TYPE 10-Q
SEQUENCE: 1
DESCRIPTION: SECOND QUARTER REPORT FOR 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 001-13915
---------
UNITED INVESTORS REALTY TRUST
(Exact name of Registrant as Specified in its Charter)
TEXAS 76-0265701
------------------------ ----------------------
(State of Incorporation) (IRS Employer
Identification Number)
5847 San Felipe, Suite 850
Houston, TX 77057
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(713) 781-2860
---------------------------------------------------
(Registrant's Telephone Number Including Area Code)
Number of shares outstanding of the issuer's Common Stock, no par value, as of
August 8, 1998: 9,514,889 shares.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No_____
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Balance Sheets
ASSETS
June 30,
1998 December 31,
(Unaudited) 1997
------------- -------------
<S> <C> <C>
Operating properties, at cost
Land ......................................................... $ 32,149,317 $ 8,118,723
Buildings and improvements ................................... 88,854,914 31,616,008
------------- -------------
121,004,231 39,734,731
Less accumulated depreciation .................................... (6,004,299) (4,861,957)
------------- -------------
114,999,932 34,872,774
Cash and cash equivalents ........................................ 11,610,321 346,149
Accounts Receivable, net of allowance ............................ 1,754,539 797,696
Prepaid expenses and other assets ................................ 2,626,762 3,270,350
------------- -------------
Total Assets ................................................. $ 130,991,554 $ 39,286,969
============= =============
LIABILITIES, MINORITY INTEREST, REDEEMABLE
PREFERED SHARES, AND COMMON SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable ........................................... $ 40,870,225 $ 24,926,499
Redeemable convertible subordinated notes ........................ -- 212,400
Short-term notes and lines of credit ............................. 3,000 3,225,000
Accounts payable, accrued expenses, and other liabilities ........ 2,804,504 1,429,233
------------- -------------
Total liabilities ................................................ 43,677,729 29,793,132
------------- -------------
Minority interest in consolidated partnerships. .................. 2,429,080 1,571,018
------------- -------------
Redeemable preferred shares of beneficial interest,$100 par value;
50,000,000 shares authorized;10,737 shares issued and outstanding
at December 31, 1997 ............................................. -- 1,068,226
------------- -------------
Common shareholders' equity: common shares of beneficial interest,
no par value; 500,000,000 shares authorized 9,514,889 and 914,889
shares issued and outstanding in 1998 and 1997 .................. 87,164,078 8,345,077
Accumulated deficit .............................................. (2,279,333) (1,490,484)
------------- -------------
Total common shareholders' equity ................................ 84,884,745 6,854,593
------------- -------------
Total liabilities, minority interest,redeemable preferred shares,
and common shareholders' equity .................................. $ 130,991,554 $ 39,286,969
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
--------------------------------------------------------
30-Jun-98 30-Jun-97 30-Jun-98 30-Jun-97
<S> <C> <C> <C> <C>
Revenues:
Rental $ 3,382,335 $ 1,235,075 $ 5,426,224 $ 2,457,427
Recoveries from tenants 926,969 326,568 1,491,896 600,436
Interest and other income 230,530 8,081 291,646 16,557
----------- ----------- ----------- -----------
Total Revenues 4,539,834 1,569,724 7,209,766 3,074,420
Property operating expenses:
Property operating 471,114 201,612 729,222 378,214
Property taxes 570,548 188,566 955,214 377,132
Property management fees 77,915 45,353 126,948 91,266
Depreciation and amortization 734,071 287,835 1,188,586 572,251
Interest (including write-off of $2,240,652
in unamortized bridge financing costs in
March, 1998) 738,720 607,770 3,990,961 1,218,973
Advisory fees (FCA) 194,746 78,000 321,986 156,000
General and administrative 202,539 97,819 370,752 125,687
----------- ----------- ----------- -----------
Total expenses 2,989,653 1,506,955 7,683,669 2,919,523
----------- ----------- ----------- -----------
Income (loss) before minority interest,
extraordinary item,and preferred share
distribution requirement 1,550,181 62,769 (473,903) 154,897
Minority interest in income of consolidated
partnerships (34,849) (12,786) (61,462) (21,856)
----------- ----------- ----------- -----------
Income (loss) before extraordinary item and
preferred share distribution requirement 1,515,332 49,983 (535,365) 133,041
Extraordinary item-prepayment penalties incurred on
early extinguishment of debt -- -- (232,532) --
----------- ----------- ----------- -----------
Net Income (loss) 1,515,332 49,983 (767,897) 133,041
Preferred share distribution requirement -- (24,158) (20,670) (48,316)
----------- ----------- ----------- -----------
Net income (loss) available
for common shareholders $ 1,515,332 $ 25,825 $ (788,567) $ 84,725
=========== =========== =========== ===========
Basic and diluted per share amounts:
Income (loss) before extraordinary item
and preferred share distribution requirement $ 0.16 $ 0.05 $ (0.09) $ 0.15
Extraordinary item - prepayment penalties
incurred on early extinguishment of debt -- -- (0.04) --
Preferred share distribution requirement -- (0.03) (0.00) (0.05)
----------- ----------- ----------- -----------
Net income (loss) available for common
shareholders $ 0.16 $ 0.02 $ (0.13) 0.10
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic 9,459,333 912,489 5,904,889 912,489
Diluted 9,459,333 912,489 5,904,889 912,489
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended
-----------------------
6/30/98 6/30/97
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (767,897) 133,041
Adjustments to reconcile net income (loss) to net cash
provided by operating
activities:
Depreciation 1,142,342 535,916
Amortization 46,244 36,335
Extraordinary item 232,532 -
Amortization of bridge financing costs 2,240,652 -
Minority interest in income of consolidated partnerships 61,462 21,856
Equity in income of investment in real estate venture .. 0 (10,185)
Changes in operating assets and liabilites (495,972) 106,661
------------ ------------
Net cash provided by operating activities 2,459,363 823,624
Cash flows from investing activities:
Purchase of and capital improvements to investment
real estate (46,037,178) (193,276)
Application of escrow deposits 1,343,389 (115,724)
------------ ------------
Net cash used in investing activities (44,693,789) (309,000)
------------ ------------
Cash flows from financing activities:
Proceeds from bridge financing 53,689,913 -
Payments on bridge financing (53,686,913) -
Proceeds from short-term notes payable 50,000 160,000
Principal payments on mortgage notes payable (16,554,914) (426,496)
Principal payments on short-term notes payable (3,275,000) -
Preferred share retirement (1,068,226) -
Convertible note retirement (212,400) -
Net proceeds from public offering 78,819,001 -
Payment of prepayment penalty (232,532) -
Payment of bridge financing costs (2,240,652) -
Preferred share distributions (20,670) (48,316)
Distribution to holders of minority interests (1,621,220) (33,644)
Payment of loan acquisition costs (147,789) -
------------ ------------
Net cash provided by (used in) financing
activities 53,498,598 (166,168)
------------ ------------
Increase in cash and cash equivalents 11,264,172 166,168
Cash and cash equivalents at beginning of period 346,149 119,316
------------ ------------
Cash and cash equivalents at end of period $ 11,610,321 $ 285,484
============ ============
Supplemental disclosures:
Cash paid for for interest (including $2,240,652
in cash paid in 1998 for bridge financing costs) $ 3,990,961 $ 1,218.973
Assumption of mortgage debt in connection with
acquisition of properties 32,498,713 -
Assumption of property tax and security deposit
liabilities in connection with acquisition of
properties 520,493 -
Purchase price adjustments held by third party 172,356 -
Issuance of downREIT units for property acquisition 2,385,940
</TABLE>
<PAGE>
United Investors Realty Trust
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
Organization
United Investors Realty Trust (the "Company") was organized on December 1,1988
as a Massachusetts business trust and subsequently converted to a Texas real
estate investment trust ("REIT"). The Company operates community shopping
centers in the sun belt states of Texas, Arizona, Florida and Tennessee. On
March 13, 1998 the Company completed an initial public offering (the "IPO") of
7,600,000 common shares of beneficial interest (the "Common Shares").
Basis of Presentation
These unaudited consolidated financial statements include the accounts of the
Company, its subsidiaries and partnerships in which it owns controlling
interests. The accompanying consolidated financial statements have been prepared
by the Company's management in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles for complete financial
statements. These statements should be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's
prospectus dated March 6, 1998 associated with it's IPO. In the opinion of
management, the financial statements contain all adjustments (which consist of
normal and recurring adjustments) necessary for a fair presentation of financial
results for the interim periods.
On May 21, 1998, the EITF reached a consensus decision on Issue No. 98-9,
"Accounting for Contingent Rent In Interim Financial Periods" which provides
that recognition of rental income in interim periods must be deferred until the
specified target that triggers the contingent rental income is achieved. This
consensus is effective May 21, 1998 and will require the Company to defer
recognition of this income until the date that the tenant's sales exceed the
breakpoint set forth in the lease agreement. This consensus is not expected to
have a material impact on the Company's results of operations.
2. Investment in Properties
At December 31, 1997, the Company owned eight shopping center properties
containing approximately 754,563 square feet of gross leasable area.
During the six months ended June 30, 1998, the Company acquired nine properties
for a total purchase price of approximately $81,000,000 including assumed debt
of approximately $32,000,000. These acquisition properties include approximately
1,651,000 square feet of gross leasable area ("GLA"), of which 435,000 square
feet are anchors that are owned by third parties. As of June 30, 1998, the
geographic diversification of the Company's portfolio on the basis of GLA owned
reflected 25% in the Houston, Texas area, 23% throughout the balance of Texas,
25% in Florida, 19% in Arizona, and 8% in Tennessee.
During the second quarter (ended June 30, 1998), the Company acquired the
following neighborhood shopping centers.
Town `N Country Plaza
Town `N Country Plaza is a 158,104 square foot shopping center located in Tampa,
Florida. The center is anchored by Big Lots (30,000 square feet) and T.J. Maxx
(24,000 square feet). As of June 30, 1998, the center is 100% leased.
The Company acquired the center on May 15, 1998 through a "downREIT"
partnership. The downREIT partnership, in which the Company is the 1% sole
general and a 98% limited partner, issued partnership units to the sellers and
assumed existing mortgage debt on the shopping center. Holders of the
partnership units are paid a distribution equivalent to distributions paid on
the Company's common shares, and may convert their partnership units
(aggregating 239,594 units) to REIT shares after one year.
Rosemeade Park Shopping Center
Rosemeade Park is a 49,554 square foot shopping center located in Carrollton,
Texas, a northern suburb of Dallas. The center is adjacent to a 58,900 square
foot Kroger Supermarket, which is owned by a third party. The center was
acquired with cash and assumption of debt, and as of June 30, 1998 is
approximately 61% leased.
Big Curve Shopping Center
Big Curve Shopping Center is located in Yuma, Arizona and includes approximately
226,400 square feet of GLA. The center is anchored by a 28,000 square-foot
Walgreens, as well as by Miller's Outpost, Albertson's and Michaels. The latter
two stores occupy an aggregate GLA of approximately 100,000 square feet that are
owned by third parties. The center is approximately 98% leased at June 30, 1998.
The Company acquired Big Curve with cash and the assumption of debt.
The following properties were acquired in the three months ended March 31, 1998.
Mason Park
Mason Park is a 218,847 square foot community shopping center located in
Houston, and is anchored by Kroger Supermarket, Walgreen's Drug Store, Palais
Royal, Cinemark and Petco. A third party owns the 58,800 square foot Kroger
store. As of June 30, 1998, the center is approximately 92% leased.
The Market at First Colony
The Market at First Colony is a 156,241 square foot community shopping center
located in Houston, and is anchored by a 62,000 square foot Kroger Supermarket,
which is owned by a third party. Major tenants in the Company's space include
T.J. Maxx, Home Savings, and Eckerd Drugs. A Taco Bell is also part of the
center and is owned by the Company. As of June 30, 1998, the center is
approximately 97% leased.
Hedwig Shopping Centers
Hedwig Shopping Centers is a 226,000 square foot shopping center located in
Houston, and is anchored by Target (120,000 square feet) and Marshall's (35,650
square feet), each of which is owned by third parties. The three separate
buildings owned by the Company include approximately 69,500 square feet. As of
June 30, 1998, the center is approximately 98% leased.
Benchmark Crossing
Benchmark Crossing is a 58,384 square foot neighborhood shopping center located
in Houston, and is anchored by Bally's Total Fitness, which occupies almost
41,000 square feet. The balance of the center is occupied by Click's Billiards,
the International House of Pancakes, Burger King and Jack in the Box. The center
is 100% leased as of June 30, 1998.
Southwest/Walgreen's Shopping Center
Southwest/Walgreen's Shopping Center is an 83,698 square foot neighborhood
shopping center anchored by Southwest Supermarkets and Walgreen's Drug Store.
The center is located in Phoenix, Arizona. As of June 30, 1998, the center is
100% leased.
University Mall Shopping Center
The University Mall Shopping Center is s 315,596 square foot shopping center
located in Pembroke Pines, Florida (an independent municipality near Ft.
Lauderdale). The center is anchored by Uptons, Sports Authority, Ross Stores,
Office Max and Eckerd Drugs. Separate buildings are also leased to TGI Fridays,
WAG's and Taco Bell. Additionally, Pollo Tropical and Red Lobster and are
situated on out parcels that are owned by third parties. As of June 30, 1998,
the center is approximately 98% leased.
Pending Acquisitions
As of June 30, 1998, the Company was under contract to purchase three additional
shopping centers. They are Colony Plaza Shopping Center (closed on July 20,
1998) in Houston, Highland Square Shopping Center in Houston, and Twelve Oaks
Plaza in Tampa.
3. Financing Activities
On January 30, and February 18, 1998, the Company received proceeds from a
bridge loan with Nomura Asset Capital Corporation for approximately $53,700,000.
The loan was collateralized by five of the properties owned at December 31, 1997
and three of the acquisition properties (see Note 2) and carried an interest
rate of 8.1875%. The terms of the loan included a 1% loan origination fee and a
1.75% loan break-up fee. The proceeds of the loan were used to pay off the
mortgages on five original properties, to purchase four acquisition properties,
and for working capital. All but $3,000 of the loan was repaid out of the IPO
proceeds on March 13, 1998. All bridge loan costs were amortized to interest
expense in the first quarter of 1998.
On February 2, 1998 the Company retired mortgage loans secured by its Autobahn,
Bandera, Centennial, El Campo and Twin Lakes properties with funds from the
bridge loan. The total refinancing was approximately $16.1 million and included
approximately $232,000 in prepayment fees. All refinancing costs and unamortized
loan costs for these loans were written off in the first quarter of 1998 and are
reflected as an extraordinary item in the accompanying statements of operations.
On March 13, 1998, the Company completed the initial public offering of
7,600,000 shares of the Company's Common Shares at a price of $10.00 per share.
The net proceeds from the offering, after deducting the related issuance costs,
amounted to approximately $69.4 million. The proceeds of the offering were
applied to pay off the bridge loan, acquire properties, purchase all but 3.6% of
the outstanding limited partners' interests in the partnership that owns the
University Park Shopping Center, purchase the minority interest in
Centennial/Park Northern, L.P., repurchase existing short-term and convertible
debt, repurchase all outstanding preferred stock, and for working capital.
During the second quarter of 1998, the Company purchased the minority interest
in Centennial/Park Northern, L.P. for approximately $900,000. In addition, the
Company completed the acquisitions of all but 3.6% of the minority interests in
University Park, L.P.
Effective April 6, 1998, the Company completed the sale of 1,000,000 Common
Shares to the Underwriters in connection with the exercise of their
overallotment option. The sale of these 1,000,000 shares at $10.00 per share
provided net proceeds to the Company of $9,300,000, which will be used for
acquisitions and working capital.
<PAGE>
4. Notes and Mortgages Payable
The following table sets forth certain information regarding the indebtedness of
the Company as of June 30, 1998:
<TABLE>
<CAPTION>
Projected
Annual
Interest
Balance As of
June 30, Interest Maturity June 30,
DESCRIPTION 1998 Rate Date 1998
- ---------------------------- ------- ----------- -------- ----------
MORTGAGE PAYABLE:
<S> <C> <C> <C> <C>
University Park $ 4,750,267 9.30% 4/1/18 $ 438,080
McMinn Plaza I 359,324 8.25% 7/1/03 27,025
McMinn Plaza W 643,579 7.63% 11/1/02 44,588
Park Northern 2,708,128 8.37% 11/19/06 224,228
Hedwig Village II 1,241,425 10.75% 6/10/99 122,744
Hedwig III 2,308,793 10.75% 6/10/99 226,639
Benchmark 3,670,027 9.25% 8/1/05 325,448
University Mall 13,283,056 8.44% 11/1/06 1,078,723
Rosemeade 3,474,564 8.30% 10/24/07 277,506
Town 'N Country 2,478,064 7.50% 11/1/02 179,597
Big Curve 5,952,998 9.19% 10/1/06 524,615
Other 3,000 8.18% 8/1/98 245
----------- ----- -------- -----------
Total $40,873,225 8.79% $ 3,469,438
=========== ==== ===========
</TABLE>
The Company's indebtedness has interest rates ranging from 7.50% to 10.75%, with
a weighted average interest rate of 8.79%, and will mature between 1999 and
2018, with a weighted average remaining term to maturity of 9.24 years.
The Company has negotiated with a bank the terms of a $30,000,000 revolving
line-of-credit at 150 basis points over LIBOR. The term is for two years, with a
one year extension. The line will be secured by first liens on the Market at
First Colony, Mason Park, Autobahn, Bandera and El Campo shopping centers. The
Company expects to execute the line of credit agreement in the third quarter of
1998.
5. Per Share Data
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("Statement 128"), which specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. Basic earnings per share is computed based upon the
weighted average number of common shares outstanding during the period
presented. Diluted earnings per share is computed based upon the weighted
average number of common shares and dilutive common share equivalents
outstanding during the periods presented. The number of diluted shares related
to outstanding stock options is computed by application of the Treasury Stock
method. The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- --------------------------
Weighted Average Shares 1998 1997 1998 1997
- ----------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic EPS 9,459,333 912,489 5,904,889 912,489
Effect of dilutive securities:
Employee share options -- -- -- --
--------- ------- --------- -------
Diluted EPS 9,459,333 912,489 5,904,889 912,489
========= ======= ========= =======
Distributions per share declared $ 0.215 $ 0.398 $ 0.215 $ 0.398
========= ======= ========= =======
</TABLE>
Subsequent to June 30, 1998, an addtional $0.215 distribution per share was
declared and is to be paid on October 27, 1998.
The computations above do not assume the conversion of the Company's redeemable
debt and redeemable preferred shares in 1997 as they would be antidilutive to
earnings per share.
6. Advisory Agreement and Related Party Transactions
The Company is managed and advised by an entity ("FCA Corp."), affiliated with
one of the trust managers (the "Advisor"). The advisory agreement currently
provides for a fee based on 6.8% of adjusted funds from operations, as defined.
During the three and six months ended June 30, 1998, the Company incurred fees
to the Advisor in the amounts of $195,000 and $322,000, respectively. For the
corresponding periods in 1997, the Advisor fees were $78,000 and $156,000,
respectively.
During the three months ended June 30, 1998, the Company acquired the Town 'N
Country Shopping Center (Town `N Country) (see Note 2) from a partnership
affiliated with individuals who serve on the Company's non-voting Advisory
Board. Town `N Country was purchased for approximately $5,000,000, including
assumption of approximately $2,500,000 in existing debt with a fixed rate of
interest of 7.5%, issuance of 238,594 downREIT partnership units valued at
approximately $2,400,000, and cash. The downREIT units are convertible into UIRT
common shares of beneficial interest after one year.
7. Incentive Stock Option Plan
In connection with the completion of its IPO, the Company granted options (the
"Options") to purchase 300,000 Common Shares to the trust managers, certain
executive officers, and to the Advisor for the benefit of certain Advisor
employees, including the Company's executive officers. These Options are
exercisable at $10.00 per share and will vest evenly over a four-year period
commencing January 1, 1999. These Options may also be assigned, in whole or in
part, directly to the beneficiaries for whom the Advisor is holding them.
8. Pro Forma Financial Information
The following unaudited pro forma condensed consolidated statement of operations
is presented as if each of the acquisitions described in Note 2 and the
financing activities described in Note 3 had all occurred as of January 1, 1997.
<TABLE>
<CAPTION>
Six Months Ended
----------------
6/30/98 6/30/97
------- -------
<S> <C> <C>
Revenue $ 9,594,000 $9,398,000
=========== ==========
Income before extraordinary item $ 203,000 $2,680,000
=========== ==========
Net income $ 203,000 $2,680,000
=========== ==========
Basic and diluted net income per share
amounts $ 0.02 $ 0.28
=========== ==========
</TABLE>
9. Subsequent Events
On July 20, 1998, the Company acquired the Colony Plaza Shopping Center, an
80,000 square foot neighborhood shopping center in Houston of which a
Albertson's owns its 53,000 square foot anchor space.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the accompanying
condensed consolidated financial statements and notes thereto. Historical
results and trends which might appear should not be taken as indicative of
future operations.
The Company has been operating since 1989 as a Texas REIT engaged in the
acquisition, ownership, management, leasing and redevelopment of community
shopping centers in the Sunbelt region of the United States. The Company focuses
on purchasing properties anchored primarily by supermarkets, drug stores and
major retail tenants located in this region.
United Investors Realty Trust owned 17 community and neighborhood shopping
centers at June 30, 1998. Of the Company's properties, 10 are located in Texas
(including five in Houston). The remaining properties are located in Arizona
(three), Florida (two), and Tennessee (two). The Company has approximately 335
leases and 325 different tenants. Leases for the Company's properties range from
less than a year for smaller spaces to over 25 years for larger tenants. Leases
generally provide for minimum lease payments plus contingent payments for the
tenants' portion of taxes, insurance, and common area maintenance expenses; some
leases also provide for contingent payments based on a tenant's sales volume.
Most of the Company's properties are anchored by grocery stores, drug stores, or
other national or regional credit tenants.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1998
Net income was $1,515,000 or $.16 per share for the second quarter of 1998, up
from $26,000, or $.02 per share, for the same quarter of 1997. The increase in
net income from 1997 to 1998 is due primarily to the Company's acquisitions
since December 31, 1997.
Rental revenues were $4,540,000 for the second quarter of 1998, as compared to
$1,570,000 for the second quarter of 1997. This increase relates almost totally
to acquisitions.
Interest expense increased by $131,000 from $608,000 in 1997 to $739,000 in
1998. This increase was due mainly to the increase in the average debt
outstanding between periods, from $27,000,000 for 1997 to $40,000,000 for 1998.
