EXHIBIT 10.50
AMENDED AND
RESTATED
LIMITED PARTNERSHIP
AGREEMENT
OF
PRENTISS OFFICE INVESTORS,
L.P.
AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
PRENTISS OFFICE INVESTORS, L.P.
This Amended and Restated Limited
Partnership Agreement (this “Agreement”) of Prentiss
Office Investors, L.P., a Delaware limited partnership (the
“Partnership”), is made to be effective as of January
29, 2004 by and between Prentiss Properties Acquisition Partners,
L.P., a Delaware limited partnership (the “General
Partner”), and Stichting Pensioenfonds ABP, a Netherlands
foundation (the “Limited Partner”, together with the
General Partner; the “Partners”).
RECITALS AND
ASSIGNMENTS :
WHEREAS, the Partnership was formed
pursuant to a Limited Partnership Agreement dated as of January 22,
2004 (the “Original Agreement”) executed by the General
Partner and Prentiss Properties Limited, Inc., a Delaware
corporation (“PPL”), and by the filing by the General
Partner of a Certificate of Limited Partnership with the Office of
the Secretary of State of the State of Delaware on January 22,
2004;
WHEREAS, pursuant to the Original
Agreement, the General Partner owns a 51% general partnership
interest in the Partnership and a 48.9% limited partnership in the
Partnership, and PPL owns a 0.1% limited partnership interest in
the Partnership;
WHEREAS, the General Partner does
hereby assign to the Limited Partner its entire 48.9% limited
partnership interest in the Partnership, and the Limited Partner
hereby assumes all of the duties and obligations of the General
Partner with respect to such 48.9% limited partnership interest
which arise under this Agreement from and after the effective date
hereof;
WHEREAS, PPL hereby assigns to the
Limited Partner its 0.1% limited partnership interest in the
Partnership, and the Limited Partner hereby assumes all of the
duties and obligations of PPL relating to such 0.1% limited
partnership interest which arise under this Agreement from and
after the date hereof; and
WHEREAS, after giving effect to the
foregoing assignments, the Limited Partner and the General Partner
own the respective Percentage Interests set forth in Section 5.1.5
of this Agreement;
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NOW, THEREFORE, in consideration of
the mutual representations, warranties and covenants hereinafter
set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree that the Original Agreement is amended
and restated in its entirety as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions . As used
herein the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural
forms of the terms defined):
1.1.1 “Act” shall mean
the Delaware Revised Uniform Limited Partnership Act, as amended
from time to time.
1.1.2 “Additional Capital
Contribution” has the meaning given such term in Section
5.2.1 hereof.
1.1.3 “Affiliate” means,
with respect to a specified Person, (a) any Person that directly,
or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified
Person, or (b) any Person that is an officer, director, trustee or
general partner of, or serves in a similar capacity with respect
to, the specified Person, or of which the specified Person is an
officer, director, trustee or general partner, or with respect to
which the specified Person serves in a similar capacity. For
purposes of this definition the term “control” when
used with respect to a Person means (i) the beneficial ownership
(as defined in Rule 13d-3 promulgated under the Securities and
Exchange Act of 1934, as amended) of 50% or more of the voting
interests in such Person, or (ii) the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the
ownership of voting securities, by contract or
otherwise.
1.1.4 “Affiliate
Contract” means any contract or other agreement between the
Partnership and any Partner or Affiliate of such
Partner.
1.1.5 “Affiliated
Person” means any Person (other than the Partnership)
composed of the General Partner and/or its Affiliates and the
Limited Partner and/or its Affiliates.
1.1.6 “Agreed Purchase
Price” means the purchase price that a third party has agreed
to pay to purchase a Property and that has been Approved by
Partners.
1.1.7 “Agreement” means
this Limited Partnership Agreement, as amended, modified,
supplemented or restated from time to time.
1.1.8 “Approval” or
“Approve” means the prior consent or prior written
authorization by a Partner or its representatives hereunder to any
decision or action taken or to be taken by the Partnership. Unless
otherwise expressly provided herein, when the term
“Approval” or “Approve” (or any variation
thereof) is used herein, such Approval shall not be unreasonably
withheld, conditioned or delayed by a Partner.
1.1.9 “Approval of
Partners” means an Approval of all of the Non-Defaulting
Partners at such time; provided, however, that if the Limited
Partner transfers a portion of its Percentage Interest in
accordance with Article XI, the “Approval of Partners”
means the Approval of the Non-Defaulting Partners at such time that
own 75% or more of the Percentage Interests.
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1.1.10 “Arbitration
Procedure” means the arbitration procedure set forth in
Article XII hereof.
1.1.11 “Auditors” means
PricewaterhouseCoopers, LLP, or such other national accounting firm
as may be auditing the General Partner’s financial statements
from time to time.
1.1.12 “Available Cash”
means, with respect to any fiscal period of the Partnership, the
excess of all cash receipts of the Partnership during such period
over the sum of (a) all cash disbursements and expenditures paid or
reserved for payment by the Partnership to defray expenses, costs,
and indebtedness of the Partnership accrued during such period
(including all fees and expenses paid or reserved for payment to
the Partners), (b) all funds required for capital improvements
(including tenant improvements and certain leasing concessions),
but only to the extent that any unfunded portion of the Commitments
is not sufficient to fully fund such capital improvements, (c) a
reasonable allowance for cash reserves for repairs, replacements,
contingencies, working capital and anticipated obligations as
determined by the General Partner to be necessary to meet
Partnership obligations for the next fiscal quarter or quarters and
as Approved by the Limited Partner to the extent such reserves are
not within the limits set forth in the applicable Business Plan and
(d) such other sums as the Partners shall Approve for retention in
the Partnership. If the General Partner determines that the
reserves of the Partnership are in excess of the amount required
for the Partnership’s operations, such reserves may be
reduced by such excess and such excess shall thereupon be included
in the amount of Available Cash available for distribution
hereunder.
1.1.13 “Budget” has the
meaning given such term in Section 8.4.1 hereof.
1.1.14 “Business Plan”
means a business plan for each Property prepared pursuant to and in
accordance with Section 8.4.1 hereof.
1.1.15 “Business Scope”
has the meaning given such term in Section 2.3 hereof.
1.1.16 “Capital Account”
has the meaning given such term in Section 7.2.1 hereof.
1.1.17 “Capital
Contribution” means a capital contribution made by a Partner
pursuant to Articles IV and V hereof. Only cash contributions which
increase a Partner’s Capital Account shall be considered a
Capital Contribution.
1.1.18 “Capital Loan”
has the meaning given such term in Section 5.2.7 hereof.
1.1.19 “Certificate” has
the meaning given to such term in the Recitals.
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1.1.20 “Code” means the
Internal Revenue Code of 1986, as amended, or corresponding
provisions of future laws.
1.1.21 “Commitments” has
the meaning given to such term in Section 5.1.7.
1.1.22 “Control” or
“Controlled by” or “Controlling” or any
derivative thereof, when used with respect to any specified Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such
Person, whether through ownership of voting securities or other
ownership interests, or by contract; provided ,
however , that, without limiting the generality of the
foregoing, (a) any Person which, together with its Affiliates,
owns, directly or indirectly, securities representing more than 50%
of the value or ordinary voting power of a corporation or more than
50% of the partnership, general partnership, Partnership or other
ownership interests (based upon value or vote) of any other Person
is deemed to Control such corporation or other Person, (b) a
general partner shall always be deemed to Control any partnership
of which it is a general partner, and (c) a managing Partner or
manager of a limited liability company shall always be deemed to
Control any limited liability company of which it is a managing
Partner or manager.
1.1.23 “Core Properties”
has the meaning set forth on Exhibit A , as such meaning may
be amended from time to time with the Approval of
Partners.
