Psaf Acq. Partnership Agreement

Exhibit 10.44


LIMITED PARTNERSHIP AGREEMENT
OF
PSAF ACQUISITION PARTNERS, L.P.


BETWEEN


PS TEXAS HOLDINGS, LTD.


AND


[LIMITED PARTNER]


DATED AS OF DECEMBER 18, 2003


Exhibits to this Agreement will be furnished to the
Securities and Exchange Commission upon request.


TABLE OF CONTENTS


Page


1. Formation; Purposes; Term.................................................1


1.1 Formation..........................................................1


1.2 Name...............................................................1


1.3 Purposes and Powers................................................1


1.4 Principal Executive Office.........................................2


1.5 Term...............................................................2


1.6 Filings; Agent for Service of Process..............................2


1.7 Other Activities...................................................2


1.8 Definitions........................................................3


2. Partners; Capital Contributions...........................................13


2.1 Partners...........................................................13


2.2 Capital Contributions..............................................13


2.3 Extent of Liability................................................15


2.4 Other Matters......................................................16


3. Allocations...............................................................16


3.1 Profits............................................................16


3.2 Losses.............................................................17


3.3 Certain Special Allocations........................................17


3.4 Gain from Sale.....................................................17


3.5 Regulatory Special Allocations.....................................18


3.6 Other Allocations Rules............................................20


3.7 Tax Allocations: Code Section 704(c)...............................21


4. Distributions.............................................................21


4.1 Operating Cash.....................................................21


4.2 Capital Proceeds...................................................22


4.3 Amounts Withheld...................................................23


5. Management................................................................23


5.1 Managing Partner; Standard of Care.................................23


5.2 Authority of Managing Partner......................................24


5.3 Limitations on Rights and Powers...................................24


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5.4 Project Acquisition................................................25


5.5 Compensation and Reimbursement.....................................28


5.6 Hazardous Materials................................................29


6. Action by Partners; Investment Committee..................................30


6.1 Action by Partners.................................................30


6.2 Investment Committee...............................................30


7. Books and Records; Fiscal Matters.........................................32


7.1 Books and Records..................................................32


7.2 Reports............................................................32


7.3 Tax Information....................................................33


7.4 Fiscal Year........................................................33


7.5 Tax Matters Partner................................................33


7.6 Tax Elections Made by Managing Partner.............................33


7.7 Taxation as a Partnership..........................................33


7.8 Avoidance of Unrelated Business Taxable Income.....................33


8. Transfer of Interests.....................................................34


8.1 Transfer of Interest of General Partner............................34


8.2 Transfer of Interest of Limited Partner............................34


8.3 Prohibited Transfers...............................................35


8.4 Representations; Legend............................................35


8.5 Distributions and Allocations in Respect to Transferred Interests..36


8.6 Right to Transfer to Affiliates....................................36


9. Options to Purchase.......................................................37


9.1 General Partner's Option to Purchase...............................37


9.2 Consideration......................................................37


9.3 Determination of Net Equity........................................37


9.4 Determination of Fair Market Value.................................37


9.5 Closing............................................................39


9.6 Limited Partner's Option to Purchase...............................39


10. Dissolution and Winding up................................................39


10.1 Liquidating Events.................................................39


10.2 Winding Up.........................................................40


10.3 Shortfall..........................................................41


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10.4 Compliance with Timing Requirements of Regulations.................41