The increase in debt outstanding is primarily a result of expenditures for
acquisitions since December 31, 1997. The increases in depreciation and
amortization, operating expenses, and ad valorem taxes were primarily the result
of the Company's acquisitions.
SIX MONTHS ENDED JUNE 30, 1998
Net loss was $(789,000) or $(0.13) per share in 1998, compared to net income in
1997 of $85,000, or $0.10 per share. Included in net loss for 1998 is $2,241,000
in non-recurring amortization of bridge financing costs and $232,000 of
extraordinary charges, or an aggregate $0.42 per share in non-recurring and
extraordinary expenses. Earnings in 1998 before such charges were $1,684,000 or
$0.29 per share. There were no non-recurring or extraordinary charges in 1997.
The increase in earnings before non-recurring and extraordinary charges is
primarily a result of operating income generated by properties acquired since
December 31, 1997.
Rental revenues increased 133% to $7,210,000 in 1998, compared with $3,074,000
for the same period of the prior year. This increase relates almost totally to
acquisitions since December 31, 1997.
Interest expense, before non-recurring amortization of bridge financing costs,
increased by $531,000 from $1,219,000 in 1997 to $1,750,000 in 1998. Weighted
average debt outstanding increased from $28,000,000 for 1997 to $40,000,000 for
1998. The increase in weighted average debt outstanding is primarily a result of
expenditures for acquisitions, including the amounts borrowed and repaid under
the bridge financing arrangement.
The increases in depreciation and amortization, operating expenses and advalorem
taxes were primarily the result of the Company's acquisitions since December 31,
1997.
Liquidity and Capital Resources
The Company acquired four shopping centers for approximately $35,000,000 and
refinanced approximately $16,000,000 in mortgage debt in February 1998 with the
proceeds of a $53,700,000 bridge financing arrangement. In March and April 1998,
the Company sold 8,600,000 common shares of beneficial interest through an
initial public offering and raised approximately $79,000,000 net of offering
costs. Such proceeds were used to repay the bridge financing, acquire
partnership units from minority interest holders, retire preferred shares and
convertible debt, and acquire five additional properties for approximately
$45,000,000 (including $32,000,000 in assumed debt). At June 30, 1998, cash and
cash equivalents of approximately $11,610,000 were comprised of remaining IPO
proceeds and cash flow from operations for the six months then ended.
Cash flows provided by operations for the six months ended June 30, 1998 were
$2,459,000 versus $823,624 for the year earlier period. Substantially all of the
year to year difference is the result of operating income from properties
acquired since December 31, 1997 and the effect of changes in the amounts of and
interest rates on mortgage debt as a result of the refinancing (described below)
and the assumption of debt in connection with the acquisitions.
The nine properties acquired since December 31, 1997 comprise approximately
1,116,000 square feet of gross leaseable area, and were acquired subject to
approximately $32,000,000 in mortgage debt. In addition, one of the properties
was acquired by a limited partnership in which the Company is the sole general
and a majority limited partner; the limited partnership issued limited
partnership units to the sellers of the property in consideration of the sellers
contributing the property to the partnership. Such limited partnership units
were valued at approximately $2,386,000, and are convertible to 238,600 common
shares of beneficial interest of the Company after one year.
In connection with its intention to continue to qualify as a REIT for Federal
income tax purposes, the Company expects to continue paying regular dividends to
its stockholders. These distributions will be paid from operating cash flows
that are expected to increase due to property acquisitions and growth in rental
revenues in the existing portfolio and from other sources. Since cash used to
pay distributions reduces amounts available for capital investment, the Company
generally intends to maintain a conservative distributions payout ratio,
reserving such amounts as it considers necessary for the expansion and
renovation of shopping centers in its portfolio, debt reduction, the acquisition
of interests in new properties as suitable opportunities arise.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financing in a manner consistent with its intention to operate with a
conservative debt capitalization policy. The Company anticipates that adequate
cash will be available from operations to fund its operating and administrative
expenses, regular debt service obligations and the payment of distributions in
accordance with REIT requirements in both the short-term and long-term.
The Company expects to execute a revolving line of credit agreement during the
third quarter of 1998. Such line of credit, which initially will be
collateralized by five existing Texas properties, will provide for borrowings of
up to $30,000,000 at approximately 150 basis points over a London Interbank
Offered Rate.
The Year 2000 Issue
Many computer systems were designed and programmed in such a manner as to be
unable to recognize dates beyond December 31, 1999. In such cases, computer
applications could fail or create erroneous results by or at the year 2000 (the
"Year 2000 Issue").
Management has completed its evaluation of the risks of a material effect on the
Company's results of operations and financial condition with respect to its
management information systems and the Year 2000 Issue. The Company uses
application software, including its accounting and property management software,
which has been certified by vendors as being Year 2000-compliant. The Company's
network software vendor has publicly indicated that it will distribute patches
to make its software Year 2000-compliant in the third quarter of 1998.
Accordingly, management does not believe that the Company's results of
operations or financial condition will be materially affected by any future
costs to make its management information systems Year 2000-compliant.
In addition to management information systems, the Company's Year 2000 risks
include those related to "embedded technology," such as micro-controllers, and
to the Year 2000 Issues of third parties with which the Company has material
relationships. The Company has recently begun the initial phase of assessing
these risks.
With respect to embedded technology, this phase includes surveying each of the
Company's properties to determine which systems may be subject to disruptions.
These systems may include climate control, lighting, security, and
telecommunications. Management will also survey its major vendors, service
providers, and tenants to assess their Year 2000 readiness, and the potential
effects, if any, their Year 2000 Issues may have on the Company. Subsequent to
completion of these surveys, which is expected in the fourth quarter of 1998,
management will develop plans to minimize the risk of any adverse effect of the
Year 2000 Issue.
Management is not presently aware of any Year 2000 Issues related to embedded
technology or third parties that may adversely affect the Company. Based on the
relatively small number of properties and a low level of reliance on technology
for property operations, management does not expect that the results of the
surveys will indicate a need for material future expenditures. Management
expects to complete the development of any necessary action plans, including
cost estimates, in the fourth quarter of 1998.
Funds From Operations
The Company considers funds from operations to be an alternate measure of the
performance of an equity REIT since such measure does not recognize depreciation
and amortization of real estate assets as operating expenses. Management
believes that reductions for these charges are not meaningful in evaluating
income-producing real estate, which historically has not depreciated. The
National Association of Real Estate Investment Trusts defines funds from
operations as net income plus depreciation and amortization of real estate
assets, less gains and losses on sales of properties. Funds from operations does
not represent cash flows from operations as defined by generally accepted
accounting principles and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or to cash flows
as a measure of liquidity. Funds from operations increased to $2,225,000 for the
second quarter of 1998, as compared to $315,000 for the same period of 1997. For
the six months ended June 30, 1997, funds from operations totaled $2,805,000, up
$2,185,000 from the same period of the prior year. This increase relates almost
totally to the impact of the Company's acquisitions since December 31,1997.
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Calculation of Funds From Operations
and Funds Available for Distribution
Three Months Ended Six Months Ended
30-Jun-98 30-Jun-97 30-Jun-98 30-Jun-97
--------------------------------------------------------
Funds From Operations:
<S> <C> <C> <C> <C>
Net Income 1,515,332 25,825 (788,567) 84,725
Plus Depreciation Expense 689,355 289,447 1,100,070 535,915
Plus Loss on Early Extinguishment of Debt -- -- 232,532 --
Plus Write-off of Unamortized Bridge
Financing Costs -- -- 2,240,652 --
Plus Minority Interest
(Town' N Country) 20,000 -- 20,000 --
--------- ------- --------- -------
Funds From Operations 2,224,687 315,272 2,804,687 620,640
========= ======= ========= =======
Funds From Operations per Share and DownReit
unit 0.23 0.35 0.47 0.68
========= ======= ========= =======
Funds available for Distribution:
Funds From Operations 2,224,687 315,272 2,804,687 620,640
Plus Amortization of Financing Costs and
Leasing Costs 31,450 18,628 50,202 36,337
Less Tenant Improvements (57,215) (166,874) (70,256) (175,346)
Less Leasing Commissions (20,671) (23,764) (33,127) (54,819)
Less Capital Improvements (15,430) -- (23,202) --
Less Straight Line Rents (135,031) (10,857) (167,162) (23,648)
Other 22,000 -- 42,200 --
----------- ----------- ----------- -----------
Funds Available for Distribution $ 2,049,790 $ 132,405 $ 2,603,342 $ 403,164
========= ======= ========= =======
Funds Available for Distribution per Share
and DownReit unit $ 0.21 $ 0.14 $ 0.44 $ 0.44
========= ======= ========= =======
Basic and Diluted Weighted Average Number of
Shares and DownReit Partnership Unit 9,579,110 912,489 5,964,778 912,489
</TABLE>
PART II - Other Information
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities
On March 13, 1998, the Company completed its initial public offering of
7,600,000 of the Company's Common Shares at a price of $10.00 per share. Net
proceeds from the offering, after deducting the related issuance costs, amounted
to approximately $69.3 million. On March 18, 1998, the Company repurchased all
outstanding preferred shares at a 3% premium, plus outstanding dividends. The
total repurchase cost was $1.138 million. The following information is furnished
pursuant to Item 701 (f) of Regulation S-K in connection with the Company's IPO:
The effective date of the Securities Act registration: March 6, 1998.
The commission file number assigned to the subject registration statement:
333-29475.
The date on which the offering commenced: February 17, 1998
The date on which the offering terminated: March 10, 1998
The name of the underwriters: Morgan Keegan & Company, Inc., Dain, Rauscher
Incorporated, Scott & Stringfellow, Inc. and Southwest Securities, Inc.
The title of the securities registered: Common shares of beneficial
interest, no par value.
The number of shares registered: 8,740,000 shares (including underwriters'
overallotment of 1,140,000 shares).
Aggregate price of the offering amount registered: $87,400,000.
The number of shares sold: 7,600,000. (in addition, 1,000,000 shares of the
underwriters' overallotment were sold in April 1998 and the offering terminated
prior to the sale of the remaining 140,000 shares which were subject to the
overallotment option.)
Aggregate offering price of the securities sold: $76,000,000 (upon the sale
in April, 1998, an additional $10,000,000 of securities were sold.)
From the effective date of the Securities Act registration statement to the
ending date of the current reporting period, the amount of expenses incurred for
the Company's account in connection with the issuance and distribution of the
securities registered:
Underwriters' discounts and commissions $ 5,320,000
Accounting fees 446,453
Attorney's fees 230,815
Printing expenses 291,646
Miscellaneous filing fees and other expenses 387,191
-----------
$ 6,676,105
Such payments referred to above were not direct or indirect payments to
officers, directors, trust managers or general partners of the issuer or the
associates or affiliates of the issuer or any person owning 10% or more of any
class of equity securities of the issuer, nor were such payments referred to
above direct or indirect payments to others, except as indicated.
Net offering proceeds excluding the overallotment were: $69,323,895
Net offering proceeds including the overallotment were: $78,819,001
<PAGE>
From the effective date of the Securities Act registration to the end of
the current reporting period, the amount of net offering proceeds used for any
purpose for which at least 5% of the issuer's total offering proceeds has been
used, were:
Repay Bridge loan $53,683,912
Break-up fee on bridge loan 939,468
Cash portion of University Mall 4,891,837
Cash portion of Benchmark Crossing 1,979,876
Cash portion of Rosemeade 1,118,383
Cash portion of Town 'N Country 203,489
Cash portion of Big Curve 2,884,871
Purchase of University Park minority interests 891,800
Purchase preferred stock 1,138,210
Repay 10% and 11% short-term notes 700,000
Repay unsecured lines-of-credit 300,000
Repay 9% Redeemable Convertible Subordinated Notes 218,004
Fee to Southwest Securities, Inc. 184,000
Working Capital 190,045
-----------
$69,323,895
(1) Of this amount, $1,400,000 was applied to the repayment of a loan from
FCMT, a mortgage trust that is also externally advised by FCA Corp, the
Company's advisor. The loan had been used to facilitate the acquisition of the
University Mall shopping center.
(2) The Company acquired all but 3.6% of the outstanding limited partner
interests and now holds an undivided 96.4% interest in the partnership that
holds title to the University Park shopping center.
Except as described in the following sentence, such payments referred to above
were not direct or indirect payments to officers, directors, trust managers or
general partners of the issuer or the associates or affiliates of the issuer or
any person owning 1 0% or more of any class of equity securities of the issuer,
nor were such payments referred to above direct or indirect payments to others,
except as indicated. Three of the Company's trust managers own interests (each
less than 1%) in FCMT, to which the Company made the $1,400,000 loan repayment
referred to in footnote 1 above.
Certain statements in this document constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and section 21E
of the Securities Acts of 1934, and the Company intends that such
"forward-looking statements" be subject to the safe harbors created thereby. The
words "believe", "expect" and "anticipate" and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are subject to many uncertainties and factors relating to the Company's
operations and business environment that may cause the actual results of the
Company to be materially different from any future results expressed or implied
by such forward-looking statements. Examples of such uncertainties include, but
are not limited to, changes in interest rates, increased competition for
acquisition of new properties, unanticipated expenses and delays in acquiring
properties or increasing occupancy rates and regional economic and business
conditions.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 4. Submisson of Matters to a Vote of Security Holders-None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
INDEX TO EXHIBITS
** 10.30 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee,James H. Shimberg on
behalf of land owner
** 10.31 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
** 10.32 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT -
Town 'N Country, L.P.
10.33 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.34 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
(b) Reports on 8-K
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 11, 1998 for the purpose of reporting the acquisition
of the Big Curve Shopping Center.
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 25, 1998 for the purpose of reporting the appointment
of R. Steven Hamner to the position of Chief Financial Officer
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Big Curve Shopping Center.
27.1 Financial Data Schedule (filed herewith)
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INVESTORS REALTY TRUST
Dated: August 14, 1998 /s/ R. Steven Hamner
----------------------------
R. Steven Hamner,
Vice President,Chief Financial Officer
INDEX TO EXHIBITS
**10.30 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee,James H. Shimberg on
behalf of land owner.
** 10.31 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
**10.32 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT -
Town 'N Country, L.P.
10.33 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.34 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
(b) Reports on 8-K
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 11, 1998 for the purpose of reporting the acquisition
of the Big Curve Shopping Center
The Company's Current Report on Form 8-K dated June 10, 1998 and
filed on June 25, 1998 for the purpose of reporting the appointment
of R. Steven Hamner to the position of Chief Financial Officer.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Big Curve Shopping Center.
27.1 Financial Data Schedule (filed herewith)
** Filed Herewith
<PAGE>
United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
October 15, 1997
By Fax (813) 725-2689
Town `N Country Plaza of Tampa, Limited
&
Trustee, James H. Shimberg
on Behalf of Landowner
c/o Stuart S. Golding Company
27001 US Highway 19 North
Suite 2095
Clearwater, Florida 34621
Re: Town `N Country Shopping (the "Property")
Gentlemen:
Confirming our telephone conversations regarding the above-referenced
Property, you (as "Seller") have agreed to grant to United Investors Realty
Trust ("UIRT") and UIRT has agreed to acquire from Seller, an option (the
"Option") to purchase the fee estate and 89% of the groundlessee's estate in the
Property, on the terms and conditions set forth below. As consideration for the
Seller's granting of the Option, UIRT shall remit to Seller within five (5)
business days after receipt by UIRT of a fully executed duplicate original of
this letter agreement, the sum of five thousand dollars ($5,000), which sum (the
"Option Payment") shall be deemed earned by Seller upon receipt, but which
Option Payment shall be credited against the Purchase Price (defined below) in
the event that UIRT timely exercises the Option.
We have agreed that the current market value of the Property, including
the fee simple estate and the groundlease, is $4,918,000. If UIRT exercises its
option, it will purchase (i) the fee simple estate, subject to the groundlease,
but free and clear of any liens or mortgages, for a price of $250,000, all cash,
and (ii) the groundlessee's estate, free and clear of any liens or mortgages,
for a price of $4,668,000, all cash (collectively, the payments of (i) and (ii)
which aggregate the sum of $4,918,000, are hereinafter sometimes referred to as
the "Purchase Price" ). The Option may be exercised at any time on or after
January 1, 1998, but before July 1, 1998, upon fifteen (15) days' prior written
notice.
UIRT hereby agrees that the Property may be subjected to a five (5)
year first mortgage loan (the "Loan") in the maximum principal amount of
$2,500,000. The interest rate on the Loan shall not exceed 8.25% per annum. The
Loan may be amortized over a term of not less than 20 years and must be
prepayable at any time without premium, penalty or cost to UIRT. Assuming a
$2,500,000 first mortgage on the Property, upon exercise of the Option, UIRT
will pay Seller the sum of $2,418,000, all cash, for the Property, including the
fee and groundlessee estates. Closing adjustments will take into account any
reduction in the outstanding principal balance of the mortgage (i.e., the cash
portion of the Purchase Price will be increased by any reduction in the
principal balance outstanding on the Loan.)
Should you elect to place this Loan on the Property, and should UIRT
elect to repay it in full, UIRT will also agree to use its best efforts to
obtain permission, if you so desire, from one of its lenders to permit you to
guarantee a portion of any loans that UIRT has outstanding in order for you to
maintain your basis in the partnership interests to the extent of the
outstanding balance of the Loan being repaid. If such guarantee cannot be
arranged and the holder of the Loan will permit UIRT to take title subject to
the Loan (at no cost to and with no liability on the part of UIRT), UIRT agrees
that it will not repay (as opposed to refinance) the Loan for a period of two
years after UIRT exercises its Option.
In connection with such Loan, please provide us with a copy of the Loan
commitment and copies of all Loan document drafts so that we may review same
prior to your closing to ensure that the terms of the Loan are consistent with
the foregoing and are not otherwise objectionable to UIRT. In addition, please
pre-clear with us the identity of each party with whom you plan to contract for
professional services in connection with the closing of the Loan, including but
not limited to parties providing appraisals, structural engineering, Phase I
environmental reports and ADA reports, as well as surveyors.
The Rental Income on which we have based our estimated current market
value takes into account only the base rent of $2,250 per month payable by
Wunderland. In the event that, during the first five years from and after
Closing (of the Option exercise), Wunderland pays any percentage rent in excess
of the base rent, UIRT and Seller will share equally in such excess, provided,
however, that if there is any rent (or other revenue) concession that remains in
effect after the Closing during the lease term, the rental income that would
otherwise have been payable during the free rent period shall be set off against
the Seller's share of any percentage rent. Seller's share of such excess, if
any, will be paid in cash.
We have ignored some expenses at this Property that do not appear to be
recurring, although, in truth, there are always some such expenses. In addition,
I believe that a new roof at Town `N Country will be required within the next
several years. UIRT proposes a one-time adjustment to the estimated equity value
for the estimated cost of such roof. The same would be true if there are any
other non-recurring capital expenditures that should be made within the first
three to five years after the Closing. As far as the roof at Town `N Country is
concerned, I understand that only about 50,000 square feet need to be replaced
within the next three to five years and that the cost of such replacement will
run about $3.00 per square foot. If this understanding is confirmed by the
structural engineer, we can either make a one time adjustment to the purchase
price for this property of $200,000 or Seller can have the new roof installed
prior to Closing and at Seller's expense. If Seller chooses to do this work
itself, UIRT will want to approve the roofing material and the roofing
contractor (such approval not to be unreasonably withheld or delayed). As part
of UIRT's diligence (which it will conduct during the thirty (30) days following
receipt by UIRT of a fully executed copy of this letter agreement), UIRT will
have the Property inspected for deferred maintenance and capital repair items by
a structural engineer.
There are a number of other issues that we have discussed and are
hereby incorporated into this non-binding letter of intent. These include the
following:
1. The Purchase Price will be paid, in part, by UIRT paying
off (without penalty) the entire Loan, if any, or taking subject to UIRT's
pro-rata share of the actual principal balance outstanding on the Loan, if any,
on Town `N Country, on the Closing Date. The Purchase Price will also be
adjusted by various closing adjustments including, but not limited to
pro-rations for rent, expenses, annualized CAM and other expense recoveries,
(the tax and/or insurance recoveries may have to be pro-rated post closing as to
some of the tenants), percentage rents based on the percentage rent payable
during the current lease year for each tenant (this may be a post-closing
pro-rata adjustment), tax and insurance deposits, if any, that are held by the
mortgagee and assignable and assigned to UIRT at Closing, security deposits,
rent concessions and persistent delinquencies, as well as other pro-rations
typically made in the Tampa area with respect to transactions of a similar
nature to the one contemplated herein. The Seller will pay for title abstract
charges and a title insurance policy in the amount of the Purchase Price (as
adjusted), a current (within 30 days of the date of a binding purchase contract)
survey, and ADA report, as well as transfer taxes or deed stamps and any
mortgagee consent or assumption fees or related costs and any documentary stamps
incurred in connection with the assumption (if required by the mortgagee) of the
mortgage. UIRT will be responsible for any costs incurred with respect to an
engineering study (or update), environmental study report (or update), audit
fees (for the S-11), and recording charges for the deeds and recording charges
for any mortgage assumption agreement. Each party will pay for its own legal
fees and will share in any purchase contract escrow fees. UIRT will front the
cost of the current survey (or survey updates), but the Seller will reimburse
UIRT for this cost at Closing, provided, however, that if Seller obtains a
survey in connection with its anticipated Loan on Town `n Country, UIRT will
only be required to front the cost of the survey update for this Property. UIRT
would like the Seller to order such surveys or survey updates so that we can
take advantage of your local knowledge and expertise.
2. If any lease is replaced prior to Closing, we will adjust the
current market value (and Purchase Price) to reflect the replacement. Similarly,
if there is any rent concession (including base rent, CAM, real estate tax
and/or insurance premium reimbursement) the projected extension thereof beyond
the Closing Date will be a closing adjustment. Along the same lines, in the
event of any persistent delinquency (i.e., where a tenant is delinquent for two
consecutive months immediately prior to Closing or for any three months out of
the last twelve months immediately prior to Closing), there will be an equitable
adjustment to the Purchase Price (or the Seller may master-lease or otherwise
guaranty the rent payments for the duration of the lease term).
3. UIRT will not exercise the Option unless it has completed, by
February 15, 1998, its initial public offering of approximately $80,000,000.