1.1.24 “Deadlock” has
the meaning set forth in Section 8.7.
1.1.25 “Deadlock Notice”
has the meaning set forth in Section 8.7.
1.1.26 “Delinquent
Partner” has the meaning given to such term in Section
5.2.2.
1.1.27 “Disposition”
means any sale, master lease, installment sale, sale-leaseback,
condominium or cooperative conversion, convertible mortgage
financing or other transfer of all or a substantial portion of a
Property or the related REIT Owner’s ownership interest
therein.
1.1.28 “Dissolution”
means dissolution of the Partnership pursuant to Section 13.1
hereof.
1.1.29 “Distribution
Share” means, with respect to any sale of a Property by the
related REIT Owner and with respect to each Partner, the amount
that such Partner would be entitled to receive if the REIT Owner
sold the Property for the Agreed Purchase Price on the projected
date of closing and the Company immediately paid all Partnership
expenses and other liabilities relating to such Property
(including, without limitation, closing costs incurred or to be
incurred in connection with such sale) and then distributed the net
proceeds of the sale to the Partners in accordance with Section
6.1.
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1.1.30 “Event of
Default” means the occurrence of any of the following
events:
(a) any material representation or
warranty made by a Partner in this Agreement that was false or
misleading in any material respect as of the date of this
Agreement;
(b) a Partner shall fail to (i) make
a Capital Contribution pursuant to Article V and such failure shall
continue for 5 days after Notice thereof shall have been given to
such Partner by any other Partner, or (ii) perform or observe any
other material covenant or agreement contained in this Agreement to
be performed or observed by such Partner, which failure shall
remain unremedied for 30 days after Notice thereof shall have been
given to such Partner by any other Partner;
(c) the transfer of an Interest by
such Partner in violation of the restrictions on transfer set forth
in Article XI hereof, except for transfers by operation of
law;
(d) a Partner shall become
insolvent, generally shall fail or be unable to pay its debts as
they mature, shall admit in writing its inability to pay its debts
as they mature, shall make a general assignment for the benefit of
creditors, shall enter into any composition or similar agreement
with creditors, or shall suspend the transaction of all or a
substantial portion of its usual business as a result of its
insolvency or general failure or inability to pay its debts as they
mature;
(e) a Partner shall file a petition
or answer or consent seeking relief under Title 11 of the United
States Bankruptcy Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy law or
other similar law, or a Partner shall consent to the institution of
proceedings thereunder or the filing of any such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or similar official to take possession of
any substantial part of a Partner’s properties;
(f) there shall be entered a decree
or order by a court constituting an order for relief in respect of
a Partner under Title 11 of the United States Bankruptcy Code, as
now constituted or hereafter amended, or any other applicable
federal, state or foreign bankruptcy law or other similar law, or
appointing a trustee, custodian, sequestrator or similar official
to take possession of any substantial part of a Partner’s
properties, or ordering the winding-up of or liquidation of the
affairs of the Partner, and any such decree or order shall continue
unstayed and in effect for a period of 60 consecutive
days;
(g) the withdrawal from the
Partnership by such Partner, except as permitted under the terms of
this Agreement;
(h) the failure of a Partner to make
an Additional Capital Contribution to which it has given its
Approval pursuant to Section 5.2.1;
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(i) a Partner, a Key Executive or a
Successor Key Executive has misappropriated Partnership funds or
has engaged in fraudulent, willful or grossly negligent conduct
with respect to the Partnership or its assets; provided ,
however , that if the misappropriation, fraudulent or
grossly negligent conduct was committed (i) by a Partner and not a
Key Executive or a Successor Key Executive and (b) without the
actual prior knowledge by any Key Executive or Successor Key
Executive, such conduct may be cured by the Partner committing such
wrongful act if, within 30 days following Partner’s knowledge
of such wrongful act, such Partner makes full restitution to the
Partnership of all damages caused by such conduct, terminates the
employment of the employee of the Partner who committed such
wrongful conduct (except in the case of grossly negligent conduct
committed by such employee where the curing Partner reasonably
believes that termination is not justified under the circumstances)
and thereafter takes all appropriate actions necessary to remediate
the situation and protect the interests of the Partnership;
or
(j) a Partner has, as a result of
the occurrence of any of the events described above (and without
regard to whether or not such Partner has cured any related
breach), caused an event of default (following expiration of
applicable cure period(s)) by the Partnership to occur under any
agreement with a lender to the Partnership or any REIT Owner or
under any other material agreement to which the Partnership is a
party; provided , however , that in no event shall
the failure by any Partner to meet a financial covenant or any
other covenant beyond such Partner’s reasonable control in
any such agreement constitute an Event of Default.
1.1.31 “FMV Price” has
the meaning set forth in Section 20.5.
1.1.32 “Forced Sale
Procedure” means the forced sale procedure set forth in
Article XV.
1.1.33 “GAAP” means
generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are
applicable from time to time.
1.1.34 “General Partner”
has the meaning set forth in the preamble.
1.1.35 “General Partner
Commitment” has the meaning set forth in Section
5.1.7.
1.1.36 “Indemnified
Party(ies)” has the meaning set forth in Section
9.2.1.
1.1.37 “Interest” or
“Partnership Interest” means, when used with reference
to any Partner, the entire ownership interest or allocated share of
such Partner in Profits, Losses, tax credits, Available Cash and
other Partnership assets, liabilities and distributions, and all
other rights and obligations of such Partner under the terms and
provisions of this Agreement and the Act.
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1.1.38 “Investment
Criteria” means the investment criteria set forth on
Exhibit B , as such criteria may be amended from time to
time with the Approval of Partners.
1.1.39 “Investment Term”
means the period commencing on the date of this Agreement and
ending on the eighteen month anniversary thereof; provided ,
however , that the General Partner and the Limited Partner
may mutually agree in writing to extend such term for two
additional six (6) month periods.
1.1.40 “Key Executives”
has the meaning given to such term in Section 17.1
hereof.
1.1.41 “Leasing Fee”
means the fee to be paid to the Manager pursuant to the Management
Agreement for the leasing services provided pursuant
thereto.
1.1.42 “Limited Partner”
has the meaning set forth in the preamble.
1.1.43 “Limited Partner
Commitment” has the meaning set forth in Section
5.1.7.
1.1.44 “Major Decision”
has the meaning given such term in Section 8.2 hereof.
1.1.45 “Management
Agreement” means the management and leasing agreement to be
executed between a REIT Owner and Manager substantially in the form
of Exhibit D .
1.1.46 “Management Fee”
means the fee to be paid Manager pursuant to the Management
Agreement for the management services provided by Manager pursuant
thereto.
1.1.47 “Manager” means
Prentiss Properties Management, L.P., a Texas limited
partnership.
1.1.48 “Non-Defaulting
Partner” means a Partner with respect to whom an Event of
Default has not occurred.
1.1.49 “Non-Delinquent
Partner” has the meaning given to such term in Section
5.2.2.
1.1.50 “Non-Exclusive
Properties” means those properties located at 321 N. Clark,
Chicago, Illinois and in Northern California which the General
Partner is considering purchasing with an existing tenant of such
property. It is contemplated that General Partner’s interest
in the entity which may acquire the property located in Northern
California will be 20% or less.
1.1.51 “Non-Qualifying
Property” means any real property and improvements thereon
that is not a Qualifying Property.
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1.1.52 “Notice” shall
mean a written communication given in accordance with the
provisions of Section 16.3 hereof.
1.1.53 “Notice Partner”
has the meaning given such term in Section 7.9.1 hereof.
1.1.54 “Partners” means
the General Partner and the Limited Partner, or any substitutes,
replacements or permitted transferees hereunder for either the
General Partner or the Limited Partner.
