AGREEMENT OF LIMITED PARTNERSHIP OF ASSET INVESTORS OPERATING PARTNERSHIP, L.P

 

Exhibit 10.1

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

ASSET INVESTORS OPERATING PARTNERSHIP, L.P.

 

 

As of

April 30, 1997

 

 

TABLE OF CONTENTS

 

 

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AGREEMENT OF LIMITED PARTNERSHIP

OF

ASSET INVESTORS OPERATING PARTNERSHIP, L.P.

 

THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of April 30, 1997, is made by and among ASSET INVESTORS CORPORATION, a Maryland corporation having an office at 3600 South Yosemite Street, Suite 1000, Denver, Colorado 80237, as general partner (the “ General Partner ”). Terry Considine, Thomas Rhodes and HFIC Inc., a Missouri corporation, as initial limited partners (each of Terry Considine, Thomas Rhodes and HFIC Inc., an “Initial Limited Partner” and together, the “Initial Limited Partners”), and those parties who may become parties to this Agreement as limited partners from time to time in accordance with the terms of this Agreement. Capitalized terms used herein but not otherwise defined shall have the meanings given them in Section 1.1.

 

W I T N E S S E T H :

 

WHEREAS, the General Partner currently qualifies as a REIT;

 

WHEREAS, Asset Investors Operating Partnership, L.P. (the “ Partnership ”), was formed on April 28, 1997 as a limited partnership pursuant to the Act, and the Certificate of Limited Partnership reflecting the foregoing was filed in the appropriate offices of the State of Delaware on April 28, 1997;

WHEREAS, the General Partner desires to conduct its current and future business through the Partnership;

 

WHEREAS, in furtherance of the foregoing, the General Partner desires to contribute certain of its Property and other assets to the Partnership;

 

WHEREAS, in exchange for the General Partner’s contributions of Property and other assets, the parties desire that the Partnership issue Partnership Units to the General Partner in accordance with the terms of this Agreement;

 

WHEREAS, each of the Initial Limited Partners agrees to contribute certain of his or its property to the Partnership in exchange for Partnership Units in accordance with the terms of this Agreement;

 

WHEREAS, the parties are considering that, in furtherance of the Partnership’s business, the Partnership may acquire Property and other assets from time to time by means of the contribution of such Property or other assets to the Partnership by the owners thereof in exchange for Partnership Units; and

 

WHEREAS, the parties hereto wish to establish herein their respective rights and obligations in connection with all of the foregoing and certain other matters.

 

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NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agrees as follows:

 

ARTICLE I

 

Definitions; Etc.

 

1.1 Definitions . Except as otherwise herein expressly provided, the following terms and phrases shall have the meanings set forth below:

 

“Accountants ” shall mean the firm or firms of independent certified public accountants selected by the General Partner from time to time on behalf of the Partnership to audit the books and records of the Partnership and to prepare statements and reports in connection therewith.

 

“ Act ” shall mean the Revised Uniform Limited Partnership Act as enacted in the State of Delaware, as the same may hereafter be amended from time to time, or any successor statute.

 

“ Administrative Expenses ” shall mean (i) all administrative and operating costs and expenses incurred by the Partnership and (ii) all administrative and operating costs and expenses and accounting and legal expenses incurred by the General Partner on behalf or for the benefit of the Partnership.

 

“ Affiliate ” shall mean, with respect to any Partner (or with respect to any other Person the Affiliates of whom are relevant for purposes of any of the provisions of this Agreement), (i) any member of the Immediate Family of such Partner or Person; (ii) any partner, trustee, director, officer, beneficiary or shareholder of such Partner or Person; (iii) any trustee or trust for the benefit of any Person referred to in the preceding clauses (i) or (ii); or (iv) any Entity which,

 

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directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Partner or any Person referred to in the preceding clauses (i) through (iii).

 

“ Affiliate Financing ” shall mean financing or refinancing obtained from a Partner or an Affiliate of a Partner by the Partnership.

 

“ Agreement ” shall mean this Agreement of Limited Partnership, as amended, modified, supplemented or restated from time to time, as the context requires.

 

“ Bankruptcy ” shall mean, with respect to any Partner, (i) the commencement by such Partner of any proceeding seeking relief under any provision or chapter of the federal Bankruptcy Code or any other federal or state law relating to insolvency, bankruptcy or reorganization, (ii) an adjudication that such Partner is insolvent or bankrupt, (iii) the entry of an order for relief under the federal Bankruptcy Code with respect to such Partner, (iv) the filing of any such petition or the commencement of any such case or proceeding against such Partner, unless such petition and the case or proceeding initiated thereby are dismissed within ninety (90) days from the date of such filing, (v) the filing of an answer by such Partner admitting the allegations of any such petition, (vi) the appointment of a trustee, receiver or custodian for all or substantially all of the assets of such Partner unless such appointment is vacated or dismissed within ninety (90) days from the date of such appointment but not less than five (5) days before the proposed sale of any assets of such Partner, (vii) the execution by such Partner of a general assignment for the

 

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benefit of creditors, (viii) the convening by such Partner of a meeting of its creditors, or any class thereof, for purposes of effecting a moratorium upon or extension or composition of its debts, (ix) the levy, attachment, execution or other seizure of substantially all of the assets of such Partner where such seizure is not discharged within thirty (30) days thereafter, or (x) the admission by such Partner in writing of its inability to pay its debts as they mature or that it is generally not paying its debts as they become due.

