<PAGE>
EXHIBIT 10.1
THE TC OPERATING LIMITED PARTNERSHIP
THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
THIS THIRD
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
entered into effective as of the 4th day of
August, 2003 (except as to the "LLC
Contributions" defined and described in the
Recitals hereof and Section 3.3(c),
as to which the effective date shall be
September 26, 2003), by and among THE
TOWN AND COUNTRY TRUST, a Maryland real
estate investment trust ("TCT"); THE
TOWN AND COUNTRY ORIOLE CORPORATION
("TC-Oriole"), THE TOWN AND COUNTRY HOLDING
CORPORATION ("REIT Sub"), and THE TOWN AND
COUNTRY HOLDING CORPORATION II ("REIT
Sub II"), each a Delaware corporation and
each a wholly-owned subsidiary of TCT;
THE BAL-PENN COMPANY, an Ohio limited
partnership ("Bal-Penn"); HARVEY SCHULWEIS
("Schulweis"); and PAUL E. TAYLOR, JR.
("Taylor"). TCT, TC-Oriole, REIT Sub and
REIT Sub II may be referred to individually
as a "General Partner" and
collectively as the "General Partners".
Bal-Penn, Schulweis, Taylor, and any
substitute or other Limited Partner
admitted to the Partnership in accordance
with Article VIII may be referred to
individually as a "Limited Partner" and
collectively as the "Limited Partners". The
Limited Partners and the General
Partners may be referred to individually as
a "Partner" and collectively as the
"Partners".
R E C I T A L S:
TCT,
TC-Oriole, Bal-Penn and Oriole formed a Maryland limited
partnership
under the name and style of The TC
Operating Limited Partnership (the
"Partnership") upon the filing of a
certificate of limited partnership with the
Maryland Department of Assessments and
Taxation on August 18, 1993 and the
execution of an Agreement of Limited
Partnership of the Partnership dated as of
August 18, 1993 (the "1993 Agreement").
Oriole assigned its interest in the
Partnership to TC-Oriole, Schulweis and
Taylor on August 23, 1993.
The
Partners amended the 1993 Agreement effective as of January 25,
1995
and entered into an Amended and Restated
Agreement of Limited Partnership
effective as of such date, and further
amended and restated the Amended and
Restated Agreement of Limited Partnership
effective as of January 31, 2001 (the
1993 Agreement, as so amended and restated,
the "Prior Agreement").
The
Partners desire to amend the provisions of the Prior Agreement
to
provide for and reflect the contribution of
additional capital to the
Partnership by TCT in exchange for
Convertible Preferred Partnership Interests,
and to make certain corresponding changes
to the allocation provisions of the
Prior Agreement, as further described in
Section 3.5 of this Agreement. Pursuant
to Section 12.4 of the Prior Agreement,
this Third Amended and Restated
Agreement of Limited Partnership has been
approved by the General Partners and a
majority in interest of the Limited
Partners.
The
Partners further wish to amend the provisions of the Prior
Agreement
to provide for and reflect:
(i) the
formation by REIT Sub and REIT Sub II of wholly-owned
subsidiaries
in the form of Delaware limited liability
companies to be known as The Town and
Country Holding Company, LLC ("Holding")
and The Town and Country Holding
Company II, LLC ("Holding II");
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(ii) the
contribution to Holding by REIT Sub of REIT Sub's 1% general
partnership interest in The TC Property
Company, a Maryland general partnership
(the "Property Company"), and in each of
the Original Companies, the New
Companies, The TC-Christina Mill Company,
The TC-Stonegate Company, and The
TC-Carlyle Station Company (all such
companies, collectively, the "First PC
Companies");
(iii) the
contribution to the Partnership by REIT Sub of REIT Sub's 100%
membership interest in Holding, and the
issuance to REIT Sub in exchange
therefor of a general partnership interest
in the Partnership;
(iv) the
contribution to Holding II by REIT Sub II of REIT Sub II's 1%
general partnership interest in The TC
Property Company II, a Maryland general
partnership ("Property Company II"), and in
each of the seven Maryland general
partnerships listed on Exhibit C hereto
(all such companies, collectively, the
"PC II Companies"); and
(v) the
contribution to the Partnership by REIT Sub II of REIT Sub II's
100% membership interest in Holding II, and
the issuance to REIT Sub II in
exchange therefor of a general partnership
interest in the Partnership.
The foregoing series of transactions is
referred to collectively herein as
the "LLC Contributions".
Therefore,
the undersigned, being the general partners and a majority in
interest of the limited partners of the
Partnership, wish to amend and restate
the Prior Agreement and to supersede in its
entirety the Prior Agreement.
A G R E E M E N T S:
In
consideration of the foregoing and the mutual promises herein
contained, the undersigned do hereby agree
that the Prior Agreement is amended
and restated to read in its entirety as
follows:
ARTICLE I
Definitions
Certain
capitalized terms used herein and in the Exhibits hereto are
defined in Exhibit A hereto. All other
capitalized terms used herein or in any
Exhibit shall have the meanings ascribed to
them in other parts hereof.
ARTICLE II
Organization
Section
2.1 Formation. The Partnership was formed as a Maryland limited
partnership upon the filing of a
certificate of limited partnership with the
office of the Maryland State Department of
Assessments and Taxation on August
18, 1993 pursuant to the provisions of the
Act. This Agreement amends, restates
and supersedes in its entirety the Prior
Agreement, and the Partnership, in
accordance with the terms and conditions
contained herein, shall continue
without interruption the business and
operations previously conducted by the
Partnership. The
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Partnership has been organized under, and
has and shall continue to be operated
subject to, the Act.
Section
2.2 Name. The name of the Partnership is "The TC Operating
Limited
Partnership".