1.1.55 “Partnership” has
the meaning set forth in the preamble.
1.1.56 “Percentage
Interest” has the meaning set forth in Section 5.1.5.
Reference to a majority or a specified percentage in Interest of
the Partners shall mean Partners whose Interests represent a
majority or such specified percentage, respectively, of the
Percentage Interests of all of the Partners.
1.1.57 “Performance
Standard” has the meaning set forth in Section
8.1.
1.1.58 “Permitted
Investments” means
(a) direct obligations of, or
obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by
any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper
maturing within 365 days from the date of acquisition thereof and
having, at such date of acquisition, the highest credit rating
obtainable from Standard & Poor’s Ratings Group or
Moody’s Investors Service, Inc.;
(c) investments in certificates of
deposit, banker’s acceptances and time deposits maturing
within 365 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and
undivided profits of not less than $500 million and has at least an
A credit rating from Standard & Poor’s Ratings Group or
an A2 credit rating from Moody’s Investors Service, Inc.;
and
(d) fully collateralized repurchase
agreements with a term of not more than 30 days for securities
described in clause (a) of this definition and entered into with a
financial institution satisfying the criteria described in clause
(c) of this definition.
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1.1.59 “Person” means
any individual, partnership, corporation, trust or other entity, or
any government or political subdivision, or any agency, department
or instrumentality thereof.
1.1.60 “PPT” means
Prentiss Properties Trust, a Maryland real estate investment
trust.
1.1.61 “Preferred
Return” means a return on any Partner’s Unreturned
Capital Contribution of ten percent (10%) per annum, compounded on
the first day of each calendar year and earned from the date on
which each Capital Contribution is funded until the date it is
fully returned by distributions of cash or other assets (including
stock in a REIT Owner) pursuant to Section 6.1(c) or Section
13.2.1(d) hereof. For purposes of calculating the Preferred Return,
each distribution by the Partnership to such Partner shall be
credited first in payment of the Preferred Return accrued on the
balance of such Partner’s Unreturned Capital Contribution as
of the date of such distribution and second in return of such
Unreturned Capital Contribution.
1.1.62 “Prime Rate”
means the prime rate as reported by the Wall Street Journal in the
Money Rates section, on the date the advance, contribution,
investment or payment in question is made, or if the Wall Street
Journal does not publish a prime rate, Prime Rate shall be the
average of the prime rates publicly announced by the five largest
national banks in the United States.
1.1.63 “Profits” or
“Losses” mean, respectively, for any Partnership fiscal
period, the net income or losses recognized by the Partnership for
purposes of determining Capital Accounts under Section 7.2 for such
period, including, without limitation, each item of Partnership
income, gain, loss or deduction, including capital gains and
capital losses.
1.1.64 “Promote
Payments” means, with respect to each Partner, the payments
to which such Partner is entitled to receive pursuant to Section
6.1(e).
1.1.65 “Property” means
a Qualifying Property or a Non-Qualifying Property acquired by the
Partnership pursuant to Section 5.1.2.
1.1.66 “PSA” has the
meaning given to such term in Section 5.1.1.
1.1.67 “Purchase Price”
has the meaning given to such term in Section 5.1.2.
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1.1.68 “Qualified
Institutional Investor” means, for purposes of Section 11.1
hereof: (a) a pension fund, pension trust or pension account that
has total real estate assets of at least $1 billion, at least $100
million of which shall be office properties; (b) a pension fund
advisor who, immediately prior to such transfer, controls at least
$1 billion of real estate assets, at least $100 million of which
shall be office properties; or (c) any other Person with a net
worth (or comparable measurement of equity value) of at least $500
million, and which, immediately prior to a transfer, controls real
estate equity assets of at least $1 billion, at least $100 million
of which shall be office properties.
1.1.69 “Qualifying
Property” has the meaning given to such term in Section
5.1.1.
1.1.70 “Regulations”
means the U.S. Treasury regulations promulgated under the Code, as
such U.S. Treasury regulations shall be in effect from time to
time.
1.1.71 “REIT Owner”
means a trust or other entity to be formed pursuant to Section
5.1.2 to own a Property.
1.1.72 “Responding
Partner” has the meaning set forth in Section
15.1.
1.1.73 “Response Date”
has the meaning set forth in Section 15.3.
1.1.74 “Successor Key
Executive” has the meaning given to such term in Section 17.1
hereof.
1.1.75 “Target Markets”
means the geographic areas (including suburbs) of Washington, D.C.,
Northern Virginia, Chicago, Illinois, Dallas/Fort Worth, Texas, San
Diego, California, Orange County, California, Northern California
(including East Bay, San Francisco and Silicon Valley) and such
other geographic areas as may be determined with the Approval of
Partners.
1.1.76 “Tax Matters
Partner” has the meaning given such term in Section 7.9.1
hereof.
1.1.77 “Taxable Income”
or “Taxable Loss” means, respectively, and for any
calendar quarter, calendar year or other fiscal period applicable
to the Partnership, the income or losses recognized by the
Partnership for U.S. federal income tax purposes for such period,
including without limitation, each item of Partnership income,
gain, loss or deduction, including capital gains and capital
losses.
1.1.78 “Term” has the
meaning set forth in Section 2.6.
1.1.79 “Transaction” has
the meaning set forth in Section 16.13(b).
1.1.80 “Unreturned Capital
Contribution” as of any date shall mean the aggregate Capital
Contributions made by a Partner through such date pursuant to
Section 4.8 and Article V, minus distributions of cash or other
assets (including stock in a REIT Owner) made to such Partner
through such date pursuant to Section 6.1(d) hereof and Section
13.2.1(d).
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1.1.81 “Value-Added
Properties” has the meaning set forth in Exhibit A ,
as such meaning may be amended from time to time with the Approval
of Partners.
ARTICLE II.
FORMATION, PURPOSES AND
DURATION
2.1 Formation . The
Partnership has been formed through the filing of the Certificate
by the General Partner under the Act. The parties hereto are
entering into this Agreement in order to complete and perfect the
organization of the Partnership and to provide for the conduct of
its business. 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.
2.2 Name . The name of the
Partnership shall be “Prentiss Office Investors, L.P.”.
The business of the Partnership shall be conducted under the name
of “Prentiss Office Investors, L.P.” or such other name
as the General Partner may from time to time determine, provided
that such other name may not in any way reference the identity
Stichting Pensioenfonds ABP. The General Partner shall give prompt
notice to the Limited Partner of any change in the name of the
Partnership and shall not identify the Limited Partner in any such
name change without the Limited Partner’s
Approval.
2.3 Purposes and Business .
The sole and only purpose and business of the Partnership is: (a)
to acquire, own, deal with and dispose of ownership interests in
the REIT Owners, which REIT Owners shall acquire, own, lease,
operate, manage and sell the Properties, in each case as more fully
described in and subject to the applicable limitations,
restrictions and other provisions of this Agreement, as an
investment for the production of income and profit; (b) to engage
in such other activities as are reasonably necessary or appropriate
to effectuate the foregoing; and (c) to engage in such other
business with the Approval of Partners (the “Business
Scope”).
2.4 Place of Business . The
principal office and place of business of the Partnership shall be
located at 3890 West Northwest Hwy., Suite 400, Dallas, Texas
75220, or at such other place as the General Partner may from time
to time designate by Notice given to the Limited Partner, provided
that the Partnership shall not have its place of business in any
jurisdiction which would require the Limited Partner to file a
local tax return in such jurisdiction solely as a result of (a)
such Limited Partner’s ownership of its Interest and (b) the
Partnership having its home office in that jurisdiction.