 

“ Book Value Per Share ” on any date shall mean the value obtained by (i) subtracting the sum of intangible assets, total liabilities and the par value of preferred stock from total assets, all as determined from the most recent balance sheet of the General Partner prepared in accordance with GAAP and (ii) dividing the number obtained in (i) by the number of Shares.

 

“ Capital Account ” shall have the meaning set forth in Section 4.5(a).

 

“ Capital Contribution ” shall mean, with respect to any Partner, the amount of cash and the initial Gross Asset Value of any asset (other than cash) contributed to the Partnership in exchange for Partnership Units (net of liabilities to which such asset is subject).

 

“ Certificate ” shall mean the Certificate of Limited Partnership establishing the Partnership, as filed with the office of the Secretary of State of the State of Delaware on April 28, 1997, as the same may be amended or restated from time to time in accordance with the terms of this Agreement and the Act.

 

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“ Charter ” shall mean the articles of incorporation of the General Partner and all amendments, supplements and restatements thereof.

 

“ Closing Price ” on any date shall mean the last sale price, regular way, of the Shares or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, of the Shares in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Shares are not then listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Shares are listed or admitted to trading or, if the Shares are not then listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotations System for the Shares or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the Snares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Shares who is selected from time to time by the Board of Directors of the General Partner.

 

“ Code ” shall mean the Internal Revenue Code of 1986, as amended, or any corresponding provisions of succeeding law.

 

“ Computation Date ” shall have the meaning set forth in Section 11.3.

 

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“ Consent of the Limited Partners ” shall mean the written consent of a Majority-In-Interest of the Limited Partners, which consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by a Majority-In-Interest of the Limited Partners, unless otherwise expressly provided herein, in their sole and absolute discretion. Whenever the Consent of the Limited Partners is sought by the General Partner, the request for such consent, outlining in reasonable detail the matter or matters for which such consent is being requested, shall be submitted to all of the Limited Partners, and each Limited Partner shall have at least fifteen (15) days from the date such notice is given in accordance with Section 12.2 to act upon such request.

 

“ Contributed General Partner Property ” shall have the meaning set forth in Section 4.1(a).

 

“ Contributed Limited Partner Property ” shall mean (i) in the case of each Initial Limited Partner, all of the property and assets described on Exhibit B next to the name of such Initial Limited Partner contributed to the Partnership, and (ii) in the case of any Limited Partner, the property or other assets contributed to the Partnership from time to time in exchange for Partnership Units pursuant to Contribution Agreements.

 

“ Contribution Agreements ” shall mean agreements between the Partnership and one or more Persons who will become Limited Partners in accordance with the terms of this Agreement, to be entered into from time to time, pursuant to which, among other things, such Persons, directly or indirectly, will contribute

 

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Contributed Limited Partner Property to the Partnership in exchange for Partnership Units.

 

“ Contribution Date ” shall mean, with respect to any property or other assets, the date such property or other assets are contributed to the capital of the Partnership.

 

“ Control ” shall mean the ability, whether by the direct or indirect ownership of shares or other equity interests, by contract or otherwise, to elect a majority of the directors of a corporation, to select the managing partner of a partnership, or otherwise to select, or have the power to remove and then select, a majority of those Persons exercising governing authority over an Entity. In the case of a limited partnership, the sole general partner, all of the general partners to the extent each has equal management control and authority, or the managing general partner or managing general partners thereof shall be deemed to have control of such partnership and, in the case of a trust, any trustee thereof or any Person having the right to select any such trustee shall be deemed to have control of such trust.

 

“ Current Per Share Market Price ” on any date shall mean the average of the Closing Price for the five consecutive Trading Days ending on such date.

 

“ Deemed Partnership Unit Value ” as of any date shall mean the greater of (i) Book Value Per Share or (ii) the Current Per Share Market Price as of the Trading Day immediately preceding such date; provided , however , that Deemed Partnership Unit Value shall be adjusted as described in Section 11.7(d) in the event

 

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of any stock dividend, stock split, stock distribution or similar transaction affecting or with respect to the Shares.

