Crossing Trail
Jacksonville, Florida 32256-9920
Attention: Chief Accounting Officer
The undersigned Limited Partner or Assignee hereby irrevocably tenders
for Redemption __________ Partnership Units in Koger-Vanguard Partners, L.P. in
accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of Koger-Vanguard Partners, L.P., dated as of ____________, 1998,
as amended (the "Agreement"), and the Redemption rights referred to therein.
The undersigned Limited Partner or Assignee:
(a) undertakes (i) to surrender such Partnership Units and
any certificate therefor at the closing of the Redemption and (ii) to
furnish to the General Partner, prior to the Specified Redemption
Date, the documentation, instruments and information required under
Section 8.6.F of the Agreement;
(b) directs that the certified check representing the Cash
Amount deliverable upon the closing of such Redemption be delivered to
the address specified below;
(c) represents, warrants, certifies and agrees that:
(1) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, good,
marketable and unencumbered title to such Partnership Units,
free and clear of the rights or interests of any other person
or entity,
(2) the undersigned Limited Partner or Assignee has,
and at the closing of the Redemption will have, the full
right, power and authority to tender and surrender such
Partnership Units as provided herein, and
(3) the undersigned Limited Partner or Assignee has
obtained the consent or approval of all persons and entities,
if any, having the right to consent to or approve such tender
and surrender; and
(d) acknowledges that he will continue to own such
Partnership Units until and unless either (1) such Partnership Units
are acquired by the General Partner pursuant to Section 8.6.B of the
Agreement or (2) such Redemption transaction closes.
Each capitalized term used herein and not otherwise defined shall have
the same meaning as is ascribed to it in the Agreement.
B-1
<PAGE> 88
Dated: ______________ Name of Limited Partner or Assignee:
------------------------------------------
(Signature of Limited Partner or Assignee)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
------------------------------------------
Signature Guaranteed by:
------------------------------------------
Issue Check Payable to: ------------------------------------------
Social Security
or identifying number: ------------------------------------------
cc: Ropes & Gray
One International Place
Boston, MA 02110-2624
Attention: Douglass N. Ellis, Jr.
William F. McCarthy
B-2
<PAGE> 89
EXHIBIT C
FORM OF PARTNER SCHEDULE
Initial and Additional Limited Partner Version
PARTNER SCHEDULE
KOGER-VANGUARD PARTNERS, L.P.
THIS PARTNER SCHEDULE is executed by Koger Equity, Inc., a Florida
corporation (the "General Partner"), and the party named below (the "New
Partner") in respect of Koger-Vanguard Partners, L.P., a Delaware limited
partnership (the "Partnership"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
________, 1998 (the "Agreement").
1. NAME, ADDRESS AND TAXPAYER IDENTIFICATION NUMBER OF NEW PARTNER:
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
TIN:
------------------------------------------------------------------
2. CAPITAL CONTRIBUTIONS BY NEW PARTNER:
Cash contribution: $
-------------------------------
Contributed Properties:
<TABLE>
<CAPTION>
Gross Amount of Indebtedness Assumed Net Value of
Address of Contributed Asset or to which the Contributed Lender/Date of Contributed
Property Value Property is Subject Debt Instrument Property
<S> <C> <C> <C> <C>
-------------------------- ---------- --------------------------------- ------------------ -----------------
-------------------------- ---------- --------------------------------- ------------------ -----------------
-------------------------- ---------- --------------------------------- ------------------ -----------------
-------------------------- ---------- --------------------------------- ------------------ -----------------
-------------------------- ---------- --------------------------------- ------------------ -----------------
</TABLE>
Total Capital Contribution: $
-----------------------------
3. PARTNERSHIP UNITS AND PREFERRED RETURN PER UNIT:
Number of Partnership Units issued
to New Partner:
------------
Class of Partnership Units issued:
------------
C-1
<PAGE> 90
Capital Contribution Represented
by Each Partnership Unit: $
-----------
Preferred Return Per Unit: an amount payable in respect of each
calendar quarter on a date for such
quarter determined by the General
Partner (each payment date, a
"Distribution Date"), equal to the
amount indicated below; provided,
however, that the amount payable in
respect of a Partnership Unit for the
calendar quarter in which it is issued,
in which it is redeemed for cash
pursuant to Section 8.6.A or 8.6.C, in
which it is acquired by the General
Partner in exchange solely for cash
pursuant to Section 8.6.B, or in which
the Partnership liquidates shall be
prorated on a daily basis; and
provided, further, that in the event
that a Partnership Unit is acquired by
the General Partner in exchange for
REIT Shares during a calendar quarter
pursuant to Section 8.6.B of the
Agreement, no amount shall accrue or be
payable in respect of such unit for
such calendar quarter:
- ----------------------------------------------------------
- ----------------------------------------------------------
- ----------------------------------------------------------
4. ADMISSION OF NEW PARTNER:
The New Partner is admitted to the Partnership as an
Initial/Additional Limited Partner. The General Partner hereby consents to such
admission.
