EX-4
Partnership Agreement
AGREEMENT OF LIMITED PARTNERSHIP
OF
REALTY PARKING PROPERTIES II L.P.
BY AND AMONG
REALTY PARKING COMPANY II, INC.
(GENERAL PARTNER)
REALTY ASSOCIATES LIMITED PARTNERSHIP
(SUBORDINATED LIMITED PARTNER)
AND
PARKING PROPERTIES HOLDING CO., INC.
(ASSIGNOR LIMITED PARTNER)
AGREEMENT OF LIMITED PARTNERSHIP
REALTY PARKING PROPERTIES II L.P.
TABLE OF CONTENTS
Page
Preliminary Statement ............................................................................ A-1
Article I - Defined Terms .................................................................. A-1
Article II - Name; Purpose; Term and Certificate ............................... A-8
Section 2.1 Name; Formation ........................................................... A-8
Section 2.2 Place of Registered Office .............................................. A-8
Section 2.3 Purpose ........................................................................... A-8
Section 2.4 Term ........... A-9
Section 2.5 Recording of Certificate ................................................ A-9
Article III - Partners; Capital .............................................................. A-9
Section 3.1 General Partner; Assignor Limited Partner; Subordinated Limited Partner
Section 3.2 Investors ................................................ ........................... A-9
Section 3.3 Partnership Capital ........................................................ A-10
Section 3.4 Liability of Partners and Investors ............................... A-10
Article IV - Allocations, Distributions and Applicable Rules ..................... A-10
Section 4.1 Allocation of Profit or Loss from a Sale ...................................... A-10
Section 4.2 Distribution of Net Proceeds of Sale or Financing .................................. A-11
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss from
Operations ....................................................................... A-12
Section 4.4 Liquidation or Dissolution ............................................ A-12
Section 4.5 General and Special Rules ............................................ A-12
Article V - Rights, Powers and Duties of the General Partner ....................................... A-15
Section 5.1 Management and Control of the Partnership; Tax Matters Partner
Section 5.2 Authority of General Partner ........................................ A-15
Section 5.3 Authority of Investors ................................................... A-20
Section 5.4 Restrictions on Authority .............................................. A-20
Section 5.5 Authority of Partners and Affiliated Persons to Deal with Partnership A-22
Section 5.6 Duties and Obligations of the General Partner ................ A-23
Section 5.7 Compensation of General Partner ................................ A-24
Section 5.8 Other Businesses of Partners ......................................... A-24
Section 5.9 Liability of General Partner and Affiliates to Limited Partners or Investors
Section 5.10 Indemnification ........................................................... A-24
Article VI - Transferability of the General Partner's Interest ............... A-25
Section 6.1 Removal, Voluntary Retirement or Withdrawal of the General Partner;
Transfer of Interests ...................................................... A-25
Section 6.2 Election and Admission of Successor or Additional General Partners
Section 6.3 Events of Withdrawal of a General Partner ..................................... A-25
Section 6.4 Liability of a Withdrawn General Partner .................................... A-26
Section 6.5 Valuation of Partnership Interest of General Partner .............................. A-26
Article VII - Assignment of Assignee Units to Investors; Transferability of Limited
Partner Interests and Units .......................................... A-27
Section 7.1 Assignment of Assignee Units to Investors .................. A-27
Section 7.2 Transferability of Units ................................................. A-28
Section 7.3 Death, Bankruptcy or Adjudication of Incompetence of an Investor or a
Limited Partner ............................................................. A-29
Section 7.4 Effective Date ................................................................ A-29
Section 7.5 Substitute Limited Partners .......................................... A-29
Section 7.6 Retirement or Withdrawal of an Investor ..................... A-29
ii
Article VII - Dissolution, Liquidation and Termination of the Fund ................................... A-30
Section 8.1 Events Causing Dissolution ............................................................ A-30
Section 8.2 Liquidation ......................... ........................................................ A-31
Section 8.3 Capital Contribution Upon Dissolution ..... ...................................... A-31
Article IX - Certain Payments to the General Partner and Affiliates ................................... X-00
Xxxxxxx 0.x Xxxxxxxxxxxxx of Certain Costs and Expenses of the General Partner and
its Affiliates ................................................................................... A-31
Section 9.2 Fees and Other Payments ............................................................... A-32
Article X - Books and Records; Bank Accounts; Reports ......... ............................ A-32
Section 10.1 Books and Records ...................................................................... A-32
Section 10.2 Bank Accounts ............................................................................ A-33
Section 10.3 Reports ....................................................................................... X-00
Xxxxxxx 00.0 Xxxxxxx Tax Elections ................................................................... A-35
Article XI - Meetings of Investors ..................................................................... A-35
Section 11.1 Calling Meetings ............................................................................ X-00
Xxxxxxx 00.0 Xxxxxx; Procedure ........................................................................ X-00
Xxxxxxx 00.0 Right to Vote .............................................................................. A-36
Section 11.4 Proxies; Rules ............................................................................. A-36
Article XII - General Provisions ....................................................................... X-00
Xxxxxxx 00.0 Xxxxxxxxxxx of General Partner as Attorney-in-Fact ....................... X-00
Xxxxxxx 00.0 Xxxxxx of Partition A-36
............................................................