2.5 Title to Partnership
Property . Legal title to each Property shall be owned by a
REIT Owner. Legal title to other property and assets of the
Partnership shall be taken and at all times held in the name of the
Partnership, or held in the name of a trustee for the Partnership
provided that the Partnership is specifically designated by name as
sole beneficiary or principal under a written trust agreement
executed by any such trustee. The manner of holding title to the
Partnership’s property and assets, whether in the name of the
Partnership or such trustee, is solely for the convenience of the
Partnership, all such property and assets of the Partnership shall
be treated as owned by the Partnership subject to the terms of this
Agreement, and the power to direct any such trustee shall rest
solely in the Partnership and shall be exercisable solely upon the
direction of the General Partner except as otherwise provided in
this Agreement.
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2.6 Term . The term of the
Partnership (the “Term”) commenced upon the filing of
the Certificate with the office of the Secretary of State of the
State of Delaware and shall continue until the Partnership has been
dissolved and its affairs wound up in accordance with the provision
of Article XIII.
2.7 Qualification . The
Partnership shall qualify and register as a foreign limited
partnership, if required, and shall file assumed name certificates
in each jurisdiction where required by reason of the nature of its
business or the ownership of its Property, and shall otherwise file
such instruments and documents in such public offices in such other
jurisdictions as is necessary in order to give effect to the
provisions of this Agreement. The Partnership shall also qualify
and register each REIT Owner in each jurisdiction where required by
reason of the ownership of its Property.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND
COVENANTS
3.1 Representations, Warranties
and Covenants of the General Partner . The General Partner
hereby makes the following representations and warranties to, and
covenants with, the Limited Partner, with full knowledge that the
Limited Partner is acting in reliance thereon in executing this
Agreement and entering into and carrying on a limited partnership
with the General Partner pursuant hereto:
3.1.1 Organization . The
General Partner is, and during the term of this Agreement shall, at
all times, continue to be a limited partnership duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
3.1.2 Authority . The General
Partner has all requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution
and delivery by the General Partner of this Agreement, and the
performance by the General Partner of its obligations hereunder,
have been duly and validly authorized, and no other actions on the
part of the General Partner are necessary to authorize such
execution, delivery and performance. This Agreement has been duly
executed and delivered by the General Partner, and this Agreement
and all exhibits and documents executed and delivered by the
General Partner in connection with the consummation of the
transactions contemplated hereby, are the valid and legally binding
obligations of the General Partner, enforceable against the General
Partner in accordance with the terms hereof and thereof, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting
creditor’s rights generally and by principles of equity
(whether considered in a proceeding at law or in equity). No
consent, approval or other action by any governmental authority is
required in connection with the execution, delivery and performance
by the General Partner of this Agreement.
Page 12
3.1.3 No Violation . The
execution, delivery and performance by the General Partner of this
Agreement, and the consummation of the transactions contemplated
hereby, do not and will not (a) violate, conflict with or result in
the breach of any provision of the General Partner’s charter
documents or partnership agreement; (b) violate, conflict with or
result in the breach of any of the terms of, result in a material
modification of, or otherwise give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time,
or both, constitute) a default under, any material instrument,
contract or other agreement, including, but not limited to, any
non-competition agreement or any agreement restricting the General
Partner or any Affiliate’s ability to engage in any business
endeavor, to which the General Partner or any Affiliate is a party,
or by or to which the General Partner or any Affiliate or any of
their respective assets or properties may be bound or subject; (c)
violate any order, writ, judgment, injunction, award or decree of
any federal, state, local or foreign court, arbitrator or
governmental or regulatory body against, or binding upon, the
General Partner or any Affiliate or any of their respective assets
or properties; (d) violate any statute, law or regulation of any
governmental or regulatory body; or (e) result in the creation or
imposition of any lien, charge or encumbrance of any nature or
description upon any of the properties, assets or businesses of the
General Partner or any Affiliate, including, without limitation,
the Property or the General Partner’s Interest.
3.1.4 Brokers . Neither the
General Partner nor any Affiliate has engaged any broker, finder or
investment banker in connection with the Partnership created
hereby, the acquisition by the Partnership of the Property or any
other transactions contemplated by this Agreement.
3.2 Representations, Warranties
and Covenants of the Limited Partner . The Limited Partner
hereby makes the following representations and warranties to, and
covenants with, the General Partner, with full knowledge that the
General Partner is acting in reliance thereon in executing this
Agreement and entering into and carrying on a limited partnership
with the Limited Partner pursuant hereto:
3.2.1 Organization . The
Limited Partner is and during the term of this Agreement shall, at
all times, continue to be a “stichting” or foundation
duly organized, validly existing and in good standing under the
laws of the Netherlands.
3.2.2 Authority . The Limited
Partner has all requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution
and delivery by the Limited Partner of this Agreement, and the
performance by the Limited Partner of its obligations hereunder,
have been duly and validly authorized by the officers of the
Limited Partner, and no other corporate actions on the part of the
Limited Partner are necessary to authorize such execution, delivery
and performance. This Agreement has been duly executed and
delivered by the Limited Partner and this Agreement and all
exhibits and documents executed and delivered by the Limited
Partner in connection with the consummation of the transactions
contemplated hereby, are the valid and legally binding obligations
of the Limited Partner, enforceable against the Limited Partner in
accordance with the terms hereof and thereof, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting
creditor’s rights generally and by principles of equity
(whether considered in a proceeding at law or in equity). No
consent, approval or other action by any governmental authority is
required in connection with the execution, delivery and performance
by the Limited Partner of this Agreement.
Page 13
3.2.3 No Violation . The
execution, delivery and performance by the Limited Partner of this
Agreement, and the consummation of the transactions contemplated
hereby, do not and will not (a) violate, conflict with or result in
the breach of any provision of the charter documents, by-laws or
similar organizational documents of the Limited Partner; (b)
violate, conflict with or result in the breach of any of the terms
of, result in a material modification of, or otherwise give any
other contracting party the right to terminate, or constitute (or
with notice or lapse of time or both constitute) a default under,
any material instrument, contract or other agreement to which the
Limited Partner is a party, or by or to which the Limited Partner
or any of its assets or properties may be bound or subject; (c)
violate any order, writ, judgment, injunction, award or decree of
any federal, state, local or foreign court, arbitrator or
governmental or regulatory body against, or binding upon, the
Limited Partner or any of its assets or properties; (d) violate any
statute, law or regulation of any governmental or regulatory body;
or (e) result in the creation or imposition of any lien, charge or
encumbrance of any nature or description upon any of the
properties, assets or businesses of the Limited Partner or the
Partnership, including, without limitation, the Limited
Partner’s Interest.
3.2.4 Brokers . Neither the
Limited Partner nor any Affiliate has engaged any broker, finder or
investment banker in connection with the Partnership created
hereby, the acquisition by the Partnership of the Property or any
other transactions contemplated by this Agreement.
ARTICLE IV.