 

“ Depreciation ” shall mean, for each Partnership Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable under the Code with respect to a Partnership asset for such year or other period, except that if the Gross Asset Value of a Partnership asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided , however , that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

 

“ Directors ” shall mean the Board of Directors of the General Partner.

 

“ Entity ” shall mean any general partnership, limited partnership, limited liability company, limited liability partnership, corporation, joint venture, trust, business trust, cooperative or association.

 

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time (or any corresponding provisions of succeeding laws).

 

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“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“ Exercise Notic e” shall have the meaning set forth in Section 11.1.

 

“ GAAP ” shall mean generally accepted accounting principles, consistently applied over prior periods.

 

“ General Partner ” shall mean Asset Investors Corporation, a Maryland corporation, its duly admitted successors and assigns and any other Person who is a general partner of the Partnership at the time of reference thereto.

 

“ Gross Asset Value ” shall have the meaning set forth in Section 4.5(b).

 

“ Gross Income ” shall mean the income of the Partnership determined pursuant to Section 61 of the Code before deduction of items of expense or deduction.

 

“ Immediate Family ” shall mean, with respect to any Person, such Person’s spouse, parents, parents-in-law, descendants by blood or adoption, nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.

 

“ Initial Limited Partner ” shall mean each of Terry Considine, Thomas Rhodes and HFIC Inc. or their duly admitted successors or assigns.

 

“ Institutional Lender ” shall mean a commercial bank or trust company, a savings and loan association or an insurance company.

 

“ Lien ” shall mean any liens, security interests, mortgages, deeds of trust, charges, claims, encumbrances, restrictions, pledges, options, rights of first offer or first refusal and any other rights or interests of others of any kind or nature, actual or contingent, or other similar encumbrances of any nature whatsoever.

 

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“ Limited Partners ” shall mean those Persons who become parties to this Agreement from time to time as limited partners (including each of the Initial Limited Partners), their permitted successors or assigns as limited partners hereof, and/or any Person who, at the time of reference thereto, is a limited partner of the Partnership.

 

“ Liquidating Agent ” shall mean such Person as is selected as the Liquidating Agent hereunder by the General Partner, which Person may include the General Partner or an Affiliate of the General Partner, provided such Liquidating Agent agrees in writing to be bound by the terms of this Agreement. The Liquidating Agent shall be empowered to give and receive notices, reports and payments in connection with the dissolution, liquidation and/or winding-up of the Partnership and shall hold and exercise such other rights and powers as are necessary or required to permit all parties to deal with the Liquidating Agent in connection with the dissolution, liquidation and/or winding-up of the Partnership.

 

“ Losses ” shall have the meaning set forth in Section 6.1(a).

 

“ Majority-In-Interest of the Limited Partners ” shall mean Limited Partner(s) who hold in the aggregate more than fifty percent (50%) of the Partnership Units then held by all the Limited Partners, as a class (but excluding any Partnership Units held by the General Partner).

 

“ Minimum Gain ” shall have the meaning set forth in Section 6.1(d)(i).

 

“ Minimum Gain Chargeback ” shall have the meaning set forth in Section 6.1(d)(i).

 

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“ Net Financing Proceeds ” shall mean the cash proceeds received by the Partnership in connection with any borrowing by or on behalf of the Partnership (whether or not secured), or distributed to the Partnership in respect of any such borrowing by any Subsidiary Entity, after deduction of all costs and expenses incurred by the Partnership in connection with such borrowing, and after deduction of that portion of such proceeds used to repay any other indebtedness of the Partnership, or any interest or premium thereon.

 

“ Net Operating Cash Flow ” shall mean, with respect to any fiscal period of the Partnership, the aggregate amount of all cash received by the Partnership from any source for such fiscal period (including Net Sale Proceeds and Net Financing Proceeds), less the aggregate amount of all expenses or other amounts paid with respect to such period and such additional cash reserves as of the last day of such period as the General Partner deems necessary for any capital or operating expenditure permitted hereunder.

 

“ Net Sale Proceeds ” shall mean the cash proceeds received by the Partnership in connection with a sale of any asset by or on behalf of the Partnership or a sale of any asset by or on behalf of any Subsidiary Entity, after deduction of 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

 

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premium, if any, thereon and any sales commissions or other costs and expenses due and payable to any Person in connection with a sale).

 

“ Nonrecourse Liabilities ” shall have the meaning set forth in Section 6.1(d)(i).

 

“ Offered Units ” shall mean the Partnership Units of Limited Partner identified in an Exercise Notice which, pursuant to the exercise of Rights, are to be acquired by the General Partner under the terms of this Agreement.

 

“ Off Market Shares ” shall mean any Shares issued by the General Partner in connection with the exercise of any warrants to issue Shares or in connection with an issuance under any stock option, dividend reinvestment or like plan, whether now existing or adopted after the date of this Agreement.