Section 12.3 Notification .......................................................................................A-36
Section 12.4 Word Meanings ........................................................................... A-37
Section 12.5 Binding Provisions ...................................................................... X-00
Xxxxxxx 00.0 Applicable Law ............................. ............................................. X-00
Xxxxxxx 00.0 Xxxxxxxxxxxx ............................................................................... A-37
Section 12.8 Separability of Provisions ............................................................. X-00
Xxxxxxx 00.0 Xxxxxxxxx Titles .................................. ......................................... A-37
Section 12.10 Entire Agreement ....................................................................... A-37
Section 12.11 Amendments ............................................................................. A-37
Signatures ......................................................................................................... A-39
Schedule A ....................................................................................................... A-40
iii
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REALTY PARKING PROPERTIES II L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of March 6, 1991, is by and
among Realty Parking Company II, Inc., a Maryland corporation, as General
Partner, Parking Properties Holding Co., Inc., a Maryland corporation, as the
Assignor Limited Partner, and Realty Associates Limited Partnership, a Maryland
limited partnership, as the Subordinated Limited Partner.
Preliminary Statement
The General Partner, the Subordinated Limited Partner and the Assignor
Limited Partner desire to form Realty Parking Properties II L.P. (the
"Partnership"), pursuant to the Delaware Revised Uniform Limited Partnership
Act, for the purpose of acquiring land and facilities, or interests in land and
facilities, to be used for parking operations and incidental ancillary uses,
with an emphasis on surface commercial parking lots believed by the Partnership
to have significant future potential for eventual sale as development sites. The
Partnership also may acquire or build parking garages, suburban parking
properties, offsite airport parking lots, sites requiring the demolition of
obsolete structures prior to use as parking facilities and vacant sites on which
parking facilities may be constructed or anything else deemed appropriate by the
General Partner. Some of the land or facilities may be acquired primarily due to
the income potential from use as a parking facility.
NOW, THEREFORE, in consideration of the mutual promises made herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINED TERMS
The defined terms used in this Agreement shall, unless the context
otherwise expressly requires, have the meanings specified in this Article I.
"Accountants" means such firm of independent certified public accountants
as shall be engaged from time to time by the General Partner on behalf of the
Partnership.
"Acquisition Expenses" means any expenses related to selection and
acquisition of Properties, whether or not acquired, including, but not limited
to, legal fees and expenses, travel and communications expenses, costs of
appraisals, non-refundable option payments on property not acquired, accounting
fees and expenses, title examination expenses, title insurance premiums and
related charges, environmental studies, surveys, real estate transfer fees and
taxes and other miscellaneous expenses.
"Acquisition Fees" means the total of all fees and commissions paid by any
party on behalf of the Partnership in connection with the purchase, development
or construction of any Property by the Partnership, including, without
limitation, the Acquisition Fee payable to the General Partner, the Acquisition
Fee payable to the Consultant, any real estate commission, selection fee,
development fee, construction fee, non-recurring management fee or loan fee, or
any fee of a similar nature, however designated.
"Act" means the Delaware Revised Uniform Limited Partnership Act (6 DEL. C.
ss.(0) 17-101 et. seq.) as amended or modified from time to time. "Additional
General Partner" means any Person who is admitted as an Additional General
Partner of the Partnership, under the provisions of Article VI, after the date
of this Agreement.
"Adjusted Capital Balance" of a Partner or an Investor means the Capital
Contribution of the Partner or the Assignor Limited Partner made on behalf of an
Investor, less any Net Proceeds of Sale or Financing actually distributed to the
Partner or Investor (other than that portion, if any, which is payment of an
unpaid Preferred Return), as provided in Article IV herein, at the time of
reference thereto.
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"Affiliate" means (i) any Person directly or indirectly controlling,
controlled by or under common control with another Person, (ii) any Person
owning or controlling 10% or more of the outstanding voting securities of such
other Person, (iii) any officer, director or partner of such Person, and (iv) if
such other Person is an officer, director or partner, any company for which such
Person acts in any such capacity.
"Agreement" means this Agreement of Limited Partnership as originally
executed and as amended from time to time, as the context requires. Words such
as "herein", "hereinafter," "hereof," "hereto," "hereby" and "hereunder," when
used with reference to this Agreement, refer to this Agreement as a whole unless
the context otherwise requires.
"Asset Based Fee" means the fee, which is payable to the General Partner
each year for advising the Partnership and managing its investments, equal to
(i) 0.75% of the Partnership's Base Amount for such year and (ii) 0.5% of the
Capital Contributions temporarily held while awaiting Investments in Properties.