FEES AND EXPENSES
4.1 Expenses . Except as
otherwise provided in this Agreement, the expenses of the
Partnership shall be allocated between the General Partner and the
Limited Partner according to their respective Percentage Interests
when such expenses are incurred. Each Partner shall be reimbursed
by the Partnership for amounts advanced by such Partner for
Partnership expenses. Such expenses include, without limiting the
generality of the foregoing, Property-related out-of-pocket due
diligence costs with respect to any Property the acquisition of
which has been approved pursuant to Section 5.1.2, Property-related
out-of-pocket acquisition costs for any Property the acquisition of
which was not approved pursuant to Section 5.1.2 (not to exceed
$250,000 per year), capital costs, operating expenses, financing
costs and sales costs. If the Limited Partner preliminarily
approves a proposed acquisition under Section 5.1.1 and
subsequently rejects the consummation of such acquisition, only the
out-of-pocket due diligence expenses incurred by the Partnership in
connection with the proposed acquisition prior to the Limited
Partner’s rejection of such acquisition will be treated as a
Partnership expense. All expenses incurred after the Limited
Partner’s rejection shall be borne solely by the Partner
incurring such expenses. Expenses incurred by any Partner in
connection with the Business Scope which are not reimbursable
pursuant to this Article IV or do not otherwise have the Approval
of Partners shall not be a Partnership expense except as otherwise
expressly provided herein. Neither the Partners nor any of their
Affiliates or the respective principals or employees of either of
them shall be entitled to any reimbursement for any costs and
expenses or paid any
Page 14
salary or other compensation incurred in
furtherance of the Business Scope, except (a) as expressly provided
in this Article IV, (b) pursuant to the agreements referenced in
Sections 4.3, 4.4 and 4.5, or (c) as expressly provided in a
Business Plan or other writing Approved by the Partners.
4.2 Organizational Costs .
Except as otherwise provided in this Agreement, the third party
legal and accounting fees and expenses and all other third party
costs and expenses incurred by each Partner in connection with the
formation and organization of the Partnership shall be a
Partnership expense, reimbursable to the Partner incurring such
expense, and shall be allocated between the General Partner and the
Limited Partner according to their respective Percentage
Interests.
4.3 Management Fee . Pursuant
to each Management Agreement, the Manager or an Affiliate shall be
entitled to receive, from the REIT Owner owning the applicable
Property described in a Management Agreement, the Management Fee
designated in such Management Agreement attached hereto as
Exhibit D , for providing the management services
contemplated thereby.
4.4 Leasing Fee . Pursuant to
each Management Agreement, the Manager or an Affiliate shall be
entitled to receive, from the REIT Owner owning the applicable
Property described in a Management Agreement, the Leasing Fee
designated in such Management Agreement attached hereto as
Exhibit D , for providing the leasing services contemplated
thereby.
4.5 Asset Management Fee .
For each fiscal quarter, the General Partner or its designated
Affiliate shall be entitled to receive an asset management fee
equal to 0.75% per annum of the average aggregate Unreturned
Capital Contributions of the Partners made through the end of such
fiscal quarter pursuant to Article V, calculated in arrears. Such
asset management fee shall be paid to the General Partner or its
designated Affiliate within five (5) business days after the last
day of each fiscal quarter.
4.6 Reimbursement of Tax
Accountant Costs . The Partnership shall not reimburse the
General Partner for any overhead related costs and expenses other
than as expressly provided herein and other than the reimbursement
of costs of a tax accountant hired by General Partner for the
administration of the various REIT Owners formed pursuant to
Section 5.1 as follows: (a) no reimbursement for any fees paid in
connection with the formation of the first two such REIT Owners
formed pursuant to Section 5.1; (b) $50,000 of annual reimbursement
in the aggregate for tax accountant costs in connection with the
administration of the next six such REIT Owners formed pursuant to
Section 5.1, such reimbursement to commence with the formation of
the third such REIT Owner; and (c) $80,000 of annual reimbursement
in the aggregate for tax accountant costs in connection with the
administration of the ninth and all additional REIT Owners formed
pursuant to Section 5.1, such reimbursement to commence with the
formation of the ninth such REIT Owner.
4.7 Other Payments . The
Partnership shall make the payments to the Partners specifically
contemplated in the last paragraph under the heading “
Diversification ” on Exhibit B
hereto.
Page 15
4.8 Capital Contributions to Pay
Fees and Expenses Payable Pursuant to this Article IV . If the
Partnership does not have sufficient cash to pay or reimburse the
fees and expenses which a Partner is to receive pursuant to this
Article IV, then the General Partner shall be entitled to request a
Capital Contribution pursuant to Section 5.1 below.
ARTICLE V.
CONTRIBUTIONS AND
FINANCING
5.1 Contributions and Percentage
Interests . The Partners shall make contributions to the
capital of the Partnership in accordance with Section 4.8 and this
Article V (each a “Capital Contribution”) and shall
have Percentage Interests as provided in this Section. If the
General Partner determines that Capital Contributions are necessary
pursuant to Section 4.8 above, then, within five (5) business days
after the General Partner requests such Capital Contributions, the
Partners will make Capital Contributions equal to their respective
Percentage Interests of the amounts requested by the General
Partner. The General Partner shall be authorized to estimate the
amount of fees and expenses to be paid or reimbursed pursuant to
Article IV over the six (6) month period following the request for
Capital Contributions described in Section 4.8 in determining the
amount of Capital Contributions to be requested to pay or reimburse
such sums.
5.1.1 Presentation of Potential
Acquisition and Approval Process . During the Investment Term,
the Partners will hold bi-monthly meetings (which may be conducted
telephonically) to discuss any potential Core Properties and
Value-Added Properties identified by the General Partner which meet
the Investment Criteria and may be acquisition targets for the
Partnership (each, a “Qualifying Property”). If the
General Partner locates a Qualifying Property, the General Partner
shall prepare a preliminary one to two page summary of the material
terms of the proposed acquisition of such Qualifying Property and
provide the preliminary summary to the Limited Partner. Within 10
business days after the receipt of such preliminary summary, the
Limited Partner will either preliminarily Approve, in its sole
discretion, proceeding with the proposed acquisition, deny such
Approval, in its sole discretion, or request any additional
information reasonably necessary in order for it to make a decision
with respect to the proposed acquisition. If the Limited Partner
requests such additional information, then it will either
preliminarily Approve, in its sole discretion, proceeding with the
proposed acquisition or deny such Approval, in its sole discretion,
within 10 business days after the receipt of such additional
information. If the Limited Partner preliminarily Approves, in its
sole discretion, proceeding with the proposed acquisition, then the
General Partner shall attempt to negotiate the purchase of the
Qualifying Property, and, if successful, the General Partner,
within a reasonable period of time, shall cause the Partnership or
an Affiliate of either the Partnership or the General Partner to
commence the negotiation of a contract of sale for the purchase of
such Qualifying Property (a “PSA”) with a feasibility
period to evaluate the Qualifying Property. Unless the General
Partner elects to cause such PSA to be terminated prior to the
expiration of the feasibility period, the General Partner shall, at
least 10 business days prior to the end of the feasibility period,
prepare an investment memorandum in the form customarily prepared
by General Partner for such proposed acquisition containing all of
the information the General Partner believes is reasonably
necessary for the Limited Partner to make a decision regarding the
purchase of the Qualifying Property and deliver it to the Limited
Partner. Within 10 business days after the receipt of such
investment memorandum, the
Page 16
Limited Partner will either Approve, in its sole
discretion, the proposed acquisition pursuant to the applicable
PSA, deny such Approval, in its sole discretion, or, no later than
3 business days following its receipt of the initial investment
memorandum, request any additional information reasonably required
in order for it to make a decision with respect to the proposed
acquisition. If the Limited Partner timely requests such additional
information, then it will Approve, in its sole discretion, the
proposed acquisition or deny such Approval, in its sole discretion,
within the later of (a) 10 business days after its receipt of the
initial investment memorandum, or (b) 5 business days after the
receipt of such additional information and, if necessary to allow
the Limited Partner sufficient time to make its decision in
accordance with this clause (b), the General Partner will use its
diligent efforts to secure an extension of the feasibility period.
