Exhibit 10
AGREEMENT OF LIMITED
PARTNERSHIP
OF
FIRST UNION REIT,
L.P.
THIS AGREEMENT OF
LIMITED PARTNERSHIP OF First Union REIT, L.P., dated as of January
1, 2005, is entered into by and among First Union Real Estate
Equity and Mortgage Investments, an Ohio business trust, and FT-TRS
Loan Corp., a Delaware corporation, together with any other Persons
who become Partners in the Partnership as provided
herein.
WHEREAS, First
Union Real Estate Equity and Mortgage Investments desires to form
the Partnership to hold all of its existing assets and liabilities
other than those listed on Schedule 1 hereto (the “Excluded
Assets”);
NOW, THEREFORE, in
consideration of the mutual covenants set forth herein, and for
other good and valuable consideration, the parties hereby agreed as
follows:
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.
“Act”
means the Delaware Revised Uniform Limited Partnership Act, as it
may be amended from time to time, and any successor to such
statute.
“Additional
Limited Partner” means a Person admitted to the Partnership
as a Limited Partner pursuant to Sections 4.2 and 12.2 hereof and
who is shown as such on the books and records of the
Partnership.
“Adjusted
Capital Account” means the Capital Account maintained for
each Partner as of the end of each Partnership taxable 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 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 taxable
year.
“Adjusted
Property” means any property, the Carrying Value of which has
been adjusted pursuant to Exhibit B hereof.
“Advisor” means FUR Advisors,
LLC.
“Advisory
Agreement” means the Advisory Agreement among First Union and
the Advisor dated the date of this Agreement.
“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 of 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 as
of the time of its contribution to the Partnership, the 704(c)
Value of such property, 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 any Adjusted
Property, its fair market value (as determined under Exhibit B
hereto) on the date of adjustment 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 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 OP Units have been transferred in a manner permitted
under this Agreement, but who has not become a Substituted Limited
Partner, and who has the rights set forth in Section
11.5.
“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 and the hypothetical balance of such Partner’s
Capital Account computed as if it had been maintained 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 Boston, Massachusetts are authorized or
required by law to close.
“Capital
Account” means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
2
“Capital
Contribution” means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which
such Partner contributes to the Partnership pursuant to Section
4.1, 4.2, or 4.3 hereof.
“Carrying
Value” means (i) with respect to a Contributed Property, the
704(c) Value of such property, and with respect to an Adjusted
Property, the Agreed Value of such property, reduced in either case
(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 following the
contribution of or adjustment with respect to such property, 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
hereof, 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 per OP Unit equal to the
Value of the Shares Amount on the Specific Redemption
Date.
“Certificate
of Limited Partnership” 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.
“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.
“Common Shares” means the common
shares of beneficial interest, par value $1.00 per share, of the
General Partner.
“Common Unit” means, with respect
to any class of Partnership Interest, a fractional, undivided share
of such class of Partnership Interest issued pursuant to Sections
4.1 and 4.3 hereof.
“Consent” means the consent or
approval of a proposed action by a Partner given in accordance with
Section 14.2 hereof.
“Contributed
Property” means each property or other asset, in such form as
may be permitted by the Act (but excluding cash), contributed to
the Partnership. Once the Carrying Value of a Contributed
Property is adjusted pursuant to Exhibit B hereof, such property
shall no longer constitute a Contributed Property for purposes of
Exhibit B hereof, but shall be deemed an Adjusted Property for such
purposes.
“Conversion
Factor” means, for any class, 1.0, provided that in the event
that the General Partner (i) declares or pays a dividend on its
outstanding Shares of any class in Shares or makes a distribution
to all holders of its outstanding Shares of any class in Shares;
(ii) subdivides its outstanding Shares of any class; or (iii)
combines its outstanding Shares of any class into a smaller number
of Shares, the Conversion Factor for the corresponding class of OP
Units shall
3
be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or
combination (assuming for such purpose that such dividend,
distribution, subdivision or combination has occurred as of such
time), and the denominator of which shall be the actual number of
Shares (determined without the above assumption) of that class
issued and outstanding on the record date for such dividend,
distribution, subdivision or combination. Any adjustment to the
Conversion Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if
any, for such event (provided, however, if a Notice of Redemption
is given prior to such a record date and the Specified Redemption
Date is after such a record date, then the adjustment to the
Conversion Factor shall, with respect to such redeeming Partner, be
retroactive to the date of such Notice of Redemption). It is
intended that adjustments to the Conversion Factor are to be made
in order to avoid unintended dilution or anti-dilution as a result
of transactions in which Shares are issued, redeemed or exchanged
without a corresponding issuance, redemption or exchange of OP
Units. If, prior to a Specified Redemption Date, Rights
(other than Rights issued pursuant to an employee benefit plan or
other compensation arrangement) were issued and have expired, and
such Rights were issued with an exercise price that, together with
the purchase price for such Rights, was below fair market value in
relation to the security or other property to be acquired upon the
exercise of such Rights, and such Rights were issued to all holders
of outstanding Shares of a class or the General Partner cannot in
good faith represent that the issuance of such Rights benefited the
Limited Partners, then the Conversion Factor applicable upon a
Notice of Redemption of OP Units of the corresponding class shall
be equitably adjusted in a manner consistent with antidilution
provisions in warrants and other instruments in the case of such a
below market issuance or exercise price. A similar equitable
adjustment to protect the value of OP Units shall be made in all
events if any Rights issued under a “Shareholder Rights
Plan” became exercisable and expired prior to a Specified
Redemption Date.