Section
2.3 Purpose and Powers. The Partnership may carry out any
business
permitted by the Act. Without limiting the
foregoing, the Partnership has the
power and authority: (a) to receive
ninety-nine percent (99%) of the general
partnership interests in the Original
Companies (the "Interests") as capital
contributions from the Limited Partners;
(b) to contribute the Interests to the
Property Company; (c) to act as a general
partner in the Property Company; (d)
to participate as a partner in
partnerships, or as the holder of an equity
interest in other entities, that acquire,
hold or dispose, or otherwise to
acquire, hold or dispose, of real estate,
buildings or any other property, real
or personal, in fee or under lease, or any
right or interest therein; (e) to
merge with Town and Country Management, and
be the surviving entity in such
merger; (f) to borrow money and issue
evidences of indebtedness, and to secure
the same by mortgage, pledge or other lien
on any Partnership Property; (g) to
accept the contribution by REIT Sub of its
interest in Holding and to admit REIT
Sub as a General Partner of the
Partnership; (h) to accept the contribution by
REIT Sub II of its interest in Holding II
and to admit REIT Sub II as a General
Partner of the Partnership; and (i) to
enter into any kind of activity, and to
execute, perform and carry out contracts of
any kind, appropriate to business of
the Partnership.
Section
2.4 Place of Business. The address of the principal office and
place of business of the Partnership shall
be 100 South Charles Street,
Baltimore, Maryland 21201. The name and
address of the Partnership's agent for
service of process in Maryland shall be The
Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland
21201.
Section
2.5 Term. The Partnership shall continue until December 31,
2090
unless earlier terminated pursuant to
Article VII hereof.
Section
2.6 Names and Addresses of Partners. The names and addresses of
the Partners are set forth in Exhibit B
hereto.
Section 2.7 Filing of
Certificates. Upon execution of this Agreement, any
amendment hereof, and every change of
membership in the Partnership, the
Partners shall sign, acknowledge and cause
to be filed such certificates of
limited partnership or of fictitious name
as may be required by applicable law
in any jurisdiction in which the
Partnership maintains an office or is engaged
in business and copies thereof will be
maintained with the records of the
partnership at the Maryland office referred
to in Section 2.4 for inspection
pursuant to Section 2.8. Subject to Section
2.8, the General Partners shall not
be obligated to furnish such certificates
or information.
Section
2.8 Records to be Kept. The General Partners shall keep or make
available at the principal office referred
to in Section 2.4 all records
required pursuant to the Act or this
Partnership Agreement. Upon written request
by any Partner, such Partner or its duly
authorized representative shall have
the right to inspect for any purpose
reasonably related to such Partner's
interest as a Partner of the Partnership,
and, at such Partner's expense, to
copy, any Partnership books and records
(including such books and records
required to be maintained pursuant to the
Act) at all reasonable times during
business hours. The General Partners may
require any Partner exercising its
rights under this Section 2.8 to establish
to the General Partners' satisfaction
that such exercise is related to such
Partner's interest as a Partner of the
Partnership.
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The General Partners also may withhold from
any Partner any information which is
subject to a confidentiality agreement or
the release of which, in the judgment
of the General Partners, adversely could
affect any Partner or the Partnership.
The General Partners from time to time may
adopt such reasonable standards with
respect to the release of information
pursuant to this Section 2.8 as they may
deem appropriate.
ARTICLE III
Capital Contributions and Accounts
Section
3.1 Initial Capital Contributions.
(a) Upon
the execution of the 1993 Agreement, the following amounts in
cash or property were contributed by the
parties listed below:
<TABLE>
<S>
<C>
TCT - cash
$
1,000
Bal-Penn - undivided 49.5% general
partnership interests in the
Original Companies, at Book Value
$47,350,586
Oriole - undivided 49.5% general
partnership interests in the
Original Companies, at Book Value
$47,350,586
</TABLE>
(b)
Immediately following such contributions, (i) Oriole distributed
its
Limited Partnership Interest among the
Oriole Partners, pro rata, in proportion
to their interests in Oriole, (ii)
TC-Oriole purchased eighty-five and 400/1000
percent (85.400%) of the Limited
Partnership Interests held by the Oriole
Partners, (iii) the Limited Partnership
Interests purchased by TC-Oriole
automatically were reconstituted as a
general Partnership Interest and (iv) TCT
contributed the sum of $263,499,000 in cash
to the Partnership.
Section
3.2 Additional Funds.
(a) If the
Partnership requires funds ("Required Funds") for any purpose,
and except (i) as otherwise provided in
Section 3.5 of this Agreement, (ii) as
reasonably necessary to maintain TCT's
status as a real estate investment trust
("REIT") for federal income tax purposes,
or (iii) as otherwise agreed by the
Partners in a future amendment to this
Agreement:
(i) Subject to Section 5.3(b), to the extent that TCT borrows all
or
any
portion of the Required Funds by entering into a Funding Loan,
TCT
shall lend
(the "General Partner Loan") to the Partnership the Funding
Loan
Proceeds on the same terms and conditions, including interest
rate,
repayment
schedule and costs and expenses, as shall be applicable with
respect to
or incurred in connection with the Funding Loan. TCT shall use
its
reasonable efforts to cause Required Funds to be advanced to
the
Partnership as third party loans or as General Partner Loans (as
opposed
to
Contributed Funds) to the maximum extent practicable under the
circumstances existing at the time Required Funds are needed;
or
(ii) to the extent TCT does not borrow all of the Required Funds
by
entering
into a Funding Loan or other borrowing, TCT may contribute to
the
Partnership as an
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additional
Capital Contribution the amount of the Required Funds not
loaned to
the Partnership (such amount, as increased by any underwriting
discount
incurred by TCT in making such additional Capital Contribution,
being
referred to as the "Contributed Funds") (hereinafter, each date
on
which TCT
so contributes Contributed Funds pursuant to this subparagraph
(ii) is
referred to as an "Adjustment Date").
Notwithstanding the foregoing, it is
understood and agreed by the Partners that
the Nonrecourse Liabilities of the
Partnership may be refinanced other than
through General Partner Loans.