Notwithstanding the foregoing time periods for Approval by the
Limited Partner, the Limited Partner shall in all instances Approve
or reject the acquisition prior to the expiration of the
feasibility period stated in the PSA for the proposed Qualifying
Property; however, if the Limited Partner requests additional
information following its receipt of an investment memorandum for a
proposed Qualifying Property, then the General Partner, no later
than the date on which it delivers the additional information
requested, shall notify the Limited Partner (i) of the last day of
the feasibility period stated in the related PSA for a proposed
Qualifying Property, and (ii) whether such feasibility period will
expire earlier than the 10 business day or 5 business day time
period, as applicable, for the Limited Partner’s response, as
provided in the preceding sentence, for its Approval or rejection
of a proposed Qualifying Property. If a proposed Qualifying
Property acquisition by the General Partner consists of a portfolio
of two or more such Qualifying Properties, then the Limited Partner
must agree to make an investment in all such Properties or refrain
from making any investment in any of such Qualifying Properties.
Once the acquisition of a Qualifying Property has been Approved,
the General Partner shall deliver the executed PSA to the Limited
Partner relating to the acquisition. Notwithstanding anything
herein to the contrary, the General Partner shall have the sole
option to terminate a PSA prior to the expiration of the
feasibility period.
5.1.2 Approved Acquisitions .
If the Limited Partner Approves the proposed acquisition pursuant
to Section 5.1.1 above or Section 5.1.4(c)(i) below, the Partners
shall make Capital Contributions to the Partnership within five (5)
business days after the General Partner requests such Capital
Contributions equal to their respective Percentage Interests of the
Purchase Price for such acquisition.
For purposes of this Section 5.1.2,
“Purchase Price” shall mean the sum of (i) the total
estimated acquisition costs for the Property, plus (ii) capital
reserves and working capital necessary for such Property and
consistent with the investment memorandum for such Property or as
otherwise Approved by the Partners, plus (iii) any earnest money
and due diligence costs incurred or to be incurred in connection
with the acquisition of the Property, plus (iv) costs, expenses and
filing fees incurred to form the REIT Owner which will own such
Property, as the amounts described in clauses (i), (ii), (iii) and
(iv) may be reasonably estimated by the General Partner. In
connection with each such acquisition of Property, the General
Partner will form a new REIT Owner, and such REIT Owner will enter
into a Management Agreement for the management and leasing of such
Property by the Manager. The Property will be acquired by or
contributed to such REIT Owner and will be the sole asset of such
REIT Owner. Each such REIT Owner will be a Maryland real estate
investment trust, unless the Partners otherwise mutually Approve
formation of a different type of entity or the formation of an
entity in a different state, that is
Page 17
qualified as and elects to be treated as a real
estate investment trust under Section 856 of the Code. Except as
otherwise expressly provided in the final sentence of Section 5.2.1
or in Section 5.2.6, in no event will the Capital Contributions
required of the Limited Partner and the General Partner exceed the
Limited Partner Commitment and the General Partner Commitment,
respectively, without the Approval of Partners, which may be
withheld in their respective sole discretion.
5.1.3 Rejected Acquisitions .
Notwithstanding anything in this Agreement to the contrary, if the
Limited Partner rejects the proposed acquisition of a Qualifying
Property pursuant to Section 5.1.1 above, or if no notice of
Approval is timely received by the General Partner after the
Limited Partner’s receipt of the investment memorandum
pursuant to Section 5.1.1 above, then the General Partner or any of
its Affiliates may purchase such Property for its own account on
terms which are not materially more favorable than those offered to
the Partnership unless such Property is reoffered to the Limited
Partner on the more favorable terms, and if either (a) the General
Partner elects to acquire such Property on terms which are not
materially more favorable than those offered to the Limited
Partner, or (b) if such Property has been reoffered to the Limited
Partner on the more favorable terms and the Limited Partner does
not Approve, in its sole discretion, the acquisition thereof by the
Partnership, then the Limited Partner will have no further rights
or obligations with respect to such Property.
5.1.4 Exclusivity Period
.
(a) During the Investment Term, so
long as the Partners have not made Capital Contributions to the
Partnership equal to or in excess of 95% of the total amount of the
Commitments, (i) neither the General Partner nor any of its
Affiliates may acquire any Qualifying Property and (ii) neither the
Limited Partner nor any of its Affiliates, in each case to the
extent they have discretionary authority over what properties to
acquire, may acquire any Qualifying Property without first offering
the Property to the Partnership for consideration in accordance
with the provisions of Section 5.1.1.
(b) Notwithstanding anything to the
contrary in this Agreement, the provisions of Section 5.1.4(a)
shall not apply to the acquisition of the Non-Exclusive Properties
by the General Partner or one of its Affiliates for its own
account, and the General Partner or one of its Affiliates shall be
free to acquire the Non-Exclusive Properties without regard to such
provisions.
(c) The General Partner may, but is
not obligated to, give the Limited Partner an option to acquire an
interest, directly or indirectly, in any Non-Qualifying Property or
group of Non-Qualifying Properties either (i) by a REIT Owner on
behalf of the Partnership or (ii) as a co-investment by the
Partners (or their Affiliates) outside of the Partnership. The
Limited Partner shall be under no obligation to acquire any
Non-Qualifying Property and any rejection thereof by the Limited
Partner shall not count as one of the Limited Partner’s
rejections pursuant to Section 5.1.4(d). Any acquisition of a
Non-Qualifying Property that is Approved by the Limited Partner
shall be acquired subject to the acquisition procedure set forth in
Section 5.1.1.
Page 18
(d) In the event the Limited Partner
rejects three proposed acquisitions of Qualifying Properties, or
rejects two consecutive proposed acquisitions of Qualifying
Properties, then either Partner shall have the right to terminate
the Investment Period upon Notice to the other Partner.
5.1.5 Percentage Interest .
The General Partner’s “Percentage Interest” is,
as of the date hereof, 51%, and the Limited Partner’s
“Percentage Interest” is, as of the date hereof, 49%.
Each Partner’s respective Percentage Interest may be changed
in the event such Partner transfers a portion of its Interest in
accordance with Article XI. The Percentage Interests of the General
Partner and Limited Partner may be changed pursuant to clause (y)
of Section 5.2.2(e) and Section 5.2.4 hereof.
5.1.6 1031 Exchange Exception
. Notwithstanding anything to the contrary in this Agreement, any
Qualifying Property may be acquired by the General Partner or an
Affiliate of the General Partner for its own account and included
in a transaction that meets the requirements of Section 1031 of the
Code if, prior to committing to do such acquisition, all of the
following conditions are satisfied:
(a) the General Partner’s
taxable gain from the sale of the Property being transferred in
connection with the transaction exceeds $2 million;
(b) the General Partner cannot
reasonably identify or acquire another piece of property that is
not a Core Property or a Value-Added Property that would be a
suitable replacement property;
(c) the General Partner identifies
the relevant replacement property within 45 days after the sale of
the replaced property in a notice provided to the Limited Partner
together with a reasonably-detailed confirmation that the
conditions in this Section 5.1.6 have been satisfied;
and
(d) without the Approval of the
Limited Partner, which may be withheld in its sole discretion, the
General Partner shall be limited to using not more than two
Qualifying Properties as replacement properties in any 12 month
period during the Investment Period.
5.1.7 Capital Commitments .
During the term of this Agreement, the General Partner has agreed
to make Capital Contributions to the Partnership of up to
$104,000,000 in the aggregate (the “General Partner
Commitment”), and the Limited Partner has agreed to make
Capital Contributions to the Partnership of up to $100,000,000 in
the aggregate (the “Limited Partner Commitment”
together with the General Partner Commitment, the
“Commitments”). On or about the date of this Agreement,
the Partners will make the Capital Contributions and take the other
actions set forth on Exhibit C hereto. During the Investment
Term, any proceeds constituting a return of a Capital Contribution
(as opposed to a return on a Capital Contribution) received by a
Partner in connection with the disposition of any Property shall be
subject to recall for additional acquisitions Approved pursuant to
Section 5.1.2 or 5.1.3 and, if so recalled by the General Partner,
shall be recontributed to the Partnership by such Partner up to the
amount of the Partners’ respective Commitments. Any such
proceeds received by a Partner that constitute the payment of a
Partner’s Preferred Return, however, shall not be subject to
recall by the Partnership during the Investment Term or at any
other time.