 

“ Partner Nonrecourse Debt ” shall have the meaning set forth in Section 6.1(d)(ii).

 

“ Partner Nonrecourse Debt Minimum Gain ” shall have the meaning set forth in Section 6.1(d)(ii).

 

“ Partner Nonrecourse Deduction ” shall have the meaning set forth in Section 6.1(d)(ii).

 

“ Partners ” shall mean the General Partner and the Limited Partners or any Person who is a general or limited partner of the Partnership at the time of reference thereto.

 

“ Partnership ” shall mean the limited partnership constituted hereby, as such limited partnership may from time to time be constituted.

 

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“ Partnership Fiscal Year ” shall mean the calendar year.

 

“ Partnership Minimum Gain ” shall have the meaning set forth in Section 1.704-2(b)(2) of the Regulations.

 

“ Partnership Units ” shall mean interests in the Partnership which entitle a Partner to the allocations (and each item thereof) specified in Section 6.1 and all distributions from the Partnership, and its rights of management, consent, approval or participation, if any, as provided in this Agreement. Each Partner’s percentage of ownership interest in the Partnership shall be determined by dividing the number of Partnership Units then owned by each Partner by the total number of Partnership Units then outstanding. The number of Partnership Units to be held by each Partner and the percentage interest of each Partner in the Partnership will be recorded on the books and records of the Partnership, which record, absent manifest error, shall be binding on all Persons.

 

“ Person ” shall mean any individual or Entity.

 

“ Pledge ” shall mean a pledge or grant of a mortgage, security interest, lien or other encumbrance in respect of a Partnership Unit.

 

“ Profits ” shall have the meaning set forth in Section 6.1(a).

 

“ Property” or “Properties ” shall mean any ownership interest in residential mortgage loans and residential mortgage loan securitizations (rated or unrated) and any other property within the scope of the investment policies of the General Partner.

 

“ Purchase Price ” shall have the meaning set forth in Section 11.3.

 

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“ Registered Agent ” shall have the meaning set forth in Section 2.5.

 

“ Registered Office ” shall have the meaning set forth in Section 2.5.

 

“ Registration Rights Agreement ” shall mean any registration rights agreement entered into between the General Partner and certain Limited Partners.

 

“ Regulations ” shall mean the final, temporary or proposed income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“ REIT ” shall mean a real estate investment trust as defined in Section 856 of the Code, or the corresponding provision of subsequent law.

 

“ REIT Expenses ” shall mean all (i) costs and expenses relating to the continuity of existence of the General Partner and its subsidiaries, including taxes, fees and assessments associated therewith, and any and all costs, expenses, salaries or fees payable to any director, officer, agent, attorney, trustee or employee of the General Partner or any of such subsidiaries, (ii) costs and expenses associated with the preparation and filing of any periodic reports by the General Partner under federal, state or local laws or regulations, including tax returns and filings with the SEC and any stock exchanges on which the Shares are listed, (iii) costs and expenses associated with compliance by the General Partner with laws, rules and regulations promulgated by any regulatory body, including the SEC, (iv) costs and expenses associated with any 401(k) plan, pension plan, incentive plan, bonus plan or other plan providing for compensation for the employees of the General Partner and (v) all operating, administrative and other costs incurred by the General Partner (including

 

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accountant’s fees, office rent and other administrative expenses of the General Partner’s office, but excluding costs of any repurchase by the General Partner of any of its securities).

 

“ REIT Requirements ” shall mean all actions or omissions as may be necessary (including making appropriate distributions from time to time) to permit the General Partner to continue to qualify as a REIT.

 

“ Rights ” shall have the meaning set forth in Section 11.1.

 

“ SEC ” shall mean the Securities and Exchange Commission.

 

“ Securities Act ” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“ Shares ” shall mean the shares of common stock, par value $.01 per share, of the General Partner.

 

“ Subsidiary Entity ” shall mean any Entity in which the Partnership owns a direct or indirect equity interest.

 

“ Substituted Limited Partner ” shall mean a Limited Partner admitted to the Partnership as such as provided in Section 9.2.

 

“ Tax Matters Partner ” shall have the meaning set forth in Section 6.7.

 

“ Third Patty ” or “ Third Parties ” shall mean a Person or Persons who is or are neither a Partner or Partners nor an Affiliate or Affiliates of a Partner or Partners.

 

“ Third Party Financing ” shall mean financing or refinancing obtained from a Third Party by the Partnership.

 

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“ Trading Da y” shall mean a day on which the principal national securities exchange on which the Shares are listed or admitted to trading is open for the transaction of business or, if the Shares are not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

“ Transfer ” means any assignment, sale, transfer or other disposition (other than a Pledge), whether voluntary or involuntary, or by operation of law.