4. Considering our anticipation of an ongoing relationship between the
parties, we welcome your suggestion that you have some input into the
substantive issues that UIRT will face after the IPO. In this regard, you had
suggested that you have some Board representation. Because of the inherent
conflict of interest that this poses, not to mention the example to other
prospective sellers that this poses, we propose to give the three of you (David
J. Scher, Loren M. Pollack and James H. Shimberg) as a group (the "Group") a
seat on UIRT's Advisory Board which UIRT is forming. The Advisory Board will
participate in all meetings, but its members will have no vote. You could
rotate, internally, the membership on this Board on an annual basis. UIRT will
grant to the Seller, options to purchase an aggregate of 3,000 shares of UIRT
common stock at the IPO price. These options will vest over a three year period
(so long as the Group, or any one of you, is on the Advisory Board) Each of you
will be entitled to exercise options for 333 shares per year commencing January
1, 1999. Thereafter, commencing January 1, 2002, 1,000 options per year will be
granted to the three of you as a group (to be allocated among you as you shall
direct) at an exercise price equal to the market price of UIRT's common stock on
the date of the grant. In the event of a merger or similar event pursuant to
which UIRT is not the surviving entity, all outstanding options will be deemed
vested and UIRT will purchase them at a price equal to the excess of the market
price of the shares immediately preceding the merger or similar event and the
option exercise price. UIRT will expect one member of your Group to attend all
meetings of the Trust Managers and will reimburse such member of the Advisory
Board for his or her expenses incurred in attending such meetings. If more than
one of your Group wishes to attend a Board Meeting, that will be fine, although
only one of you will be reimbursed. Although, an Advisory Board member will have
no vote, such member will not be subject to election by the shareholders. The
Advisory Board members will be appointed by the Trust Managers. I think that
with respect to our anticipated purchase of other properties owned by you and
the possibility of joint venture development with you, it is important that we
avoid any conflicts of interest, especially in the initial years of our public
format. Hopefully, the Advisory Board will serve our respective needs and
desires.
5. We understand that you own or control a number of additional
shopping centers in the central Florida area that you may have an interest in
either selling or exchanging for OP Units. We will be more than happy to explore
this with you after the completion of our IPO. Should we agree on a purchase
price for any or all of these properties, and you wish to exchange them for OP
Units, we will do so at a discount off of the UIRT market price of $0.25 per
share. In order to avoid any perception of manipulation, we propose to use the
average market price of the UIRT common stock for the 30 trading days
immediately prior to the acquisition.
6. With respect to the Twelve Oaks Shopping Center, I understand that
you have temporarily withdrawn this property from consideration for sale pending
your ability to find a replacement tenant for the Craft Depot lease. We respect
your decision on this matter and wish you Godspeed. When you have a new tenant
in place, we will be happy to revisit the acquisition of this center and the
price that we will be willing to pay for it. Should we go forward with this
center, we will also grant to your group an option for an additional 3,000
shares of UIRT common stock. The option exercise price will be tied to the
market price of the stock at the time of the grant.
7. Upon timely remittance of the Option Payment, UIRT may conduct its
due diligence investigation of the Property. In connection therewith, UIRT may
inspect and make copies of Seller's books and records in so far as they pertain
to the operation and maintenance of the Property for the years 1994, 1995 and
1996 and year-to-date 1997. UIRT may also make, or cause its agents to make,
physical inspections of the Property. Seller shall remit to UIRT monthly a
current rent roll for the Property and agrees to keep UIRT informed on a current
basis regarding any new, modified, or canceled leases and rent concessions and
maintenance and capital expenditures.
Thanks again to each of you for your cooperation in this matter.
Sincerely,
Lewis H. Sandler
President and CEO
Approved:
Town `N Country Plaza of Tampa, Limited
By: Town `N Country Park, Inc.
its general partner
By: _______________________________________ Date: ___________________
Name: _____________________________________
Title: ____________________________________
PSK Associates, Limited Partnership
its general partner
By: Stuart S. Golding Company
as agent
By: _______________________________________ Date: ____________________
Name: ______________________________________
Title: _____________________________________
James H. Shimberg as Trustee for fee landowners
Date: ____________________
By: _________________________________________
Name: James H. Shimberg_____________________
Title: Trustee______________________________
cc: Rob Scharar
Randy Keith
Dan Jones
<PAGE>
REAL ESTATE PROMISSORY NOTE
$2,500,000.00 Tampa, Florida
December l6, 1997
1. Payment Schedule
FOR VALUE RECEIVED, the undersigned, and if more than one,
each of them jointly and severally (hereinafter called "Maker") promises to pay
to the order of SOUTHTRUST BANK, NATIONAL ASSOCIATION (together with any
subsequent holder of this Note, hereinafter called "Holder") at its office in
Tampa, Florida, or at such other place as Holder may from time to time
designate, the principal sum of Two Million Five Hundred Thousand,
($2,500,000.00), with interest thereon from the date hereof on the unpaid
balance of principal, at a fixed interest rate of Eight and One Quarter percent
(8.25%) per annum. The foregoing interest and principal will be payable as
follows.
a. commencing on the 10th day of January 1998, and continuing on the like day of
each and every month thereafter, through and including the 10th day of November,
2002, Maker shall pay to Holder equal monthly installments consisting of
principal and interest in the amount of Twenty One Thousand Four Hundred Eighty
Seven Dollars and Thirty One Cents ($21,487.31).
b. on the 10th day of December, 2002 ("Maturity Date"), a final payment shall be
due and payable in the amount of the entire unpaid principal, together with all
accrued and unpaid interest, and any other amounts due in connection with this
Note.
c. notwithstanding (a) or (b) above, in the event the Maker's Debt Service Ratio
is less than 1:20:1:00 at the time of Holder's review of Maker's periodic
financial statements as provided in Loan Agreement, Maker shall pay to Holder, a
sum equal to an amount sufficient to reduce the unpaid principal so that after
reduction of principal the Debt Service Ratio shall be as required.
2. Loan Agreement
This Note is secured as described in that certain Loan
Agreement of even date between Maker and Holder including, without limitation,
and secured by all of the property encumbered individually by:
a. that certain Mortgage and Security Agreement dated of even date herewith and
recorded in the Public Records of Hillsborough County, Florida, encumbering the
real property described therein ("Mortgage");
b. that certain Assignments of Leases, Rents, Profits and Contract Rights dated
of even date herewith and recorded in the Public Records of Hillsborough County,
Florida;
c. that certain UCC-1 Financing Statement filed with the Florida Secretary of
State; and
d. that certain UCC-1 Financing Statement recorded in the Public Records of
Hillsborough
County, Florida;
including all proceeds thereof and rights in connection with all property
described therewith (which property, together with additions and substitutions,
is called the "Collateral"). Holder will have such rights with respect to the
Collateral as is authorized by law. The parties expressly agree that if the
Collateral or a portion thereof is real estate, all of the covenants,
conditions, and agreements contained in the Mortgage are hereby made a part of
this Note. If Maker has other loans with Holder, or if Maker takes out other
loans with Holder in the future, collateral securing those loans will also
secure this Note. All provisions and terms of the Loan Agreement are expressly
made a part hereof by reference with the same effect as if set forth herein.
3. Late Charges
If any payment is more than 10 days late, Maker shall pay Holder, without notice
or demand, a late charge equal to 5% of the unpaid payment. The foregoing late
charge is provided to compensate Holder for its expense in collecting and
administering delinquent payments and is not to be construed as interest. This
provision for late charges shall not be deemed to extend any applicable cure or
grace provision.
4. Interest
Interest hereunder, if not paid when due, may at Holder's option, without notice
to Maker, be added to the principal balance and bear interest at the interest
rate applicable to principal.
After the maturity or due date for any payment due hereunder, through
acceleration or otherwise, interest will accrue on the principal balance
remaining unpaid at the highest nonusurious lawful rate (Default Rate) until
paid provided that if any such default is cured within any applicable grace
period, Holder shall waive such additional interest. All payments hereunder will
first be credited to interest and lawful charges then accrued and the remainder
to principal. All interest on this Note will be computed on the basis of the
actual number of days elapsed in a 360-day year, comprised of twelve 30-day
months, except Default Rate which shall be computed on the basis of the actual
number of days elapsed in a 365 day year (366 days of leap year).
In no event will Holder be entitled to unearned or unaccrued interest or other
charges or rebates, except as may be authorized by law; nor will any such party
be entitled or receive at any time any such charges not allowed or permitted by
law, or any interest in excess of the highest lawful rate. Any payments of
interest in excess of the highest lawful rate will be credited by Holder on
interest accrued or principal or both; except that Maker will have an option to
demand refund as to any such interest or charges in excess of the highest lawful
rate.
5. Guaranty
The indebtedness evidenced by this Note, and all other indebtedness of Maker to
Holder, however
and whenever incurred or evidenced, whether primary, secondary, direct,
indirect, absolute, contingent, sole,
joint, or several, due to become due, or which may be hereafter contracted or
acquired, whether arising in the
ordinary course of business or otherwise (hereinafter with this Note,
collectively called "Liabilities") is
guaranteed by those certain Continuing and Unconditional Guaranties of even
date executed by LOREN M. POLLACK, H.
SARA GOLDING SCHER, PAUL R. GOLDING, KENNETH A. GOLDING, MANDELL SHIMBERG
AND JAMES H. SHIMBERG (herein
"Guarantors").
6. Prepayment
Prepayment in full of the principal amount, plus accrued
interest, of the Note will be accepted by Holder at any time during the term of
the Note; without penalties.
7. Default
Maker will be in default under this Note upon: (a) nonpayment of any interest or
principal under this Note for a period of 10 days after payment is due; (b)
there shall occur any Event of Default as provided in the Loan Agreement or any
other Loan Document referenced therein; (c) dissolution, termination of
existence, insolvency, or business failure of any Maker, or death of any
Guarantor, (unless an additional individual guarantor, acceptable to Lender,
executes and delivers an unconditional and continuing guaranty, in form
acceptable to Lender) appointment of a receiver of any part of the property of
any such party, assignment for the benefit of creditors by or the commencement
of any proceedings in bankruptcy or insolvency by or against any Maker or
Guarantor; (d) the entry of a judgment against any Maker or Guarantor; (e) the
issuing of any attachment or garnishment, or the filing of any lien, against any
property of Maker or Guarantor; (f the taking of possession of any substantial
part of the property of any Maker or Guarantor at the instance of any
governmental authority; (g) the merger, consolidation, reorganization of Maker
or the occurrence of any event which results in a change of ownership,
management or control of any Maker (except the admission or withdrawal of a
limited partner of maker provided any limited partner admitted executes and
delivers a continuing and unconditional guaranty, in form acceptable to Lender)
(h) falsity in any material respect of, or any material omission in, any
representation or statement made to Holder by or on behalf of any Maker or any
Guarantor in connection with the loan evidenced by this Note, including without
limitation, any representation or statement made in the Loan Agreement; (i) the
pledge, sale, conveyance, encumbrance, assignment, transfer, or granting of a
security interest by Maker of any equity interest in any of the Collateral
(whether voluntarily or involuntarily or directly or indirectly).
8. Remedies
Holder will have all of the rights and remedies of a creditor, mortgagee, and
secured party under all applicable law, or, as otherwise provided in the Loan
Agreement. Without limiting the generality of the foregoing, upon the occurrence
of any monetary default under this Note and such default is not cured within ten
(10) days from the occurrence of such default, or any other applicable cure
period as provided in the Loan Agreement, Holder may at its option and without
notice or demand: (1) declare the entire unpaid principal and accrued interest
accelerated and due and payable at once, together with any and all other
Liabilities of any Maker or any of such Liabilities selected by Holder; and (2)
set off against this Note all money owed by Holder in any capacity to each or
any Maker or Guarantor whether or not due and also set off against all other
liabilities of each Maker to Holder all money owed by Holder in any capacity to
any Maker or Guarantor, and Holder will be deemed to have exercised such right
of setoff and to have made a charge against any such money immediately upon the
occurrence of such default although made or entered on the books subsequent
thereto. Upon disposition of any Collateral after the occurrence of any default
hereunder, Maker and Guarantor will be and will remain liable for any
deficiency; and Holder shall account to Maker and Guarantor for any surplus, but
Holder shall have the right to apply all or part of such surplus (or to hold the
same as a reserve) against any and all other Liabilities of each or any Maker to
Holder.
Holder may, at any time whether or not this Note is due: (i) pledge or transfer
this Note and its interest in the Collateral, whereupon Holder will be relieved
of all duties and responsibilities hereunder and relieved from any and all
liability with respect to any Collateral so pledged or transferred, and pledges
or transferee will for all purposes stand in the place of Holder hereunder and
have all the rights of Holder hereunder; (ii) transfer the whole or any part of
the Collateral into the name of itself or its nominee; (iii) demand, sue for,
collect, or make any compromise or settlement it deems desirable with reference
to the Collateral; (iv) take possession or control of any proceeds of the
Collateral; and (v) exercise all other rights necessary or required, in Holder's
discretion, in order to protect its interests under this Note.
9. General Provisions
a. No delay or omission on the part of Holder in exercising any right hereunder
will operate as a waiver of such right or of any other rights under this Note.
Presentment, demand, protest, notice of dishonor, and all other notices are
hereby waived by each and every Maker and Guarantor. Maker and Guarantor jointly
and severally, promises and agrees to pay all costs of collection and reasonable
attorney's fees, including reasonable attorney's fees of any suit, out of court,
in trial, on appeal, in bankruptcy proceedings or otherwise, incurred or paid by
Holder in enforcing this Note or preserving any right or interest of Holder
hereunder; Any notice to Maker will be sufficiently served for all purposes if
placed in the mail, postage prepaid, addressed to, or left upon the premises at
the address shown below or any other address shown on Holder's records.
b. Each Maker and Guarantor hereby expressly consents to any and all extensions,
modifications, and renewals, in whole or in part, including but not limited to
changes in payment schedules and interest rates, and all delays in time of
payment or other performance which Holder may grant or permit at any time and
from time to time without limitation and without any notice to or further
consent of any Maker. Each Maker and Guarantor will also be bound by each of the
foregoing terms, without the requirement that Holder first go against any
security interest otherwise held by Holder.
c. This Note shall be governed by, construed and enforced in accordance with the
laws of the State of Florida without reference to the choice of law rules or
conflict of law rules in that state.
d. WAIVER OF JURY TRIAL. MAKER, GUARANTOR AND HOLDER (BY ITS ACCEPTANCE OF THIS
NOTE) HEREBY AGREE AS FOLLOWS: (A) EACH OF THEM KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY,
IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LlTlGATION (AN "ACTlON")
BASED UPON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE OR ANY
RELATED DOCUMENTS, INSTRUMENTS, OR AGREEMENTS (WHETHER ORAL OR WRlTTEN AND
WHETHER EXPRESS OR IMPLIED AS A RESULT OF A COURSE OF DEALING, A COURSE OF
CONDUCT, A STATEMENT, OR OTHER ACTION OF EITHER PARTY); (B) NEITHER OF THEM MAY
SEEK A TRIAL BY JURY IN ANY SUCH ACTION; (C) NEITHER OF THEM WILL SEEK TO
CONSOLIDATE ANY SUCH ACTION (IN WHICH A JURY TRIAL HAS BEEN WAIVED) WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND (D)
NEITHER OF THEM HAS IN ANY WAY AGREED WITH OR REPRESENTED TO THE OTHER OF THEM
THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
e. If any part of this Note cannot be enforced, the remaining provisions of this
Note shall continue in full force and effect and shall be enforceable against
Maker.
f. Holder shall not be deemed to be a partner or joint
venturer with Maker or any Guarantor or any other parties. Maker and Guarantor
agree to indemnify and hold Holder harmless from and against any and all
liabilities, damages, claims, demands, costs, expenses and attorneys' fees
resulting from such a construction of the parties and their relationship.
FLORIDA DOCUMENT EXCISE TAX HAS BEEN PAID AND THE PROPER
DOCUMENTARY STAMPS ARE AFFIXED TO THE MORTGAGE AND SECURITY
AGREEMENT SECURING THIS NOTE.
- ------------------------------------------
JAMES H. SHIMBERG, PRESIDENT
TOWN 'N COUNTRY PLAZA OF TAMPA, LTD.
BY OWN 'N COUNTRY PARK, INC., a Florida Corporation
- ------------------------------------------
JAMES H. SHIMBERG, PRESIDENT
P5K, Inc., a Florida Corporation A General Partner
Its President
Principal Mailing Address: 27001 U.S. Highway 19N, Suite 2095
Clearwater, Florida 34621
FOR CLERK'S OFFICE USE
PREPARED BY AND RETURN TO:
FRANK J. GRECO, ESQUIRE
HARRIS, BARRETT, MANN & DEW
P.O. DRAWER i44i
ST. PETERSBURG, FL 33731-1441
MORTGAGE MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into this 15th day of May 1998, by and between
James H. Shimberg, individually and as trustee ("Shimberg") and Town 'N Country
Plaza of Tampa, Ltd ("TNC") (herein collectively called "Mortgagor"), and
SouthTrust Bank, National Association (herein, "Mortgagee").
WITNESSETH:
WHEREAS, Shimberg is the owner in fee simple of that certain real property
situate, lying and being in Hillsborough County, Florida, more particularly
described on Exhibit "A" attached hereto and by reference made a part hereof
(herein, "Property"); and
WHEREAS, Mortgagee is the owner and holder of that certain Promissory Note dated
December 16, 1997, in the original principal amount of $2,500,000.00 (herein,
"Note"), made by TNC to Mortgagee, secured by Mortgage dated December 16, 1997,
and filed for record December 18, 1997 in O.R. Book 8837, Page 0127, Public
Records of Hillsborough County, Florida executed by Mortgagor (herein,
"Mortgage"); and
WHEREAS, the Mortgage now encumbers the Property described in the Mortgage, and
in Exhibit "A" attached, and the total indebtedness secured by the Mortgage, and
represented' by the Note is Two Million Four Hundred Seventy Nine Thousand Six
Hundred Ninety Three Dollars and 17/100 ($2,479,693.17) plus accrued interest of
Seventeen Thousand Six Hundred Thirteen Dollars and 52/100 ($17,613.52), as of
May 11, 1998, and with a per diem interest rate of $568.2630; and
WHEREAS, the Mortgagor has requested Mortgagee to modify the Note and Mortgage,
and Mortgagee has agreed to such modification.
NOW, THEREFORE, the parties hereto in consideration of the premises, and more
particularly in order to induce Mortgagee to modify the Note and Mortgage, do
covenant and agree as follows:
1. It is hereby agreed by and between the parties hereto that the total unpaid
principal plus accrued interest under the Note and Mortgage held by Mortgagee is
$2,497,306.69 as of May 11,1998, and in lieu of the interest rate specified in
the Note and Mortgage, the interest rate from the date hereon on the unpaid
principal balance of the Note and Mortgage shall be Seven and one-half percent
(7.5%) per annum.
2. That Mortgage is a valid first lien with interest thereon as provided
therein, and that there are no defenses or offsets to the Mortgage or Note.
3. That when the terms and provisions contained in the Note and Mortgage in any
way conflict with the terms and the provisions contained in this Agreement, the
terms and provisions herein contained shall prevail, and that as modified by
this Agreement, the Note and Mortgage, and all of the other terms and conditions
contained therein, are hereby ratified, confirmed and shall remain in full force
and effect.
4. Except as provided in this Agreement the obligations secured by the Mortgage
are unaffected, unchanged and unimpaired. By entering into this Agreement, the
parties, have no intention whatsoever to extinguish or discharge the obligations
secured by the Mortgage, or to effect any novation or to release or discharge
the lien of the Mortgage, or change or vary the Mortgage lien's priority status.
5. This Agreement shall bind and apply to the parties hereto, their respective
successors and assigns.
6. This Agreement may be executed in counterparts each of which so executed
shall be deemed an original which all taken together shall constitute one and
the same instrument.
IN WITNESS WIIEREOF, the parties hereto have executed this Agreement under seal
as of the day and year first above written.
Signed, Sealed and Delivered in the Presence of:
LORI A. DYER
JAMES H. SHIMBERG, JR.
"Mortgagor":
James H. Shimberg, Individually
and as Trustee
Town 'N Country Plaza of Tampa, Ltd.
By: Town 'N Country park, Inc., a Florida corp.
Its General Partner
James H. Shimberg, President
By: PSK, Inc., a Florida corp.
A General Partner
H. Sara Golding Scher
Its President
Town 'N Country Plaza of Tampa, Ltd.
By: own N Country' Park, Inc., a Florida corp.
By: PSK, Inc., a Florida corp. A General Partner
H. Sara Golding Scher
Its President
"Mortgagee":
SouthTrust Bank,
National Association
By:
Craig H. Carrier
As its: Senior Vice President
The undersigned, Guarantors of the Mortgage and Note, acknowledge and consent to
the terms of the aforesaid Mortgage Modification Agreement.
"Guarantors"
Loren M. Pollack
H. Sara Golding Scher
Paul R. Golding
Kenneth A. Golding
Mandell Shimberg
James H. Shimberg
"Mortgagee":
SouthTrust Bank, National Association
By:
Craig H. Carrier
As its: Senior Vice President
The undersigned, Guarantors of the Mortgage and Note, acknowledge and consent to
the terms of the aforesaid Mortgage Modification Agreement.
"Guarantors"
Loren M. Pollack
H. Sara Golding Scher
Paul R. Golding
Kenneth A. Golding
Mandell Shimberg
James H. Shimberg
"Mortgagee":
SouthTrust Bank, National Association
By:
Craig H. Carrier
As its: Senior Vice President
The undersigned, Guarantors of the Mortgage and Note, acknowledge and consent to
the terms of the aforesaid Mortgage Modification Agreement:
"Guarantors"
Loren M. Pollack
H. Sara Golding Scher
Paul R. Golding
Kenneth A. Golding
Mandell Shimberg
James H. Shimberg
"Mortgagee":
SouthTrust Bank, National Association
By: Frank A. Boullosa
As its: Senior Vice President
The undersigned, Guarantors of the Mortgage and Note, acknowledge and consent to
the terms of the aforesaid Mortgage Modification Agreement.
"Guarantors"
Loren M. Pollack
H. Sara Golding Scher
Paul R Golding
Kenneth A. Golding
Mandell Shimberg
James H. Shimberg
STATE OF Florida
COUNTY OF Hillsborough
The foregoing instrument was acknowledged before me this 20th day of May, 1998,
by as Senior Vice President of SouthTrust Bank, National Association,
who is personally known to me who has produced
----------------------
_________________________ as identification.
Gail A. Clayton
My Commission #CC524284
Expires: January 11, 2000
Bonded Thru Notary Public Underwriters
STATE OF ____________
COUNTY OF __________
The foregoing instrument was acknowledged before me this _____ day of
__________________, 1998, by James H. Shimberg, as President of Town 'N Country'
Park, Inc., general partner of Town 'N Country Plaza of Tampa, Ltd., on behalf
of the partnership, who is personally known to me or who has produced
_______________________ as identification.
STATE OF _____________
COUNTY OF ___________
The foregoing instrument was acknowledged before me this _____ day of
___________________, 1998, by Craig H. Carrier, as Senior Vice President of
SouthTrust Bank, National Association, who is personally known to me or who has
produced _________________________ as identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
STATE OF
COUNTY OF
The foregoing instrument was acknowledged before me this day of
____________________ 1998, by James H. Shimberg, as President of Town 'N Country
Park, Inc. ,general partner of Town 'N Country Plaza of Tampa, Ltd., on behalf
of the partnership, who is personally known to me, or Wh o has Produced as
identification.