Page 19
By way of example, if during the Investment Term
the Limited Partner has made total Capital Contributions of
$80,000,000 of its $100,000,000 Limited Partner Commitment, and
there was a distribution to the Limited Partner resulting in a
return of a Capital Contribution equal to $30,000,000, then (a) the
$30,000,000 distributed to the Limited Partner is subject to being
recalled during the Investment Term pursuant to this Section 5.1.7,
and (b) the Limited Partner is committed to make during the
Investment Term for Approved acquisitions of Property an additional
$20,000,000 Capital Contribution out of its original $100,000,000
Limited Partner Commitment pursuant to the first sentence of this
Section 5.1.7.
5.2 Additional Capital
Contributions .
5.2.1 Contributions . The
Approval of Partners is required pursuant to Section 8.2 hereof for
any Capital Contributions in excess of (a) the Commitments (which,
except as otherwise expressly provided in this Section 5.2.1, may
be granted or withheld in a Partner’s sole discretion), (b)
financing obtained by the Partnership as described in Section 5.2.7
hereof and (c) Available Cash, which the General Partner believes
are necessary in order for the Partnership to carry out the
Partnership’s purpose and conduct its business. Any Capital
Contributions which have the Approval of Partners pursuant to this
Section 5.2.1, or are otherwise expressly permitted pursuant to
this Section 5.2.1 or Section 5.2.6 without the Approval of the
Partners, shall be deemed “Additional Capital
Contributions” hereunder and shall be required within 10
business days following the General Partner’s request
therefor, in an amount equal to each Partner’s respective
Percentage Interest of any such total Additional Capital
Contributions. Notwithstanding anything in this Section 5.2 or
Section 8.2(k) to the contrary, the Partners shall be required to
make Additional Capital Contributions, within 10 business days
following the General Partner’s request therefor, in an
amount equal to their respective Percentage Interests of Additional
Capital Contributions which the General Partner reasonably
determines are necessary for the maintenance or repair of a
Property or are required for a Property to comply with applicable
law. Any request for Additional Capital Contributions pursuant to
this Section 5.2.1 shall be accompanied by a reasonably detailed
description of the reason(s) for the request.
5.2.2 Failure to Make
Contributions . If any Partner fails to contribute timely all
or any portion of any Capital Contribution that it is obligated or
has otherwise agreed to contribute pursuant to the provisions of
Article V (such Partner being herein referred to as the
“Delinquent Partner”), the other Partner (referred to
as a “Non-Delinquent Partner”) may, at its option, at
any time following the date of default and prior to the date such
default is cured, elect any one or more of the following rights and
remedies:
(a) Advance the Capital Contribution
required of the Delinquent Partner, on behalf of such Delinquent
Partner, which advance shall constitute a loan by the
Non-Delinquent Partner to the Delinquent Partner. The
Non-Delinquent Partner shall have a security interest pursuant to
the Uniform Commercial Code of the State of Delaware in the
Percentage Interest of the Delinquent Partner in accordance with
Section 5.2.3 below, and if such loan is not
Page 20
repaid, together with interest at a
rate 800 basis points (8%) in excess of the Prime Rate (but in no
event in excess of the highest lawful rate) from the date of
advance until the date repaid, within 45 days after such loan is
advanced, the Non-Delinquent Partner shall be entitled to either
(i) subject to the limitations on personal liability set forth
below, seek repayment of such loan by all appropriate judicial
and/or non-judicial proceedings, including, but not limited to, the
right to foreclose its security interest in the Interest of the
Delinquent Partner in accordance with applicable law or (ii) extend
such loan for such period of time as the Non-Delinquent Partner
determines. Notwithstanding anything in this Agreement to the
contrary, if the Non-Delinquent Partner elects to make a loan to a
Delinquent Partner pursuant to this Section 5.2.2(a), then the
Non-Delinquent Partner also, in lieu of advancing the Capital
Contribution required of it as capital, instead may elect to treat
the Capital Contribution required of and made by the Non-Delinquent
Partner as a loan by the Non-Delinquent Partner to the Partnership
which bears interest at the interest rate described in this Section
5.2.2(a), and all such loans so made by the Non-Delinquent Partner
shall be repayable pursuant to Sections 6.1(a) and (b) or Section
13.2.1(b) hereof;
(b) Withdraw its Capital
Contribution and continue for all other purposes to be treated as a
Non-Defaulting Partner; or
(c) Subject to the limitation on
liability set forth in Section 5.2.2(d) hereof, a Non-Delinquent
Partner may, in addition to any specific rights and remedies
provided for herein, exercise any other rights or remedies to which
such Partner may be entitled at law or in equity.
(d) Notwithstanding anything in this
Section 5.2 to the contrary, if a Delinquent Partner fails to make
an Additional Capital Contribution pursuant to this Section 5.2,
neither the Delinquent Partner nor its respective shareholders,
officers or directors shall have any personal liability with
respect to the Additional Capital Contribution not made, and the
Non-Delinquent Partner may not pursue any action to compel payment
of the Additional Capital Contribution except as otherwise
expressly permitted in this Section 5.2, but the Delinquent Partner
shall not be liable for any deficiency judgment following the
foreclosure of any such security interest.
(e) Notwithstanding anything in this
Article V to the contrary, if the Limited Partner Approves the
proposed acquisition of a Property pursuant to Section 5.1.1 above,
but either Partner fails to make the Capital Contribution for the
purchase of such Property requested by the General Partner pursuant
to Section 5.1.2 and the Contributing Partner (as hereinafter
defined) does not elect to cause the Partnership to purchase the
Property as provided below in this Section 5.2.2(e), then either
(i) the Partner which has made the Capital Contribution so
requested (the “Contributing Partner”) can terminate
the PSA for the purchase of such Property, in which event the
Partner which failed to contribute such Capital Contribution (the
“Noncontributing Partner”) shall be solely and
personally liable for 100% of the earnest money forfeited by
the
Page 21
Partnership as a result of the
termination of such PSA, together with 100% of all due diligence
costs theretofore incurred by the Partnership or any Partner in
connection with the acquisition of such Property pursuant to such
terminated PSA and that would be reimbursable to the Partnership or
such Partner if the acquisition had occurred, with such
reimbursement to be due within 10 business days following a written
demand therefor and to bear interest at the rate of 8% in excess of
the Prime Rate (but in no event in excess of the highest lawful
rate) from the date due until repaid, or (ii) the Contributing
Partner can purchase the Property for itself or through an
Affiliate pursuant to the PSA and the Noncontributing Partner shall
not have a right to participate in such purchase. In the event that
the Contributing Partner elects to purchase the Property for itself
or through an Affiliate, there shall be no obligation for the
Contributing Partner, or the Affiliate that is purchasing the
Property, to reimburse the Partnership (or individual Partner) for
any earnest money, due diligence costs, or other costs incurred by
the Partnership in connection with the Property, and all third
party reports and reports prepared by the Partners shall be the
sole property of the purchasing Contributing Partner or Affiliate
thereof. If the Contributing Partner does not elect either of the
options described in clause (i) or (ii) above in this Section
5.2.2(e), the Contributing Partner may cause the Partnership to
purchase the Property Approved by the Limited Partner pursuant to
Section 5.1.1, and, at the time of making such election to cause
the Partnership to purchase the Property, (x) the Contributing
Partner may elect to advance the Capital Contribution on behalf of
the Noncontributing Partner as a loan to the Noncontributing
Partner pursuant to Section 5.2.2(a) above, or (y) if the General
Partner is the Contributing Partner, the General Partner may
advance the Capital Contribution on behalf of the Limited Partner
as a Capital Contribution, and cause the Percentage Interests of
the Partners to be recalculated, as of the date such advance under
this clause (y) is made, in the manner set forth in Section 5.2.4
below. For purposes of such recalculation, the General Partner
shall be deemed as having made a Capital Contribution to the
Partnership in an amount (the “Contribution Bonus”)
equal to 135% of the actual Capital Contributions so contributed by
the General Partner. The amount of such Capital Contribution as so
calculated pursuant to this clause (y) will be deemed a Capital
Contribution for all purposes under this Agreement and will reduce
the Capital Account balance of the Limited Partner by an equal
amount.