(b)
Effective on each Adjustment Date, the Percentage Interest of
each
Limited Partner shall be adjusted so that
the Percentage Interest of such
Limited Partner shall be equal to a
fraction, (i) the numerator of which is
equal to the number of Conversion Shares
that such Limited Partner would receive
if it were to convert in full all of its
unexercised Units (or Deemed Units) on
such Adjustment Date and (ii) the
denominator of which is equal to the sum of
(x) the
product of (A) the total number of issued and outstanding
Common
Shares on
the Adjustment Date (excluding any Conversion Shares issued by
the TCT on
or prior to such date) and (B) the Partnership Interest
Fraction,
plus
(y) any
Conversion Shares issued by TCT on or prior to such date, plus
(z) the
Conversion Shares which would be issued by TCT assuming that
all
Limited
Partners converted in full all of their unexercised Units (or
Deemed
Units).
The General Partners promptly shall give
each Limited Partner written notice of
its Percentage Interest, as adjusted.
Percentage Interests shall be rounded to
the nearest one-thousandth of one
percent.
(c)
Effective on each Adjustment Date, the Percentage Interest of
TCT
shall be adjusted such that it shall be
equal to 100% minus the sum of (i) the
Percentage Interest of TC-Oriole, REIT Sub
and REIT Sub II and (ii) the
Percentage Interests of all Limited
Partners immediately after being adjusted
pursuant to paragraph (b) of this Section
3.2 on such Adjustment Date.
(d) All calculations
pursuant to this Section 3.2 shall be made without
regard to any limit placed on the ownership
of Common Shares, and any
outstanding Excess Shares shall be treated
as Common Shares.
(e) Except
as provided in Section 7.6, the Limited Partners shall not be
required, nor have they agreed, to make any
additional Capital Contributions to
the Partnership.
(f) Any
Partnership Interest acquired by TCT under this Agreement
automatically shall be converted into a
general Partnership Interest.
(g)
Notwithstanding anything to the contrary in this Section 3.2,
the
Percentage Interests of the Partners
following the LLC Contributions (but before
the redemption of Partnership Interests
pursuant to Section 3.5(c)) and the
Percentage Interests of the Partners
following the redemption of Partnership
Interests pursuant to Section 3.5(c) shall
be as indicated on Exhibit B.
Section
3.3 Capital Accounts.
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(a) A
separate Capital Account shall be maintained for each Partner
and
shall be determined and adjusted as set
forth on Exhibit D hereto. No interest
shall be paid on the Capital Contributions
or Capital Account of any Partner.
(b)
Following the transactions contemplated by Section 3.1, the
Capital
Accounts of the Partners were as set forth
on Exhibit H hereto.
(c) On or
about the effective date of the LLC Contributions:
(i) REIT
Sub shall contribute to Holding REIT Sub's 1% general
partnership
interest in the Property Company and in
each of the First PC Companies;
(ii) REIT
Sub shall contribute to the Partnership REIT Sub's 100%
membership interest in Holding, and the
Partnership shall issue to REIT Sub in
exchange therefor a general partnership
interest in the Partnership;
(iii) REIT
Sub II shall contribute to Holding 2 REIT Sub II's 1% general
partnership interest in Property Company II
and in each of the PC II Companies;
and
(iv) REIT
Sub II shall contribute to the Partnership REIT Sub II's 100%
membership interest in Holding 2, and the
Partnership shall issue to REIT Sub II
in exchange therefor a general partnership
interest in the Partnership.
Section
3.4 Stock Incentive Plan.
If at any
time or from time to time Common Shares are granted in
accordance with the terms of the Stock
Incentive Plan:
(a) Each
date on which TCT issues any Common Shares pursuant to the
Stock
Incentive Plan shall be deemed to
constitute an Adjustment Date and the
interests of the Partners shall be adjusted
accordingly.
(b) For
purposes of this Section 3.4, Common Shares issued subject to
forfeiture or other similar restrictions
shall be deemed issued if dividends
accrue thereon; otherwise, restricted
Common Shares shall be deemed issued upon
the lapse of such restrictions. In
addition, the grant of options to purchase
Common Shares pursuant to the Stock
Incentive Plan shall not constitute the
grant or issuance of Common Shares for
purposes of this Section 3.4.
(c) TCT
shall contribute to the Partnership any consideration received
on
issuance of Common Shares pursuant to the
Stock Incentive Plan.
Section
3.5 Issuance of Convertible Preferred Partnership Interests to
TCT.
(a)
Effective as of August 4, 2003, TCT made an additional Capital
Contribution to the Partnership in an
amount equal to the net proceeds received
by TCT upon the sale on August 4, 2003 of
$74,750,000 aggregate principal amount
of TCT's 5.375% Convertible Senior Notes
due 2023 (the "Notes") issued pursuant
to the Indenture, dated as of August 4,
2003 (the "Indenture"), between TCT and
The Bank of New York, as trustee. In
exchange therefor, the Partnership issued
to TCT 74,750 convertible preferred
interests in the Partnership having the
terms, conditions and restrictions set
forth in Exhibit K hereto (the
"Convertible Preferred Partnership
Interests").
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(b) In
accordance with Exhibit D hereto, TCT's Capital Account has
been
increased by $74,750,000 to reflect the
additional Capital Contribution
described in Section 3.5(a).
(c)
Immediately following receipt of the additional Capital
Contribution
described in Section 3.5(a), the
Partnership distributed $14,999,292 of such
Capital Contribution to cause the
redemption of the Partnership Interests held
by TCT.
Section
3.6 Convertible Securities.
(a) If TCT
issues Convertible Debt Securities, such Convertible Debt
Securities shall be treated as a General
Partner Loan. Upon any conversion or
exchange of the Convertible Debt Securities
for Common Shares, the date on which
any Common Shares are issued shall be
deemed an Adjustment Date, and the
interests of the Partners shall be adjusted
accordingly.