Notary Public
My Commission Expires: ~~
Serial Number:
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this day of 18th May, 1998,
by H. Sara Golding Scher, President of PSK, Inc, a Florida corp. who is
personally known to me or who has produced drivers license as identification.
Lora A. Dyer
My Commission #CC618678 EXPIRES
February 9, 2001
Bonded Thru Troy Fain Insurance, Inc.
Printed Name: Lori A. Dyer
Notary Public
My Commission Expirs: 2-9-2001
Serial Number: CC618678
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 15th day of May,1998,
by Loren M. Poilack who is personally known to me or who has produced
_____________________ as identification.
Bonded Thru Troy Fain Insurance, Inc.
Printed Name: Lora A. Dyer
Notary Public
My Commission Expires 2-9-2001
Serial Number: CC618678
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 18th day of May 1998,
by H. Sara Golding Scher, who is personally known to me or who has produced
________________ as identification.
Notary Public
My Expires:
Serial Number
STATE OF NEW MEXICO
COUNTY OF SANTE FE
The foregoing instrument was acknowledged before me this 18th day of May, 1998,
by Paul R. Golding, who is personally known to me or who has produced driver's
license as identification.
Printed Name: Arthur A. Fields
Notary Public-State of New Mexico
My Commission Expires: 9/10/2001
Serial Number: N/A
District of Columbia
The foregoing instrument was acknowledged before me this 18th day of May
1998, by Kenneth A. Golding,
who is personally known to me or who has produced
driver's license as identification.
Printed Name: Carolyn Davis
Notary Public
My Commission Expires: 8-14-2000
Serial Number:
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 19th day of May 1998,
by H. Sara Golding Scher, who is personally known to me or who has produced
_____________ as identification.
Bonded thru Troy Fain Insurance, Inc.
Printed Name: Lori A. Dyer
Notary Public
My Commission Expires:2-9-2001
Serial Number: CC618678
STATE OF New Mexico
COUNTY OF
The foregoing instrument was acknowledged before me this day of _______
, 1998, by Paul R. Golding, who is personally known to me or who has
produced _
__________ identification.
SEAL
~ Printed Name:
- - Notary Public
________ My Commission Expires:
My Serial Number:
STATE OF _________
COUNTY OF _______
The foregoing instrument was acknowledged before me this ___ day of _______
- -, 1998, by Kenneth A. Golding, who is personally known to me or who has
produced ____________ as identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this ___ day of _______
1998, by H. Sara Golding Scher, who is personally known to me or who has
produced ____________ as identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
STATE OF FLORIDA
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this ___ day of _______
1998, by Paul R. Golding, who is personally known to me or who has produced _
___________ as identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
The foregoing instrument was acknowledged before me this L(pound)day of 1998, by
Kenneth A Golding, who is personally known to me or who has produced
identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
STATE OF _________ COUNTY OF ________
The foregoing instrument was acknowledged before me this ___ day of _______
,1998, by Mandell Shimberg, who is personally known to me or who has produced
_____________ as identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
STATE OF _________ COUNTY OF
The foregoing instrument was acknowledged before me this day of -, 1998, by
James H. Shimberg, who is personally known to me or who has produced
___________a s identification.
Notary Public
My Commission Expires. ~~~
Serial Number:
STATE OF
COUNTY of
The foregoing instrument was acknowledged before me this/I day of
___ 1998, by Mandeli Shimberg, who is personally known to me,or who hp_#iir.
_____________ as identification
Printed'Name:
__ Notary Public
My Commission Expires:
Serial Number:
STATE OF ________
COUNTY OF _______
The foregoing instrument was acknowledged before me this ___ day of _______
- -, 1998, by James H. Shimberg, who is personally known to me or who has produced
____________a s identification.
Printed Name:
Notary Public
My Commission Expires:
Serial Number:
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UIRT-TOWN `N COUNTRY, L.P.
DATED AS OF MAY 15, 1998
<PAGE>
D1995A:100322-8
(iv)
041771:0001
TABLE OF CONTENTS
ARTICLE I. DEFINED TERMS.......................................................1
ARTICLE II. ORGANIZATIONAL MATTERS............................................12
Section 2.1 Organization; Continuation.........................12
Section 2.2 Name...............................................12
Section 2.3 Registered Office and Agent; Principal Office......13
Section 2.4 Power of Attorney..................................13
Section 2.5 Term...............................................14
ARTICLE III. PURPOSE..........................................................14
Section 3.1 Purpose and Business...............................14
Section 3.2 Powers.............................................15
ARTICLE IV. CAPITAL CONTRIBUTIONS AND ISSUANCESOF PARTNERSHIP INTERESTS.......15
Section 4.1 Capital Contributions of the Partners..............15
Section 4.2 Loans and Guarantees...............................16
Section 4.3 No Preemptive Rights...............................17
Section 4.4 Other Contribution Provisions......................17
Section 4.5 No Interest on Capital.............................17
ARTICLE V.DISTRIBUTIONS.......................................................17
Section 5.1 Requirement and Characterization of Distributions..17
Section 5.2 Amounts Withheld...................................18
ARTICLE VI.ALLOCATIONS........................................................18
ARTICLE VII.MANAGEMENT AND OPERATIONS OF BUSINESS.............................20
Section 7.1 Management.........................................20
Section 7.2 Certificate of Limited Partnership.................23
Section 7.3 Restrictions on General Partner's Authority........24
Section 7.4 Reimbursement of the General Partner...............24
Section 7.5 Outside Activities of the General Partner..........25
Section 7.6 Indemnification....................................25
Section 7.7 Liability of the General Partner...................27
Section 7.8 Other Matters Concerning the General Partner.......28
Section 7.9 Title to Partnership Assets........................29
Section 7.10 Reliance by Third Parties..........................29
ARTICLE VIII.RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS.......................30
Section 8.1 Limitation of Liability............................30
Section 8.2 Management of Business.............................30
Section 8.3 Outside Activities of Limited Partners.............30
Section 8.4 Return of Capital..................................31
Section 8.5 Rights of Limited Partners Relating to the
Partnership........................................31
Section 8.6 Put Right..........................................31
Section 8.7 Call Right.........................................34
ARTICLE IX.BOOKS, RECORDS, ACCOUNTING AND REPORTS.............................37
Section 9.1 Records and Accounting.............................37
Section 9.2 Fiscal Year........................................37
Section 9.3 Reports............................................37
ARTICLE X.TAX MATTERS.........................................................38
Section 10.1 Preparation of Tax Returns.........................38
Section 10.2 Tax Elections......................................38
Section 10.3 Tax Matters Partner................................38
Section 10.4 Organizational Expenses............................39
Section 10.5 Withholding........................................40
ARTICLE XI. TRANSFERS AND WITHDRAWALS.........................................41
Section 11.1 Transfer...........................................41
Section 11.2 Limited Partners' Rights to Transfer...............41
Section 11.3 Substituted Limited Partners.......................42
Section 11.4 Assignees..........................................43
Section 11.5 General Provisions.................................43
ARTICLE XII. ADMISSION OF PARTNERS............................................44
Section 12.1 Admission of Successor General Partner.............44
Section 12.2 Amendment of Agreement and Certificate of Limited
Partnership........................................44
ARTICLE XIII.DISSOLUTION AND LIQUIDATION......................................44
Section 13.1 Dissolution........................................44
Section 13.2 Winding Up.........................................45
Section 13.3 Deficit Capital Accounts...........................47
Section 13.4 Deemed Distribution and Recontribution.............47
Section 13.5 Rights of Limited Partners.........................47
Section 13.6 Notice of Dissolution..............................47
Section 13.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.................48
Section 13.8 Reasonable Time for Winding Up.....................48
Section 13.9 Waiver of Partition................................48
Section 13.10 Liability of Liquidator............................48
ARTICLE XIV. AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS.....................49
Section 14.1 Amendments.........................................49
Section 14.2 Meetings of the Partners...........................50
ARTICLE XV.GENERAL PROVISIONS.................................................51
Section 15.1 Addresses and Notice...............................51
Section 15.2 Title and Captions.................................51
Section 15.3 Pronouns and Plurals...............................51
Section 15.4 Further Action.....................................51
Section 15.5 Binding Effect.....................................52
Section 15.6 Creditors..........................................52
Section 15.7 Waiver.............................................52
Section 15.8 Counterparts.......................................52
Section 15.9 Applicable Law.....................................52
Section 15.10 Invalidity of Provisions...........................53
Section 15.11 Entire Agreement...................................53
Section 15.12 No Rights as Shareholders..........................53
<PAGE>
Exhibit A Partners, Capital Accounts and Partnership Interests
Exhibit B Capital Account Maintenance Rules
Exhibit C Special Allocation Rules
Exhibit D Form of Put Notice
Exhibit E Form of Call Notice
Exhibit F Form of Partnership Unit Certificate
<PAGE>
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
UIRT-TOWN `N COUNTRY, L.P.
This Amended and Restated Agreement of Limited Partnership, dated as of
May 15, 1998 (this "Agreement"), is entered into by and among United Investors
Realty Trust, a Texas real estate investment trust, as General Partner and those
certain Class A Limited Partners whose names are set forth in Exhibit A hereof,
as Limited Partners.
WHEREAS, UIRT-Town `N Country, L.P. (the "Partnership") was formed
under the Delaware Revised Uniform Limited Partnership Act pursuant to an
Agreement of Limited Partnership dated April 2, 1998; and
WHEREAS, upon the effective date hereof, UIRT-Interim Lender, Inc. (the
"Withdrawing Partner") shall withdraw from the Partnership and the Limited
Partners shall be admitted to the Partnership upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree to
continue the Partnership upon the following terms and conditions:
ARTICLE I.
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Accrued Amounts" has the meaning assigned to it in the definition of
GP Return.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such statute.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the
<PAGE>
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5)
and (ii) decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account is intended to comply with
the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Adjusted Capital Account as of
the end of the relevant Partnership Year.
"Adjusted Property" means any property the Carrying Value of which has
been adjusted pursuant to Exhibit B hereto.
"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person, (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreed Value" means (i) in the case of any Contributed Property, the
704(c) Value of such property as of the time of its contribution to the
Partnership, reduced by any liabilities either assumed by the Partnership upon
such contribution or to which such property is subject when contributed; (ii) in
the case of the Property the initial "Agreed Value" shall mean $2,607,462.78 (of
which $250,000 shall be the Agreed Value of the portion of the Property which is
land and which shall be contributed to the Partnership by James H. Shimberg, as
Trustee, and $2,357,462.78 shall be the Agreed Value of the portion of the
Property which constitutes improvements contributed to the Partnership by Town
`N Country Plaza of Tampa, Ltd. and (iii) in the case of any property
distributed to a Partner by the Partnership, the Partnership's Carrying Value of
such property at the time such property is distributed, reduced by any
indebtedness either assumed by such Partner upon such distribution or to which
such property is subject at the time of distribution as determined under Section
752 of the Code and the Regulations thereunder.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as it may be amended, supplemented or restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has not
become a Substituted Limited Partner, and who has only the rights set forth in
Section 11.4 hereof.
<PAGE>
"Book-Tax Disparities" means, with respect to any item of Contributed
Property or Adjusted Property, as of the date of any determination, the
difference between the Carrying Value of such Contributed Property or Adjusted
Property and the adjusted basis thereof for federal income tax purposes as of
such date. A Partner's share of the Partnership's Book-Tax Disparities in all of
its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B hereto and the hypothetical balance of such Partner's Capital
Account computed as if it had been maintained, with respect to each such
Contributed Property or Adjusted Property, strictly in accordance with federal
income tax accounting principles.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in Dallas, Texas are authorized or required by law to
close.
"Call Notice" means a Call Notice substantially in the form of Exhibit
E.
"Call Right" has the meaning assigned to it in Section 8.7.A.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereto. The Capital Account balance of each Partner who is
a Partner on the Effective Date shall be set forth opposite such Partner's name
on Exhibit A hereto.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 hereof.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereto, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash equal to the average of the daily
market price per share of Shares for the ten consecutive trading days prior to
the Valuation Date multiplied by the number of Shares which comprise the Share
Consideration as of the Valuation Date. The market price for each such trading
day shall be the closing price per Share for such trading day as listed on
NASDAQ National Market System.
"Certificate" means the Certificate of Limited Partnership relating to
the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
<PAGE>
"Class A Limited Partners" means those Persons who are identified as
Class A Limited Partners on the attached Exhibit A and any permitted successors
and assigns thereof (including the General Partner, to the extent that it
acquires Class A Partnership Units from such Class A Limited Partners
hereunder).
"Class A Partnership Units" means that certain class of Partnership
Units issued to the Class A Limited Partners hereunder and entitling them to the
rights further described herein.
"Closing Date" has the meaning assigned to it in Section 7.1.F.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Consideration" means (i) the Cash Amount or (ii) the Share
Consideration, as determined by the General Partner, in its sole discretion.
"Contributed Property" means each property or other asset contributed
to the Partnership, in such form as may be permitted by this Agreement and the
Act, but excluding cash contributed or deemed contributed to the Partnership.
Once the Carrying Value of a Contributed Property is adjusted pursuant to
Exhibit B hereto, such property shall no longer constitute a Contributed
Property for purposes of Exhibit B hereto, but shall be deemed an Adjusted
Property for such purposes.
"Contribution Agreement" has the meaning assigned to it in Section
4.1.A.
"Contributors" has the meaning assigned to it in Section 4.1.A.
"Debt" means, as to any Person, as of any date of determination, (i)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services, (ii) all amounts owed by such Person to banks or
other Persons in respect of reimbursement obligations under letters of credit,
surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person, (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof, and (iv) obligations of such Person
incurred in connection with entering into a lease which, in accordance with
generally accepted accounting principles, should be capitalized.
<PAGE>
"Declaration of Trust" means the Declaration of Trust of the General
Partner, as amended.
"Deemed Amount" has the meaning assigned to it in the definition of GP
Return.
"Depreciation" means, for each Partnership Year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to such beginning adjusted tax basis; provided, however,
that if the federal income tax depreciation, amortization, or other cost
recovery deduction for such year is zero, Depreciation shall be determined with
reference to such beginning Carrying Value using any reasonable method selected
by the General Partner.
"Dissolution Notice" has the meaning assigned to it in Section 13.6.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extended Option Period" has the meaning assigned to it in Section
8.6.A(5).
"General Partner" means United Investors Realty Trust, a Texas real
estate investment trust and any successor or assign thereof who becomes the
General Partner in accordance with the terms of this Agreement.
"General Partner Interest" means the Partnership Interest held by the
General Partner in the capacity of a general partner. A General Partner Interest
may be expressed as a number of Partnership Units.
"GP Capital Contribution" means that certain Capital Contribution of
cash in the sum of $108,331.73 made by the General Partner to the Partnership in
accordance with Section 4.1.A. of this Agreement, plus any and all Capital
Contributions made by the General Partner to the Partnership, from time to time,
under Section 4.1.D.
"GP Return" means (i) $5,000,000 (the "Deemed Amount"), plus (ii) an
amount which accrues and accumulates at the rate of twenty percent (20%) per
annum on such amount (the "Accrued Amounts").
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
<PAGE>
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage such Person's
affairs or estate, (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) as to any
trustee of a trust which is a Partner, the termination of the trust (but not the
substitution of a new trustee), or (v) 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 assets, (f) any proceeding seeking liquidation, reorganization or
other relief of or against such Partner under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver or
liquidator that has not been vacated or stayed within ninety (90) days of such
appointment or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding or
threatened with being made a party to a proceeding by reason of the Person's
status as (A) the General Partner, (B) a Limited Partner or (C) a trustee,
director, officer, employee or agent of the Partnership or the General Partner
or an Affiliate and (ii) such other Persons (including Affiliates of the General
Partner, a Limited Partner or the Partnership) as the General Partner may
designate from time to time (whether before or after the event giving rise to
potential liability), in its sole and absolute discretion.
"Limited Partners" means the Persons who are identified as Limited
Partners on Exhibit A of this Agreement as well as the General Partner to the
extent that it owns Partnership Units in the Partnership other than its General
Partner Interest.
"Limited Partner Interest" means a Partnership Interest held by a
Limited Partner in the Partnership in the capacity of a limited partner
representing a fractional part of the Partnership Interests of all Limited
Partners. A Limited Partner Interest may be expressed as a number of Partnership
Units.
<PAGE>
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2.A hereof.
"Lockout Period" has the meaning set forth in Section 7.1.F.
"LP Capital Contribution" means the Agreed Value of the Property
contributed to the Partnership under Section 4.1.A.
"LP Return" means with regard to a holder of Class A Partnership Units
and with respect to any fiscal period of the Partnership, a cash amount equal to
the aggregate cash dividends that would have been payable to such holder of
Class A Partnership Units in the event that such holder owned Shares equal in
number to such holder's Share Consideration during such entire fiscal period of
the Partnership; provided, however, that with regard to the period beginning
upon the effective date hereof and ending upon June 30, 1998, the LP Return
shall be equal to $0.1075 per Class A Partnership Unit.
"Net Capital Proceeds" means the net cash proceeds received by the
Partnership in connection with (i) any condemnation or deeding in lieu of
condemnation of all or a portion of any Partnership asset, (ii) any collection
in respect of property, hazard, or casualty insurance (but not business
interruption insurance) or any damage award; or (iii) any other transaction the
proceeds of which, in accordance with generally accepted accounting principles,
are considered to be capital in nature (other than a transaction described in
the definition of "Net Financing Proceeds" or the definition of "Net Sale
Proceeds"), after deduction of (a) all costs and expenses incurred by the
Partnership with regard to such transactions and (b) all amounts expended by the
Partnership for the acquisition of additional Partnership assets or for capital
repairs or improvements to the Property with such cash proceeds.
"Net Cash Flow from Capital Transactions" means for any fiscal period
of the Partnership, Net Financing Proceeds, plus Net Sale Proceeds, plus Net
Capital Proceeds.
<PAGE>
"Net Cash Flow from Operations" shall mean, with respect to any fiscal
period of the Partnership, the excess, if any, of "Operating Receipts" over
"Expenditures." For purposes hereof, the term "Operating Receipts" means the sum
of (i) all cash receipts of the Partnership from all sources for such period,
other than Net Sale Proceeds, Net Financing Proceeds, Net Capital Proceeds and
Capital Contributions (other than any Capital Contributions made by the General
Partner to the Partnership under Section 4.1.D), plus (ii) any amounts held as
reserves as of the last day of the period immediately prior to such fiscal
period that the General Partner deems to no longer be necessary for any capital
or operating expenditure permitted hereunder. The term "Expenditures" means the
sum of (a) all expenses of the Partnership of any nature for such period, (b)
all amounts attributable to principal payments and interest on account of any
indebtedness of the Partnership (provided, that upon the election of the General
Partner the term "Expenditures" shall not include an payments of interest or
principal to the General Partner in repayment of any loans made by the General
Partner to the Partnership), (c) any amounts attributable to reserves (including
without limitation, reserves for expenses which may be paid on an annual,
semi-annual or other basis which occur less frequently than the fiscal period of
the Partnership in question) which the General Partner in its sole discretion
deems necessary for any capital or operating expenditures permitted hereunder or
any reserves for other purposes that the General Partner in its sole discretion
shall determine to be appropriate; and (d) any amounts attributable to working
capital accounts or other cash or similar balances which the General Partner
determines to be necessary or appropriate in its sole discretion.
"Net Financing Proceeds" shall mean the cash proceeds received by the
Partnership in connection with any borrowing or refinancing of borrowing by or
on behalf of the Partnership from any Person (whether or not secured), after
deduction of (i) all costs and expenses incurred by the Partnership in
connection with such borrowing, (ii) that portion of such proceeds used to repay
any other indebtedness of the Partnership or any interest or premium thereon,
and (iii) that portion of such proceeds used to acquire additional property or
assets for the Partnership or to make any capital improvement or repair on the
Property.
"Net Sale Proceeds" means the cash proceeds received by the Partnership
in connection with a sale of any asset by or on behalf of the Partnership after
deduction of (i) any costs or expenses incurred by the Partnership, or payable
specifically out of the proceeds of such sale (including, without limitation,
any repayment of any indebtedness required to be repaid as a result of such sale
or which the General Partner elects to repay out of the proceeds of such sale,
together with accrued interest and premium, if any, thereon and any sales
commissions or other costs and expenses due and payable to any Person in
connection with a sale, including to a Partner or its Affiliates), or (ii) any
such proceeds reinvested in the Property for capital repairs or improvements or
otherwise used to acquire additional assets for the Partnership.
"Net Income" means, for any taxable period, the excess, if any, of the
Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
included in the calculation of Net Income shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C hereto, Net Income or the resulting Net Loss,
whichever the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B hereto. If an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C hereto, Net Loss or the resulting Net Income,
whichever the case may be, shall be recomputed without regard to such item.
<PAGE>
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 1.B of Exhibit C hereto
if such properties were disposed of in a taxable transaction in full
satisfaction of such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"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 Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued upon the terms and conditions set forth in this Agreement, and any
successor thereto.
"Partnership Interest" means a Limited Partner Interest or the General
Partner Interest and includes any and all benefits to which the holder of such
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
<PAGE>
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Section 4.1 hereof, and
includes any classes or series of Partnership Units established upon or after
the effective date hereof (including without limitation those certain Class A
Partnership Units established upon the effective date hereof). The number of
Partnership Units outstanding and the Percentage Interests in the Partnership
represented by such Partnership Units are set forth in Exhibit A hereto, as such
Exhibit A may be amended and restated from time to time. The ownership of
Partnership Units may be evidenced by a certificate in a form approved by the
General Partner.
"Partnership Unit Certificate" means a certificate representing the
Partnership Interest of a Partner and issued in the form attached hereto as
Exhibit F.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner the Percentage Interest
expressed as a percentage of the whole set forth in Exhibit A attached hereto,
as such exhibit may be amended and restated from time to time.