5. DESIGNATED PROPERTIES:
<TABLE>
<CAPTION>
Description of Designated Property Permitted Sale Date
<S> <C>
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
</TABLE>
6. DESIGNATED INDEBTEDNESS:
<TABLE>
<CAPTION>
Description of Designated Indebtedness Permitted Repayment Date
<S> <C>
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
--------------------------------------------------------- -------------------------------------------------
</TABLE>
C-1
<PAGE> 91
7. DESIGNATED PARTIES AND QUALIFIED DESCENDANTS:
Designated Parties:
Qualified Descendants:
8. PERMITTED TENDER DATE:
The Permitted Tender Date for the New Partner shall be the _________
anniversary of the Closing Date.
9. AGREEMENT:
The New Partner acknowledges receipt of a copy of, and agrees to be
bound by, the Agreement, as it may be amended from time to time. The New
Partner specifically confirms (a) the representations and warranties contained
in Section 3.4 of such Agreement, as it may be amended from time to time, and
(b) the grant of the power of attorney set forth in Section 2.4 of such
Agreement.
10. ADDITIONAL TERMS AND CONDITIONS:
___________________________________________________________
___________________________________________________________
___________________________________________________________
IN WITNESS WHEREOF, the parties have executed this Partner Schedule as
of the date indicated below.
Dated: _________________, 1998
"GENERAL PARTNER": KOGER EQUITY, INC., as General Partner
of KOGER-VANGUARD PARTNERS,
L.P.
By____________________________________
Name: Victor A. Hughes
Title: Chairman and Chief Executive
Officer
C-2
<PAGE> 92
EXHIBIT D
"NEW PARTNER":
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, AND THE
ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO SUCH SALE, TRANSFER OR OTHER
DISPOSITION, UNLESS THE HOLDER HEREOF COMPLIES WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER AND CERTAIN OTHER PROVISIONS AS SET FORTH IN THE AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF THE PARTNERSHIP, DATED AS OF
__________, 1998, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE PARTNERSHIP.
Certificate No. ____
KOGER-VANGUARD PARTNERS, L.P.
FORMED UNDER THE LAWS OF THE STATE OF DELAWARE
This certifies that _________________
is the owner of ___________________ FULLY PAID PARTNERSHIP UNITS OF
KOGER-VANGUARD PARTNERS, L.P. (the "Partnership"),
transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Units represented hereby are issued and shall
be held subject to all of the provisions of the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of _______, 1998, as the
same may be amended and/or supplemented from time to time.
IN WITNESS WHEREOF, the undersigned has signed this Certificate.
Dated: By:_________________________________________
C-3
<PAGE> 1
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-55179 of Koger Equity, Inc. on Form S-3, Registration Statement No. 33-54617
of Koger Equity, Inc. on Form S-8, Registration Statement No. 333-20975 of
Koger Equity, Inc. on Form S-3, Registration Statement No. 333-23429 of Koger
Equity, Inc. on Form S-8 and Registration Statement No. 333-37919 of Koger
Equity, Inc. on Form S-3 of our report dated August 21, 1998, on the statement
of revenues and certain expenses of Vanguard Office Centre for the year ended
December 31, 1997 appearing in this Current Report on Form 8-K of Koger Equity,
Inc., dated October 22, 1998.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 29, 1998