 

1.2 Exhibit, Etc. References to “Exhibit” are, unless otherwise specified, to one of the Exhibits attached to this Agreement, and references to an “Article” or a “Section” are, unless otherwise specified, to one of the Articles or Sections of this Agreement. Each Exhibit attached hereto and referred to herein is hereby incorporated herein by reference.

 

ARTICLE II

 

Formation

 

2.1 Formation . The Partnership was formed as a limited partnership pursuant to the provisions of the Act, and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions hereinafter set forth. The Partners agree that the rights and liabilities of the Partners shall be as provided in the Act except as otherwise herein expressly provided. Promptly upon the execution and delivery hereof, the General Partner shall cause each notice,

 

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instrument, document or certificate as may be required by applicable law and which may be necessary to enable the Partnership to continue to conduct its business, and to own its properties, under the Partnership name, to be filed or recorded in all appropriate public offices. Upon request of the General Partner, the Limited Partners shall execute any assumed or fictitious name certificate or certificates required by law to be filed in connection with the Partnership. The General Partner shall cause the execution and delivery of such additional documents and shall perform such additional acts consistent with the terms of this Agreement as may be necessary to comply with the requirements of law for the formation, qualification and operation of a limited partnership under the laws of the State of Delaware (it being understood that the General Partner shall be required to provide the Limited Partners with copies of any amended Certificates of Limited Partnership required to be filed under such laws only upon request) and for the qualification or reformation and operation of a limited partnership in each other jurisdiction in which the Partnership shall conduct business.

 

2.2 Name . The business of the Partnership shall be conducted under the name of Asset Investors Operating Partnership, L.P. or such other name as the General Partner may select, and all transactions of the Partnership, to the extent permitted by applicable law, shall be carried on and completed in such name (it being understood that the Partnership may adopt assumed or fictitious names in certain jurisdictions); provided , however , that the General Partner may not select the name (or any derivation thereof) of any Limited Partner without the prior consent of such Limited Partner.

 

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2.3 Character of the Business . The purpose of the Partnership shall be to acquire, hold, own, sell, transfer, encumber, convey, exchange and otherwise dispose of or deal with Properties; to acquire, hold, own, develop, redevelop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange and otherwise dispose of or deal with real and personal property and interests therein of all kinds; to deal with any other assets and to undertake all activities as may be permitted for a REIT pursuant to the provisions of Section 856, et seq . of the Code; to acquire, hold, own, sell, transfer, encumber, convey, exchange and otherwise dispose of or deal with interests in any Entity engaged in any of the foregoing activities; to undertake such other activities as may be necessary, advisable, desirable or convenient to the business of the Partnership, and to engage in such other ancillary activities as shall be necessary or desirable to effectuate the foregoing purposes. The Partnership shall have all powers necessary or desirable to accomplish the purposes enumerated. In connection with the foregoing, but subject to all of the terms, covenants, conditions and limitations contained in this Agreement and any other agreement entered into by the Partnership, the Partnership shall have full power and authority to enter into, perform and carry out contracts of any kind, to borrow or lend money and to issue evidences of indebtedness, whether or not secured by mortgage, trust deed, pledge or other Lien, and, directly or indirectly, to acquire, hold, own, develop, redevelop, construct, improve, maintain, operate, sell, lease, transfer, encumber, convey, exchange and otherwise dispose of or deal with additional Properties or other assets necessary or useful in connection with its

 

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business. Notwithstanding anything to the contrary set forth in this Section 2.3, the Partnership shall not engage in any activity in which a REIT is not permitted to engage pursuant to Section 856 et seq. of the Code.

 

2.4 Location of the Principal Place of Business . The location of the principal place of business of the Partnership shall be at 3600 South Yosemite Street, Suite 1000, Denver, Colorado 80237, or such other location as shall be selected from time to time by the General Partner in its sole discretion; provided , however , that the General Partner shall promptly notify the Limited Partners of any change in the location of the principal place of business of the Partnership.

 

2.5 Registered Agent and Registered Office . The Registered Agent of the Partnership shall be The Prentice-Hall Corporation System, Inc. or such other Person as the General Partner may select in its sole discretion. The Registered Office of the Partnership shall be c/o The Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, Delaware 19901, County of Kent, or such other location as the General Partner may select in its sole and absolute discretion. The General Partner shall promptly notify the Limited Partners of any change in the Registered Agent or Registered Office of the Partnership.

 

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ARTICLE III

 

Term

 

3.1 Commencement . The Partnership commenced business as a limited partnership on April 28, 1997 upon the filing of the Certificate with the Secretary of State of the State of Delaware.

 

3.2 Dissolution . The Partnership shall continue until dissolved and terminated upon the occurrence of the earliest of the following events:

 

(a) the dissolution, termination, retirement, resignation, or Bankruptcy of any General Partner, unless the Partnership is continued as provided in Section 9.1;

 

(b) the election to dissolve the Partnership made in writing by the General Partner;

 

(c) the sale or other disposition of all or substantially all the assets of the Partnership; or

 

(d) the dissolution of the Partnership as required by operation of law.