“Declaration
of Trust” means the Declaration of Trust or other similar
organizational document governing the General Partner, as amended,
supplemented or restated from time to time.
“Depreciation” means, for each
taxable 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.
“Disregarded
Entity” means a limited liability company or other
unincorporated entity which is, directly or indirectly, wholly
owned by the General Partner or the Partnership and whose existence
is disregarded for federal income tax purposes under Treasury
Regulation Section 1.7701-3.
4
“Extraordinary Transaction” shall
mean, with respect to the General Partner, the occurrence of one or
more of the following events: (i) a merger (including a triangular
merger), consolidation or other combination with or into another
Person; (ii) the direct or indirect sale, lease, exchange or other
transfer of all or substantially all of its assets in one
transaction or a series of related transactions; or (iii) any
reclassification, recapitalization or change of its outstanding
equity interests (other than a change in par value, or from par
value to no par value, or as a result of a split, dividend or
similar subdivision).
“General
Partner” means First Union Real Estate Equity and Mortgage
Investments, an Ohio business trust, in its capacity as the general
partner of the Partnership, or its successors as general partner of
the Partnership.
“General
Partner Interest” means a Partnership Interest held by the
General Partner, in its capacity as general partner. A
General Partner Interest may be expressed as a number of OP
Units.
“Governing
Documents” means the Declaration of Trust, the By-laws of the
General Partner and such other documents effecting the General
Partner’s ability to take (or not take) certain
actions.
“Immediate
Family” means, with respect to any natural Person, such
natural Person’s estate or heirs or current spouse, parents,
parents-in-law, children, siblings and grandchildren (in each case
whether by adoption or not) and any trust or estate, all of the
beneficiaries of which consist of such Person or such
Person’s spouse, parents, parents-in-law, children, siblings
or grandchildren.
“Incapacity” or
“Incapacitated” means, (i) as to any individual
Partner, death, total physical disability or entry by a court of
competent jurisdiction adjudicating him incompetent to manage his
or her Person 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 or limited liability company which is a
Partner, the dissolution and commencement of winding up of the
partnership or limited liability company; (iv) as to any estate
which is a Partner, the distribution by the fiduciary of the
estate’s entire interest in the Partnership; (v) as to any
trustee of a trust which is a Partner, the termination of the trust
(but not the substitution of a new trustee); or (vi) as to any
Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in
effect; (b) the Partner is adjudged as bankrupt or insolvent, or a
final and nonappealable order for relief under any bankruptcy,
insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers
a general assignment for the benefit of the Partner’s
creditors; (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a
petition filed against the Partner in any proceeding of the nature
described in clause (b) above; (e) the Partner seeks, consents to
or acquiesces in the appointment of a trustee, receiver or
liquidator for the Partner or for all or any substantial part of
the Partner’s properties; (f) any proceeding seeking
liquidation, reorganization or other relief of or against such
Partner under any bankruptcy, insolvency or
5
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 has not been vacated or stayed
within ninety (90) days of such appointment; or (h) an appointment
referred to in clause (g) which has been stayed is not
vacated within
ninety (90) days after the expiration of any such stay.
“Indemnitee” means (i) any Person
made a party to a proceeding by reason of (A) his or its status as
the General Partner, or as a director, officer, shareholder or
member of the Partnership or the General Partner, or (B) his or its
liabilities, pursuant to a loan guarantee 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 assets subject to); and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or
after the event giving rise to potential liability), in its sole
and absolute discretion.
“IRS”
means the Internal Revenue Service, which administers the internal
revenue laws of the United States.
“Limited
Partner” means any Person (including the General Partner)
named as a Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended from time to time, or any Substituted
Limited Partner or Additional Limited Partner, in such
Person’s capacity as a Limited Partner of the
Partnership.
“Limited
Partnership Interest” means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part
of the Partnership Interests of all Partners and includes any and
all benefits to which the holder of such a Partnership Interest may
be entitled, as provided in this Agreement, together with all
obligations of such Person to comply with the terms and provisions
of this Agreement. A Limited Partner Interest may be expressed as a
number of OP Units.
“Liquidating
Event” has the meaning set forth in Section 13.1.
“Liquidator” has the meaning set
forth in Section 13.2.
“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 federal income
tax accounting principles, subject to the specific adjustments
provided for in Exhibit B.
“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
federal income tax accounting principles, subject to the specific
adjustments provided for in Exhibit B.
“New
Securities” has the meaning set forth in Section
4.3.
6
“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 2.B of Exhibit C 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 taxable year
shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
“Nonrecourse
Liability” has the meaning set forth in Regulations Section
1.752-1(a)(2).
“Notice of
Redemption” means the Notice of Redemption substantially in
the form of Exhibit D to this Agreement.
“OP
Unit” or “Unit” means a fractional, undivided
share of the Partnership Interests of all Partners issued pursuant
to Sections 4.1, 4.2 and 4.3 and includes the Common Units and the
Preferred Units. The number of OP Units of each class
outstanding and the Percentage Interest in the Partnership
represented by such Units are set forth in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. The
ownership of OP Units shall be evidenced by such form of
certificate for units as the General Partner adopts from time to
time unless the General Partner determines that the OP Units shall
be uncertificated securities.