The Asset Based Fee will be accrued without interest when funds are not
available for its payment. Any accrued Asset Based Fee will be paid from the
next available Net Cash Flow or Net Proceeds from a Sale or Financing of
Properties and not from Working Capital Reserves. In the event of the
termination of the General Partner as general partner of the Partnership, the
General Partner will be paid that Asset Based Fee to which it is entitled
through the date of such termination.
"Assigned Limited Partnership Interest" means a Partnership Interest which
is credited to the Assignor Limited Partner on the books and records of the
Partnership in respect of a purchase of one Unit by an Investor. Each Assigned
Limited Partnership Interest represents a contribution to the capital of the
Partnership equal to $25, regardless of any reduction in Sales Commissions.
"Assignee Units" means the ownership interests of an Investor in the
Partnership at any particular time, including the right of such Investor to any
and all benefits to which an Investor may be entitled as provided in this
Agreement. The ownership interests of the Investors in the Partnership are
sometimes referred to herein as "Units".
"Assignor Limited Partner" means Parking Properties Holding Co., Inc. which
will (i) own any Assigned Limited Partnership Interests issued pursuant to
Sections 3.2 and 7.1 hereof and (ii) transfer and assign to those Persons who
acquire Units all of its rights and interest in Assigned Limited Partnership
Interests in accordance with Sections 3.2 and 7.1 hereof.
"Base Amount" means that portion of Capital Contributions originally
committed to Investment in Properties without regard to leverage and including
Working Capital Reserves of up to 3% of the Capital Contributions (the
"Permitted Working Capital Reserves"). The Base Amount shall be recomputed
annually by subtracting from the then fair market value of the Partnership's
Properties as determined by independent appraisals plus the Permitted Working
Capital Reserves, an amount equal to the outstanding debt secured by the
Partnership's Properties.
"Capital Account" means (i) the separate account maintained and adjusted on
the books and records of the Partnership for each Partner and (ii) the separate
subaccount of the Capital Account of the Assignor Limited Partner maintained and
adjusted for each Investor. Each Partner's and Inves- tor's Capital Account is
credited with his Capital Contributions and his distributive share of Profit (or
item thereof). Each Partner's or Investor's Capital Account is debited with the
cash and the fair market value of any property distributed to him (net of
liabilities assumed by such Partner or Investor and liabilities to which such
distributed property is subject), and his distributive share of Loss (and
deduction (or item thereof)). Each Partner's and Investor's Capital Account
shall also be adjusted pursuant to Section 4.5 hereof and as required by the
Income Tax Regulations promulgated under Section 704 of the Code. Any questions
concerning a Partner's or Investor's Capital Account shall be resolved by the
General Partner in its reasonably exercised discretion, applying principles
consistent with this Agreement and the regulations promulgated under Section 704
of the Code in order to assure that all allocations herein will have substantial
economic effect or will otherwise be respected for income tax purposes. For
purposes of this Agreement, a Partner or Investor who has more than one
Partnership Interest or Unit, as the case may be, shall have a single Capital
Account that reflects all of his Partnership Interests and Units, regardless of
the class of Interests owned (e.g.,
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general or limited) and regardless of the time or manner in which the
Partnership Interests and Units were acquired.
"Capital Contribution" means the total amount of cash and the fair market
value of any other assets contributed to the Partnership by a Partner in respect
of an Interest or Unit (net of liabilities assumed by the Partnership and
liabilities to which any such contributed assets are subject) and, with respect
to an Investor, the Capital Contribution of the Assignor Limited Partner made on
behalf of such Investor (without regard to any reduction of Sales Commissions).
Any reference in this Agreement to the Capital Contribution of a then-Partner or
Investor shall include a Capital Contribution previously made by any prior
Partner or Investor with respect to the Interest or Unit of such then- Partner
or then-Investor, except to the extent that all or a portion of the Interest or
Unit of any prior Partner or Investor shall have been terminated and the portion
so terminated not transferred to a successor Partner or Investor.
"Certificate" means the Certificate of Limited Partnership establishing the
Partnership, as filed with the office of the Secretary of State of the State of
Delaware on or about the date of this Agreement, as it may be amended from time
to time in accordance with the terms of this Agreement and the Act.
"Code" means the Internal Revenue Code of 1986, as amended (or any
corresponding provision of succeeding law).
"Competitive Real Estate Commission" means that real estate or brokerage
commission paid for the purchase or sale of a Property which is reasonable,
customary and competitive in light of the size, type and location of the
Property.
"Consultant" means (i) Central Parking System, Inc., or (ii) such other
person selected by the Partnership to advise the Partnership regarding
acquisitions, operations and dispositions. "Controlling Person" of the General
Partner or Affiliate thereof means any person who (a) performs functions for the
General Partner or Affiliate similar to those of (i) a Chairman or member of the
Board of Directors, (ii) executive management, such as a President, or a Vice-
President, Secretary or Treasurer, or (iii) senior management; or (b) holds a 5%
or more equity interest in the General Partner or Affiliate, or has the power to
direct or cause the direction of the General Partner, or Affiliate, whether
through the ownership of voting securities, by contract or otherwise.