 

ARTICLE IV

 

Contributions to Capital

 

4.1 General Partner Capital Contributions .

 

(a) As of the date hereof, the General Partner shall contribute, or cause to be contributed, to the Partnership, all of the Property and

 

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assets described on Exhibit A (the “ Contributed General Partner Property ”). To the extent the Contributed General Partner Property was financed by borrowings made by the General Partner or is otherwise subject to any liability, the Partnership shall take subject to or assume the obligations of the General Partner with respect to such indebtedness (or such other liability) concurrently with the contribution by the General Partner thereof (or, if such assumption is not possible, the Partnership shall obligate itself to the General Partner in an amount and on terms equal to such indebtedness or other liability). In exchange for the Contributed General Partner Property, the Partnership shall issue to the General Partner the number of Partnership Units set forth on Exhibit A.

 

(b) At any time, and from time to time, the General Partner may contribute to the capital of the Partnership, in exchange for Partnership Units, additional Property or other assets (including cash) which the General Partner in good faith determines are desirable to further the purposes or business of the Partnership. Except as otherwise provided in the succeeding sentence, in the event Partnership Units are issued by the Partnership to the General Partner in accordance with this Section 4.1(b), the number of Partnership Units so issued shall be determined by dividing (i) the aggregate amount of cash (in the case of contributed assets consisting of cash) plus the Gross Asset Value (net of liabilities secured by such contributed asset that the Partnership assumes or takes subject to) of the Property or other assets so contributed as of the Contribution Date (in the case of contributed assets not consisting of cash) by (ii) the Deemed Partnership Unit Value; provided , that to the

 

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extent such contributed asset was financed by borrowings made by the General Partner or is otherwise subject to any liability, the Partnership shall take subject to or assume the obligations of the General Partner with respect to such indebtedness (or other liability) concurrently with the contribution by the General Partner of such asset (or, if such assumption is not possible, the Partnership shall obligate itself to the General Partner in an amount and on terms equal to such indebtedness or other liability). In the event Partnership Units are issued by the Partnership to the General Partner in exchange for the contribution of cash that was acquired by the General Partner in connection with the issuance of Off Market Shares, the number of Partnership Units so issued by the Partnership shall be equal to the number of Off Market Shares issued by the General Partner.

 

4.2 Limited Partner Capital Contributions .

 

(a) Each Initial Limited Partner shall contribute, as a contribution to the capital of the Partnership, the Property and other assets described on Exhibit B next to the name of such Initial Limited Partner. In exchange for such Contributed Limited Partner Property to be contributed by the Initial Limited Partners, the Partnership shall issue to each Initial Limited Partner the number of Partnership Units set forth on Exhibit B next to the name of each such Initial Limited Partner.

 

(b) At such time as additional Limited Partners are admitted to the Partnership or additional Partnership Units are issued to Limited Partners pursuant to Section 9.3, such Limited Partners shall contribute, or cause to be

 

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contributed, as their initial (or additional, as the case may be) contribution to the capital of the Partnership, in exchange for Partnership Units, Property or other assets as shall be set forth in, and in accordance with and subject to the terms and conditions of, Contribution Agreements.

 

4.3 No Obligation to Make Further Capital Contributions; No Third Party Beneficiary . Except as set forth above, no Partner shall have any obligation to make contributions to the capital of the Partnership. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make contributions to the capital of the Partnership or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make contributions to the capital of the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners.

 

4.4 No Interest; No Return . No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to withdraw any part of its

 

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Capital Account or to demand or receive the return of its Capital Contribution from the Partnership.

 

4.5 Capital Accounts .

 

(a) Each Partner, including a substitute Partner who shall pursuant to the provisions of this Agreement acquire a Partnership Unit, shall have a separate capital account maintained by the Partnership (a “ Capital Account ”). The Capital Account of each Partner shall be:

 

(i) credited with: the amount of cash contributed by such Partner to the capital of the Partnership; the initial Gross Asset Value (net of liabilities secured by such contributed asset that the Partnership assumes or takes subject to) of any other asset contributed by such Partner to the capital of the Partnership; the amount of unsecured liabilities of the Partnership assumed by such Partner; such Partner’s distributive share of Profits; and any other items in the nature of income or gain that are allocated to such Partner pursuant to Section 6.1, but excluding tax items described in Regulations Section 1.704-1(b)(4)(i); and

 

(ii) debited with: the amount of cash distributed to such Partner pursuant to the provisions of this Agreement; the Gross Asset Value (net of liabilities secured by such distributed asset that such Partner assumes or takes subject to) of any Partnership asset distributed to such Partner pursuant to any provision of this Agreement; the amount of unsecured liabilities of such Partner assumed by the Partnership; such Partner’s

 

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distributive share of Losses; in the case of the General Partner, payments of REIT Expenses by the Partnership; and any other items in the nature of expenses or losses that are allocated to such Partner pursuant to Section 6.1, but excluding tax items described in Regulations Section 1.704-1(b)(4)(i).