"Permitted Transferee" means (i) with respect to a Limited Partner
which is a trust and which is issued Partnership Units upon the date set forth
on the cover page hereof, any beneficiary of such trust as of the date set forth
on the cover page of this Agreement; (ii) with respect to any Limited Partner
which is a Partnership and which is issued Partnership Units upon the date set
forth on the cover page hereof, any partner of such Partnership as of the date
set forth on the cover page hereof; and (iii) with respect to any Partner who is
a natural person, such Partner's spouse, parents, children and grandchildren.
"Person" means a natural person, partnership (whether general or
limited), trust, real estate investment trust, business trust, estate,
association, corporation, limited liability company, unincorporated
organization, custodian, nominee or any other individual or entity in its own or
any representative capacity.
"Property" means that certain parcel of real property and improvements
commonly referred to as the "Town 'N Country Shopping Center" which shall be
acquired by the Partnership in accordance with the provisions of the
Contribution Agreements.
"Put Notice" means a Put Notice substantially in the form of Exhibit D
"Put Right" has the meaning assigned to it in Section 8.6.A.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Sections 734, 743, and
754 of the Code) upon the disposition of any property or asset of the
Partnership, which gain represents the recapture of deductions previously taken
with respect to such property or asset.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
<PAGE>
"REIT" means a real estate investment trust under Sections 856 through
859 of the Code.
"Residual Gain" or "Residual Loss" means any item of gain or loss, as
the case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of Contributed Property or
Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 2.B.(1)(b) or 2.B.(2)(b) of Exhibit C hereto to eliminate
Book-Tax Disparities.
"Return on Capital" means, collectively, the GP Return and the LP
Return.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" means with respect to any Contributed Property the fair
market value of such property at the time of contribution as set forth in the
Contribution Agreements with respect to the Property or as otherwise determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its sole and absolute discretion, use such
method as it deems reasonable and appropriate to allocate the aggregate of the
704(c) Values of Contributed Properties in a single or integrated transaction
among each separate property on a basis proportional to their fair market
values.
"Share" means a common share of beneficial interest (or other
comparable common equity interest) of the General Partner.
"Share Consideration" means with respect to each holder of Class A
Partnership Units, such number of Shares as set forth opposite such holder's
name on the attached Exhibit G. The number of Shares which constitute the Share
Consideration hereunder shall automatically be adjusted in the event of any (i)
Share split, (ii) Share dividend, (iii) recapitalization, (iv) merger or (v)
reorganization (collectively, an "Equity Adjustment"). In the event that an
Equity Adjustment occurs with respect to the Shares prior to the exercise of the
Put Right or the Call Right, the Share Consideration shall automatically be
adjusted to equal that number of Shares into which the number of Shares which
constitute the Share Consideration (prior to the foregoing adjustment) would
have been converted following the Equity Adjustment, if the Class A Limited
Partner were the owner of such Shares immediately prior to such Equity
Adjustment.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or joint venture, or other entity of
which a majority of (i) the voting power of the voting equity securities or (ii)
the value of outstanding equity interests is owned, directly or indirectly, by
such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.3 hereof.
<PAGE>
"Town `N Country" means Town `N Country Plaza of Tampa, Ltd., a
Florida limited partnership.
"Unpaid LP Return" means the aggregate unpaid LP Return owing a Class A
Limited Partner less all amounts distributed by the Partnership to the Class A
Limited Partner in reduction thereof.
"Unpaid GP Return" means the accrued and unpaid GP Return owing the
General Partner reduced by all amounts distributed to the General Partner in
reduction thereof; provided that any such distributions shall be applied first
to the repayment of any and all Accrued Amounts owing the General Partner and
after repayment of all such Accrued Amounts to repayment of the Deemed Amount.
"Unrealized Gain" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereto) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereto) as of such date.
"Unrealized Loss" means, with respect to any item of Partnership
property as of any date of determination, the excess, if any, of (i) the
Carrying Value of such property (prior to any adjustment to be made pursuant to
Exhibit B hereto) as of such date, over (ii) the fair market value of such
property (as determined under Exhibit B hereto) as of such date.
"Unreturned GP Capital" means $108,331.73 less all amounts distributed
by the Partnership to the General Partner under Section 5.1.A(iii) and Section
13.2.A(5), in reduction thereof.
"Unreturned LP Capital" means with respect to each Class A Limited
Partner such Class A Limited Partner's aggregate Capital Contributions to the
Partnership less all amounts distributed by the Partnership to such Class A
Limited Partner under Section 13.2.A(6) in reduction thereof.
"Valuation Date" means with respect to the Put Right, the date upon
which the Class A Limited Partner delivers the Put Notice to the General Partner
and with respect to the Call Right, the date upon which the General Partner
delivers the Call Notice to a Class A Limited Partner.
ARTICLE II.
ORGANIZATIONAL MATTERS
Section II.1 Organization; Continuation.
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The Partnership is a limited partnership which is organized pursuant to
the provisions of the Act and continued upon the terms and conditions set forth
in this Agreement. Except as expressly provided herein to the contrary, the
rights and obligations of the Partners and the administration and termination of
the Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.
Section II.2 Name.
The name of the Partnership is UIRT-Town `N Country, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section II.3 Registered Office and Agent; Principal Office.
The registered office of the Partnership in the State of Delaware shall
be located at The Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801 and the registered agent for service of process on
the Partnership in the State of Delaware at such registered office shall be The
Corporation Trust Company. The principal office of the Partnership shall be 5847
San Felipe, Suite 850, Houston, Texas 77057, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of Delaware as the General Partner deems advisable.
Section II.4 Power of Attorney.
10 General. Each Limited Partner and each Assignee who accepts
Partnership Units (or any rights, benefits or privileges associated therewith)
is deemed to irrevocably constitute and appoint the General Partner, any
Liquidator and authorized officers and attorneys-in-fact of each, and each of
those acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to:
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(1) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (a) all certificates, documents and other
instruments (including, without limitation, this Agreement and the Certificate
and all amendments or restatements thereof) that the General Partner or any
Liquidator deems appropriate or necessary to form, qualify or continue the
existence or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware and in all other jurisdictions in which the Partnership may or plans
to conduct business or own property, (b) all instruments that the General
Partner or any Liquidator deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in accordance
with its terms, (c) all deeds, other conveyance documents and other instruments
or documents that the General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the Partnership pursuant
to the terms of this Agreement, including, without limitation, a certificate of
cancellation, (d) all instruments relating to the admission, withdrawal, removal
or substitution of any Partner pursuant to, or other events described in,
Article XI, XII or XIII hereof or the Capital Contribution of any Partner and
(e) all certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of Partnership
Interests; and
(2) execute, swear to, seal, acknowledge and file all ballots,
consents, approvals, waivers, certificates and other instruments appropriate or
necessary, in the sole and absolute discretion of the General Partner or any
Liquidator, to make, evidence, give, confirm or ratify any vote, Consent,
approval, agreement or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or appropriate or
necessary, in the sole discretion of the General Partner or any Liquidator, to
effectuate the terms or intent of this Agreement.
20 Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designations, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
Section II.5 Term.
The term of the Partnership commenced upon the date on which the
Certificate was filed in the office of the Secretary of State of the 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
XIII hereof or as otherwise provided by law.
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ARTICLE III.
PURPOSE
Section III.1 Purpose and Business.
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit the
General Partner at all times to be classified as a REIT, unless the General
Partner ceases to qualify, or is not qualified, as a REIT for any reason or
reasons not related to the business conducted by the Partnership; (ii) to enter
into any partnership, joint venture, limited liability company or other similar
arrangement to engage in any of the foregoing or the ownership of interests in
any entity engaged, directly or indirectly, in any of the foregoing; and (iii)
to do anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting the General Partner's right in its sole
discretion to cease qualifying as a REIT, the Partners acknowledge that the
status of the General Partner as a REIT inures to the benefit of all the
Partners and not solely the General Partner or its Affiliates.
Section III.2 Powers.
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and
develop real property, and lease, sell, transfer and dispose of real property;
provided, however, that the Partnership shall not take, or shall refrain from
taking, any action which, in the judgment of the General Partner, in its sole
and absolute discretion, (i) could adversely affect the ability of the General
Partner to continue to qualify as a REIT, (ii) could subject the General Partner
to any additional taxes under Section 857 or excise taxes under Section 4981 of
the Code or (iii) could violate any law or regulation of any governmental body
or agency having jurisdiction over the General Partner or its securities, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.
<PAGE>
ARTICLE IV.
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section IV.1 Capital Contributions of the Partners.
10 Capital Contributions to the Partnership. Upon the
effective date hereof, (i) the General Partner shall make a cash contribution to
the Partnership in the sum of $108,331.73 (the "GP Capital Contribution") and
shall be issued such Class A Partnership Units and such Percentage Interest in
the Partnership as set forth opposite its name on the attached Exhibit A, (ii)
Town `N Country Plaza of Tampa, Ltd. and James H. Shimberg, as Trustee (the
"Contributors"), shall contribute the Property to the Partnership, pursuant to
the terms and provisions of the those certain Contribution Agreements dated May
15, 1998 by and among the Contributors and the Partnership (the "Contribution
Agreements") and (iii) each Class A Limited Partner whose name is set forth in
the attached Exhibit A shall be issued such Class A Partnership Units and such
Percentage Interest in the Partnership as set forth opposite its name on the
attached Exhibit A. Upon the effective date hereof (and after giving effect to
any cash payments to the Contributors under the Contribution Agreements), the
Partners' Capital Accounts, the Partnership Units assigned to each Partner and
the Percentage Interest in the Partnership represented by such Partnership Units
shall be as set forth in the attached Exhibit A.
20 General Partner Interest. A number of Partnership Units
issued to the General Partner upon the effective date hereof equal to one
percent (1%) of all outstanding Partnership Units from time to time shall be
deemed to be the Partnership Units held by the General Partner as a general
partner and shall be the General Partner Interest. All other Partnership Units
originally issued the General Partner shall, for purposes of consents, approvals
and voting hereunder, be deemed to be and treated as Class A Partnership Units
originally issued the General Partner in its capacity as a Class A Limited
Partner in the Partnership and shall entitle the General Partner to all of the
rights as a Limited Partner hereunder (other than the right to receive Unpaid LP
Return or Unreturned LP Capital); provided, however, that in the event that the
General Partner shall acquire any Class A Partnership Units from any Class A
Limited Partner hereunder, the General Partner shall be deemed with regard to
such acquired Partnership Units to be a Class A Limited Partner and shall be
entitled to all of the rights as a Class A Limited Partner with respect to such
Class A Partnership Units (including the voting, approval and consent rights
hereunder as well as the right to receive Unpaid LP Return and Unreturned LP
Capital with regard to such Class A Partnership Units).
<PAGE>
30 No Obligation to Make Additional Capital Contributions.
Except as provided in Section 4.1.D and Section 10.5 hereof or the further
provisions of this Section 4.1.C, the Partners shall have no obligation to make
any additional Capital Contributions or provide any additional funding to the
Partnership (whether in the form of loans, repayments of loans or otherwise). No
Partner shall have any obligation to restore any deficit that may exist in its
Capital Account, either upon a liquidation of the Partnership or otherwise;
provided, however, upon reasonable request of a Class A Limited Partner, the
General Partner may enter into a deficit restoration obligation pursuant to
which such Class A Limited Partner shall agree to restore all or any portion of
the deficit balance in its Capital Account upon the liquidation of the
Partnership under Article XIII.
40 Additional Capital Contributions by General Partner.
Notwithstanding the provisions of Section 4.1.C, the General Partner shall make
such additional Capital Contributions to the Partnership as shall be necessary
to provide the Partnership with sufficient Net Cash Flow from Operations to make
quarterly distributions to the Class A Limited Partners during each quarterly
period of the Partnership equal to Unpaid LP Return owing the Class A Limited
Partners for such quarterly period.
Section IV.2 Loans and Guarantees.
10 Loans by the General Partner. The General Partner may
solicit and accept loans to the Partnership from such Persons (including
Partners, Affiliates of the Partnership or any Partner), at such times, in such
amounts and upon such terms as the General Partner, in its sole and absolute
discretion, may determine to be advisable.
20 Partner Guarantees. Upon the reasonable request of a Class
A Limited Partner, the General Partner shall allow such Class A Limited Partner
to guarantee all or a portion of the indebtedness of the Partnership.
Section IV.3 No Preemptive Rights.
Except to the extent expressly granted by the Partnership pursuant to
another agreement (as determined in good faith by the General Partner), no
Person shall have any preemptive, preferential or other similar right with
respect to (i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any Partnership Units or other Partnership Interests.
Section IV.4 Other Contribution Provisions.
In the event that any Partner is admitted to the Partnership and is
given a Capital Account in exchange for services rendered to the Partnership,
such transaction shall be treated by the Partnership and the affected Partner as
if the Partnership had compensated such Partner in cash, and the Partner had
contributed such cash to the capital of the Partnership, unless the General
Partner and such affected Partner specifically agree otherwise.
<PAGE>
Section IV.5 No Interest on Capital.
No Partner shall be entitled to interest on its Capital Contributions
or its Capital Account. Under no circumstances shall the Return on Capital to
which a Partner may be entitled hereunder be construed as interest.
ARTICLE V.
DISTRIBUTIONS
Section V.1 Requirement and Characterization of Distributions.
10 Net Cash Flow from Operations. The General Partner shall
distribute at least quarterly Net Cash Flow from Operations in such amount as
shall be determined by the General Partner in its reasonable discretion in the
following manner: (i) first, to the Class A Limited Partners pro rata among them
in proportion to the Unpaid LP Return owing each such Class A Limited Partner,
in an amount equal to the Unpaid LP Return owing such Class A Limited Partners;
(ii) second, to the General Partner in repayment of any Unpaid GP Return owing
the General Partner; (iii) third, to the General Partner in return of any
Unreturned GP Capital due the General Partner; and (iv) finally, to the Partners
in accordance with their Percentage Interests.
20 Net Cash Flow from Capital Transactions. The General
Partner shall distribute at least quarterly Net Cash Flow from Capital
Transactions in such amount as shall be determined by the General Partner in its
reasonable discretion in accordance with the provisions of Section 13.2.A
hereof.
30 Put/Call Distributions. If the exercise of the Put Right or
Call Right entitles any Class A Limited Partner to any dividend on Shares owned
or deemed owned by the Class A Limited Partner on or after the record date for
such dividend, the distributions pursuant to this Article V with respect to any
Unpaid LP Return to which such Class A Limited Partner would otherwise be
entitled for the period including such record date shall be offset (and the LP
Return reduced) by any such dividend to which such Class A Limited Partner is
entitled.
Section V.2 Amounts Withheld.
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners or Assignees pursuant to Section 5.1 above for all purposes
under this Agreement.
<PAGE>
ARTICLE VI.
ALLOCATIONS
Section VI.1 Allocations for Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining the
rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereto) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
10 Net Income. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, and subject to the provisions of Sections
6.1.C, 6.1.D, 6.1.E, and 6.1.F, Net Income (and to the extent necessary to
accomplish the purposes hereof, items of gross income and gain) shall be
allocated (i) first, to the Class A Limited Partners in an amount equal to the
cumulative LP Return paid to the Class A Limited Partners less the cumulative
allocations of Net Income made previously to the Class A Limited Partners under
this clause (i); (ii) second, to the General Partner in an amount equal to the
cumulative GP Return paid or payable to the General Partner less the cumulative
allocations of Net Income made previously to the General Partner under this
clause (ii); (iii) third, to the General Partner in an amount equal to the
cumulative Net Losses allocated to the General Partner pursuant to clause (v) of
Section 6.1.B below less the cumulative allocations of Net Income made
previously to the General Partner under this clause (iii); (iv) fourth, to the
General Partner in an amount equal to the cumulative Net Losses allocated to the
General Partner pursuant to clause (iv) of Section 6.1.B below less the
cumulative allocations of Net Income made previously to the General Partner
under this clause (iv); (v) fifth, to the Class A Limited Partners in an amount
equal to the cumulative Net Losses allocated to such Class A Limited Partners
pursuant to clause (iii) of Section 6.1.B below less the cumulative allocations
of Net Income made previously to the Limited Partners under this clause (v); and
(vi) finally, the balance, if any, shall be allocated to the Partners in
accordance with and in proportion to their respective Percentage Interests in
the Partnership.
<PAGE>
20 Net Losses. After giving effect to the special allocations
set forth in Section 1 of Exhibit C, and subject to the provisions of Sections
6.1.C, 6.1.D, 6.1.E and 6.1.F, Net Losses (and to the extent necessary to
accomplish the purposes hereof, items of loss, expense and deduction) shall be
allocated (i) first, to the Partners until the cumulative Net Losses allocated
to each Partner under this clause (i) equals the cumulative Net Income allocated
to each Partner under clause (vi) of Section 6.1.A.; (ii) second, to the Class A
Limited Partners, in an amount equal to each Class A Limited Partner's Adjusted
Capital Account balance prior to the allocation under this clause (ii); (iii)
third, to the General Partner, in an amount equal to the General Partner's
Adjusted Capital Account balance prior to the allocation under this clause
(iii); and (iv) fourth, to the General Partner, to the extent that any further
allocation of Net Losses to Class A Limited Partners would result in such Class
A Limited Partners having Adjusted Capital Account Deficits.
30 Allocation of Nonrecourse Debt. For purposes of Regulations
Section 1.752-3(a), the Partners agree that Nonrecourse Liabilities of the
Partnership in excess of the sum of (i) the amount of Partnership Minimum Gain
and (ii) the total amount of Nonrecourse Built-in Gain shall be allocated among
the Partners in accordance with their respective Percentage Interests.
40 Recapture Income. Any gain allocated to the Partners upon
the sale or other taxable disposition of any Partnership asset shall, to the
extent possible after taking into account other required allocations of gain
pursuant to Exhibit C hereto, be characterized as Recapture Income in the same
proportions and to the same extent as such Partners have been allocated any
deductions directly or indirectly giving rise to the treatment of such gains as
Recapture Income.
50 Allocations by General Partner to Reflect Economic Rights.
In the event the General Partner shall determine, in its good faith judgment,
that it is necessary to modify the manner in which the Partnership's items of
income, gain, loss and deduction shall be allocated among the Partners in a
taxable year (or portion thereof) in order to cause such allocation to reflect
accurately the relative economic rights of the Partners or to comply with the
Code or the Regulations, the General Partner may make such a modification.
ARTICLE VII.
MANAGEMENT AND OPERATIONS OF BUSINESS
Section VII.1 Management.
10 Powers of General Partner. Except as otherwise expressly
provided in this Agreement, all management powers over the business and affairs
of the Partnership are and shall be exclusively vested in the General Partner,
and no Limited Partner shall have any right to participate in or exercise
control or management power over the business and affairs of the Partnership.
The General Partner may not be removed by the Limited Partners with or without
cause. In addition to the powers now or hereafter granted a general partner of a
limited partnership under applicable law or which are granted to the General
Partner under any other provision of this Agreement, the General Partner,
subject to Section 7.3 below, shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Partnership, to exercise all powers set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof, including, without
limitation:
<PAGE>
(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 (as 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 Section 4981 of the
Code) and to make distributions to its shareholders sufficient to permit the
General Partner to maintain REIT status), the assumption or guarantee of, or
other contracting for, indebtedness and other liabilities, the issuance of
evidences of indebtedness (including the securing of same by deed to secure
debt, mortgage, deed of trust or other lien or encumbrance on the Partnership's
assets) and the incurring of any obligations the General Partner deems necessary
for the conduct of the activities of the Partnership and the granting of
security interests in the assets of the Partnership in order to secure
indebtedness of the Partnership, the General Partner or their respective
Affiliates;
(2) the making of tax, regulatory and other filings, or
rendering of periodic or other reports to governmental or other agencies having
jurisdiction over the business or assets of the Partnership;
(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any conversion, option,
privilege or subscription right or other right available in connection with any
assets at any time held by the Partnership) or the merger or other combination
of the Partnership with or into another entity, on such terms as the General
Partner deems proper (all of the foregoing subject to any prior approval only to
the extent required by Section 7.3 hereof);
(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose consistent with the terms of
this Agreement and on any terms it sees fit, including, without limitation, the
financing of the conduct of the operations of the General Partner, the
Partnership or any of the Partnership's Subsidiaries, the lending of funds to
other Persons (including, without limitation, the General Partner, and its
Affiliates) and the repayment of obligations of the Partnership and its
Affiliates and/or any other Person in which the Partnership has an equity
investment and the making of capital contributions to its Affiliates;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or improvements owned
by the Partnership or any Subsidiary of the Partnership;
(6) the negotiation, execution, and performance of any
contracts, conveyances or other instruments that the General Partner considers
useful or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement, including
contracting with contractors, developers, consultants, accountants, legal
counsel, other professional advisors and other agents and the payment of their
expenses and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
<PAGE>
(8) the holding, managing, investing and reinvesting of
cash and other assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees of the Partnership, any
division of the Partnership, or the General Partner (including, without
limitation, employees having titles such as "president," "vice president,"
"secretary" and "treasurer") and agents, outside attorneys, accountants,
consultants and contractors of the General Partner, the Partnership, or any
division of the Partnership and the determination of their compensation and
other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or appropriate;
(12) the formation of, or acquisition of an interest in, and
the contribution of property to, any corporation, limited or general
partnerships, joint ventures, limited liability companies or other relationships
that it deems desirable (including, without limitation, the acquisition of
interests in, and the contributions of property to its Subsidiaries and any
other Person in which may have an equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the settlement, compromise, submission
to arbitration or any other form of dispute resolution or abandonment of any
claim, cause of action, liability, debt or damages due or owing to or from the
Partnership, the commencement or defense of suits, legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the representation of the Partnership in all suits or legal proceedings,
administrative proceedings, arbitrations or other forms of dispute resolution,
the incurring of legal expense and the indemnification of any Person against
liabilities and contingencies to the extent permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its Subsidiaries or any other
Person (including, without limitation, the contribution or loan of funds by the
Partnership to such Persons), incurring indebtedness on behalf of such Persons
or the guarantee of the obligations of such Persons;
(15) the determination of the fair market value of any
Partnership property distributed in kind, using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of attorney, of any
right, including the right to vote, appurtenant to any assets or investment held
by the Partnership;
<PAGE>
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection with any Subsidiary
of the Partnership or any other Person in which the Partnership has a direct or
indirect interest, individually or jointly with any such Subsidiary or other
Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which the Partnership
does not have any interest pursuant to contractual or other arrangements with
such Person;
(19) the making, executing and delivering of any and all
deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties, indemnities,
waivers, releases or other legal instruments or agreements in writing necessary
or appropriate in the judgment of the General Partner for the accomplishment of
any of the powers of the General Partner under this Agreement;
(20) the amendment and restatement of Exhibit A hereto to
reflect accurately at all times the Capital Accounts, Partnership Units, and
Percentage Interests of the Partners as the same are adjusted from time to time
to the extent necessary to reflect redemptions, Capital Contributions, the
issuance of Partnership Units, the admission of any Substituted Limited Partner
or otherwise, as long as the matter or event being reflected in Exhibit A hereto
otherwise is authorized by this Agreement; and
(21) the employment and compensation of Persons to provide
goods and/or services to the Partnership and the adoption on behalf of the
Partnership, of employee benefit plans for the benefit of employees of the
General Partner, the Partnership or any Affiliate or Subsidiary of either of
them in respect of services performed for the benefit of the Partnership or its
Subsidiaries.