"Disposition Advisory Fee" means the fee, payable on the Sale of any
Property, equal to 1.5% of the contract price for the sale of such Property
payable to the General Partner, the Sponsor or their Affiliates if any such
Entity provides a substantial amount of services in the effort to sell such
Property and subject to the limitations set forth in Section 5.2(a)(viii).
"Due Diligence Expense Reimbursement Fee" means the file equal to 2% of the
Gross Proceeds of the Offering allowed to the Selling Agent, which may be
re-allowed to Soliciting Dealers, for advisory services, due diligence
activities and the reimbursement of expenses.
"Entity" means any general partnership, limited partnership, corporation,
joint venture, trust, estate, business trust, cooperative, association or other
legal form of organization.
"Escrow Agent" means Mercantile-Safe Deposit & Trust Company, or such other
escrow agent chosen by the General Partner to hold funds from Persons who have
subscribed to become Investors pending the assignment of Assignee Units to them.
"Financing" means all indebtedness encumbering the Properties or incurred
by the Partnership, the principal amount of which is scheduled to be paid over a
period of not less than 48 months, and not more than 50% of the principal amount
of which is scheduled to be paid during the first 24 months.
"Front-End Fees" means fees and expenses paid by any Person for any
services rendered during the organization or acquisition phase of the
Partnership, including the Offering and Organization
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Expense Fee, the Due Diligence Expense Reimbursement Fee, the Sales Commissions,
the Acquisition Expenses, the Acquisition Fees and any other similar fees.
"General Partner" means Realty Parking Company II, Inc. and any other
Person designated as a General Partner in the Schedule and any Person who
becomes a Successor or Additional General Partner as provided herein, in each
such Person's capacity as a General Partner of the Partnership.
"General Partner Acquisition Fee" means the non-accountable fee paid to the
General Partner equal to 2% of the Gross Proceeds of the Offering, payable at
each closing for Unitholders as Gross Proceeds of the Offering are raised, for
services rendered in connection with the development of the technical and
managerial infrastructure required in order to evaluate and acquire Properties
and for identifying, evaluating, negotiating and providing other miscellaneous
services in regard to the acquisition of the Properties.
"Gross Proceeds of the Offering" means the aggregate of the proceeds from
the sale of Units in the Offering, which amount is equal to the total of all
Capital Contributions of the Investors.
"Increased Maximum Offering Amount" means the total amount of $100,000,000
in Gross Proceeds of the Offering.
"Interest" or "Partnership Interest" means the entire ownership interest
(which may be segmented into and/or expressed as a percentage of various rights
and/or liabilities) of a Partner in the Partnership at any particular time,
including the right of such Partner to any and all benefits to which a Partner
may be entitled as provided in the Agreement and in the Act, together with the
obligations of such Partner to comply with all the terms and provisions of this
Agreement and of the Act.
"Interim Investments" means the highly-liquid, short-term investments,
including bank certificates of deposit, publicly-available money-market funds
having assets in excess of $50,000,000 (including money-market funds managed by
the General Partner or its Affiliates), short-term government obligations,
bankers' acceptances, high grade commercial paper, GNMA or FNMA mortgage
pass-through certificates or discount notes and similar investments as
determined by the General Partner in its sole discretion, made with the Net
Proceeds of the Offering until such Net Proceeds of the Offering are disbursed
for acquisition of Properties or retained as Working Capital Reserves; provided,
however, that such investments do not consist of deposits of funds with
affiliated financial institutions or money market mutual funds unless such
deposits (i) do not exceed five percent (5%) of all deposits held by such entity
and do not require the payment of any fees by the Partnership, (ii) are not part
of "compensating balance" arrangements for the benefit of other than the
Partnership and (iii) earn interest or dividends at a rate competitive with
those available from similar independent depositories.
"Investor" means (i) any Person who holds an Assignee Unit and is reflected
as an Investor on the books and records of the Partnership, and (ii) any
Investor who has been admitted to the Partnership as a Substitute Limited
Partner pursuant to Section 7.5 hereof.
"Investment in Properties" means the amount of Capital Contributions
actually paid or allocated to the purchase and development of the Properties
(including the purchase of Properties, Working Capital Reserves allocable
thereto (except that Working Capital Reserves in excess of 3% shall not be
included), and other cash payments such as interest and taxes, but excluding
Front-End Fees).
"Leases" means those certain agreements to be entered into by the
Partnership and the Parking Lot Operator pursuant to which the Parking Lot
Operator shall lease, operate and manage each of the Properties.