10.5 Rights of Partners.................................................41


11. Indemnification...........................................................41


11.1 Indemnification....................................................41


11.2 Expenses...........................................................42


11.3 Indemnification Rights Nonexclusive................................42


11.4 Errors and Omissions Insurance.....................................42


11.5 Assets of the Partnership..........................................42


12. Defaulting Event Remedies.................................................42


12.1 Election to Purchase Defaulting Partner's Interest.................42


12.2 Purchase Price of Defaulting Partner's Interest....................43


12.3 Remedies Nonexclusive..............................................43


13. Representations and Warranties............................................44


13.1 Representations and Warranties of the General Partner..............44


13.2 Representations and Warranties of the Limited Partner..............45


13.3 Agreements of the General Partner..................................45


14. Miscellaneous.............................................................46


14.1 Notices............................................................46


14.2 Binding Effect.....................................................48


14.3 Construction.......................................................48


14.4 Time...............................................................48


14.5 Headings...........................................................48


14.6 Severability.......................................................48


14.7 Incorporation by Reference.........................................48


14.8 Further Action.....................................................48


14.9 Variation of Pronouns..............................................48


14.10 Governing Law......................................................49


14.11 Waiver of Action for Partition.....................................49


14.12 Counterparts.......................................................49


14.13 Sole and Absolute Discretion.......................................49


14.14 Entire Agreement...................................................49


14.15 Attorneys' Fees....................................................49


14.16 Third Parties......................................................49


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14.17 Waiver.............................................................49


14.18 Amendment and Modification.........................................49


14.19 Dispute Resolution.................................................49


14.20 Confidentiality....................................................50


14.21 Guarantees.........................................................51


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LIMITED PARTNERSHIP AGREEMENT
OF
PSAF ACQUISITION PARTNERS, L.P.


This LIMITED PARTNERSHIP AGREEMENT OF PSAF ACQUISITION PARTNERS, L.P. is entered into as of December 18, 2003, and shall be effective as of January 1, 2004 (the "Effective Date"), by and between PS TEXAS HOLDINGS, Ltd., a Texas limited partnership, as the General Partner, and [LIMITED PARTNER], pursuant to the provisions of the Act.


WHEREAS, the General Partner and the Limited Partner propose to form a limited partnership to pursue the acquisition and ownership of a number of well-located self-storage facilities in the United States for income and capital appreciation;


NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Partners hereby covenant and agree among themselves as follows:


1. FORMATION; PURPOSES; TERM


1.1 Formation. The Partners hereby form the Partnership as a limited partnership pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement.


1.2 Name. The name of the Partnership shall be PSAF Acquisition Partners, L.P. and all business of the Partnership shall be conducted in such name or in the name "Public Storage."


1.3 Purposes and Powers.


(a) The Partnership is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Partnership is, directly and indirectly, acquiring, owning, renovating, leasing and otherwise operating and dealing with, and selling or otherwise disposing of, the Projects as self-storage facilities, and conducting any and all activities as may be necessary or incidental to the foregoing.


(b) The Partnership is empowered to do any and all things necessary, appropriate or convenient for the furtherance and accomplishment of its purposes, and for the protection and benefit of the Partnership and its Property, including but not limited to the following:


(i) Entering into and performing contracts of any kind;


(ii) Acquiring, renovating, operating, maintaining, owning,
transferring, renting, leasing, selling or otherwise disposing of any
property, real, personal or mixed;


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(iii) Applying for and obtaining governmental authorizations and
approvals; and


(iv) Bringing and defending actions at law or in equity.


(c) Except as otherwise provided in this Agreement, the Partnership shall not engage in any other activity or business. No Partner shall have any authority to hold itself out as a general agent of another Partner in any other business or activity.


1.4 Principal Executive Office. The principal executive office of the Partnership shall be at 701 Western Avenue, Glendale, California 91201-2349. The principal executive office may be changed from time to time by the General Partner.


1.5 Term. The term of the existence of the Partnership shall commence on the Effective Date and shall continue until the winding up and liquidation of the Partnership and its business is completed following a Liquidating Event, as provided in Section 10.


1.6 Filings; Agent for Service of Process.


(a) The General Partner has caused a Certificate of Limited Partnership on Form LP-1 to be filed with the California Secretary of State in accordance with the Act. The Partnership shall take any and all actions reasonably necessary to perfect and maintain the status of the Partnership as a limited partnership under the laws of the State of California and under the laws of any other states or jurisdictions in which the Partnership engages in business.


(b) To the extent required pursuant to the Act or the applicable laws of any other state or jurisdiction, the name and address of the agent for service of process shall be Harvey Lenkin, 701 Western Avenue, Glendale, California 91201-2349, or any successor as appointed by the General Partner.


(c) Upon the dissolution of the Partnership, the Partnership shall promptly execute and cause to be filed any necessary certificates of dissolution and cancellation in accordance with the Act and the applicable laws of any other state or jurisdiction in which the Partnership has engaged in business.