“Partner” means a General Partner
or a Limited Partner, and “Partners” means the General
Partner and the Limited Partners collectively.
“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 taxable year shall be determined in accordance
with the rules of Regulations Section 1.704-2(i)(2).
“Partnership” means the limited
partnership formed under the Act and pursuant to this Agreement, as
it may be amended and/or restated, and any successor
thereto.
“Partnership
Interest” means an ownership interest in the Partnership
representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to
comply with the terms and provisions of this Agreement. A
Partnership Interest may be expressed as a number of OP
Units.
7
“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 a Partnership Minimum
Gain, for a Partnership taxable year shall be determined in
accordance with the rules of Regulations Section
1.704-2(d).
“Partnership
Record Date” means the record date established by the General
Partner for a distribution pursuant to Section 5.1 hereof, which
record date shall be the same as the record date established by the
General Partner for a distribution to its shareholders of some or
all of its portion of such distribution.
“Partnership
Year” means the fiscal year of the Partnership, which shall
be the calendar year.
“Percentage
Interest” means, as to a Partner holding a Partnership
Interest of any class issued hereunder, its interest in such class,
determined by dividing the OP Units of such class owned by such
Partner by the total number of OP Units of such class then
outstanding as specified in Exhibit A attached hereto,
as such exhibit may be amended and restated from time to
time.
“Person” means an individual or a
corporation, partnership, trust, unincorporated organization,
association or other entity.
“Preferred
Shares” means the preferred shares of beneficial interest of
the General Partner.
“Preferred
Unit” means, with respect to any preferred class of
Partnership Interest, a fractional, undivided share of such class
of Partnership Interest issued pursuant to Section 4.1 and 4.3
hereof.
“Preferred
Unit Redemption Amount” means, with respect to any Preferred
Unit, the amount payable by the General Partner on account of the
redemption of one Preferred Share pursuant to the applicable
provisions of the Declaration of Trust.
“Publicly
Traded” means listed or admitted to trading on the New York
Stock Exchange, the American Stock Exchange or another national
securities exchange or designated for quotation on the NASDAQ
National Market, or any successor to any of the
foregoing.
“Qualified
REIT Subsidiary” means an entity which is wholly owned by a
real estate investment trust and whose existence is disregarded for
federal income tax purposes under Section 856(i) of the
Code.
“Recapture
Income” means any gain recognized by the Partnership upon the
disposition of any property or asset of the Partnership, which gain
is characterized as ordinary income because it represents the
recapture of deductions previously taken with respect to such
property or asset.
“Redeeming
Partner” has the meaning set forth in Section 8.7
hereof.
8
“Redemption
Right” has the meaning set forth in Section 8.7
hereof.
“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).
“REIT”
means a real estate investment trust under Sections 856 through 860
of the Code.
“REIT
Expenses” shall mean (i) costs and expenses relating to the
continuity of existence of the General Partner and any Person in
which the General Partner owns an equity interest, to the extent
not prohibited in this Agreement, other than the Partnership (which
Persons shall, for purposes of this definition, be included within
the definition of “General Partner”), including taxes,
fees and assessments associated therewith (other than federal,
state or local income taxes imposed upon the General Partner as a
result of the General Partner’s failure to distribute to its
shareholders an amount equal to its taxable income), any and all
costs, expenses or fees payable to any trustee or director of the
General Partner or such Persons, (ii) costs and expenses relating
to any offer or registration of securities by the General Partner
(the proceeds of which will be contributed or advanced to the
Partnership) and all statements, reports, fees and expenses
incidental thereto, including underwriting discounts and selling
commissions applicable to any such offer of securities, (iii) 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 filings with the Securities
and Exchange Commission, (iv) costs and expenses associated with
compliance by the General Partner with laws, rules and regulations
promulgated by any regulatory body, including the Securities and
Exchange Commission, and (v) all other operating or administrative
costs of the General Partner incurred in the ordinary course of its
business; provided , however , that any of the
foregoing expenses that are determined by the General Partner to be
expenses relating to the ownership and operation of, or for the
benefit of, the Partnership shall be treated, subject to Section
7.4 hereof, as reimbursable expenses under Section 7.4 hereof
rather than as “REIT Expenses”.
“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(a) or 2.B.2(a) of Exhibit C to eliminate Book-Tax
Disparities.
“Rights” shall have the meaning set
forth in the definition of “Shares Amount.”
“Sale or
Disposition” means any of the following Partnership
transactions: sales, exchanges, or other dispositions of real or
personal property, condemnations or any recovery or damage awards,
and insurance proceeds (other than business or rental interruption
insurance proceeds).
“704(c)
Value” of any Contributed Property means the fair market
value of such property or other consideration at the time of
contribution, as determined by the General Partner using such
reasonable method of valuation as it may adopt. Subject to
Exhibit B hereof, the
9
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 the separate properties on a basis proportional
to their respective fair market values.
“Share” means a share of beneficial
interest (or other comparable equity interest) of the General
Partner. Shares may be issued in one or more classes or
series in accordance with the terms of the Declaration of
Trust. In the event that there is more than one class or
series of Shares, the term “Shares” shall, as the
context requires, be deemed to refer to the class or series of
Shares that correspond to the class or series of Partnership
Interests for which the reference to Shares is made.