"Limited Partner" means any Person who is designated as a Limited Partner
on the books and records of the Partnership at the time of reference thereto, in
each such Person's capacity as a Limited Partner of the Partnership.
"Limited Partnership Interest" means the ownership interest of the Assignor
Limited Partner and all other Limited Partners in the Partnership.
A-4
"Limited Partnership Interest Percentage" in respect of any Investor means
the percentage obtained by converting to a percentage the fraction having the
number of Assignee Units owned by such Investor as its numerator and having the
number of Assignee Units owned by all Investors at the time of reference thereto
as its denominator.
"Majority Vote of the Investors" shall mean the affirmative vote of
Investors owning more than 50% of the outstanding Units or the consent of
Investors owning more than 50% of the outstanding Units, as the case may be.
"Maximum Offering Amount" means the total amount of $25,000,000 in Gross
Proceeds of the Offering.
"Minimum Gain" means with respect to each non-recourse liability of the
Partnership and subject to certain adjustments pursuant to Income Tax Reg.
ss.1.704-1(b)(4)(iv)(c), the amount of gain (of whatever character), if any,
that would be realized by the Partnership, if the Partnership disposed of (in a
taxable transaction) any of the assets subject to such liability in full
satisfaction of the liability. For this purpose, only the portion of the assets'
adjusted basis allocated to non-recourse liabilities of the Partnership shall be
taken into account.
"Minimum Offering Amount" means the amount of $2,500,000 in Gross Proceeds
of the Offering.
"Net Cash Flow" means, with respect to any fiscal period, the excess, if
any, of (i) all cash funds derived from the operations of the Partnership during
such period, including the yield from the Interim Investments and excess Working
Capital Reserves deemed distributable by the General Partner pursuant to Section
3.3E hereof, over (ii) all cash disbursed in the operations of the Partnership
during such period, including cash used to pay, or establish reasonable reserves
for, operating expenses, fees, commissions, debt service and loan repayments,
improvements, repairs, replacements, contingencies and anticipated obligations,
except to the extent any such payment is made out of reserves set aside for such
purpose. Net Cash Flow shall not include amounts distributed or to be
distributed under Section 4.2 hereof.
"Net Proceeds from a Financing" means the gross proceeds to the Partnership
of any Financing, less any amounts deemed necessary by the General Partner to be
allocated to the establishment of reserves, the payment of any debts and
liabilities of the Partnership to creditors, and the payment of any reasonable
expenses or costs associated with the Financing, including but not limited to,
fees, points, or commissions paid to any unaffiliated Persons.
"Net Proceeds from a Sale" means the gross proceeds to the Partnership of
any Sale, less any amount deemed necessary by the General Partner to be
allocated to the establishment of reserves, the payment of any debts and
liabilities of the Partnership to creditors, and the payment of any reasonable
expenses or costs associated with the Sale, including but not limited to, fees
or real estate brokerage commissions paid to any unaffiliated Persons, the
disposition fee equal to 1.5% of the contract price for the sale of the
Properties payable to the Consultant upon the sale of a Property and, subject to
Sections 5.2.A(viii) and 9.2.A(vi), fees or real estate brokerage commissions
paid to the General Partner or Affiliates.
"Net Proceeds of the Offering" means the Gross Proceeds of the Offering
less the Sales Commissions, the Due Diligence Expense Reimbursement Fee, the
Offering and Organization Expense Fee, and the General Partner Acquisition Fee.
"Net Proceeds from a Sale or Financing" means the Net Proceeds from a Sale
or Net Proceeds from a Financing, as the case may be.
"Notification" means a writing, containing the information required by this
Agreement to be communicated to any Person, sent or delivered to such Person in
accordance with the provisions of Section 12.3 of this Agreement.
"Offering" means the offering and sale of Units for a minimum of
$2,500,000, a maximum of $25,000,000, and an increased maximum of $100,000,000,
as more fully described in the Prospectus.
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"Offering and Organization Expense Fee" means the non-accountable fee paid
to the General Partner equal to 3% of the Gross Proceeds of the Offering,
payable at such times as the Investors are recognized as such on the books of
the Partnership, for services rendered in connection with the structuring and
organization of the Partnership, and the supervision and review of all documents
prepared in connection therewith. A portion of the Offering and Organization
Expense Fee (not to exceed 1% of the Gross Proceeds of the Offering) may be paid
to the Selling Agent and re-allowed to other broker-dealers, including
Affiliates of the Selling Agent. The General Partner will be responsible for all
Organizational and Offering Expenses in connection with the Offering, including
accounting, legal and escrow and depositary fees, printing costs, registration
and filing fees, including "Blue Sky" fees, and advertising, marketing and
promotion costs.
"Organization and Offering Expenses" means those expenses incurred in
connection with and in preparing the Partnership for registration and
subsequently offering and distributing it to the public, including sales
commissions paid to broker-dealers in connection with the distribution of the
Partnership and all advertising expenses.