(b) If TCT
issues Convertible Equity Securities, the date on which any
Common Shares are issued upon conversion or
exchange of the Convertible Equity
Securities shall be deemed an Adjustment
Date, and the interests of the Partners
shall be adjusted accordingly.
Section
3.7 Conversion of Units. Upon any conversion of any Unit by any
Limited Partner or the acquisition by TCT
or the Partnership of any Partnership
Interests (and related Units) or Conversion
Shares pursuant to Exhibit J, such
conversion or acquisition shall be treated
as an Adjustment Date and the
interests of the Limited Partners and TCT
shall be adjusted accordingly.
Section
3.8 Redemption of Units. If TCT redeems or purchases any of its
outstanding Common Shares, the Partnership
shall redeem Units held by TCT on
substantially similar terms and in the same
amount, and the redemption shall be
treated as an Adjustment Date and the
Percentage Interests of the Partners shall
be adjusted pursuant to Section 3.2(b).
ARTICLE IV
Accounting, Distributions and Allocations
Section
4.1 Accounting. Partnership books shall be kept on the accrual
basis and in accordance with generally
accepted accounting principles. The
taxable and fiscal year of the Partnership
shall be the calendar year.
Section
4.2 Cash Flow.
(a)
Subject to Section 7.2, Cash Flow of the Partnership shall be
determined by the General Partners and
distributed at such times and in such
amounts as the General Partners from time
to time may determine; provided,
however, that any such distribution shall
be made pro rata, in proportion to
each Partner's Percentage Interest. No
Partner shall receive any distribution
from the Partnership except as herein
provided or upon termination of the
Partnership.
(b)
Notwithstanding the foregoing, but subject to Section 5.9, the
General
Partners shall use their best efforts to
cause the Partnership to distribute
sufficient Cash Flow for each year or other
period so that the General Partners'
share of such Cash Flow will enable TCT to
pay
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shareholder dividends that will (i) satisfy
the distribution requirements for
qualifying as a REIT under the Code and
Regulations ("REIT Requirements"), and
(ii) avoid any federal income or excise tax
liability of TCT.
Section
4.3 Allocation of Profits and Losses.
(a) After
giving effect to the required special allocations, if any,
described in Exhibit E hereto, Net Profits
for each fiscal year shall be
allocated to the Partners, pro rata, in
proportion to their Percentage
Interests.
(b) After
giving effect to the required special allocations, if any, set
forth in Exhibit E, Net Losses for each
fiscal year shall be allocated to the
Partners, pro rata, in proportion to their
Percentage Interests.
(c) After
giving effect to the required special allocations, if any, set
forth in Exhibit E, Gain From Sale shall be
allocated as follows:
(i)
Gain From Sale
in respect of an asset held by one of the Original
Companies shall be allocated among the Partners as follows:
(1) First, to
all Partners with deficit MG-Inclusive Capital
Account balances, in an amount equal to the aggregate of such
deficit MG-Inclusive Capital Account balances, in the
proportion to their respective deficit MG-Inclusive Capital
Account balances.
(2) Second, to
the Partners such that the ratio of each Partner's
positive MG-Inclusive Capital Account balance to the aggregate
MG-Inclusive Capital Account balances of all the Partners is
equal to such Partner's Percentage Interest; and
(3) Third, the
balance to the Partners, pro rata, in proportion to
their Percentage Interests.
(ii)
Gain From Sale in
respect of any other asset shall be allocated
among the Partners as follows:
(1) First, to
the Limited Partners, pro rata, in proportion to
their Percentage Interests, in an amount not to exceed the
aggregate amount of Depreciation in respect of such asset
which has been specially allocated to the Limited Partners
pursuant to Sections 1(a)(1) and (2) of Exhibit E;
(2) Second, the
balance to the Partners, pro rata, in proportion
to their Percentage Interests.
(d) After
giving effect to the required special allocations, if any, set
forth in Exhibit E, Loss From Sale shall be
allocated as follows:
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(i) First, to all Partners with positive MG-Inclusive Capital
Account
balances, such that the ratio of each Partner's positive
MG-Inclusive Capital Account balance to the aggregate positive
MG-Inclusive Capital Account balance of all Partners with
positive
MG-Inclusive Capital Account balances is equal to the ratio of
such
Partner's
Percentage Interest to the aggregate Percentage Interest of all
Partners
with positive MG-Inclusive Capital Account balances;
(ii) Second, to all Partners such that the ratio of each
Partner's
MG-Inclusive Capital Account balance to the aggregate MG-Inclusive
Capital
Account
balance of all Partners is equal to such Partner's Percentage
Interest;
and
(iii) Third, the balance to the Partners, pro rata, in proportion
to
their
Percentage Interests.
(e)
Notwithstanding the foregoing provisions of this Section 4.3, if
the
allocations pursuant to this Section 4.3
would not otherwise cause the Capital
Accounts of the Partners on liquidation to
be in the amounts described in the
next sentence, then (i) items of income,
gain, loss and deduction shall be
specially allocated among the Partners in
the amounts and in the proportions
necessary to cause the Capital Accounts of
the Partners to be as described in
the next sentence, and (ii) Net Profits,
Net Losses, Gain From Sale and Loss
From Sale shall be deemed not to include
the items specially allocated pursuant
to this sentence. The Capital Accounts of
the Partners are anticipated to be (x)
first, for TCT, the amount referred to in
Section 7.2(c), and then (y) next, to
the Partners (including TCT) in proportion
to their Percentage Interests.
(f) To the
extent provided in Exhibit E, the General Partners shall have
the right, but not the obligation, to make,
change or adjust certain special
allocations of depreciation at future
times.
Section
4.4 Tax Elections. The General Partners have caused the
Partnership to make an election under Code
Section 754, and have caused the
Property Company and each Company to make
such elections, on the 1993 federal
income tax returns of such entities.