20 No Approval by Limited Partners. Each of the Limited
Partners agrees that the General Partner is authorized to execute, deliver and
perform the above-mentioned agreements and transactions on behalf of the
Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement (except as expressly
provided to the contrary in Section 7.3), the Act or any applicable law, rule or
regulation, to the full extent permitted under the Act or other applicable law.
The execution, delivery or performance by the General Partner or the Partnership
of any agreement authorized or permitted under this Agreement shall not
constitute a breach by the General Partner of any duty that the General Partner
may owe the Partnership or the Limited Partners or any other Persons under this
Agreement or of any duty stated or implied by law or equity.
<PAGE>
30 Insurance. At all times from and after the date hereof, the
General Partner, at the expense of the Partnership, may cause the Partnership to
obtain and maintain (i) casualty, liability and other insurance on the
properties of the Partnership, (ii) liability insurance for the Indemnities
hereunder and (iii) such other insurance as the General Partner, in its
reasonable discretion, determines to be necessary.
40 Working Capital and Other Reserves. At all times from and
after the date hereof, the General Partner may cause the Partnership to
establish and maintain working capital reserves in such amounts as the General
Partner, in its sole and absolute discretion, deems appropriate and reasonable
from time to time.
50 No Obligations to Consider Tax Consequences of Limited
Partners. In exercising its authority under this Agreement, the General Partner
may, but shall be under no obligation to, take into account the tax consequences
to any Partner (including the Limited Partners) of any action taken (or not
taken) by it. The General Partner and the Partnership shall not have liability
to any Limited Partner for monetary damages or otherwise for losses sustained,
liabilities incurred or benefits not derived by such Limited Partner in
connection with such decisions.
60 Limitation on Sale of Property. Notwithstanding any
provision to the contrary herein, the General Partner shall not voluntarily
sell, transfer, exchange or otherwise dispose of all or any part of the
Partnership's interest in the Property during the period (the "Lockout Period")
commencing on the date such Property is contributed to the Partnership (the
"Closing Date") and ending upon the fourth anniversary of such Closing Date,
except in connection with a like-kind exchange of the Property pursuant to
Section 1031 of the Code, or any other sale, transfer, exchange or disposition
pursuant to which the Class A Limited Partners shall not recognize taxable gain
for federal income tax purposes. Notwithstanding anything to the contrary set
forth herein, the prohibition against the sale, transfer, exchange or other
disposition by the Partnership of the Property or any portion thereof shall
automatically terminate at such point in time that (i) the Class A Limited
Partners or their successors shall have at any time exercised their Put Right in
one or multiple transactions, with respect to 50 percent or more of the total
number of Partnership Units originally issued to such Class A Limited Partners
hereunder, or (ii) the Class A Limited Partners or their successors shall have
effected a sale, transfer, assignment or other disposition (in one or multiple
transactions) of 50 percent or more of the total number of Partnership Units
originally issued to such Class A Limited Partners hereunder, other than
pursuant to any gift, sale, transfer or assignment to a Permitted Transferee in
accordance with Section 11.2.A.
70 Notice of Certain Events. In the event that the General
Partner shall at any time cause the Partnership to voluntarily sell, transfer,
exchange or otherwise dispose of all or any part of the Partnership's interest
in the Property in any transaction other than a like-kind exchange of the
Property pursuant to Section 1031 of the Code, or any other sale, transfer,
exchange or disposition pursuant to which the Class A Limited Partners shall not
recognize taxable gain for federal income tax purposes, the General Partner
shall provide each Class A Limited Partner with written notice of such proposed
transaction at least 90 days prior to the closing of such transaction.
<PAGE>
Section VII.2 Certificate of Limited Partnership.
The General Partner shall use all reasonable efforts to cause to be
filed a Certificate of Limited Partnership and such certificates or documents as
may be reasonable and necessary or appropriate for the formation, qualification
and operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and any other state,
the District of Columbia or other jurisdiction in which the Partnership may
elect to do business or own property. To the extent that such action is
determined by the General Partner to be reasonable and necessary or appropriate,
the General Partner shall file amendments to and restatements of the Certificate
and do all the things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware and each other state, the District of Columbia or other
jurisdiction in which the Partnership may elect to do business or own property.
The General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate or any amendment thereto to any Limited Partner.
Section VII.3 Restrictions on General Partner's Authority. The General
Partner may not take any action in contravention of an express prohibition or
limitation of this Agreement or any action that reasonably could be expected to
cause the Partnership not to qualify as a "partnership" for federal income tax
purposes without the written Consent of (i) all of the Class A Limited Partners
or (ii) such lower percentage of the Limited Partner Interests as may be
specifically provided for under a provision of this Agreement or the Act.
Section VII.4 Reimbursement of the General Partner.
10 No Compensation. Except as provided in this Section 7.4 and
elsewhere in this Agreement (including the provisions of Articles V and VI
hereof regarding distributions, payments and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
<PAGE>
20 Responsibility for Partnership Expenses. The Partnership
shall be responsible for and shall pay all expenses relating to the
Partnership's organization, the ownership of its assets and its operations. The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its good faith discretion, for all expenses
it, and/or its Affiliates incur relating to the operation of, or for the benefit
of, the Partnership. The General Partner shall determine in good faith the
amount of expenses incurred by the General Partner and its Affiliates related to
the operation of, or for the benefit of, the Partnership. In the event that
certain expenses are incurred for the benefit of both the Partnership and other
entities (including the General Partner or any of its Affiliates), such expenses
will be allocated to the Partnership and such other entities in such a manner as
the General Partner in its good faith discretion deems fair and reasonable. Such
reimbursements shall be in addition to any reimbursement to the General Partner,
and/or its Affiliates pursuant to Section 10.3.C hereof and as a result of
indemnification pursuant to Section 7.6 below. All payments and reimbursements
hereunder shall be characterized for federal income tax purposes as expenses of
the Partnership incurred on its behalf, and not as expenses of the General
Partner, and/or its Affiliates.
30 Reimbursement not a Distribution. If and to the extent any
reimbursement made pursuant to this Section 7.4 is determined for federal income
tax purposes not to constitute a payment of expenses of the Partnership, the
amount so determined shall constitute a guaranteed payment under Section 707(c)
of the Code, shall be treated consistently therewith by the Partnership and all
Partners and shall not be treated as a distribution for purposes of computing
the Partners' Capital Accounts.
Section VII.5 Outside Activities of the General Partner.
The General Partner shall devote to the Partnership such time
as may be necessary for the proper performance of its duties as General Partner,
but the General Partner is not required, and is not expected, to devote its full
time to the performance of such duties. It is understood that the General
Partner, and its officers, directors, employees, agents, trustees, Affiliates,
Subsidiaries and shareholders shall have substantial business interests and
engage in substantial business activities in addition to those relating to the
Partnership, including, without limitation, engaging in other business interests
and activities which are in direct or indirect competition with the Partnership.
Neither the Partnership nor any Partners shall have any right by virtue of this
Agreement or the partnership relationship established 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 directly competitive with the business of the
Partnership, shall not be deemed wrongful or improper in any manner. Neither the
General Partner nor any Affiliate of the General Partner shall be obligated to
present any particular opportunity to the Partnership even if such opportunity
is of a character which, if presented to the Partnership, could be taken by the
Partnership, and, regardless of whether or not such opportunity is competitive
with the Partnership. The General Partner, and any Affiliate of the General
Partner shall have the right to take for its own account (individually or as a
shareholder, member, trustee, partner or fiduciary), or to recommend to others,
any such particular opportunity. The General Partner, and its Affiliates may
hold Limited Partner Interests and shall be entitled to exercise all rights of a
Limited Partner relating to such Limited Partner Interests.
Section VII.6 Indemnification.
<PAGE>
10 GENERAL. THE PARTNERSHIP SHALL INDEMNIFY EACH INDEMNITEE
FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES, JOINT OR
SEVERAL, EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND OTHER
LEGAL FEES AND EXPENSES), JUDGMENTS, FINES, SETTLEMENTS AND OTHER AMOUNTS
ARISING FROM OR IN CONNECTION WITH ANY AND ALL CLAIMS, DEMANDS, ACTIONS, SUITS
OR PROCEEDINGS, CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE INCURRED BY THE
INDEMNITEE AND RELATING TO THE PARTNERSHIP, OR ITS OPERATIONS, AS SET FORTH IN
THIS AGREEMENT, IN WHICH ANY SUCH INDEMNITEE MAY BE INVOLVED, OR IS THREATENED
TO BE INVOLVED, AS A PARTY OR OTHERWISE, UNLESS IT IS ESTABLISHED BY A FINAL
DETERMINATION OF A COURT OF COMPETENT JURISDICTION THAT: (I) THE ACT OR OMISSION
OF THE INDEMNITEE WAS MATERIAL TO THE MATTER GIVING RISE TO THE PROCEEDING AND
EITHER WAS COMMITTED IN BAD FAITH OR WAS THE RESULT OF ACTIVE AND DELIBERATE
DISHONESTY, (II) THE INDEMNITEE ACTUALLY RECEIVED AN IMPROPER PERSONAL BENEFIT
IN MONEY, PROPERTY OR SERVICES OR (III) IN THE CASE OF ANY CRIMINAL PROCEEDING,
THE INDEMNITEE HAD REASONABLE CAUSE TO BELIEVE THAT THE ACT OR OMISSION WAS
UNLAWFUL. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL EXTEND TO ANY
LIABILITY OF ANY INDEMNITEE, PURSUANT TO A LOAN GUARANTEE, CONTRACTUAL
OBLIGATIONS FOR ANY INDEBTEDNESS OR OTHER OBLIGATIONS OR OTHERWISE, FOR ANY
INDEBTEDNESS OF THE PARTNERSHIP OR ANY SUBSIDIARY OF THE PARTNERSHIP (INCLUDING,
WITHOUT LIMITATION, ANY INDEBTEDNESS WHICH THE PARTNERSHIP OR ANY SUBSIDIARY OF
THE PARTNERSHIP HAS ASSUMED OR TAKEN SUBJECT TO), AND THE GENERAL PARTNER IS
HEREBY AUTHORIZED AND EMPOWERED, ON BEHALF OF THE PARTNERSHIP, TO ENTER INTO ONE
OR MORE INDEMNITY AGREEMENTS CONSISTENT WITH THE PROVISIONS OF THIS SECTION
7.6.A 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 7.6.A. THE TERMINATION
OF ANY PROCEEDING BY CRIMINAL CONVICTION OR UPON A PLEA OF NOLO CONTENDERE OR
ITS EQUIVALENT, OR AN ENTRY OF AN ORDER OF PROBATION PRIOR TO JUDGMENT, CREATES
A REBUTTABLE PRESUMPTION THAT THE INDEMNITEE ACTED IN A MANNER CONTRARY TO THAT
SPECIFIED IN THIS SECTION 7.6.A WITH RESPECT TO THE SUBJECT MATTER OF SUCH
PROCEEDING. ANY INDEMNIFICATION PURSUANT TO THIS SECTION 7.6.A SHALL BE MADE
ONLY OUT OF THE ASSETS OF THE PARTNERSHIP, AND ANY INSURANCE PROCEEDS FROM THE
LIABILITY POLICY COVERING THE GENERAL PARTNER AND ANY INDEMNITIES, 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 7.6.A.
<PAGE>
20 Advancement of Expenses. Reasonable expenses expected to be
incurred by an Indemnitee shall be paid or reimbursed by the Partnership in
advance of the final disposition of any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative made or
threatened against an Indemnitee upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.6.A has been met and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
30 No Limitation of Rights. The indemnification provided by
this Section 7.6 shall be in addition to any other rights to which an Indemnitee
or any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
40 Insurance. The Partnership may purchase and maintain
insurance on behalf of the Indemnities and such other Persons as the General
Partner shall determine against any liability that may be asserted against or
expenses that may be incurred by such Persons in connection with the
Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Persons against such liability under the provisions of
this Agreement.
50 No Personal Liability for Limited Partners. In no event may
an Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
60 Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.6 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the terms
of this Agreement.
70 Benefit. The provisions of this Section 7.6 are for the
benefit of the Indemnities, 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 7.6, or any
provision hereof, shall be prospective only and shall not in any way affect the
Partnership's obligation to any Indemnitee under this Section 7.6 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or related to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
80 Indemnification Payments Not Distributions. If and to the
extent any payments to any Partner pursuant to this Section 7.6 constitute gross
income to such Partner (as opposed to the repayment of advances made on behalf
of the Partnership), such amounts shall constitute guaranteed payments within
the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.
<PAGE>
Section VII.7 Liability of the General Partner.
10 General. Notwithstanding anything to the contrary set forth
in this Agreement, neither the General Partner, nor the trust managers,
directors or officers of the General Partner, or any Affiliate of the General
Partner, shall be liable for monetary damages to the Partnership, any Partners
or any Assignees for losses sustained, liabilities incurred or benefits not
derived as a result of errors in judgment or mistakes of fact or law or of any
act or omission if the General Partner acted in good faith.
20 No Obligation to Consider Separate Interests of Limited
Partners or Shareholders. The Limited Partners expressly acknowledge that the
General Partner is acting on behalf of the Partnership, and the shareholders of
the General Partner collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited Partners
(including, without limitation, the tax consequences to Limited Partners or
Assignees) in deciding whether to cause the Partnership to take (or decline to
take) any actions, and that neither the General Partner, nor any of its
Affiliates, shall be liable for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by Limited Partners in
connection with such decisions, provided that the General Partner has acted in
good faith.
30 Actions of Agents. The General Partner may exercise any of
the powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents. Neither the
General Partner, nor any of its Affiliates, shall be responsible for any
misconduct or negligence on the part of any such agent appointed by the General
Partner in good faith.
4. Effect of Amendment. Any amendment, modification or repeal
of this Section 7.7 or any provision hereof shall be prospective only and shall
not in any way affect the limitations on the liability of the General Partner,
or any Affiliate of the General Partner, to the Partnership and the Limited
Partners under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.
Section VII.8 Other Matters Concerning the General Partner.
1. 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.
<PAGE>
2. Reliance on Advisors. The General Partner may consult with
legal counsel, accountants, appraisers, management consultants, investment
bankers, architects, engineers, environmental consultants and other consultants
and advisors selected by it, and any act taken or omitted to be taken in
reliance upon the opinion of such Persons as to matters which the General
Partner reasonably believes to be within such Persons' professional or expert
competence shall be conclusively presumed to have been done or omitted in good
faith and in accordance with such opinion.
3. Action Through Agents. The General Partner shall have the
right, in respect of any of its powers or obligations hereunder, to act through
any of its duly authorized officers and a duly appointed attorney or
attorneys-in-fact. Each such attorney shall, to the extent provided by the
General Partner in the power of attorney, have full power and authority to do
and perform each and every act and duty which is permitted or required to be
done by the General Partner hereunder.
4. Actions to Maintain REIT Status or Avoid Taxation of the
General Partner. Notwithstanding any other provisions of this Agreement or the
Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT or (ii) to allow the General Partner to
avoid incurring any liability for taxes under Section 857 or 4981 of the Code,
is expressly authorized under this Agreement and is deemed approved by all of
the Limited Partners.
Section VII.9 Title to Partnership Assets.
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
Section VII.10 Reliance by Third Parties.
<PAGE>
Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE VIII.
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section VIII.1 Limitation of Liability.
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
Section VIII.2 Management of Business.
No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any trustee, officer, director, employee, partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any trust manager, officer, director,
employee, partner, agent or trustee of the General Partner, the Partnership or
any of their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section VIII.3 Outside Activities of Limited Partners.
<PAGE>
Any Limited Partner and any trust manager, officer, director, employee,
agent, trustee, Affiliate or shareholder of any Limited Partner shall be
entitled to and may have business interests and engage in business activities in
addition to those relating to the Partnership, including business interests and
activities in direct or indirect competition with the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. None of the Limited
Partners nor any other Person shall have any rights by virtue of this Agreement
or the partnership relationship established hereby in any business ventures of
any other Person, and such Person shall have no obligation pursuant to this
Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Partnership,
Limited Partner or Person.
Section VIII.4 Return of Capital.
No Limited Partner shall be entitled to the withdrawal or return of its
Capital Contributions, except to the extent of distributions made pursuant to
this Agreement or upon termination of the Partnership as provided herein. Except
to the extent expressly provided to the contrary by Exhibit C hereto or as
permitted by Sections 5.1., 6.1 and 13.2 hereof or otherwise expressly provided
in this Agreement, no Limited Partner or Assignee shall have priority over any
other Partner or Assignee either as to the return of Capital Contributions or as
to profits, losses, distributions or credits.
Section VIII.5 Rights of Limited Partners Relating to the
Partnership.
1. General. In addition to other rights provided by this Agreement or
by the Act, each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner's Partnership Interest, upon written demand with
a statement of the purpose of such demand and at such Limited Partner's own
expense:
(10 to obtain a copy of the Partnership's federal,
state and local income tax returns for each Partnership Year; and
(20 to obtain a copy of this Agreement and the
Certificate and all amendments thereto.
Section VIII.6 Put Right.
1. General.
(10 Subject to Section 8.6.A(6) and Section 8.6.C hereof, upon
the first Business Day following the one- year anniversary of the effective date
hereof, each Class A Limited Partner shall have the right (the "Put Right") to
require the Partnership to redeem all of the Class A Partnership Units held by
such Class A Limited Partner at a price equal to and in the form of the
Consideration. The Put Right shall be exercised pursuant to a Put Notice
delivered to the General Partner by the Class A Limited Partner. A Class A
Limited Partner may not exercise the Put Right for less than its entire interest
in the Partnership.
<PAGE>
(20 A Class A Limited Partner shall have no right with respect
to any interest in the Partnership after providing the Put Notice described
above, other than the right to receive payment for its interest in the
Partnership in accordance with this Section 8.6.
(30 The Assignee of a Class A Limited Partner may exercise the
rights of such Class A Limited Partner pursuant to this Section 8.6, and such
Class A Limited Partner shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such Class A
Limited Partner's Assignee. In connection with any exercise of such rights by
such Assignee on behalf of a Class A Limited Partner, the Consideration shall be
paid by the Partnership directly to such Assignee and not to the Class A Limited
Partner.
(40 Each Class A Limited Partner shall be unable to exercise
the Put Right and the Put Right shall lapse following the expiration of the
Extended Option Period after the occurrence of a Liquidating Event unless and
until the Partners shall continue the business of the Partnership under Article
XIII.
(50 Notwithstanding the provisions of this Section 8.6.A to
the contrary, upon the occurrence of a Liquidating Event, the General Partner
shall provide each Class A Limited Partner with a Dissolution Notice in
accordance with Section 13.6; and following the occurrence of any such
Liquidating Event, a Class A Limited Partner may exercise the Put Right
hereunder by providing the General Partner with a Put Notice during the thirty
(30) day period (the "Extended Option Period") following delivery of the
Dissolution Notice to such Class A Limited Partner.
(60 Notwithstanding the first sentence of Section 8.6.A(1), if
the General Partner shall breach the provisions of Section 7.1.F hereof, the Put
Right granted to each Class A Limited Partner hereunder shall immediately become
exercisable by each such Class A Limited Partner hereunder in accordance with
the further provisions of this Section 8.6.
2. Payment of Consideration.
(10 Within thirty (30) days after the delivery of a Put Notice
by a Class A Limited Partner under this Section 8.6 the Partnership (subject to
the limitations set forth in Section 8.6.C) shall transfer and deliver the
Consideration to such Class A Limited Partner or, as applicable, his Assignee
whereupon the Partnership (or its designee) shall redeem the Partnership Units
offered by such Class A Limited Partner or, as applicable, his Assignee.
(20 In the event that the Partnership elects to pay the
Consideration to a Class A Limited Partner in the form of the Share
Consideration and such Share Consideration is not a whole number of Shares, such
Class A Limited Partner shall be paid (i) that number of Shares which equals the
nearest whole number less than such amount plus (ii) an amount of cash which the
General Partner determines, in its reasonable discretion, to represent the fair
value of the remaining fractional Share which would otherwise be payable to such
Class A Limited Partner.
<PAGE>
(30 Each Class A Limited Partner agrees to deliver to the
Partnership the Partnership Unit Certificate(s) representing its Limited Partner
Interest and to execute such documents as the General Partner may reasonably
require in connection with the transfer of Shares upon exercise of the Put Right
(including without limitation an assignment of Partnership Units pursuant to the
terms of which such Class A Limited Partner agrees to indemnify and hold the
Partnership and the General Partner harmless from and all liabilities, charges,
costs and expenses relating to such Class A Limited Partner's Partnership Units
which are subject to the Put Right or the exercise of the Put Right).
(40 Notwithstanding the provisions of this Section 8.6.A to
the contrary, a Class A Limited Partner that exercises the Put Right shall be
deemed to have offered to sell the Class A Partnership Units described in the
Put Notice to the General Partner and the General Partner may, in its sole and
absolute discretion, elect to purchase directly and acquire such Class A
Partnership Units by paying to the Class A Limited Partner the Consideration
within the applicable period of time further set forth in Section 8.6.B(1)
whereupon the General Partner shall acquire the Class A Partnership Units
offered to the General Partner in connection with the exercise of the Put Right
and shall be treated for all purposes of this Agreement as the owner of such
Class A Partnership Units (and a Class A Limited Partner with respect to such
Class A Partnership Units) and the provisions of Section 8.6.A and this Section
8.6.B shall apply to and for the benefit of the General Partner in lieu of the
Partnership. If the General Partner shall elect to exercise its right to
purchase Class A Partnership Units under this section 8.6.B(4) with respect to a
Put Notice, it shall so notify the Class A Limited Partner within five Business
Days after the receipt by the General Partner of such Put Notice from such Class
A Limited Partner. Unless the General Partner (in its sole and absolute
discretion) shall exercise its right to purchase Class A Partnership Units from
such Class A Limited Partner pursuant to this Section 8.6.B(4), the General
Partner shall not have any obligation to the Class A Limited Partner or the
Partnership with respect to such Class A Limited Partner's exercise of the Put
Right. In the event that the General Partner shall exercise its right to
purchase Class A Partnership Units with respect to the exercise of a Put Right
in the manner described in the first sentence of this Section 8.6.4(B), the
Partnership shall have no obligation to pay any amount to the Class A Limited
Partner with respect to such Class A Limited Partner's exercise of such Put
Right, (or with respect to the Class A Partnership Units subject to such Put
Notice) and each of the Partnership, the General Partner and the Limited Partner
shall treat the transaction between the General Partner and the Class A Limited
Partner for federal income tax purposes as a sale of the Class A Limited
Partner's Class A Partnership Units to the General Partner. Each Class A Limited
Partner agrees to execute such documents as the General Partner may reasonably
require in connection with the exercise of the Put Right and the delivery of the
Consideration by the General Partner to such Class A Limited Partner.