"Parking Consulting Agreement" means the agreement referred to in the
Prospectus by and between the Partnership and Central Parking System, Inc.,
"Parking Lot Operator" means (i) Central Parking System, Inc. or an Affiliate,
or (ii) such other person selected by the Partnership to operate the Properties.
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed in accordance with this
Agreement by the parties hereto, as said limited partnership may from time to
time be constituted.
"Partnership Property" means all or any portion of the assets owned or to
be owned by the Partnership, including the Properties and all incidental
personal property.
"Person" means any individual or Entity.
"Preferred Return" means the cumulative, non-compounded annual return equal
to 12% of the Adjusted Capital Balance of each Investor commencing as of the
first day of the calendar quarter immediately following the calendar quarter in
which such Investor was admitted to the Partnership, except as set forth in
Section 7.2.E in regard to transferred or assigned Units, less any Net Cash Flow
distributed to each Investor pursuant to Section 4.3 and any Net Proceeds from a
Sale or Financing distributed to each Investor in respect of the Preferred
Return pursuant to Section 4.2A(i).
"Profit" or "Loss" means, for each fiscal year or other period, an amount
equal to the Partner- ship's taxable income or loss for such year or period,
with the following adjustments: (i) any income of the Partnership that is exempt
from federal income tax shall be added to such taxable income or loss; (ii) any
expenditures of the Partnership described in Section 705(a)(2)(B) of the Code,
or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to Income
Tax Reg. ss.1.704-1(b)(2)(iv)(i), shall be subtracted from such taxable income
or loss; and (iii) Pursuant to Income Tax Reg. ss.1.704- l(b)(iv)(g)(3), an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes shall be taken into account, except that if the fair market
value on the date that the asset is contributed to the Partnership (or if the
basis of such asset for book purposes is adjusted under the Income Tax
Regulations, such adjusted book basis) differs from its adjusted basis for
federal income tax purposes at the beginning of such year or other period, the
depreciation, amortization and other cost recovery deductions taken into account
shall be equal to an amount which bears the same ratio to such beginning fair
market value (or adjusted book basis) as the federal income tax depreciation,
amortization, or other cost recovery deduction for such year or other period
bears to such beginning adjusted tax basis. Except as otherwise provided herein,
each item of income, gain, loss, deduction, preference or recapture entering
into the computation of Profit or Loss hereunder shall be allocated to each
Partner in the same proportion as Profit and Loss are allocated.
"Profit or Loss from Operations" means Profit or Loss of the Partnership
from any source other than a Sale.
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"Properties" means the land and facilities, or interests in land and
facilities, acquired by the Partnership to be used for parking operations and
incidental ancillary uses, including, without limitation, surface commercial
parking lots, parking garages, suburban parking properties, offsite airport
parking lots, sites requiring the demolition of obsolete structures prior to use
as parking facilities, vacant sites on which parking facilities may be
constructed and anything else deemed appropriate by the General Partner.
"Prospectus" means the Partnership's Prospectus contained in the
Registration Statement filed on Form S-11 with the Securities and Exchange
Commission for the registration of the Units under the Securities Act of 1933,
in the final form in which it is filed with the Securities and Exchange
Commission and as thereafter supplemented pursuant to Rule 424 under the
Securities Act of 1933. Any reference herein to "date of the Prospectus" shall
be deemed to refer to the date of the Prospectus in the form filed pursuant to
Rule 424(b) of the Securities Act of 1933.
"Sale" means any transaction entered into by the Partnership resulting in
the receipt of cash or other consideration (other than the receipt of Capital,
Contributions) not in the ordinary course of its business including, without
limitation, sales or exchanges or other dispositions of Properties and real or
personal property of the Partnership, condemnations, recoveries of damage awards
and insurance proceeds (other than business or rental interruption insurance
proceeds), but excepting any Financing.
"Sales Commissions" means the maximum total (or any portion thereof) of 6%
of the Gross Proceeds of the Offering paid to the Selling Agent or Soliciting
Dealers for their efforts in offering the Units. The 6% maximum Sales
Commissions will be reduced for volume purchases and purchases by the Consultant
and its Affiliates and Alex. Xxxxx Realty, Inc. and its Affiliates and their
directors, their officers and their employees as specified in the Prospectus.
"Schedule" means Schedule A annexed hereto as amended from time to time and
as so amended at the time of reference thereto.
"Selling Agent" means Armata Financial Corp., an Affiliate of the General
Partner, which will offer the Units on a best efforts basis pursuant to the
Selling Agent Agreement.
"Selling Agent Agreement" means that certain agreement to be entered into
by the Partnership, the Selling Agent, and the General Partner, pursuant to
which the Selling Agent will offer and sell the Units on a best efforts basis.