ARTICLE V
Powers, Duties, Liabilities, and Compensation of Partners
Section
5.1 Powers and Duties of Partners.
(a)
Subject to the provisions of Section 5.3 hereof, the General
Partners
shall have sole and complete authority to
manage, control and make all decisions
affecting the business and assets of the
Partnership, and shall have (without
limiting the foregoing) the power to:
(i)
authorize or approve all actions in furtherance of the
purposes of the Partnership;
(ii) open
accounts with financial institutions in the
Partnership's name and deposit, maintain and with-draw funds
therein or therefrom;
(iii) admit
Limited Partners in accordance with and subject to the
provisions of Article VIII;
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(iv)
cause the
Partnership to employ from time to time persons or
entities for the operation and management of any and all
properties which may come under the ownership and/or control
of the Partnership, including (but not limited to)
accountants and attorneys, on such terms and for such
compensation as the General Partners shall determine;
(v)
cause the Partnership to borrow funds (secured or unsecured)
as needed to meet its obligations, and to execute notes,
mortgages, deeds of trust, financing statements, assignment
of rents and leases, loan agreements and related documents
in connection with any such borrowing;
(vi)
obtain replacements of any such mortgage, deed of trust or
other financing and, in furtherance thereof, to pledge any
Partnership Property existing on, or acquired after, the
date hereof;
(vii) cause the
Partnership to prepay, in whole or in part, any
mortgage, deed of trust or other financing, or to refinance,
increase, modify or extend the same;
(viii) cause the
Partnership to enter into, approve and enforce
leases and other agreements involving any property, real or
personal;
(ix) cause
the Partnership to exercise any rights it may have as
a partner in the Property Company or any other partnership
and to contribute or lend funds or property to the Property
Company or any such other partnership;
(x)
cause the Partnership to convey title to a nominee and
reacquire the same;
(xi) cause
the Partnership to maintain, repair and improve any
property owned by the Partnership;
(xii) cause the
Partnership to sell, exchange or convey title to,
or grant an option for the sale of, all or any part of any
Partnership Property;
(xiii) cause the
Partnership to merge with Town and Country
Management and become the surviving entity of such merger;
and
(xiv) cause the
Partnership to transfer the management company
assets, liabilities and operations to a subsidiary of TCT.
The General Partners shall have such
additional rights, authority and powers
conferred by law as are consistent with the
purposes of the Partnership. Any
power or right granted to the General
Partners in this Agreement may be
exercised solely by TCT as the managing
General Partner.
(b) The
General Partners shall devote such time to the affairs of the
Partnership as, in their sole discretion,
they deem necessary to supervise the
business of the Partnership; to ensure
compliance with all contracts, loans and
other documents to which the Partnership is
a party or Partnership Property is
subject; to cause to be prepared all
reports which are required to be furnished
by the Partnership to any person; and to do
all other things and execute and
deliver any documents which may be
necessary or advisable in order to supervise
and manage the affairs and business, and
carry out the purposes, of the
Partnership in accordance with this
Agreement.
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Notwithstanding the foregoing but subject
to paragraph (f), it is expressly
understood and agreed that the General
Partners shall not be required to devote
their entire time or attention to the
business of the Partnership.
(c) No
Limited Partner, in its capacity as a Limited Partner, shall
take
part in the control and management of the
business of the Partnership or have
any power to bind the Partnership to any
obligation.
(d) The
General Partners shall provide the following to each Partner
within ninety (90) days after the end of
each fiscal year:
(i) Annual
operating statements regarding the financial situation
of the Partnership as of the end of each fiscal year,
including a balance sheet, profit and loss statement,
statement of partner's capital and statement of cash flows;
and
(ii) Annual tax
reporting information.
(e) The
Limited Partners shall not have the right to remove any General
Partner.
(f) So
long as any Partnership Interests are held by an Original
Limited
Partner, the General Partners agree that
any acquisition, disposition or lease
of real estate properties shall be done
exclusively through the Partnership or
through entities in which the Partnership
directly or indirectly owns all of the
equity interests.
Section
5.2 Compensation of General Partners.
(a) Except
for the distributions provided in Section 4.2, the General
Partners shall not be entitled to receive
any other compensation from the funds
of the Partnership for services rendered or
duties performed in connection with
the management of the operations of the
Partnership or any services performed by
them pursuant to Section 7.2; provided that
the General Partners shall be
reimbursed by the Partnership, to the
extent permitted under Section 5.2(b), for
all of their out-of-pocket costs and
expenses incurred by them or by their
trustees, directors, officers or employees
in managing the business or affairs
of the Partnership, including any legal,
accounting or other professional
services rendered to the Partnership.
(b) Except
as provided in Sections 5.5(a) and 5.7, the parties hereto
agree that a portion of the aggregate
post-Formation expenses incurred by the
General Partners or the Partnership
(excluding the expenses of any management
company subsidiary of TCT) equal to the
Partnership Interest Fraction multiplied
by the aggregate amount of such expenses
shall be deemed to be expenses of the
Partnership and shall be treated, for all
purposes of this Agreement, as if
directly incurred by the Partnership; and
the remainder of such aggregate
expenses shall be deemed to be
non-reimbursable expenses of the General Partners
and shall be treated, for all purposes of
this Agreement, as if directly
incurred by the General Partners.
Notwithstanding the foregoing, any income or
excise taxes to which the General Partners
or REIT Sub become subject by virtue
of a decision by the Board of Trustees of
TCT to cease to comply with the REIT
Requirements shall be borne solely by the
General Partners.
Section
5.3 Limitation on General Partners' Authority.
(a) The
General Partners shall have no authority to:
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(i) take any action which is contravention of this Partnership
Agreement
or the Act; or
(ii) require partition of Partnership Property or compel any
sales
or
appraisements of Partnership assets or sale of a deceased
Partner's
interest
therein, except as otherwise expressly permitted by this
Partnership Agreement or with the Consent of the Limited
Partners.