“Shares
Amount” means a number of Shares of the applicable class
equal to the product of the number of Partnership Units of the
corresponding class offered for redemption by a Redeeming Partner
times the applicable Conversion Factor; provided, that in
the event the General Partner issues to all holders of Shares of
that class rights, options, warrants or convertible or exchangeable
securities entitling such holders to subscribe for or purchase
Shares or any other securities or property (collectively, the
“Rights”), then the Shares Amount shall also include
such rights that a holder of that number of Shares of that class
would be entitled to receive; and provided , further
, that the Shares Amount shall be adjusted pursuant to
Section 7.5 hereof in the event that the General Partner
acquires material assets other than on behalf of the
Partnership.
“Specified
Redemption Date” means the sixty-first (61st) day after
receipt by the General Partner of a Notice of Redemption or, if
such date is not a Business Day, the first Business Day thereafter;
provided that no Specified Redemption Date shall occur before that
date that is 12 months after the issuance of the applicable OP
Units, and provided further that if the General Partner combines
its outstanding Shares of a class into a smaller number of Shares,
no Specified Redemption Date for the corresponding class of OP
Units shall occur after the record date of such combination of
Shares and prior to the effective date of such
combination.
“Stock
Option Plan” means any share or stock incentive plan or
similar compensation arrangement (including, without limitation,
any arrangement whereby the Partnership or the General Partner
delivers Units or shares of capital stock of the General Partner
into a “rabbi trust”) of the General Partner, the
Partnership or any Affiliate of the Partnership or General Partner,
as the context may require.
“Subsidiary” means, with respect to
any Person, any corporation, partnership or other entity of which a
majority of (i) the voting power of the voting equity securities;
or (ii) the outstanding equity interests, is owned, directly or
indirectly, by such Person.
“Substituted
Limited Partner” means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 11.4.
“Taxable
REIT Subsidiary” means an entity in which the REIT owns stock
and which elects to be treated as such under Section 856(l) of the
Code.
10
“Terminating
Capital Transaction” means any sale or other disposition of
all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets
of the Partnership.
“Transfer” has the meaning set
forth in Section 11.1.
“Unrealized
Gain” attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (i) the
fair market value of such property (as determined under Exhibit B
hereof) as of such date over (ii) the Carrying Value of such
property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date.
“Unrealized
Loss” attributable to any item of Partnership property means,
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 hereof) as of such date over (ii) the fair
market value of such property (as determined under Exhibit B
hereof) as of such date.
“Value” means, with respect to a
Share, the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the Specified
Redemption Date for such Shares. The market price for each
such trading day shall be: (i) if the applicable class of Shares
are listed or admitted to trading on any securities exchange or the
Nasdaq National Market System, the closing price on such day, or if
no such sale takes place on such day, the average of the closing
bid and asked prices on such day; (ii) if the applicable class of
Shares are not listed or admitted to trading on any securities
exchange or the Nasdaq National Market System, the last reported
sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General
Partner; or (iii) if the applicable class of Shares are not listed
or admitted to trading on any securities exchange or the Nasdaq
National Market System and no such last reported sale price or
closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by
a reliable quotation source designated by the General Partner, or
if there shall be no bid and asked prices on such day, the average
of the high bid and low asked prices, as so reported, on the most
recent day (not more than ten (10) days prior to the date in
question) for which prices have been so reported; provided that if
there are no bid and asked prices reported during the ten (10) days
prior to the date in question, the Value of the applicable class of
Shares shall be determined by the General Partner acting in good
faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the
event the Shares Amount of the applicable class includes Rights,
then the Value of such Rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment,
appropriate, provided that the Value of any rights issued pursuant
to a “Shareholder Rights Plan” shall be deemed to have
no value unless a “triggering event” shall have
occurred (i.e., if the Rights issued pursuant thereto are no longer
“attached” to the applicable class of Shares and are
able to trade independently).
11
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1
Organization
The Partnership is
a limited partnership organized pursuant to the provisions of the
Act. 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 2.2
Name
The name of the
Partnership is First Union REIT, 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 its Affiliates. The words “Limited
Partnership,” “L.P.,” “Ltd.” or
similar words or letters shall be included in the
Partnership’s name where necessary for the purposes of
complying with the laws of any jurisdiction that so
requires. The General Partner in its sole and absolute
discretion may change the name of the Partnership at any time and
from time to time and shall notify the Limited Partners of such
change in the next regular communication to the Limited
Partners.
Section 2.3
Registered Office and
Agent; Principal Office
The address of the
registered office of the Partnership in the State of Delaware shall
be located at Corporation Service Company, 2711 Centerville Road,
Suite 400, Wilmington, County of New Castle, Delaware 19808, and
the registered agent for service of process on the Partnership in
the State of Delaware at such registered office shall be
Corporation Service Company. The principal office of the
Partnership shall be 7 Bulfinch Place, Suite 500, P.O. Box 9507,
Boston, Massachusetts 02114 or such other place as the General
Partner may from time to time designate by notice to the Limited
Partners. The Partnership may maintain offices at such other
place or places within or outside the State of Delaware as the
General Partner deems advisable.
Section 2.4
Term
The term of the
Partnership commenced on August 5, 2004, 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 in perpetuity, unless it is dissolved pursuant to the
provisions of Article XIII hereof or as otherwise provided by
law.