"Sponsor" means any Person directly or indirectly instrumental in
organizing, wholly or in part, the Partnership or who will manage or participate
in the management of the Partnership, and any Affiliate of such Person, but does
not include a Person whose only relation with the Partnership is as that of an
independent property manager, whose only compensation is as such. Sponsor does
not include wholly independent third parties such as attorneys, accountants and
underwriters whose only compensation is for professional services rendered in
connection with the Offering or the operations of the Partnership. A Person may
also be a Sponsor of the Partnership by (i) taking the initiative, directly or
indirectly, in founding or organizing the business or enterprise of the
Partnership, either alone or in conjunction with one or more other Persons, (ii)
receiving a material participation in the Partnership in connection with the
founding or organizing of the business of the Partnership, in consideration of
services or property, or both services and property, (iii) having a substantial
number of relationships and contacts with the Partnership, (iv) possessing
significant rights to control Partnership properties, (v) receiving fees for
providing services to the Partnership which are paid on a basis that is not
customary in the industry, or (vi) providing goods or services to the
Partnership on a basis which was not negotiated at arm's-length with the
Partnership.
"Subordinated Limited Partner" means Realty Associates Limited Partnership
and such other Persons who are designated as Subordinated Limited Partners on
the books and records of the Partnership.
"Substitute Limited Partner" means any Investor who has elected to convert
from an Investor to a Limited Partner pursuant to Section 7.5 of this Agreement.
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"Successor General Partner" means any Person who is admitted as a Successor
General Partner to the Partnership under the provisions of Article VI after the
date of this Agreement.
"Tax Matters Partner" means the General Partner designated in Section 5.1C
as the tax matters partner, as defined in Section 6231(a)(7) of the Code.
"Termination Date of the Offering" means the date upon which the Offering
terminates. The General Partner, at any time and in its sole discretion, may
determine to terminate the Offering. Furthermore, if subscriptions for the
Minimum Offering Amount are not received and accepted on or prior to twelve (12)
months from the date of the Prospectus, the Offering automatically will
terminate. If the Offering is not terminated as described above, the Offering
will continue until 1,000,000 Units are sold (subject to increase by up to an
additional 2,000,000 Units in the sole discretion of the General Partner) or
such time as the General Partner determines to terminate the Offering. However,
the total offering period will not exceed 24 months from the date of the
Prospectus.
"Unit" means (i) an Assignee Unit representing the assignment by the
Assignor Limited Partner of one Assigned Limited Partnership Interest and (ii)
the Partnership Interest attributable to one Unit of any Investor who has become
a Substitute Limited Partner pursuant to Section 7.5 hereof.
"U.S. Person" means a Person who is (i) an individual who is either a
United States citizen or a resident of the United States for federal income tax
purposes, (ii) a corporation, partnership, or other legal entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (iii) a corporation that is not created or organized in or under the
laws of the United States or any political subdivision thereof but which has
made an election under Section 897(i) of the Code to be treated as a domestic
corporation for certain purposes of federal income taxation, or (iv) an estate
or trust whose income from sources without the United States is includable in
its gross income for federal income tax purposes regardless of its connection
with a trade or business carried on in the United States.
"Working Capital Reserves" means, initially, the portion of the Gross
Proceeds of the Offering set aside as working capital reserves pursuant to
Section 3.3E, as increased or decreased from time to time at the discretion of
the General Partner.
ARTICLE II
NAME; PURPOSE; TERM AND CERTIFICATE
Section 2.1 Name; Formation
The Partners hereby form the limited partnership to be known as "Realty
Parking Properties II L.P.," and such name shall be used at all times in
connection with the Partnership's business and affairs; provided, however, that
the Partnership may use trade names in its business operations. The Partnership
shall be governed by the Act.
Section 2.2 Place of Registered Office
The address of the registered office in the State of Delaware of the
Partnership is Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000; the name of the registered agent for service of process on the
Partnership in the State of Delaware at that address is The Corporation Trust
Company. The Partnership's principal place of business is 000 Xxxx Xxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 or such other place(s) as the
General Partner may hereafter determine. Notification of any change in the
location of the principal office shall be given to the Partners and Investors on
or before the date of any such change.
Section 2.3 Purpose
The purpose of the Partnership is to acquire, own, develop, maintain,
finance, encumber, operate as a business, lease, sell, dispose of and otherwise
deal with the Properties, and to do all things necessary, convenient or
incidental to the achievement of the foregoing.
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Section 2.4 Term
The Partnership shall continue until December 31, 2015, unless the
Partnership is sooner dissolved in accordance with the provisions of this
Agreement; however the anticipated life of the Partnership does not exceed 20
years from the date of the Prospectus.
Section 2.5 Recording of Certificate
The General Partner shall take all necessary action to maintain the
Partnership in good standing as a limited partnership under the Act, including,
without limitation, the filing of the Certificate and such amendments and
further certificates as may be necessary under the Act and necessary to qualify
the Partnership to do business in such states as the Partnership owns property.