(b) The
General Partners shall not take any one or more of the
following
actions without the Consent of the Limited
Partners:
(i) Amend, modify or terminate this Agreement;
(ii) Sell, exchange, lease, mortgage, pledge or otherwise
transfer
all or
substantially all of the Partnership Property;
(iii) Cause,
permit or allow the Property Company to sell, exchange,
lease,
mortgage, pledge or otherwise transfer all or any portion of
its
interest
in all or substantially all of the Companies or any of the
Properties;
(iv) Cause, permit or allow any of the Companies, or either
general
partner of
any of the Companies, to sell, exchange, lease, mortgage,
pledge or
otherwise transfer all or any portion of any of their
respective
interests
in all or substantially all of the Properties;
(v) Cause, permit or allow the Partnership to refinance any
indebtedness secured by mortgages encumbering all or substantially
all of
the
Properties, to increase or decrease the amount of such mortgage
indebtedness other than by required amortization of principal,
or
otherwise
to incur indebtedness other than in the ordinary course of the
Partnership's business;
(vi) Change the nature of the Partnership's business;
(vii)
Transfer their Partnership Interests to a person other than an
existing
General Partner;
(viii) Admit one or more successor or additional general partners
to
the
Partnership;
(ix) Cause the Partnership to merge with or into any other
entity;
or
(x) Take any action, or cause, permit or allow the Partnership,
the
Property
Company or any of the Companies to take any action, in respect
of
the
Properties (other than as provided in clause (v), above) which
would
result in
any adverse tax effect to any of the Original Limited Partners.
Section
5.4 Reliance on Act of General Partners. No person dealing with
the General Partners, or any of them, shall
be required to ascertain whether a
General Partner is acting in accordance
with this Agreement, and such person
shall be protected in relying solely upon
the
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<PAGE>
deed, transfer, or assurance of, and the
execution of any instrument or
instruments by, such General Partner.
Section
5.5 Liabilities of Partners.
(a) None
of the General Partners nor any of their trustees, directors,
officers, employees or agents shall be
liable to the Partnership or to any other
Partner for any actions or omissions to act
taken in good faith and reasonably
believed to be in the best interests of the
Partnership, but shall be liable for
bad faith, willful misconduct, fraud, or
gross negligence, provided that, no
individual trustee, director, officer,
employee or agent of a General Partner
shall be liable to the Partnership or any
Partner except for his or her own
fraud.. A General Partner shall remain
liable for the obligations of the
Partnership incurred or arising out of its
operations while it was a General
Partner, but not for obligations arising
thereafter.
(b) Except
as required or otherwise provided by Section 7.6 or the Act, no
Limited Partner shall be (i) required to
make any further contributions to the
capital of the Partnership to restore a
loss, to discharge any liability of the
Partnership or for any other purpose, or
(ii) personally liable for any
liabilities of the Partnership or the
General Partners.
Section
5.6 General Partner Loans. Any loan to the Partnership from a
General Partner shall be treated (except
for tax purposes) as Partnership
indebtedness to an unrelated third party
and shall be approved by the trustees
of TCT with the Consent of the Limited
Partners.
Section
5.7 Indemnification of General Partners. The Partnership shall
indemnify the General Partners and each
trustee, director, officer, employee and
agent of the General Partners
(collectively, the "Indemnified Parties"), to the
fullest extent permitted by law, and save
and hold such Indemnified Parties
harmless from, and in respect of, (a) all
Losses incurred in connection with or
resulting from any claim, action,
proceeding or demand against the Indemnified
Parties or the Partnership that arise out
of or in any way relate to the
Partnership, its properties, business or
affairs, and (b) any Losses resulting
from such claims, actions, proceedings and
demands, including amounts paid in
settlement or compromise of any such claim,
action, proceeding or demand;
provided, however, that no Indemnified
Party shall be entitled to
indemnification hereunder if and to the
extent any Losses arise as a result of
such Indemnified Party's bad faith, willful
misconduct, fraud, or gross
negligence. The termination of any action,
suit, or proceeding by judgment,
order, settlement or upon a plea of nolo
contendere or its equivalent, shall not
of itself create a presumption that an
Indemnified Party acted with bad faith,
willful misconduct, fraud or gross
negligence.
Section
5.8 Tax Matters Partner. TCT shall be the Tax Matters Partner
in
accordance with and subject to the
provisions set forth on Exhibit F.
Section
5.9 Operation in Accordance with REIT Requirements. The
Partners
acknowledge and agree that the Partnership
shall be operated in a manner that
will enable TCT to (a) satisfy the REIT
Requirements and (b) avoid any federal
income or excise tax liability. The
Partnership shall avoid taking any action,
or permitting any entity owned or
controlled by it to take any action, which
would result in TCT ceasing to satisfy the
REIT Requirements or would result in
the imposition of any federal income or
excise tax liability on TCT.
Notwithstanding the foregoing, a majority
of the trustees of TCT may waive
compliance with this Section 5.9 if such
trustees determine that such
noncompliance would be in the best
interests of TCT.
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<PAGE>
Section
5.10 Refinancing of Certain Nonrecourse Liabilities. In the
event
of a refinancing of Nonrecourse Liabilities
to which the Properties are subject,
and subject to Section 5.3(b), the General
Partners may secure the resulting
Nonrecourse Liabilities with Supplemental
Properties through the use of
guarantees or direct issuance of notes or
bonds and the execution and delivery
of mortgages, deeds of trust and related
security documents in respect thereof.
ARTICLE VI
Bankruptcy and Liquidation
Section
6.1 Dissolution or Continuation of Partnership. In the event of
an
"event of withdrawal" (as defined in
Section 10402 of the Act as in effect on
the date of this Agreement) of, or in
respect of, the sole remaining General
Partner, this Partnership shall dissolve
unless the remaining Partners shall
unanimously elect to continue the
Partnership within ninety (90) days after
notice of such event (it being understood
that in the case of an event of
withdrawal under Section 10-402(4) such 90
day period shall commence after the
lapse of the 120 day period specified
therein). In the absence of such an
election, the Partnership shall be
dissolved on such ninetieth day. If the
election to continue the Partnership is
made, the remaining Partner or Partners
(a) shall designate a new general partner
who consents to and accepts such
designation and (b) shall have the option
to either substitute the successor or
personal representative of the withdrawing
General Partner as a Limited Partner
or to purchase the withdrawing General
Partner's interest on such terms and
conditions as may be agreed upon by the
parties. The new general partner shall
be subject to the same obligations as the
General Partners under this Agreement.