Section 2.5
Power of
Attorney
A.
Each Limited Partner and
each Assignee hereby constitutes and appoints the General Partner,
any Liquidator, and authorized officers and attorneys-in- fact of
each, and each of those acting singly, in each case with full power
of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead
to:
12
i.
execute, swear to,
acknowledge, deliver, file and record in the appropriate public
offices (a) all certificates, documents and other instruments
(including, without limitation, this Agreement and the Certificate
of Limited Partnership and all amendments or restatements thereof)
that the General Partner or the Liquidator deems appropriate or
necessary to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
partnership in which the Limited Partners have limited liability)
in the State of Delaware and in all other jurisdictions in which
the Partnership may or plans to conduct business or own property;
(b) all instruments that the General Partner deems appropriate or
necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms; (c) all
conveyances and other instruments or documents that the General
Partner or the Liquidator deems appropriate or necessary to reflect
the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a
certificate of cancellation; (d) all 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 relating to the Capital Contribution of any Partner; and
(e) all certificates, documents and other instruments relating to
the determination of the rights, preferences and privileges of
Partnership Interests; and
ii.
execute, swear to, 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.
Nothing contained
herein shall be construed as authorizing the General Partner or any
Liquidator to amend this Agreement except in accordance with
Article XIV hereof or as may be otherwise expressly provided for in
this Agreement.
B.
The foregoing power of
attorney is hereby declared to be irrevocable and a power coupled
with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner and
any Liquidator to act as contemplated by this Agreement in any
filing or other action by it on behalf of the Partnership, and it
shall survive and not be affected by the subsequent Incapacity of
any Limited Partner or Assignee and the transfer of all or any
portion of such Limited Partner’s or Assignee’s OP
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 designation, powers of attorney and
other instruments as the General Partner or the Liquidator, as the
case may be, deems necessary to effectuate this Agreement and the
purposes of the Partnership.
13
ARTICLE III
PURPOSE
Section 3.1
Purpose and
Business
The purpose and
nature of the business to be conducted by the Partnership is (i) to
conduct any business that may be lawfully conducted by a limited
partnership organized pursuant to the Act; provided, however, that
such business shall be limited to and conducted in such a manner as
to permit the General Partner at all times to be classified as a
REIT, unless the General Partner ceases to qualify as a REIT for
reasons other than the conduct of the business of the Partnership;
(ii) to enter into any partnership, joint venture, limited
liability company or other similar arrangement to engage in any of
the foregoing or to own interests in any entity engaged, directly
or indirectly, in any of the foregoing; and (iii) to do anything
necessary or incidental to the foregoing. The General Partner
also shall be empowered to do any and all acts and things necessary
or prudent to ensure that the Partnership will not be classified as
a “publicly traded partnership” for purposes of Section
7704 of the Code, including but not limited to imposing
restrictions on transfers and restrictions on
redemptions.
Section 3.2
Powers
The Partnership
shall have full power and authority 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, 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 other real estate-related assets, and
lease, sell, transfer and dispose of real property and other real
estate-related assets; provided , however , that the
Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and
absolute discretion, (i) could adversely affect the ability of
the General Partner to continue to qualify as a REIT,
(ii) could subject the General Partner to any additional taxes
under Section 857 or Section 4981 of the Code or (iii) could
violate any law or regulation of any governmental body or agency
having jurisdiction over the General Partner or its securities,
unless such action (or inaction) shall have been specifically
consented to by the General Partner in writing.
Section 3.3
Partnership Only for
Purposes Specified
The Partnership
shall be a partnership only for the purposes specified in
Section 3.1 above, and this Agreement shall not be deemed to
create a partnership among the Partners with respect to any
activities whatsoever other than the activities within the purposes
of the Partnership as specified in Section 3.1 above.
14
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1
Capital Accounts and
Capital Contributions of the Partners
A.
Capital Contributions;
Capital Accounts. Capital Accounts shall be maintained for each
Partner pursuant to Exhibit B hereof. At the time of their respective execution
of this Agreement, the Partners shall make Capital Contributions as
set forth in Exhibit A hereof. The Partners shall own Units
of the class and in the amounts set forth in Exhibit A hereof,
which shall be adjusted from time to time by the General Partner as
provided for herein to the extent necessary to accurately reflect
exchanges, Capital Contributions, the issuance of additional Units
or similar events having an effect on a Partner’s number of
Units.
B.
[INTENTIONALLY OMITTED]
C.
Capital Contributions By Merger . To the extent the
Partnership acquires any property by the merger of any other Person
into the Partnership, Persons who receive Partnership Interests in
exchange for their interests in the Person merging into the
Partnership shall become Partners and shall be deemed to have made
Capital Contributions as provided in the applicable merger
agreement and as set forth in Exhibit A hereto.
D.
No Obligation to Make
Additional Capital Contributions . Except as provided in Sections 4.2 and 10.4
hereof or elsewhere in this Agreement, 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. Each Partner shall own the number of OP Units set
forth for such Partner in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest shall be adjusted in Exhibit A from time to
time by the General Partner to the extent necessary to reflect
accurately redemptions, additional Capital Contributions, the
issuance of additional OP Units (pursuant to any merger or
otherwise), or similar events having an effect on any
Partner’s Percentage Interest.