<PAGE>
3. Exceptions to Exercise of Put Right.
Notwithstanding the provisions of Sections 8.6.A and 8.6.B above, no
Class A Limited Partner shall be entitled to exercise the Put Right above if (i)
a Liquidating Event has occurred and such Class A Limited Partner's Put Right
shall have lapsed under Section 8.6.A(4) and the Partners shall fail to continue
the Partnership under Article XIII hereof; or (ii) the delivery of Shares to the
Class A Limited Partner (a) would be prohibited under the Declaration of Trust
of the General Partner, (b) would adversely affect the ability of the General
Partner to continue to qualify as a REIT or subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code, or (c) would be
prohibited under applicable federal or state securities laws or regulations.
4. No Liens on Partnership Units Delivered.
Each Class A Limited Partner covenants and agrees with the Partnership
and the General Partner that all Class A Partnership Units delivered in
connection with the exercise of the Put Right shall be delivered to the
Partnership or the General Partner, respectively, free and clear of all liens
and encumbrances and, notwithstanding anything contained herein to the contrary,
neither the Partnership nor the General Partner shall be under any obligation to
acquire a Class A Limited Partner's Class A Partnership Units, (1) to the extent
that any such Class A Partnership Units are subject to any liens or
encumbrances, or (2) in the event that such Class A Limited Partner shall fail
to give the General Partner adequate assurances that such Class A Partnership
Units are not subject to any such liens or encumbrances or shall fail to agree
to fully indemnify the General Partner from any such liens or encumbrances as
well as the liabilities, charges, costs and expenses referenced in the last
sentence of Section 8.6.B(3). Each Class A Limited Partner further agrees that,
in the event any state or local transfer tax is payable as a result of the
transfer of its Class A Partnership Units to the Partnership or General Partner,
respectively, such Class A Limited Partner shall assume and pay such transfer
tax.
Section VIII.7 Call Right.
1. General.
(1) Subject to Section 8.7.C below, on or after the fifth
anniversary of the effective date hereof, the General Partner shall have the
right (the "Call Right") to purchase all of the Partnership Units held by each
Class A Limited Partner at a price equal to and in the form of the
Consideration. The Call Right shall be exercised pursuant to a Call Notice
delivered by the General Partner to any such Class A Limited Partner. The
General Partner may not exercise the Call Right for less than the entire
interest of a Class A Limited Partner in the Partnership.
(2) No Class A Limited Partner shall have any right with
respect to any interest in the Partnership after receiving the Call Notice
described above, other than the right to receive payment for its interest in the
Partnership in accordance with this Section 8.7.
<PAGE>
(3) The Assignee of a Class A Limited Partner shall be bound
by and subject to the Call Right of the General Partner pursuant to this Section
8.7. In connection with any exercise of such Call Right by the General Partner
with respect to an Assignee, the Consideration shall be paid by the General
Partner directly to such Assignee and not to the Class A Limited Partner from
which such Assignee acquired its Class A Partnership Units.
(4) The General Partner shall be unable to exercise the Call
Right and the Call Right shall lapse upon the occurrence of a Liquidating Event
unless and until the Partners shall continue the business of the Partnership
under Article XIII.
2. Payment of Consideration.
(1) Within [thirty (30)] days after the delivery of the Call
Notice by the General Partner to a Class A Limited Partner under this Section
8.7, the General Partner (subject to the limitations set forth in Section 8.7.C)
shall transfer and deliver the Consideration to such Class A Limited Partner or
as applicable his Assignee whereupon the General Partner (or its designee) shall
acquire the Class A Partnership Units of such Class A Limited Partner or as
applicable his Assignee and shall be treated for all purposes of this Agreement
as the owner of such Class A Partnership Units (and a Class A Limited Partner
with respect to such Class A Partnership Units).
(2) In the event that the General Partner elects to pay the
Consideration to such Class A Limited Partner in the form of the Share
Consideration and such Share Consideration is not a whole number of Shares, the
Class A Limited Partner shall be paid (i) that number of Shares which equals the
nearest whole number less than such amount plus (ii) an amount of cash which the
General Partner determines, in its reasonable discretion, to represent the fair
value of the remaining fractional Share which would otherwise be payable to the
Class A Limited Partner.
(3) Each Class A Limited Partner agrees to deliver to the
General Partner the Partnership Unit Certificate(s) representing its Limited
Partner Interest and to execute such documents as the General Partner may
reasonably require in connection with the issuance of Shares upon exercise of
the Call Right (including without limitation an assignment of Class A
Partnership Units pursuant to the terms of which such Class A Limited Partner
agrees to indemnify and hold General Partner harmless from and all liabilities,
charges, costs and expenses relating to such Class A Limited Partner's Class A
Partnership Units which are subject to the Call Right or the exercise of the
Call Right).
3. Exceptions to Exercise of Call Right.
<PAGE>
Notwithstanding the provisions of Sections 8.7.A and 8.7.B
above, the General Partner shall not be entitled to exercise the Call Right
pursuant to the Section 8.7.A above if (i) a Liquidating Event has occurred with
regard to the Partnership and the Partnership has not been continued under
Article XIII hereof; or (ii) the delivery of Shares to the Class A Limited
Partner (a) would be prohibited under the Declaration of Trust of the General
Partner, (b) would adversely affect the ability of the General Partner to
continue to qualify as a REIT or subject the General Partner to any additional
taxes under Section 857 or Section 4981 of the Code, or (c) would be prohibited
under applicable federal or state securities laws or regulations.
4. No Liens on Partnership Units Delivered.
Each Class A Limited Partner covenants and agrees with the General
Partner that all Class A Partnership Units delivered in connection with the Call
Right shall be delivered to the General Partner, free and clear of all liens and
encumbrances and, notwithstanding anything contained herein to the contrary, the
General Partner shall not be under any obligation to acquire a Class A Limited
Partner's Class A Partnership Units, (1) to the extent that any such Partnership
Units are subject to any liens or encumbrances, or (2) in the event that the
Class A Limited Partner shall fail to give the General Partner adequate
assurances that such Class A Partnership Units are not subject to any such liens
or encumbrances or shall fail to agree to fully indemnify the General Partner
from any such liens or encumbrances as well as the liabilities, charges, costs
and expenses referenced in the last sentence of Section 8.7.B(3). Each Class A
Limited Partner further agrees that, in the event any state or local transfer
tax is payable as a result of the transfer of its Partnership Units to the
General Partner, such Class A Limited Partner shall assume and pay such transfer
tax.
ARTICLE IX.
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section IX.1 Records and Accounting.
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business. 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 or other media, photographs, micro graphics
or any other information storage device, provided that the records so maintained
are convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained on an accrual basis in
accordance with generally accepted accounting principles for financial reporting
purposes and in accordance with tax accounting principles for tax reporting
purposes.
Section IX.2 Fiscal Year.
The fiscal year of the Partnership shall be the calendar year.
<PAGE>
Section IX.3 Reports.
As soon as practicable after the conclusion of each Partnership Year,
the General Partner shall cause to be mailed to each Limited Partner an annual
report, as of the close of such Partnership Year, containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared on a consolidated basis with the Partnership, for such Partnership
Year.
ARTICLE X.
TAX MATTERS
Section X.1 Preparation of Tax Returns.
The General Partner shall arrange for the preparation and timely filing
of all returns of Partnership income, gains, deductions, losses and other items
required of the Partnership for federal and state income tax purposes and shall
use all reasonable efforts to furnish, within ninety (90) days of the close of
each taxable year, the tax information reasonably required by Limited Partners
for federal and state income tax reporting purposes.
Section X.2 Tax Elections.
Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code (including, without limitation, the election available
under Section 754 of the Code). The General Partner shall have the right to seek
to revoke any such election upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section X.3 Tax Matters Partner.
1. General. The General Partner shall be the "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to Section 6223(c)(3)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address, taxpayer identification
number and profit interest of each of the Limited Partners and any Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners.
2. Powers. The tax matters partner is authorized, but not required:
<PAGE>
(10 to enter into any settlement with the IRS with respect to
any administrative or judicial proceedings for the adjustment of Partnership
items required to be taken into account by a Partner for income tax purposes
(such administrative proceedings being referred to as a "tax audit" and such
judicial proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state that such
agreement shall bind all Partners, except that such settlement agreement shall
not bind any Partner (i) who (within the time prescribed pursuant to the Code
and Regulations) files a statement with the IRS providing that the tax matters
partner shall not have the authority to enter into a settlement agreement on
behalf of such Partner or (ii) who is a "notice partner" (as defined in Section
6231(a)(8) of the Code) or a member of a "notice group" (as defined in Section
6223(b)(2) of the Code);
(20 in the event that a notice of a final administrative
adjustment at the Partnership level of any item required to be taken into
account by a Partner for tax purposes (a "final adjustment") is mailed to the
tax matters partner, to seek judicial review of such final adjustment, including
the filing of a petition for readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims Court or the District Court
of the United States for the district in which the Partnership's principal place
of business is located;
(30 to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(40 to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is not allowed by the IRS,
to file an appropriate pleading (petition or complaint) for judicial review with
respect to such request;
(50 to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to any item required to be
taken into account by a Partner for tax purposes, or an item affected by such
item; and
(60 to take any other action on behalf of the Partners of the
Partnership in connection with any tax audit or judicial review proceeding to
the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.6 hereof shall be fully applicable to the tax
matters partner in its capacity as such.
3. Reimbursement.
The tax matters partner shall receive no compensation for its services.
All costs and expenses incurred by the tax matters partner in performing its
duties as such (including legal and accounting fees and expenses and expenses
reimbursable under Section 7.4 hereof) shall be borne by the Partnership.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm or a law firm to assist the tax matters partner in discharging
its duties hereunder.
<PAGE>
Section X.4 Organizational Expenses.
The Partnership shall elect to deduct expenses, if any, incurred by it
in organizing the Partnership ratably over a sixty (60) month period as provided
in Section 709 of the Code.
Section X.5 Withholding.
Each Limited Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
recourse loan by the Partnership to such Limited Partner, which loan shall be
repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each
Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner. In such event the
General Partner shall have the right to receive distributions that would
otherwise be distributable to such defaulting Limited Partner until such time as
such loan, together with all interest thereon, has been paid in full, and any
such distributions so received by the General Partner shall be treated as having
been distributed to the defaulting Limited Partner and immediately paid by the
defaulting Limited Partner to the General Partner in repayment of such loan. Any
amounts payable by a Limited Partner hereunder shall bear interest at the lesser
of (A) the base rate on corporate loans at large United States money center
commercial banks, as published from time to time in the Wall Street Journal,
plus four (4) percentage points or (B) the maximum lawful rate of interest on
such obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
<PAGE>
ARTICLE XI.
TRANSFERS AND WITHDRAWALS
Section XI.1 Transfer.
1. Definition. The term "transfer," when used in this Article XI with
respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which a Partner purports to assign all or any part of
its interest in the Partnership to another Person, and includes a sale,
assignment, gift, pledge, encumbrance, hypothecation, mortgage, exchange or any
other disposition by law or otherwise. However, the term "transfer" when used in
this Article XI does not include any purchase of Partnership Units by the
General Partner from a Limited Partner pursuant to the exercise of the Put Right
or the Call Right in accordance with the provisions of Section 8.6 or 8.7
hereof.
2. General. No Partnership Interest held by a Limited Partner may be
transferred, in whole or in part, except in accordance with the terms and
conditions set forth in this Article XI. Any transfer or purported transfer of a
Limited Partner Interest not made in accordance with this Article XI shall be
null and void.
3. Transfer by General Partner. The General Partner may not transfer
its General Partner Interest in the Partnership without the Consent of all of
the Class A Limited Partners unless (1) the transfer of the General Partner
Interest is to an Affiliate of the General Partner, or (2) the transfer of the
General Partner Interest is pursuant to or in connection with a merger
(including a triangular merger), consolidation or other combination with or into
another Person, reclassification, recapitalization or change of outstanding
Shares (a "Business Combination"), and either (a) the Business Combination has
been approved by the Consent of all Class A Limited Partners, or (b) an Equity
Adjustment is made to the Consideration to be received by the Class A Limited
Partners.
Section XI.2 Limited Partners' Rights to Transfer.
<PAGE>
1. General. Except to the extent expressly permitted in Section 11.2.B
or in connection with the exercise of the Put Right or the Call Right pursuant
to Sections 8.6 or 8.7 hereof, a Limited Partner may not transfer all or any
portion of its Limited Partner Interest, or any of such Limited Partner's
economic rights as a Limited Partner, without the prior written consent of the
General Partner, which consent may be withheld by the General Partner, in its
sole and absolute discretion, for any reason or for no reason; provided,
however, that a Limited Partner may transfer all or any portion of its Limited
Partner Interest to a Permitted Transferee without the prior written consent of
the General Partner, as long as at least 90 days prior to such transfer, the
Limited Partner shall provide the General Partner with written notice of such
transfer. Any transfer otherwise permitted under Section 11.2.B (including
without limitation any transfer by a Limited Partner to a Permitted Transferee)
shall be subject to the conditions set forth in Sections 11.2.C and 11.2.D, and
all permitted transfers shall be subject to Section 11.3 and Section 11.4.
2. Incapacitated Limited Partners. If a Limited Partner is
Incapacitated, 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.
3. No Transfers Violating Securities Laws. The General Partner may in
its sole discretion, prohibit any transfer of Partnership Units by a Limited
Partner if, in the opinion of legal counsel to the Partnership, such transfer
would require filing of a registration statement under the Securities Act or
would otherwise violate any federal, or state securities laws or regulations
applicable to the Partnership or the Partnership Units.
4. General Partner Authority with Regard to Other Transfers. The
General Partner may, in its sole discretion, prohibit any transfer of
Partnership Units by a Limited Partner, if (i) in the opinion of legal counsel
it would result in the termination of the Partnership of the Partnership for
federal income tax purposes, (ii) in the opinion of legal counsel for the
Partnership, it would adversely affect the ability of the General Partner to
continue to qualify as a REIT or would subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or (iii) such
transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.
Section XI.3 Substituted Limited Partners.
1. Consent of General Partner. No Limited Partner shall have the right
to substitute a transferee as a Limited Partner in its place (whether or not the
transfer of the Limited Partner's Partnership Interest is permitted under
Section 11.2). The General Partner shall, however, have the right to consent to
the admission of a transferee of the interest of a Limited Partner pursuant to
this Section 11.3 as a Substituted Limited Partner, which consent may be given
or withheld by the General Partner in its sole and absolute discretion and for
any reason or no reason. The General Partner's failure or refusal to permit a
transferee of any such interests to become a Substituted Limited Partner shall
not give rise to any cause of action against the Partnership, the General
Partner or any other Partner.
<PAGE>
2. Rights of Substituted Limited Partner. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 2.4) and such other documents or instruments as may be
required to effect the admission.
3. Amendment and Restatement of Exhibit A. Upon the admission of a
Substituted Limited Partner, the General Partner shall amend and restate Exhibit
A hereto to reflect the name, address, Capital Account, number of Partnership
Units, and Percentage Interest of such Substituted Limited Partner and to
eliminate or adjust, if necessary, the name, address, Capital Account and
Percentage Interest of the predecessor of such Substituted Limited Partner (and
any other Partner, as necessary).
Section XI.4 Assignees.
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, such transferee shall be considered an Assignee for
purposes of this Agreement. An Assignee shall be entitled to all of the rights
of an assignee of a limited partner interest under the Act, including the right
to receive distributions from the Partnership and the share of Net Income, Net
Losses, gain, loss and Recapture Income attributable to the Partnership Units
assigned to such transferee, and, as applicable shall have the rights granted to
the Limited Partner from which it received its Partnership Units under Section
8.6 (and be subject to the Call Right granted to the General Partner under
Section 8.7), but shall not be deemed to be a holder of Partnership Units for
any other purpose under this Agreement, and shall not be entitled to vote such
Partnership Units in any matter presented to the Limited Partners for a vote
(such Partnership Units being deemed to have been voted in the same manner as
the Partnership Units held by the General Partner). In the event any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article XI to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units. The General Partner shall have no liability
under any circumstances with respect to any Assignee as to which it does not
have actual notice.
Section XI.5 General Provisions.
1. Withdrawal of Limited Partner. No Limited Partner may withdraw from
the Partnership other than as a result of a permitted transfer of all of such
Limited Partner's Partnership Units in accordance with this Article XI or, as
applicable, pursuant to the transfer of all of its Partnership Units under
Section 8.6 or 8.7 hereof.
2. Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant to
this Article XI or pursuant to Section 8.6 or 8.7 hereof shall immediately cease
to be a Limited Partner.
<PAGE>
3. Allocations. If any Partnership Interest is transferred in
compliance with the provisions of this Article XI or, as applicable, transferred
pursuant to Section 8.6 or 8.7 hereof, Net Income, Net Losses, each item thereof
and all other items attributable to such interest shall be divided and allocated
between the transferor Partner and the transferee Partner by taking into account
their varying interests during the fiscal year in accordance with Section 706 of
the Code, using any permissible method of allocation under such Code Section.
ARTICLE XII.
ADMISSION OF PARTNERS
Section XII.1 Admission of Successor General Partner.
A successor to, or transferee of, all of the General Partner's General
Partner Interest pursuant to Section 11.1.C hereof who is proposed to be
admitted as a successor General Partner shall be admitted to the Partnership as
the General Partner. Any such transferee shall carry on the business of the
Partnership without dissolution. In each case, the admission shall be subject to
the successor General Partner's executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be reasonably required by the Limited Partners
to effect the admission.
Section XII.2 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 (including an amendment and restatement of
Exhibit A hereto) and, if necessary, to prepare as soon as practicable an
amendment of this Agreement and, if required by law, shall prepare and file an
amendment to the Certificate and may for such purpose exercise the power of
attorney granted pursuant to Section 2.4 hereof.
ARTICLE XIII.
DISSOLUTION AND LIQUIDATION
Section XIII.1 Dissolution.
The Partnership shall not be dissolved by the admission of a
Substituted Limited Partner or by the admission of a successor General Partner
in accordance with the terms of this Agreement. Upon the withdrawal of the
General Partner, any successor General Partner shall continue the business of
the Partnership. The Partnership shall dissolve, and its affairs shall be wound
up, upon the first to occur of any of the following ("Liquidating Events") :
<PAGE>
(10 the expiration of its term as provided in Section
2.5 hereof;
(2) an event of withdrawal of the General Partner, as defined
in the Act (other than an event of bankruptcy), unless, within ninety (90) days
after the withdrawal a "majority in interest" (as defined below) of the
remaining Partners Consent in writing to continue the business of the
Partnership and to the appointment, effective as of the date of withdrawal, of a
substitute General Partner;
(3) the sale of all or substantially all of the assets
of the Partnership;
(4) the entry of a decree of judicial dissolution
of the Partnership pursuant to the provisions of the Act;
(5) the sale of the Property;
(6) a final and non-appealable judgment is entered by a court
of competent jurisdiction ruling that the General Partner is bankrupt or
insolvent, or a final and non-appealable order for relief is entered by a court
with appropriate jurisdiction against the General Partner, in each case under
any federal or state bankruptcy or insolvency laws as now or hereafter in
effect, unless prior to or within ninety days after of the entry of such order
or judgment a "majority in interest" (as defined below) of the Class A Limited
Partners Consent in writing to continue the business of the Partnership and to
the appointment, effective as of a date prior to the date of such order or
judgment, of a substitute General Partner.
As used herein, a "majority in interest" shall refer to Partners who hold more
than fifty percent (50%) of the outstanding Percentage Interests.
Section XIII.2 Winding Up.
1. General. Upon the occurrence of a Liquidating Event, and as
applicable, the failure of the Partners to continue the business of the
Partnership, the Partnership shall continue solely for the purposes of winding
up its affairs in an orderly manner, liquidating its assets, and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a majority in interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom shall be applied and distributed in the following
order:
<PAGE>
(1) first, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than the Partners;
(2) second, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners;
(3) third, to the Class A Limited Partners pro rata among them
in proportion to the Unpaid LP Return owing each such Class A Limited Partner in
an amount equal to any Unpaid LP Return owing such Class A Limited Partners;
(4) fourth, to the General Partner in an amount equal
to any Unpaid GP Return owing the General Partner;
(5) fifth, to the General Partner in an amount equal to
the Unreturned GP Capital owing the General Partner;
(6) sixth, to the Class A Limited Partners pro rata among them
in proportion to the Unreturned LP Capital owing each such Class A Limited
Partner, in an amount equal to the Unreturned Capital owing such Class A Limited
Partners; and
(7) finally, the balance, if any, shall be distributed to the
General Partner and the Class A Limited Partners pro rata, in accordance with
their respective Percentage Interests.
2. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A above which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A above,
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.
<PAGE>
3. Liquidating Trust. In the discretion of the General Partner, a pro
rata portion of the distributions that would otherwise be made to the General
Partner and Limited Partners pursuant to this Article XIII may be: (A)
distributed to a trust established for the benefit of the General Partner and
Limited Partners for the purposes of liquidating Partnership assets, collecting
amounts owed to the Partnership and paying any contingent or unforeseen
liabilities or obligations of the Partnership or of the General Partner arising
out of or in connection with the Partnership (in which case the assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the General Partner, in the same
proportions as the amount distributed to such trust by the Partnership would
otherwise have been distributed to the General Partner and Limited Partners
pursuant to this Agreement); or (B) withheld to provide a reasonable reserve for
Partnership liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Partnership, provided that
such withheld amounts shall be distributed to the General Partner and Limited
Partners in the manner and order of priority set forth in Section 13.2.A as soon
as practicable.
Section XIII.3 Deficit Capital Accounts.
Unless provided to the contrary pursuant to any deficit restoration
obligation arising under Section 4.1.C or similar written agreement, 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.