 

In the event that any or all of a Partner’s Partnership Units are transferred within the meaning of Regulations Section 1.704-1(b)(2)(iv)(l), the transferee thereof shall succeed to the Capital Account of the transferor to the extent that it relates to the Partnership Units so transferred.

 

In the event the Gross Asset Values of Partnership assets are adjusted pursuant to Section 4.5(b)(ii), the Capital Accounts of the Partners shall be adjusted to reflect the aggregate net adjustments as if the Partnership sold all of its property for its fair market values and recognized gain or loss for federal income tax purposes equal to the amount of such aggregate net adjustment.

 

The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Section 1.704-1(b) of the Regulations, and shall be interpreted and applied as provided in the Regulations.

 

(b) The term “ Gross Asset Value ” or “ Gross Asset Values ” means, with respect to any asset of the Partnership, such asset’s adjusted basis for federal income tax purposes, except as follows:

 

(i) the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be (A) in the case of any asset

 

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contributed by the General Partner and described on Exhibit A, the number of Partnership Units issued therefor multiplied by the greater of Book Value Per Share or the Current Per Share Market Price as of the Trading Day immediately preceding the Contribution Date, plus the amount of any liabilities assumed by the Partnership in connection with such contribution, or to which the contributed asset is otherwise subject (which Gross Asset Value is set forth on Exhibit A), (B) in the case of any asset contributed by an Initial Limited Partner and described on Exhibit B, the Gross Asset Value as set forth on Exhibit B, (C) in the case of any asset contributed after the date hereof by a Limited Partner, the gross fair market value of such asset (as reasonably determined by the General Partner) and (D) in the case of any other asset contributed after the date hereof by the General Partner, (X) if such asset was acquired by the General Partner after the date hereof directly or indirectly in exchange for the issuance of its Shares, the greater of Book Value Per Share or the Current Per Share Market Price as of the Trading Day immediately preceding the Contribution Date multiplied by the number of Shares issued in connection with such acquisition, (Y) if such asset was acquired by the General Partner after the date hereof for consideration other than its Shares and in contemplation of, or substantially contemporaneously with, the contribution thereof to the Partnership, the amount of such consideration plus, in the case of clauses (X) and (Y), (aa) the amount of any costs or expenses incurred, or reasonably expected to be incurred, by the General Partner in

 

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connection with such acquisition and contribution, plus (bb) the amount of any liabilities assumed by the General Partner or to which such asset is subject, and (Z) if such asset was acquired by the General Partner after the date hereof and is not an asset referred to in clauses (X) or (Y), the gross fair market value of such asset (as reasonably determined by the General Partner) plus the amount of any costs or expenses incurred, or reasonably expected to be incurred, by the General Partner in connection with such acquisition and contribution;

 

(ii) the Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as reasonably determined by the General Partner, immediately prior to the following events:

 

(A) a Capital Contribution (other than a de minimis Capital Contribution, within the meaning of Section 1.704-l(b)(2)(iv)(f)(5)(i) of the Regulations) to the Partnership by a new or existing Partner as consideration for Partnership Units;

 

(B) the distribution by the Partnership to a Partner of more than a de minimis amount (within the meaning of Section l.704-l(b)(2)(iv)(f)(5)(ii) of the Regulations) of Partnership property as consideration for the redemption of Partnership Units; and

 

(C) the liquidation of the Partnership within the meaning of Section 1.704-l(b)(2)(ii)(g) of the Regulations;

 

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(iii) the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross fair market values of such assets, as reasonably determined by the General Partner, as of the date of distribution.

 

At all times, Gross Asset Values shall be adjusted by any Depreciation taken into, account with respect to the Partnership’s assets for purposes of computing Profits and Losses. Any adjustment to the Gross Asset Values of Partnership property shall require an adjustment to the Partners’ Capital Accounts as described in Section 4.5(a).