Section 4.2
Issuances of Partnership
Interests
The General
Partner is hereby authorized to cause the Partnership from time to
time to issue to the Partners (including the General Partner and
its Affiliates) or other Persons (including, without limitation, in
connection with the contribution of property to the Partnership)
additional OP Units or other Partnership Interests in one or more
classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or
other special rights, powers and duties, including rights, powers
and duties senior to the Limited Partner Interests issued on the
Effective Date, all as shall be determined by the General Partner
in its sole and absolute discretion subject to Delaware law,
including, without limitation, (i) the allocations of items of
Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests; (ii) the right of each
such class or series of Partnership Interests to share in
Partnership distributions; and (iii) the rights of each such class
or series of Partnership
15
Interests upon
dissolution and liquidation of the Partnership; provided that no
such additional OP Units or other Partnership Interests shall be
issued to the General Partner, unless either (a)(1) the additional
Partnership Interests are issued in connection with the grant,
award or issuance of Shares or other equity interests by the
General Partner, which Shares or other equity interests have
designations, preferences and other rights such that the economic
interests attributable to such Shares or other equity interests are
substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the
General Partner in accordance with this Section 4.2 and (2) the
General Partner shall make a Capital Contribution to the
Partnership in an amount equal to the proceeds raised in connection
with such issuance, or (b) the additional Partnership Interests are
issued to all Partners in proportion to their respective Percentage
Interests. In addition, the General Partner may acquire OP
Units from other Partners pursuant to this Agreement. In the
event that the Partnership issues Partnership Interests pursuant to
this Section 4.2, the General Partner shall make such revisions to
this Agreement (without any requirement of receiving approval of
the Limited Partners) including but not limited to the revisions
described in Section 5.4, Section 6.2 and Section 8.7.E. hereof, as
it deems necessary to reflect the issuance of such additional
Partnership Interests and the special rights, powers and duties
associated therewith. Unless specifically set forth otherwise
by the General Partner, any Partnership Interest issued after the
Effective Date shall have the same rights, powers and duties as the
Partnership Interests issued on the Effective Date.
Section 4.3
Contributions of Proceeds
of Issuances of Shares.
From and after the
date hereof, the General Partner shall not issue any additional
Shares of any class (other than Shares issued pursuant to Section
8.7), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Shares
(collectively “New Securities”) other than to all
holders of Shares of that class unless (i) the General Partner
shall cause the Partnership to issue to the General Partner,
Partnership Interests or rights, options, warrants or convertible
or exchangeable securities of the Partnership having designations,
preferences and other rights, all such that the economic interests
are substantially similar to those of the New Securities; and (ii)
the General Partner contributes to the Partnership the proceeds
from the issuance of such New Securities and from the exercise of
rights contained in such New Securities, provided that if the
proceeds received by the General Partner are less than the gross
proceeds of such issuance as a result of any underwriter’s
discount or other expenses paid or incurred in connection with such
issuance, then the General Partner shall be deemed to have made a
Capital Contribution to the Partnership in the amount equal to the
sum of the net proceeds of such issuance plus the amount of such
underwriter’s discount and other expenses paid by the General
Partner (which discount and expense shall be treated as an expense
for the benefit of the Partnership for purposes of Section
7.4). Without limiting the foregoing, General Partner is
expressly authorized to issue New Securities for no tangible value
or for less than fair market value, and the General Partner is
expressly authorized to cause the Partnership to issue to the
General Partner corresponding Partnership Interests, so long as (x)
the General Partner concludes in good faith that such issuance is
in the interests of the General Partner and the Partnership (for
example, and not by way of limitation, the issuance of Shares and
corresponding OP Units pursuant to an employee stock purchase plan
providing for employee grants or purchases of Shares or employee
stock options that have an exercise price that is less than the
fair market value of the Shares, either at the time of issuance or
at the time of exercise); and (y) the General Partner contributes
all proceeds, if any, from such issuance and exercise to
16
the
Partnership. In the
case of employee acquisitions of New Securities at a discount from
fair market value or for no value in connection with a grant of New
Securities, the amount of such discount representing compensation
to the employee, as determined by the General Partner, shall be
treated as an expense of the issuance of such New
Securities.
Section 4.4
No Preemptive
Rights
Except to the
extent expressly granted by the General Partner (on behalf of the
Partnership) pursuant to another agreement, no Person shall have
any preemptive, preferential or other similar right with respect to
(i) additional Capital Contributions or loans to the Partnership or
(ii) issuance or sale of any OP Units or other Partnership
Interests.
Section 4.5
Other Contribution
Provisions
In the event that
any Partner is admitted to the Partnership and is given 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
for the fair market value of such services, and the Partner had
contributed such cash to the capital of the Partnership.
Section 4.6
No Interest on
Capital
No Partner shall
be entitled to interest on its Capital Contributions or its Capital
Account.
Section 4.7
Conversion of Convertible Preferred Units.
A.
If at any time holders of the Preferred Shares shall exercise their
rights, if any, under the Declaration of Trust to convert any
Preferred Shares to Common Shares, in whole or in part (including
any fractions thereof), then, simultaneously with such conversion,
an equal number of Preferred Units shall be automatically converted
into the number of Common Units equal to the product of (x) the
number of Common Shares into which the Preferred Shares are
converted, multiplied by (y) a fraction the numerator of which is
one and the denominator of which is the Common Unit Conversion
Factor in effect on such date.