Section
6.2 Actions of the Limited Partners.
In the
event a Limited Partner shall do any of the following:
(a)
file a voluntary
petition in bankruptcy;
(b)
be adjudicated a
bankrupt or insolvent;
(c)
(i) file a
petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or
similar relief under any statute, law, or rule; or (ii) file an
answer or other pleading admitting or failing to contest the
material allegations of a petition filed against it in any such
proceeding;
(d)
die; or
(e)
be
dissolved;
then the legal representative or successor
in interest automatically shall be
substituted as a Limited Partner upon
compliance with the provisions of the Act;
provided that the estate of a deceased
Partner shall be deemed an assignee of
such deceased Partner, and shall be
admitted as a substitute Limited Partner
upon compliance with Section 8.4.
Section
6.3 Withdrawal of Partners. No Partner shall be entitled to
withdraw from the Partnership other than in
connection with (a) a transfer or
assignment of all of such Partner's
Partnership Interest pursuant to the terms
and conditions of this Agreement or (b)
dissolution and
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<PAGE>
termination of the Partnership. The
Partnership shall not be obligated to
purchase the interest of any withdrawing
Partner, nor shall such Partner be
entitled to receive any payment or
distribution from the Partnership in
connection with its withdrawal.
ARTICLE VII
Dissolution of Partnership
Section
7.1 Termination. The Partnership shall be terminated and
dissolved
upon the first to occur of the following
("Liquidating Events"): (a) completion
of its term of years, (b) an event of
withdrawal of a sole remaining General
Partner under Section 6.1 and the failure
of the Partners to elect to continue
the business of the Partnership without
liquidation pursuant to Section 6.1, or
(c) the voluntary dissolution of the
Partnership by the General Partners with
the Consent of the Limited Partners. Upon
the dissolution and the commencement
of the winding up of the Partnership, a
certificate of cancellation shall be
filed pursuant to Section 10-203 of the
Act.
Section
7.2 Winding Up. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the
purposes of winding up its affairs in
an orderly manner, liquidating its assets,
and satisfying the claims of its
creditors and Partners. No Partner shall
take any action that is inconsistent
with the winding up of the Partnership's
business and affairs. The General
Partners (or, if there is no General
Partner, any person elected by a majority
in interest of the Percentage Interests)
shall be responsible for overseeing the
winding up and dissolution of the
Partnership and shall take full account of the
Partnership's liabilities and Partnership
Property, and the Partnership Property
shall be liquidated as promptly as is
consistent with obtaining the fair value
thereof, and the assets of the Partnership
or the proceeds therefrom, to the
extent sufficient therefor, shall be
applied and distributed in the following
order:
(a) First,
to the payment and discharge of all the Partnership's debts and
liabilities to creditors other than the
General Partners, including the
establishment of any necessary
reserves;
(b)
Second, to the payment and discharge of all the Partnership's
debts
and liabilities to the General
Partners;
(c) Third,
to the payment of the Liquidation Preference in respect of the
Convertible Preferred Partnership
Interests; and
(d) The
balance, if any, to the Partners in accordance with their
positive
Capital Accounts, after giving effect to
all contributions, distributions, and
allocations for all periods.
Section
7.3 Deemed Distribution and Recontribution. Notwithstanding any
other provisions of this Article VII, if
the Partnership is liquidated within
the meaning of Regulations Section
1.704-1(b)(2)(ii)(g)(3) but no Liquidating
Event has occurred, the Partnership
Property shall not be liquidated, the
Partnership's liabilities shall not be paid
or discharged, and the Partnership's
affairs shall not be wound up.
Section
7.4 Accounting for Dissolution and Liquidation. Each Partner
shall
be furnished with such statements
concerning the dissolution and liquidation of
the Partnership as are prepared by the
Partnership's accountants.
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<PAGE>
Section
7.5 Waiver of Appraisement. The provisions of Articles VI and
VII
shall be in lieu of any statutory mode of
settlement of the interest of a
Partner. An inventory and appraisement of
the Partnership's assets and a sale of
a deceased Partner's interest therein are
hereby waived and dispensed with, and,
in lieu thereof, the interest in the
Partnership of a deceased Partner shall be
subject solely to the provisions of this
Agreement.
Section
7.6 Deficit Restoration Obligation. If there is a deficit in a
Partner's Capital Account following the
liquidation of such Partner's interest
in the Partnership within the meaning of
Regulations Section
1.704-1(b)(2)(ii)(g), as determined after
taking into account all Capital
Account adjustments for the taxable year of
the Partnership in which such
liquidation occurs (other than those made
as a result of this section), such
Partner will be unconditionally obligated
to restore the amount of such deficit
balance by the end of such taxable year
(or, if later, within ninety (90) days
after the date of such liquidation), which
amount shall, upon liquidation of the
Partnership, be applied and distributed in
accordance with Section 7.2.
ARTICLE VIII
Sale of Partnership Interest; Admission of Limited Partners
Section
8.1 General Partners. Without the Consent of the Limited
Partners
and the approval of the remaining General
Partner, the interests of a General
Partner shall not be transferable (other
than to another General Partner);
provided, however, that the General
Partners may reduce their Percentage
Interests in connection with the admission
of additional Limited Partners
pursuant to Section 8.5.