5.2.3 Grant of Security
Interest . Subject to the limitation on liability set forth in
Section 5.2.2(d) hereof, each Partner hereby grants to each of the
other Partners, as security for the payment of all Capital
Contributions to be made by such Partner, a security interest in
and to its Interest, all pursuant to and in accordance with the
provisions of the Uniform Commercial Code of the State of Delaware,
and agrees that in the event of any default in the payment of said
Capital Contribution which default continues for a period of 45
days after a loan has been advanced pursuant to Section 5.2.2(a)
and the Non-Delinquent Partner has not elected to extend the term
of such loan pursuant to clause (ii) of Section 5.2.2(a), each
Non-Delinquent Partner shall have and is hereby granted all the
rights and remedies of a secured party under the Uniform Commercial
Code of the State of Delaware, including, but not limited to, the
right to Available Cash distributable to the Delinquent Partner and
the power to sell the Interest of the
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Delinquent Partner and the right to bid at
either a public or private sale in accordance with applicable law
in connection with the foreclosure of such security interest;
provided , however , no sale or other disposition
shall be made of the collateral or any part thereof except upon not
less than 10 days’ prior notice to the Delinquent Partner.
Each Partner further agrees to execute and deliver all such
financing statements, security agreements and other instruments as
may be required by the other Partners to effectuate and carry out
the provisions of this Section 5.2.3.
5.2.4 Reallocation of Partnership
Percentage Interests . If the General Partner elects to advance
the Capital Contributions required of the Limited Partner as a
Capital Contribution pursuant to clause (y) of Section 5.2.2(e)
above, the Percentage Interests shall be recalculated and
reallocated, effective as of the date of such election by the
General Partner, in accordance with the following
procedures:
(a) The “Deemed Capital”
of each of the Partners shall be computed as of the date of such
recalculation. For purposes hereof the “Deemed Capital”
of each Partner shall equal the sum of the aggregate amount of any
Capital Contributions to the Partnership made by such Partner for
its own account, including any Contribution Bonuses previously
received by such Partner in accordance with clause (y) of Section
5.2.2(e), less any prior distributions to the General Partner
constituting a return of Capital Contributions.
(b) The new Percentage Interest of
the General Partner shall be expressed as a percentage and shall
equal the Deemed Capital of the General Partner divided by the
aggregate Deemed Capital of the Partners.
(c) The new Percentage Interest of
the Limited Partner shall be the difference between 100% and the
aggregate new Partner Percentage Interests of the Limited
Partner.
(d) The following is an example of
the reallocation of Percentage Interests to be made pursuant to
this Section 5.2.4:
(i) Assumptions: Each Partner has a
50% Percentage Interest, the aggregate Capital Contributions of the
General Partner are $100,000,000, the aggregate Capital
Contributions of the Limited Partner are $100,000,000, no
distributions have previously been made to the Partners, an
Additional Capital Contribution of $20,000,000 has been Approved by
the Partners pursuant to Section 5.2.1 and 8.2, the General Partner
has funded its Percentage Interest of the $20,000,000 Additional
Capital Contribution (50% of $20,000,000 or $10,000,000), the
Limited Partner has failed to contribute its Percentage Interest of
the Additional Capital Contribution ($10,000,000), the General
Partner has elected to fund the Limited Partner’s unpaid
contribution of $10,000,000 as a Capital Contribution and to
require reallocation of the Partners’ Percentage Interests
pursuant to clause (y) of Section 5.2.2(e).
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(ii) Deemed Capital of the General
Partner: The Deemed Capital of the General Partner shall equal the
sum of (i) $100,000,000 (the aggregate Capital Contributions of the
General Partner), (ii) the Additional Capital Contribution made by
the General Partner of $10,000,000 on its own behalf and (iii)
$13,500,000 (the Contribution Bonus equal to 135% of the
$10,000,000 unpaid Additional Capital Contribution of the Limited
Partner), or a total of $123,500,000.
(iii) Recalculation of Percentage
Interests: The new Percentage Interest of the General Partner will
be 56%, calculated by dividing $123,500,000 (the Deemed Capital of
the General Partner) by $220,000,000 (the aggregate Capital
Contributions of the Partners), and the new Percentage Interest of
the Limited Partner will be 44% (100% - 56% = 44%).
5.2.5 No Election of Remedies
. No action by a Non-Delinquent Partner in electing to enforce any
one or more of the rights or remedies set forth in Section 5.2.2
above shall constitute an election of remedies by such
Non-Delinquent Partner, or preclude the Non-Delinquent Partner from
seeking any such other or further relief or remedies as may be
appropriate in respect of such default, subject to the limitations
of liability of the Partners set forth in Section
5.2.2(d).
5.2.6 Partnership Financing .
The Partnership shall, with the Approval of Partners, be permitted
to incur, or cause REIT Owners to incur, indebtedness from time to
time (which, if approved by the Partners pursuant to Section
8.2(a), may include purchase money financings incurred in
connection with Property acquisitions) in an aggregate amount of up
to 60%, in the aggregate, of the undepreciated acquisition costs of
the Properties; provided, however, that (a) indebtedness
encumbering one or more Properties may exceed 60% of their
undepreciated acquisition costs so long as total indebtedness
encumbering all Properties encumbered from time to time does not
exceed 60% of the total undepreciated acquisition costs of all
Properties and (b) not more than 30% of the total amount of any
such indebtedness incurred by the Partnership and/or the REIT
Owners shall be unhedged, floating rate debt without the Approval
of Partners. If indebtedness encumbering the Properties causes a
violation of either of the foregoing clauses (a) or (b), the
General Partner shall promptly remediate the violation in a manner
that is Approved by the Limited Partner with Partnership funds,
which may include the partial or total prepayment of indebtedness
on one or more Properties. No indebtedness will be recourse in any
way to Partners or any of their Affiliates; provided, however, that
the Partnership and/or the REIT Owners may provide limited recourse
in certain circumstances and, if limited recourse is required by a
lender for customary non-recourse carve-outs for gross negligence,
willful misconduct, misapplication of funds, payment of taxes
and/or insurance premiums and certain similar wrongful acts, the
General Partner shall be responsible for satisfying such
requirements. Unless waived by the Limited Partner, all financings
will be assumable subject to lender approval rights and fee
payments to be negotiated with any such lender. If (i) annual third
party appraisals are obtained following the expiration of the
Investment Term for all Properties pursuant to Section 7.5.5
hereof, and (ii) the total indebtedness of the Partnership and REIT
Owners as of the date of such appraisals exceeds 65% of the total
appraised value of all Properties as reflected in such appraisals,
then,
Page 24
notwithstanding anything in Section 5.2 or in
Section 8.2(k) to the contrary, the General Partner may request
Additional Capital Contributions, or, if so instructed by the
Limited Partner, the General Partner shall request Additional
Contributions, in an aggregate amount sufficient to pay down the
total indebtedness of the Partnership and REIT Owners so that such
indebtedness, following such principal reduction, will
not