B.
If at any time Preferred Shares are to be redeemed pursuant to the
Declaration of Trust or purchased by the General Partner, the
Partnership shall redeem an equal number of Preferred Units by
payment of the Preferred Unit Redemption Amount therefor or
purchase price paid by the General Partner immediately prior to or
concurrently with such redemption or purchase.
C.
The General Partner shall amend Exhibit A as applicable to reflect
each conversion of Preferred Units, and the issuance of additional
Common Units in connection therewith and each redemption of
Preferred Units.
17
ARTICLE V
DISTRIBUTIONS
Section 5.1
Requirement and Characterization of Distributions
A.
General . The General Partner shall have the exclusive
right and authority to declare and cause the Partnership to make
distributions as and when the General Partner deems appropriate or
desirable in its sole discretion. Notwithstanding anything to
the contrary contained herein, in no event may a Partner receive a
distribution with respect to a Partnership Unit for a quarter or
shorter period if such Partner is entitled to receive a
distribution for such quarter or shorter period with respect to a
Share for which such Partnership Unit has been redeemed or
exchanged. Unless otherwise expressly provided for herein or
in an agreement at the time a new class of Partnership Interests is
created in accordance with Article IV hereof, no Partnership
Interest shall be entitled to a distribution in preference to any
other Partnership Interest. For so long as the General
Partner elects to qualify as a REIT, the General Partner shall make
such reasonable efforts, as determined by it in its sole and
absolute discretion and consistent with the qualification of the
General Partner as a REIT, to make distributions to the Partners in
amounts such that the General Partner will receive amounts
sufficient to enable it to pay shareholder dividends that will (1)
satisfy the requirements for qualification as a REIT under the Code
and the Regulations (the “REIT Requirements”) and
(2) avoid any federal income or excise tax liability for the
General Partner.
B.
Method . When, as and if declared by the General
Partner, the Partnership will make distributions to the General
Partner in any amount necessary to enable the General Partner to
pay REIT Expenses, and thereafter:
(i)
first, to holders of Preferred Units in an amount equal to
preferential distributions accumulated and unpaid on such Preferred
Units in accordance with their respective terms;
(ii)
second, to holders of Common Units, pro rata in accordance with
their respective Common Units;
Each holder of
Partnership Interests that are entitled to any preference in
distribution shall be entitled to a distribution in accordance with
the rights of any such class of Partnership Interests (and, within
such class, pro rata in proportion to the respective Percentage
Interests on such Partnership Record Date). Notwithstanding
anything to the contrary contained herein, in no event shall any
partner receive a distribution with respect to any Common Unit with
respect to any quarter until such time as the Partnership has
distributed to the holders of the Preferred Units all distributions
payable with respect to such Preferred Units through the last day
of such quarter, in accordance with the instruments designating
such Preferred Units.
18
Section 5.2
Amounts
Withheld
All amounts
withheld pursuant to the Code or any provisions of any state or
local tax law and Section 10.4 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.
Section 5.3
Distributions Upon
Liquidation
Proceeds from a
Terminating Capital Transaction and any other cash received or
reductions in reserves made after commencement of the liquidation
of the Partnership shall be distributed to the Partners in
accordance with Section 13.2.
Section 5.4
Revisions to Reflect
Issuance of Additional Partnership Interests
In the event that
the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such revisions to
this Article V as it deems necessary to reflect the issuance of
such additional Partnership Interests.
ARTICLE VI
ALLOCATIONS
Section 6.1
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.
A.
Net Income . After giving effect to the special
allocations set forth in Section 1 of Exhibit C hereto,
Net Income shall be allocated (i) first, to the General Partner to
the extent that Net Losses previously allocated to the General
Partner pursuant to the last sentence of Section 6.1.B below exceed
Net Income previously allocated to the General Partner pursuant to
this clause (i) of Section 6.1.A; (ii) second, to holders of
Preferred Units until their aggregate allocations of Net Income
under this clause (ii) equal the sum of all distributions made or
being made for the applicable period pursuant to clause (i) of
Section 5.1.B (provided that the allocation provided for in this
clause (ii) shall not apply to the extent that such distributions
are treated as or determined to be guaranteed payments under
Section 707(c) of the Code); and (iii) third, to holders of Common
Units in proportion to their respective Percentage Interests.
B.
Net Losses . After giving effect to the special
allocations set forth in Section 1 of Exhibit C hereto,
Net Losses shall be allocated (i) first, to holders of Common Units
in proportion to their respective Percentage Interests until the
aggregate allocations of Net Losses pursuant to this clause (i)
equal the aggregate allocations of Net Income to them pursuant to
clause (iii) of Section 6.1.A; and (ii) thereafter, to holders of
Common Units in proportion to
19
their Percentage
Interests; provided that, Net Losses shall not be allocated
to any Limited Partner pursuant to this Section 6.1.B to the
extent that such allocation would cause such Limited Partner to
have an Adjusted Capital Account Deficit (or increase any existing
Adjusted Capital Account Deficit) at the end of such taxable year
(or portion thereof). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated
to the General Partner.
C.
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 holders of Common Units in accordance with their respective
Percentage Interests.
D.
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.