Section
8.2 Limited Partners' Right to Assign. (a) Subject to Sections
8.2(b), 8.3, 8.4 and 10.1, a Limited
Partnership Interest shall be assignable,
in whole or in part, but the assignee shall
not become a Limited Partner, except
pursuant to Section 8.4. An assignee who
does not become a Limited Partner shall
have no rights hereunder except to receive
any allocations or distributions
which (but for the assignment) would have
been made to the assignor. Except as
provided in Section 6.2, no assignment of a
Limited Partnership Interest shall
be effective as to the Partnership until a
duplicate original copy of the
instrument of assignment, properly
executed, shall have been received by the
Partnership.
(b)
Transfers of Limited Partnership Interests pursuant to the
conversion
of Units shall not be subject to the
restrictions and limitations of this
Article VIII.
Section
8.3 Restrictions on Transfer of Limited Partnership Interest.
Except as provided in Sections 6.2 and
8.2(b), no transfer or assignment of a
Limited Partnership Interest shall be made
unless the following conditions have
been met:
(a) The
General Partners may require as a condition of sale, exchange
or
other transfer of any Limited Partnership
Interest, that the transferor assume
any costs reasonably incurred by the
Partnership in connection therewith.
(b) No
such assignment shall be made to a minor or incompetent.
(c) No
such assignment shall be made if, in the written opinion of
counsel
to the Partnership, such assignment may not
be effected without registration
under the Securities Act or would result in
the violation of any applicable
state securities laws or would cause
the
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<PAGE>
Partnership to become subject to the
reporting requirements of the Securities
Exchange Act of 1934.
(d) No Limited Partnership
Interest or any portion thereof shall be
transferable or assignable to the extent
that any such transfer or assignment
would result in the termination of the
Partnership for Federal income tax
purposes or treatment of the Partnership as
a publicly traded partnership under
Code Section 7704, except in the sole
discretion of the General Partners, or to
the extent that such transfer would cause
TCT to fail to satisfy the REIT
Requirements at any time at which such
requirements are applicable to TCT.
Except as provided in Sections 6.2 and
8.2(b), any assignment, sale, exchange or
other transfer in contravention of the
provisions hereof shall be void and shall
not bind the Partnership.
Section
8.4 Substitute Limited Partners; Effect of Substitution and/or
Assignment.
(a)
Except as
provided in Sections 6.2 and 8.2(b), no Limited Partner
shall have the right to substitute an assignee as a Limited
Partner
in his place unless the General Partners, in their sole
discretion,
shall consent to the admission of any such assignee as a
substitute
Limited Partner and have obtained the Consent of the Limited
Partners to such admission, and the following conditions have
been
met:
(i) a duly
executed and acknowledged written instrument of assignment
shall have been filed with the Partnership,
which instrument shall set forth the
intention of the assignor that the assignee
succeed to his interest as a
substitute Limited Partner;
(ii) the
assignor and assignee shall have executed and acknowledged such
other instruments as the General Partners
may deem necessary to effect such
substitution, including the written
acceptance and adoption by the assignee of
the provisions of this Agreement and the
written agreement of the assignee to be
personally liable for the assignor's
deficit restoration obligations under
Section 7.6 and liable on a non-recourse
basis for the representations and
warranties set forth in Exhibit C to the
extent provided by Article XI; and
(iii) the
provisions of Section 8.3 of this Agreement are complied with.
No assignment of a Limited Partner's
interest shall relieve the assignor (or his
legal successors) of the duties and
obligations arising under this Partnership
Agreement until the assignee is admitted as
a substitute Limited Partner.
Consent to substitution of a Limited
Partner shall not be unreasonably delayed
or withheld by the General Partners, nor
shall the General Partners refuse to
consent to an assignment and substitution
for the purposes of preserving an
indemnification obligation or remedy
pursuant to Article XI.
(b) The
General Partners shall amend the certificate of limited
partnership if required under applicable
law to reflect any substitution of a
Limited Partner effected under this
section. By executing or adopting this
Partnership Agreement, each Partner hereby
consents to the admission of
substitute Limited Partners by the General
Partners as provided in this Section,
and the amendment of the certificate of
limited partnership to reflect any such
admission.
(c) Each
person who becomes a substitute Limited Partner shall duly
execute this Partnership Agreement and
shall ratify and agree to be bound by all
prior permitted actions taken by the
Partnership and the General Partners.
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<PAGE>
Section
8.5 Additional Limited Partners. The General Partners may admit
additional Limited Partners to the
Partnership with the Consent of the Limited
Partners.
Section
8.6 Partnership Certificates. Limited Partnership Certificates
("Certificates") may be issued to evidence
interests in Limited Partnership
Interests, to the extent the General
Partners determine such Certificates to be
advisable. While such Certificates may
serve as evidence of Limited Partnership
Interests, the presence or absence of a
Certificate representing a Limited
Partnership Interest shall not adversely
affect the right of any Limited
Partner. The records of the Partnership
shall be conclusive as to the identity
and Percentage Interests of the Limited
Partners. If issued, each certificate
shall be signed by authorized officers of
the General Partners. Certificates
shall be in such form as the General
Partners shall deem appropriate and not
inconsistent with law. In case any
Certificate is lost, stolen, mutilated or
destroyed, the General Partners may
authorize the issuance of a new Certificate
in place thereof upon such terms and
conditions as the General Partners deem
advisable. In the event that a Limited
Partnership Interest evidenced by a
Certificate is adjusted pursuant to Article
III hereof, the Percentage Interest
of the Limited Partner shown on such
Certificate shall be adjusted accordingly,
and upon surrender of such Certificate, a
new Certificate evidencing the
adjusted Limited Partnership Interest may
be issued to the extent the General
Partners determine a new Certificate to be
advisable.
ARTICLE IX
Grant of Units to Limited Partners
Section
9.1 Grant of Units.
(a) TCT
hereby grants to each Limited Partner such number of Units as
are
set forth in Exhibit I hereto, subject to
adjustment as provided in Exhibit J
hereto. Units shall not be separable from a
Limited Partnership Interest, and
the assignee of a Limited Partnership
Interest automa