1.7 Other Activities.


(a) The Limited Partner acknowledges that the PSA Affiliates are engaged in the business, directly and indirectly, of acquiring, owning, renovating, developing, leasing, managing and operating self-storage facilities. The Limited Partner understands that the PSA Affiliates may be involved, directly or indirectly, in various other projects and businesses not included in the Partnership. The Partners hereby agree that the creation of the Partnership and involvement herein by each of the Partners shall not prejudice their rights (or the rights of their Affiliates) to have such other interests and activities and to enjoy profits or other benefits therefrom, and each Partner waives any rights it might otherwise have to share or participate in such other interests or activities of the other Partners or their Affiliates. Except as otherwise provided in this Agreement, the Partners and their Affiliates may engage in or possess any interest in any


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other business venture of any nature or description, independently or with others, including without limitation, the acquisition, ownership, development, leasing, managing and operation of self-storage facilities or other real property, and neither the Partnership nor any Partner shall have any right by virtue of this Agreement in and to such venture or the income or profits derived therefrom.


(b) Notwithstanding the provisions of Section 1.7(a) above, so long as the General Partner is required to afford the Partnership the first right to acquire and own a Qualifying Project pursuant to Section 6.2, no PSA Affiliate (other than a Hughes Affiliate) shall acquire a Qualifying Project without complying with the provisions of Section 6.2.


1.8 Definitions. Capitalized words and phrases used in this Agreement have the meanings set forth in this Section 1.8 or elsewhere in this Agreement:


(a) "Act" means the California Revised Limited Partnership Act as set forth in Title 2 (commencing with Section 15611) of the Corporations Code of the State of California, as amended from time to time (or any corresponding provisions of succeeding law), provided that the substantive rights of the Partners under this Agreement shall not be adversely affected by any such amendment.


(b) "Acquisition Costs" means the third party costs incurred by the Partnership or any PSA Affiliate to acquire a Qualifying Project which has been approved for acquisition by the Investment Committee in accordance with Section 5.4 (regardless of whether such Qualifying Project is actually acquired by the Partnership), including any and all third party costs of closing such acquisition (e.g., transfer tax, title insurance, escrow charges, recording fees, legal fees, commissions, brokerage, finders' or similar fees and other charges of third party vendors incurred in connection with the evaluation, negotiation and closing of a Project) and any and all rebranding costs (e.g., changing signs, painting); provided, however that such costs shall not exceed the amounts set forth on the Acquisition Pro-Forma Budget; and provided further that, such costs shall not include costs attributable to properties considered for acquisition by the Partnership but not approved for acquisition by the Investment Committee in accordance with Section 5.4. Acquisition Costs shall include a reserve established by the General Partner, as set forth in the Acquisition Pro-Forma Budget, to pay for the (1) deferred maintenance, if any, of a Project and (2) costs, if any, of initial operations and lease up until a Project has achieved three consecutive months of positive Net Operating Income.


(c) "Acquisition Period" means the period commencing on the Effective Date and continuing until the earlier to occur of (i) the date which is nine months after the Effective Date or (ii) the date on which the Partnership has acquired or committed to acquire Projects that require or would require total Capital Contributions from Partners in excess of $125,000,000.


(d) "Acquisition Pro-Forma Budget" means the pro-forma budget in the form attached as Exhibit F, prepared by the General Partner and approved by the Investment Committee as set forth in Section 5.4(a). The Acquisition Pro-Forma Budget shall identify with specificity the nature, amount and payee of all payments proposed to be made to PSA Affiliates for Acquisition Costs.


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(e) "Adjusted Capital Account Deficit" means, with respect to any Partner, the deficit balance, if any, in such Partner's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:


(i) Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and


(ii) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.


The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.


(f) "Adjusted Capital Contributions" means, as of any day with respect to a Partner, such Person's Capital Contributions, adjusted as follows:


(i) Increased by the amount of any Partnership liabilities which, in
connection with distributions to such Person pursuant to Sections 4.1,
4.2, and 10.2(c), are assumed by such Person or are secured by any
Property distributed to such Person; and


(ii) Reduced by the amount of cash and the Gross Asset Value of any
Property distributed to such Person pursuant to Sections 2.2(d),
4.2(b), 4.2(d) and 10.2(c) and the amount of any liabilities of such
Person assumed by the Partnership or which are secured by any Property
contributed by such Person to the Partnership.