Section 6.2
Revisions to Allocations
to Reflect Issuance of Additional Partnership Interests
In the event that
the Partnership issues additional Partnership Interests to the
General Partner or any Additional Limited Partner pursuant to
Article IV hereof, the General Partner shall make such revisions to
this Article VI as it deems necessary to reflect the terms of the
issuance of such additional Partnership Interests.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1
Management
A.
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 shall have full power and authority to do all
things deemed necessary or desirable by it on such terms and
conditions as the General Partner in its sole discretion deems
appropriate, 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:
i .
the making of any
expenditures, the lending or borrowing of money, including, without
limitation, making prepayments on loans and borrowing
20
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
mortgage, deed of trust or other lien or encumbrance on the
Partnership’s assets) and the incurring of any obligations it
deems necessary or desirable for the conduct of the activities of
the Partnership;
ii.
the making of tax,
regulatory and other filings, or rendering of periodic or other
reports to governmental or other agencies having jurisdiction over
the business or assets of the Partnership, the registration of any
class of securities of the Partnership under the Securities
Exchange Act of 1934, as amended, and the listing of any debt
securities of the Partnership on any exchange;
iii.
the acquisition,
disposition, sale, 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 in its sole and absolute
discretion;
iv.
the use of the assets of
the Partnership (including, without limitation, cash on hand) for
any purpose consistent with the terms of this Agreement, 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/or
the Subsidiaries of the Partnership) and the repayment of
obligations of the Partnership and its Subsidiaries and any other
Person in which the Partnership has an equity investment and the
making of capital contributions to its Subsidiaries;
v.
the management, operation,
leasing, landscaping, repair, alteration, demolition or improvement
of any real property or improvements owned by the Partnership or
any Subsidiary of the Partnership or any other Person in which the
Partnership has made a direct or indirect equity
investment;
vi.
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 (including the Advisor) and the payment
of their expenses and compensation out of the Partnership’s
assets;
21
vii.
the distribution of
Partnership cash or other Partnership assets in accordance with
this Agreement;
viii.
the holding, managing,
investing and reinvesting of cash and other assets of the
Partnership and, in connection therewith, the opening, maintaining
and closing of bank and brokerage accounts and the drawing of
checks or other orders for the payment of moneys;
ix.
the collection and receipt
of revenues and income of the Partnership;
x.
the selection and
dismissal of employees of the Partnership (including, without
limitation, employees having titles such as
“president,” “vice president,”
“secretary” and “treasurer,) and agents, outside
attorneys, accountants, consultants and contractors of the
Partnership, and the determination of their compensation and other
terms of employment or hiring;
xi.
the maintenance of such
insurance for the benefit of the Partnership, the Partners and
directors and officers thereof as it deems necessary and
appropriate;
xii.
the formation of, or
acquisition of an interest in, and the contribution of property to,
any further 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 it has an equity investment from time
to time);
xiii.
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;
xiv.
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;
xv.
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;
xvi.
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
22
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;
xvii.
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;
xviii.
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;
xix.
the distribution of cash
to acquire OP Units held by a Limited Partner in connection with a
Limited Partner’s exercise of its Redemption Right under
Section 8.7 hereof;
xx.
the amendment and
restatement of Exhibit A hereto to reflect accurately at all times
the Capital Contributions 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 OP
Units, the admission of any Additional Limited Partner or any
Substituted Limited Partner or otherwise, which amendment and
restatement, notwithstanding anything in this Agreement to the
contrary, shall not be deemed an amendment of this Agreement, as
long as the matter or event being reflected in Exhibit A hereto
otherwise is authorized by this Agreement;
xxi.
the approval and/or
implementation of any merger (including a triangular merger),
consolidation or other combination between the Partnership and
another person that is not prohibited under this Agreement, whether
with or without Consent, the terms of Section 17-211(g) of the Act
shall be applicable such that the General Partner shall have the
right to effect any amendment to this Agreement or effect the
adoption of a new partnership agreement for a limited partnership
if it is the surviving or resulting limited partnership of the
merger or consolidation (except as may be expressly prohibited
under Section 14.1.C or Section 14.1.D); and
xxii.
the taking of any and all
actions necessary or desirable in furtherance of, in connection
with or incidental to the foregoing.
B.
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,
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
23
Partners or any
other Persons under this Agreement or of any duty stated or implied
by law or equity.
C.
Insurance
. At all times from
and after the date hereof, the General Partner may cause the
Partnership to obtain and maintain (i) casualty, liability and
other insurance on the properties of the Partnership, (ii)
liability insurance for the Indemnitees hereunder and (iii) such
other insurance as the General Partner, in its sole and absolute
discretion, determines to be necessary.
D.
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 (both in purpose and amount) from time
to time, including upon liquidation of the Partnership pursuant to
Section 13.2 hereof.
E.
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 of any action taken (or not taken) by it. The
General Partner and the Partnership shall not have liability to a
Limited Partner for monetary damages or otherwise for losses
sustained, liabilities incurred or benefits not derived by such
Limited Partner in connection with such decisions, provided
that the General Partner has acted in good faith and not beyond its
authority under this Agreement.
Section 7.2
Certificate of Limited
Partnership
The Partnership
has previously caused the Certificate to be filed with the
Secretary of State of Delaware. 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 use
all reasonable efforts to cause to be filed such other certificates
or documents as may be reasonable and necessary or appropriate for
the fo
| 