 

4.6 Additional Funds .

 

(a) The Partnership may obtain funds from time to time (“ Required Funds ”) which, in the sole discretion of the General Partner, are necessary or desirable to meet the needs, obligations or requirements of the Partnership, or-to maintain adequate working capital, or to repay Partnership indebtedness, and to carry out the Partnership’s purposes, from the proceeds of Third Party Financing or Affiliate Financing, in each case pursuant to such terms and conditions and in such manner (including the engagement of brokers and/or investment bankers to assist in providing such financing) and amounts as the General Partner shall determine in its sole discretion to be in the best interests of the Partnership, and subject to the terms and conditions of this Agreement. Any and all funds required or expended, directly or indirectly, by the Partnership for capital expenditures may be obtained or replenished through Partnership borrowings. Any Third Party Financing or Affiliate Financing obtained by the General Partner on behalf of the Partnership may be convertible in whole or in part into Partnership Units (to be issued in accordance with Section 9.3),

 

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and (i) may be secured by a mortgage or deed of trust, assignments and/or other Lien on or in respect of all or any portion of the assets of the Partnership or any other security made available by the Partnership, or may be unsecured, (ii) may include or be obtained through the public or private placement of debt and/or other instruments, domestic and foreign, (iii) may provide for the option to acquire Partnership Units (to be issued in accordance with Section 9.3), and (iv) may include or provide for interest rate swaps, credit enhancers, and/or other transactions or items in respect of such Third Party Financing or Affiliate Financing; provided , however , that in no event may the Partnership obtain any Affiliate Financing or Third Party Financing that is recourse to any Partner or any Affiliate, partner, shareholder, beneficiary, principal, officer, or director of any Partner without the consent of the affected Person or - Persons to whom such recourse may be had.

 

(b) To the extent the Partnership does not borrow all of the Required Funds (and whether or not the Partnership is able to borrow all or part of the Required Funds), the General Partner (or in Affiliate thereof) may (i) itself borrow such Required Funds, in which case the General Partner shall lend such Required Funds to the Partnership on the same economic terms and otherwise on substantially identical terms, or (ii) raise such Required Funds in any other manner (including, without limitation, by an offering of the General Partner’s capital stock), in which case the General Partner shall contribute lo the Partnership as an additional Capital Contribution the amount of the Required Funds so raised (“ Contributed Funds ”) (hereinafter, each date on which the General Partner so contributes

 

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Contributed Funds pursuant to this paragraph (b) is referred to as an “ Adjustment Date ”). In the event the General Partner advances Required Funds to the Partnership pursuant to this paragraph (b), the Partnership shall assume and pay (or reflect on its books as additional Required Funds) the expenses (including any applicable under-writing discounts) incurred by the General Partner (or such Affiliate) in connection with the raising of such Required Funds through a public offering of its securities or otherwise. In addition, in the event the General Partner advances Required Funds to the Partnership as Contributed Funds pursuant to this paragraph (b), additional Partnership Units shall be issued to the General Partner to reflect its contribution of the Contributed Funds. The number of Partnership Units so issued shall be determined by dividing the amount of Contributed Funds by the Deemed Partnership Unit Value.

 

ARTICLE V

 

Representations and Warranties

 

5.1 Representations and Warranties by the General Partner . The General Partner represents and warrants to the Limited Partners and to the Partnership that (i) it is a corporation duly formed, validly existing and in good standing under the laws of the State of Maryland, with full right, corporate power and authority to fulfill all of its obligations hereunder or as contemplated herein; (ii) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action; (iii) this Agreement has been duly executed and

 

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delivered by and is the legal, valid and binding obligation of the General Partner, and is enforceable in accordance with its terms, except as such enforcement may be limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other laws of general application affecting the rights and remedies of creditors and (b) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); (iv) no authorization, approval, consent or order of any court or governmental authority or agency or any other entity is required in connection with the execution and delivery of this Agreement by the General Partner, except as may have been received prior to the date of this Agreement; (v) the execution and delivery of this Agreement by the General Partner and the consummation of the transactions contemplated hereby will not conflict with or constitute a breach or violation of, or default under, any contract, indenture, mortgage, loan agreement, note, lease, joint venture or partnership agreement or other instrument or agreement to which the General Partner is a party; (vi) the Partnership Units, upon payment of the consideration therefore pursuant to this Agreement, will be validly issued, fully paid and, except as otherwise provided in accordance with applicable law, non-assessable; and (vii) there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the General Partner, threatened against the General Partner that, if determined adversely to the General Partner, could reasonably be expected to (A) result in any adverse change in the condition, financial or otherwise, of the General Partner, or (B) adversely affect the ability of the General

 

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Partner to consummate the transactions contemplated hereby or perform its obligations hereunder.

 

5.2 Representations and Warranties by the Limited Partners . Each Limited Partner, for itself only, represents and warrants to the General Partner, the other Limited Partners and the Partnership that (i) all transactions contemplated by this Agreement to be performed by such Limited Partner have been duly authorized by all necessary action; and (ii) this Agreement is binding upon, and enforceable against, such Limited Partner in accordance with its terms, except as such enforcement may be limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other laws of general application affecting the rights and remedies of creditors and (b) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

5.3 Acknowledgment by Each Partner . Except as otherwise provided herein, each Partner hereby acknowledges that (