In the event such Person Transfers all or any portion of its Interest in accordance with the terms of this Agreement, its transferee shall succeed to its Adjusted Capital Contribution to the extent it relates to the transferred Interest.


(g) "Affiliate" means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person owning or controlling 10% or more of the outstanding voting interests of such Person, (iii) any officer, director or general partner of such Person, or (iv) any Person who is an officer, director, general partner, trustee or holder of 10% or more of the voting interests of any Person described in clauses (i) through (iii) of this sentence.


(h) "Agreement" means this Limited Partnership Agreement of PSAF Acquisition Partners, L.P. and the exhibits hereto, as amended from time to time. Words such as "herein," "hereinafter," "hereof," "hereto" and "hereunder" refer to this Agreement as a whole, unless the context otherwise requires.


(i) "Appraiser" means a disinterested entity that is experienced in valuing real estate portfolios and (a) is a M.A.I. appraiser that is a member of the American Institute of Real Estate Appraisers, any organization successor


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thereto, or other nationally recognized organization of real estate appraisers, with at least five years' experience in the case of the First and Second Appraisers and ten years' experience in the case of the Third Appraiser in conducting appraisals in the commercial real estate industry, and is qualified and experienced in appraising self-storage facilities similar to the Property, or (b) that works in conjunction with another disinterested entity with the qualifications described in (a) and both such entities sign the report. "First Appraiser," "Second Appraiser" and "Third Appraiser" shall have the meanings set forth in Section 9.4.


(j) "Appraised Value" means the amount that a third party buyer would reasonably be expected to pay for all of the Property, on a portfolio basis, in a cash purchase, taking into account the current condition, use and zoning of the Property, net of a provision for all normal costs of sale, including a real estate commission at prevailing rates.


(k) "Business Day" means Monday through Friday of each week, except that a legal holiday recognized as such by the United States Government shall not be regarded as a Business Day.


(l) "Business Plans" means the "Initial Business Plan" attached hereto as Exhibit G and "Annual Business Plans" in the form attached hereto as Exhibit H.


(m) "Capital Account" means, with respect to any Partner, the Capital Account maintained for such Person in accordance with the following provisions:


(i) To each Person's Capital Account there shall be credited such
Person's Capital Contributions, such Person's distributive share of
Profits under Section 3.1 and any items in the nature of income or gain
that are specially allocated pursuant to Sections 3.4 or 3.5, and the
amount of any Partnership liabilities assumed by such Person or that
are secured by any Property distributed to such Person.


(ii) To each Person's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to
such Person pursuant to Sections 2.2(d), 4.1, 4.2, 4.3 and 10.2, such
Person's distributive share of Losses under Section 3.2 and any items
in the nature of expenses or losses that are specially allocated
pursuant to Sections 3.3 or 3.5, and the amount of any liabilities of
such Person assumed by the Partnership or that are secured by any
property contributed by such Person to the Partnership.


(iii) In the event any Interest is transferred in accordance with
the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the
transferred Interest.


(iv) In determining the amount of any liabilities for purposes of
the definitions of "Adjusted Capital Contributions" and "Capital
Accounts," there shall be taken into account Code Section 752(c) and
any other applicable provisions of the Code and Regulations.


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The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities that are secured by contributed or distributed property or that are assumed by the Partnership or the Partners), are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Partner pursuant to Section 10 upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b).


(n) "Capital Contributions" means, with respect to any Partner, the amount of money and the Gross Asset Value at the time of contribution of any property (other than money) contributed to the Partnership with respect to the interest in the Partnership held by such Partner.


(o) "Capital Proceeds" means the gross cash proceeds of sales and financings of the Partnership's Properties, less the portion thereof used to pay or establish reserves for all Partnership expenses, any debt payments, capital improvements and other costs of renovations, replacements and contingencies, all as determined in accordance with the terms hereof.


(p) "Capital Reserve" means a reserve for capital expenditures of 2.3% of an ...