Section XIII.4 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Article XIII, in the event
the Partnership is deemed liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up. Instead,
for federal income tax purposes and for purposes of maintaining Capital Accounts
pursuant to Exhibit B hereto, the Partnership shall be deemed to have
distributed its assets in kind to the General Partner and Limited Partners, who
shall be deemed to have assumed and taken such assets subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be deemed
to have recontributed the Partnership assets in kind to the Partnership, which
shall be deemed to have assumed and taken such assets subject to all such
liabilities.
Section XIII.5 Rights of Limited Partners.
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. Except as otherwise provided in this
Agreement, no Limited Partner shall have priority over any other Partner as to
the return of its Capital Contributions, distributions, or allocations.
<PAGE>
Section XIII.6 Notice of Dissolution.
In the event a Liquidating Event occurs or an event occurs that would,
but for provisions of an election or objection by one or more Partners pursuant
to Section 13.1 above, result in a dissolution of the Partnership, the General
Partner shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Partners (a "Dissolution Notice").
Section XIII.7 Termination of Partnership and Cancellation of
Certificate of Limited Partnership.
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 above, all Partnership Units shall be
canceled and all rights relating thereto, including the Call Right and the Put
Right shall lapse, the Partnership shall be terminated, the Certificate and all
qualifications of the Partnership as a foreign limited partnership in
jurisdictions other than the State of Delaware shall be canceled, and such other
actions as may be necessary to terminate the Partnership shall be taken.
Section XIII.8 Reasonable Time for Winding Up.
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 above, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section XIII.9 Waiver of Partition.
Each Partner hereby waives any right to partition of the Partnership
property.
Section XIII.10 Liability of Liquidator.
THE LIQUIDATOR SHALL BE INDEMNIFIED AND HELD HARMLESS BY THE
PARTNERSHIP FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, COSTS, DAMAGES,
AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER ARISING OUT OF OR INCIDENTAL TO
THE LIQUIDATOR'S TAKING OF ANY ACTION AUTHORIZED UNDER OR WITHIN THE SCOPE OF
THIS AGREEMENT; PROVIDED, HOWEVER, THAT THE LIQUIDATOR SHALL NOT BE ENTITLED TO
INDEMNIFICATION, AND SHALL NOT BE HELD HARMLESS, WHERE THE CLAIM, DEMAND,
LIABILITY, COST, DAMAGE OR CAUSE OF ACTION AT ISSUE ARISES OUT OF (I) A MATTER
ENTIRELY UNRELATED TO THE LIQUIDATOR'S ACTION OR CONDUCT PURSUANT TO THE
PROVISIONS OF THIS AGREEMENT OR (II) THE PROVEN WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE OF THE LIQUIDATOR.
<PAGE>
ARTICLE XIV.
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section XIV.1 Amendments.
1. General. Amendments to this Agreement may be proposed by the General
Partner or by any Partners holding twenty-five percent (25%) or more of the
Class A Partnership Units. Following such proposal (except an amendment pursuant
to Section 14.1.B below), the General Partner shall submit any proposed
amendment to the Class A Limited Partners. The General Partner shall seek the
written vote of the Class A Limited Partners on the proposed amendment or shall
call a meeting to vote thereon and to transact any other business that it may
deem appropriate. For purposes of obtaining a written vote, the General Partner
may require a response within a reasonable specified time, but not less than
five (5) days, and failure to respond in such time period shall constitute a
vote which is consistent with the General Partner's recommendation with respect
to the proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D below, a
proposed amendment shall be adopted and be effective as an amendment hereto if
it is approved by the General Partner and it receives the Consent of Partners
holding a majority of the Class A Partnership Units then held by Partners.
2. Amendments Not Requiring Limited Partner Approval. Notwithstanding
Section 14.1.A or Section 14.1.C hereof, the General Partner shall have the
power, without the Consent of any Limited Partner, to amend this Agreement as
may be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner or any Affiliate of
the General Partner for the benefit of the Limited Partners;
(2) to reflect the admission, substitution,
termination, or withdrawal of any Partner in accordance with this Agreement;
(3) to reflect a change that does not adversely affect any of
the Limited Partners in any material respect, or to cure any ambiguity, correct
or supplement any provision in this Agreement not inconsistent with law or with
other provisions, or make other changes with respect to matters arising under
this Agreement that will not be inconsistent with law or with the provisions of
this Agreement or as may be expressly provided by any other provisions of this
Agreement; and
(4) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a federal,
state or local agency or contained in federal, state or local law.
<PAGE>
The General Partner shall notify the Limited Partners when any action under this
Section 14.1.B is taken.
3. Other Amendments Requiring Certain Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended without the Consent of such Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a general partner's interest, (ii) modify the limited liability of a
Limited Partner, (iii) alter rights of Partners to receive distributions
pursuant to Article V or XIII or the allocations specified in Article VI, (iv)
amend Section 8.6 or 8.7 or any defined terms set forth in Article I that relate
to the Put Right or the Call Right, or (v) amend this Section 14.1.C.
4. Amendment and Restatement of Exhibit A Not An Amendment.
Notwithstanding anything in this Article XIV or elsewhere in this Agreement to
the contrary, any amendment and restatement of Exhibit A hereto by the General
Partner to reflect events or changes otherwise authorized or permitted by this
Agreement, whether pursuant to Section 7.1.A(20) hereof or otherwise, shall not
be deemed an amendment of this Agreement and may be done at any time and from
time to time, as necessary by the General Partner without the Consent of any
Limited Partner.
Section XIV.2 Meetings of the Partners.
1. 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 Class A Limited Partners holding twenty-five percent (25%) or more of
the Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than five (5) days nor more than thirty (30) days prior to the date of such
meeting. Partners who are entitled to vote may vote in person or by proxy at
such meeting. Whenever the vote or Consent of Partners is permitted or required
under this Agreement, such vote or Consent may be given at a meeting of Partners
or may be given in accordance with the procedure prescribed in Section 14.1.A
above. Except as otherwise expressly provided in this Agreement, the Consent of
holders of a majority of the Class A Partnership Units (including Limited
Partner Interests held by the General Partner) shall control.
2. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by Partners whose consent is
required by this Agreement. Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of such
Partners. 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.
<PAGE>
3. Proxy. Each Class A Limited Partner may authorize any Person or
Persons to act for him by proxy on all matters in which a Class 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 Class A
Limited Partner or its attorney-in-fact. No proxy shall be valid after the
expiration of eleven (11) months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the Limited
Partner executing it, such revocation to be effective upon the Partnership's
receipt of written notice thereof.
4. 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 discretion.
ARTICLE XV.
GENERAL PROVISIONS
Section XV.1 Addresses and Notice.
Any notice, demand, request or report required or permitted to be given
or made to a Partner or Assignee under this Agreement shall be in writing and
shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A hereto or such other
address as the Partners shall notify the General Partner in writing. Such
communications shall be deemed sufficiently given, served, sent or received for
all purposes at such time as delivered to the addressee (with the return receipt
or delivery receipt being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
Section XV.2 Title and Captions.
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
Section XV.3 Pronouns and Plurals.
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
<PAGE>
Section XV.4 Further Action.
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section XV.5 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section XV.6 Creditors.
Other than as expressly set forth herein with regard to any Indemnitee,
none of the provisions of this Agreement shall be for the benefit of, or shall
be enforceable by, any creditor of the Partnership.
Section XV.7 Waiver.
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section XV.8 Counterparts.
This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
Section XV.9 Applicable Law.
<PAGE>
This Agreement shall be governed by and construed in accordance with
the laws, including choice of law rules, of the State of Delaware. The federal
and state courts of competent jurisdiction located in Dallas County, Texas,
shall have exclusive personal jurisdiction over the parties to this Agreement.
Each party agrees to process being effected upon it by registered mail sent to
the address and in the manner specified in Section 15.1. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to any suit, action or proceeding arising out of or
relating to this Agreement being brought in the federal or state courts of
competent jurisdiction located in Dallas County, Texas, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. In any litigation
between the parties to this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party all costs and expenses (including, without
limitation, fees and expenses of advisors and attorneys and related court costs)
incurred by the prevailing party in such litigation. All obligations to be
performed under this Agreement shall be performed in Dallas County, Texas.
Section XV.10 Invalidity of Provisions.
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section XV.11 Entire Agreement.
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any prior written oral understandings or agreements among them
with respect thereto.
Section XV.12 No Rights as Shareholders.
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as shareholders
of the General Partner, including, without limitation, any right to receive
dividends or other distributions made to shareholders of the General Partner or
to vote or to consent or receive notice as shareholders in respect to any
meeting of shareholders for the election of directors of the General Partner or
any other matter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
<PAGE>
CLASS A LIMITED PARTNERS:
TOWN `N COUNTRY PARK, INC.,
a Florida corporation
By:
-----------------------------------------
Name: James H. Shimberg
Title:
--------------------------------------
PSK, INC., a Florida Corporation,
By:
-----------------------------------------
Name: H. Sarah Golding Scher
Title: President
MANDELL SHIMBERG, JR. REVOCABLE TRUST
By:
-----------------------------------------
Name:
---------------------------------------
Title: Trustee
JAMES H. SHIMBERG REVOCABLE TRUST
By:
-----------------------------------------
Name:
--------------------------------------
Title: Trustee
Robert Pomerance
Richard N. Pomerance
<PAGE>
Charles Snitow
Loren Pollack
PSK ASSOCIATES, LTD.
By: Stuart S. Golding Company,
Authorized Agent
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MANDELL SHIMBERG JR. IRREVOCABLE TRUST
By:
----------------------------------------
Name:
---------------------------------------
Its: Trustee
JANET R. SHIMBERG PERSONAL TRUST
By:
-----------------------------------------
Name:
---------------------------------------
Its: Trustee
<PAGE>
EXHIBIT A
PARTNERS, CAPITAL ACCOUNTS AND PARTNERSHIP INTERESTS
Initial
Capital Number of
Name Account Partnership Percentage
and Address Balance Units Interest
GENERAL PARTNER:
United Investors Realty Trust ....... $ 108,331.73 10,833 99%
CLASS A LIMITED PARTNERS:
Mandell Shimberg, Jr
Irrevocable Trust ................... $ 95,720.00 9,572 0.040%
611 W. Bay St
Tampa, Fl 33606
Richard N. Pomerance ................ $ 27,710.00 2,771 0.012%
45 Metacomet Rd
Waban, MA 02168-1418
Charles Snitow ...................... $ 123,330.00 12,333 0.052%
4 Sniffen Ct
New York, NY 10016
Janet R. Shimberg
Personal Trust ...................... $ 20,150.00 2,015 0.008%
611 W. Bay Street
Tampa, FL 33606
PSK, Inc. ........................... $ 22,420.00 2,242 0.009%
27001 US Highway 19 North
Clearwater, FL 34616
Mandell Shimberg, Jr
Revocable Trust ..................... $ 426,050.00 42,605 0.179%
611 W. Bay St
Tampa, FL 33606
James H. Shimberg
Revocable Trust ..................... $ 426,050.00 42,605 0.178%
611 W. Bay St
Tampa, FL 33606
Robert Pomerance .................... $ 123,330.00 12,333 0.052%
Mizzentop Rd. RR Box 300
Pawling, NY 12564
Loren Pollack ....................... $ 112,120.00 11,212 0.047%
27001 US Highway 19 North
Clearwater, FL 34616
PSK Associates, Ltd. ................ $ 986,640.00 98,664 0.414%
27001 US Highway 19 North
Clearwater, FL 34616
Town `N Country Park, Inc. .......... $ 22,420.00 2,242 0.009%
-------------- ----- -----
611 West Bay St
Tampa, FL 33606
TOTAL ............. $ 2,494,271.73 249,427 100%
============== ======= ===
<PAGE>
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE RULES
1. Capital Accounts of the Partners.
A. The Partnership shall maintain for each Partner a separate Capital
Account in accordance with the rules of Regulations Section l.704-l(b)(2)(iv).
Such Capital Account shall be increased by (i) the amount of all Capital
Contributions and any other deemed contributions made by such Partner to the
Partnership pursuant to this Agreement and (ii) all items of Partnership income
and gain (including income and gain exempt from tax) computed in accordance with
Section 1.B hereof and allocated to such Partner pursuant to Section 6.1 of the
Agreement and Exhibit C of the Agreement, and decreased by (x) the amount of
cash or Agreed Value of all actual and deemed distributions of cash or property
made to such Partner pursuant to the Agreement and (y) all items of Partnership
deduction and loss computed in accordance with Section 1.B hereof and allocated
to such Partner pursuant to Section 6.1 of the Agreement and Exhibit C of the
Agreement.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in the Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income, gain, loss and
deduction shall be made without regard to any election under Section 754 of the
Code which may be made by the Partnership, provided that the amounts of any
adjustments to the adjusted bases of the assets of the Partnership made pursuant
to Section 734 of the Code as a result of the distribution of property by the
Partnership to a Partner (to the extent that such adjustments have not
previously been reflected in the Partners' Capital Accounts) shall be reflected
in the Capital Accounts of the Partners in the manner and subject to the
limitations prescribed in Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and
deduction shall be made without regard to the fact that items described in
Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not includable in gross
income or are neither currently deductible nor capitalized for federal income
tax purposes.
<PAGE>
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the adjusted
basis of such property as of such date of disposition were equal in amount to
the Partnership's Carrying Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset
is adjusted pursuant to Section 1.D hereof, the amount of any such adjustment
shall be taken into account as gain or loss from the disposition of such asset.
(6) Any items specially allocated under Section 2 of Exhibit C
of the Agreement shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the Carrying Values of
all Partnership assets shall be adjusted upward or downward to reflect any
Unrealized Gain or Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2) hereof, as if such
Unrealized Gain or Unrealized Loss had been recognized on an actual sale of each
such property and allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times:
(a) immediately prior to the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a de
minimis Capital Contribution; (b) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c) immediately prior to
the liquidation of the Partnership within the meaning of Regulations Section
1.704-l(b)(2)(ii)(g), provided however that adjustments pursuant to clauses (a)
and (b) above shall be made only if the General Partner determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Partners in the Partnership.
(3) In accordance with Regulations Section
1.704-l(b)(2)(iv)(e), the Carrying Value of Partnership assets distributed in
kind shall be adjusted upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as of the time any
such asset is distributed.
<PAGE>
(4) In determining Unrealized Gain or Unrealized Loss for
purposes of this Exhibit B, the aggregate cash amount and fair market value of
all Partnership assets (including cash or cash equivalents) shall be determined
by the General Partner using such reasonable method of valuation as it may
adopt, or in the case of a liquidating distribution pursuant to Article XIII of
the Agreement, shall be determined and allocated by the Liquidator using such
reasonable methods of valuation as it may adopt. The General Partner, or the
Liquidator, as the case may be, shall allocate such aggregate fair market value
among the assets of the Partnership in such manner as it determines in its sole
and absolute discretion to arrive at a fair market value for individual
properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section l.704-1(b).
2. No Interest.
No interest shall be paid by the Partnership on Capital Contributions
or on balances in Partners' Capital Accounts.
3. No Withdrawal.
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles V and XIII of the Agreement.
<PAGE>
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit C,
the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of Section
6.1 of the Agreement or any other provisions of this Exhibit C, if there is a
net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f)(6). This Section
1.A is intended to comply with the minimum gain chargeback requirements in
Regulations Section 1.704-2(f) and for purposes of this Section 1.A only, each
Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other provision
of Section 6.1 of this Agreement or any other provisions of this Exhibit C
(except Section 1.A hereof), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Partnership Year, each
Partner who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)
(5), shall be specially allocated items of Partnership income and gain for such
year (and, if necessary, subsequent years) in an amount equal to such Partner's
share of the net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)
(5). Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required to be allocated to each General Partner and
Limited Partner pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Section 1.704-2(i) (4). This Section
1.B is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
Solely for purposes of this Section 1.B, each Partner's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant to Section
6.1 of the Agreement or this Exhibit C with respect to such Partnership Year,
other than allocations pursuant to Section 1.A hereof.
<PAGE>
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or
1.704-l(b)(2)(ii)(d)(6), and after giving effect to the allocations required
under Sections 1.A and 1.B hereof with respect to such Partnership Year, such
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain (consisting of a pro rata portion of each item of Partnership income,
including gross income and gain for the Partnership Year) shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate, to
the extent required by the Regulations, its Adjusted Capital Account Deficit
created by such adjustments, allocations or distributions as quickly as
possible. This Section 1.C is intended to constitute a "qualified income offset"
under Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
D. Gross Income Allocation. In the event that any Partner has an
Adjusted Capital Account Deficit at the end of any Partnership Year (after
taking into account allocations to be made under the preceding paragraphs hereof
with respect to such Partnership Year), each such Partner shall be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, its Adjusted Capital Account Deficit.
E. Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the General Partner determines in its good faith
discretion that the Partnership's Nonrecourse Deductions must be allocated in a
different ratio to satisfy the safe harbor requirements of the Regulations
promulgated under Section 704(b) of the Code, the General Partner is authorized,
upon notice to the Limited Partners, to revise the prescribed ratio for such
Partnership Year to the numerically closest ratio which would satisfy such
requirements.
F. Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions
for any Partnership Year shall be specially allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
G. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
<PAGE>
2. Allocations for Tax Purposes.
A. Except as otherwise provided in this Section 2, for federal income
tax purposes, each item of income, gain, loss and deduction shall be allocated
among the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 6.1 of the Agreement
and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners consistent with the
principles of Section 704(c) of the Code to take into account the variation
between the 704(c) Value of such property and its adjusted basis at the time of
contribution; and
(b) any item of Residual Gain or Residual
Loss attributable to a Contributed
Property shall be allocated among the Partners in the same manner as its
correlative item of "book" gain or loss is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(i)....first, be allocated among the Partners in
a manner consistent with
the principles of Section 704(c) of the Code to take into account the Unrealized
Gain or Unrealized Loss attributable to such property and the allocations
thereof pursuant to Exhibit B;
(ii)....second, in the event such
property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with Section
2.B(1) of this Exhibit C; and
(b) any item of Residual Gain or Residual
Loss attributable to an Adjusted
Property shall be allocated among the Partners in the same manner its
correlative item of "book" gain or loss is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
C. To the extent Regulations promulgated pursuant to Section 704(c) of
the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall have the authority in its sole discretion to elect the
method to be used by the Partnership and such election shall be binding on all
Partners.
<PAGE>
EXHIBIT D
FORM OF PUT NOTICE
The undersigned hereby irrevocably (i) exercises its Put Right with
regard to all of its Class A Partnership Units in UIRT-Town `N Country, L.P. in
accordance with the terms of the Agreement of Limited Partnership of UIRT-Town
`N Country, L.P., as amended, (the "Partnership Agreement") and the Put Right
referred to therein, (ii) surrenders such Partnership Units and all right, title
and interest therein and (iii) directs that the Consideration (as determined in
accordance with the provisions of the Partnership Agreement) deliverable upon
exercise of the Put Right be delivered to the address specified below, and if
Shares are to be delivered, such Shares be registered or placed in the name(s)
and at the address(es) specified below. The undersigned hereby represents,
warrants, and certifies that the undersigned (a) has marketable and unencumbered
title to such Class A Partnership Units, free and clear of the rights of or
interests of any other person or entity, (b) has the full right, power and
authority to transfer and surrender such Partnership Units as provided herein
and (c) has obtained the consent or approval of all persons or entities, if any,
having the right to consult or approve such redemption and surrender.
Dated:
By:
Name:
Title:
IF CONSIDERATION PAID
IN SHARES, SUCH
SHARES ARE TO BE ISSUED TO:
Name:
Address:
Please insert social security or taxpayer identification number:
<PAGE>
EXHIBIT E
FORM OF CALL NOTICE
The undersigned hereby irrevocably exercises its Call Right with regard
to all of the Class A Partnership Units owned by in UIRT-Town `N Country, L.P.
in accordance with the terms of the Agreement of Limited Partnership of
UIRT-Town `N Country, L.P., as amended (the "Partnership Agreement") and the
Call Right referred to therein. The undersigned shall pay the [Cash Amount/Share
Consideration] (as determined in accordance with the provisions of the
Partnership Agreement) to __________ at the notice address of __________
provided in the Partnership Agreement upon receipt of (1) the duly executed
Partnership Unit Certificate of __________ transferring all right, title and
interest in __________ to the undersigned, (2) if Shares are to be delivered,
instructions as to the name and address and taxpayer identification number of
the person to whom such Shares will be registered or placed, and (3) the
representation, warranty and certification of __________ that __________ (a) has
marketable and unencumbered title to such Partnership Unit, free and clear of
the rights of or interests of any other person or entity, (b) has the full
right, power and authority to transfer and surrender such Partnership Unit as
provided herein, and (c) has obtained the consent or approval of all persons or
entities, if any, having the right to consult or approve such redemption and
surrender.
UNITED INVESTORS REALTY TRUST,
a Texas real estate investment trust
By:
Name:
Title:
<PAGE>
EXHIBIT F
FORM OF PARTNERSHIP UNIT CERTIFICATE
<PAGE>
Number Units
UIRT-TOWN `N COUNTRY, L.P.
This Certifies that is the owner of Class A Partnership Units of the
above Limited Partnership transferable only on the books of the Limited
Partnership by the holder hereof in person or by a duly authorized Attorney upon
surrender of this Certificate properly endorsed. Transfer of these Units is
subject to substantial restrictions as set forth in the Amended and Restated
Agreement of Limited Partnership of UIRT-Town `N Country, L.P. (the "Partnership
Agreement").
The Partnership will furnish without charge to each rightful holder
hereof who so requests, a copy of the Partnership Agreement which sets forth the
powers, designations, preferences and relative participation rights of Partners
and the qualifications, limitations or restrictions of such rights.
In Witness Whereof, the said Limited Partnership has caused this
Certificate to be signed by and to be sealed with the Seal of the Limited
Partnership if one is adopted.
Dated:
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000868196
<NAME> United Investors Realty Trust
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Jun-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 11,610,321
<SECURITIES> 0
<RECEIVABLES> 1,754,539
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,991,622
<PP&E> 121,004,231
<DEPRECIATION> (6,004,299)
<TOTAL-ASSETS> 130,991,554
<CURRENT-LIABILITIES> 2,804,504
<BONDS> 0
0
0
<COMMON> 87,164,078
<OTHER-SE> (2,279,333
<TOTAL-LIABILITY-AND-EQUITY> 130,991,554
<SALES> 0
<TOTAL-REVENUES> 7,209,766
<CGS> 0
<TOTAL-COSTS> 1,559,338
<OTHER-EXPENSES> 2,133,370
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,990,961
<INCOME-PRETAX> (535,365)
<INCOME-TAX> 0
<INCOME-CONTINUING> (535,365)
<DISCONTINUED> 0
<EXTRAORDINARY> (232,532)
<CHANGES> 0
<NET-INCOME> (788,567)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13
</TABLE>