The General Partner shall not be required to send a copy of the Partnership's
filed Certificate to each Partner and Investor.
ARTICLE III
PARTNERS; CAPITAL
Section 3.1 General Partner; Assignor Limited Partner, Subordinated Limited
Partner
The name, address and Capital Contribution of the General Partner, the
Assignor Limited Partner and the Subordinated Limited Partner are set forth on
the Schedule. Upon the dissolution and termination of the Partnership, the
General Partner, on or before the later of the last day of the fiscal year in
which the dissolution of the Partnership occurs or ninety (90) days after the
date of dissolution of the Partnership, shall make a Capital Contribution to the
Partnership in an amount equal to the lesser of (A) the deficit balance, if any,
in its Capital Account or (B) the excess of 1.01% of the Capital Contributions
and Limited Partners (excluding capital contributions of the Assignor Limited
Partner on behalf of Investors) over the Capital Contributions previously
contributed by the General Partner.
Section 3.2 Investors
A. The General Partner is authorized to accept orders for Units pursuant to
the Offering. All orders for Units shall be held in trust and deposited in an
escrow account with the Escrow Agent. Orders for Units shall be accepted or
rejected by the General Partner within thirty (30) days after their receipt by
the Escrow Agent.
B. Upon the receipt by the Escrow Agent of orders for an amount equal to
the Minimum Offering Amount, the Escrow Agent shall release the funds in the
escrow account to the Assignor Limited Partner which shall immediately transmit
such funds to the Partnership. Subsequent orders for Units that are accepted by
the General Partner shall be released from the escrow account and transmitted to
the Partnership or returned to subscribers in accordance with the Prospectus.
Upon release of an Investor's funds from the escrow account to the Partnership,
an Assigned Limited Partnership Interest shall be credited to the Assignor
Limited Partner on the books and records of the Partnership in respect of such
Unit and the Assignor Limited Partner shall assign all of its rights with
respect to such Assigned Limited Partnership Interest to the Investor to the
extent permitted by, and in accordance with, the Agreement and applicable law.
The Assignor Limited Partner hereby agrees to exercise any and all rights with
respect to such Assigned Limited Partnership Interest as directed by the
Investor.
C. Any interest earned on moneys paid by Investors during the period such
moneys are held in escrow by the Escrow Agent shall be paid to the Partnership
following the release of orders and shall be distributed in accordance with
Section 4.5A hereof. Persons whose orders for Units are rejected by the General
Partner shall be returned their moneys (and interest earned thereon) within ten
(10) days after such rejection.
D. No order for Units sold as part of the Offering shall be accepted after
the Termination Date of the Offering. If the General Partner does not accept
orders totalling an amount equal to the Minimum Offering Amount on or prior to
twelve (12) months from the date of the Prospectus, the Escrow Agent
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shall promptly return all moneys deposited by subscribers together with any
interest earned on such moneys.
E. For purposes of this Agreement, an Investor who acquires Units in the
Offering shall be recognized as an Investor with respect to such Units on the
date that such Investor's funds are released from the escrow account to the
Partnership.
Section 3.3 Partnership Capital
A. Each Partner's and Investor's Capital Contribution shall be paid in cash
on or prior to the date of such Partner's admission to the Partnership or the
date of the recognition of the Investor on the books and records of the
Partnership.
B. Except to the extent of any interest income earned on an Investors
Capital Contribution while it is held in escrow, and later distributed to such
Investor pursuant to Section 4.5A, no Partner or Investor shall be paid interest
on any Capital Contribution.
C. Except as otherwise provided in this Agreement, no Partner or Investor
shall have the right to withdraw, or receive any return of, his Capital
Contribution prior to December 31, 2040.
D. Under circumstances requiring a return of any Capital Contribution, no
Partner shall have the right to demand or receive property other than cash.
E. The Partnership shall initially set aside Working Capital Reserves for
contingencies related to ownership of the Properties in an amount equal to at
least 3% of the Gross Proceeds of the Offering. If in any fiscal quarter, the
General Partner determines that the Working Capital Reserves of the Partnership
are in excess of the amount deemed sufficient in connection with the ownership
of the Properties and that such Working Capital Reserves may be reduced, the
amount of such reduction may be distributed to the Partners and Investors as a
portion of the Partnership's Net Cash Flow. Upon the Sale or disposition of a
Property, any Working Capital Reserves maintained for such Property may be
distributed, in the General Partner's discretion, to Partners and Investors or
applied as Working Capital Reserves for other Properties.
Section 3.4 Liability of Partners and Investors
A. Except as provided in Section 17-607 of the Act, or in Section 3.1 with
respect to the Subordinated Limited Partner, the Limited Partners and Investors
shall be liable only to pay their Capital Contributions and no Limited Partner
or Investor will be personally liable for the debts, liabilities, contracts, or
other obligations of the Partnership.
B. Except as set forth in 3.4A, no Limited Partner or Investor shall be
required to lend any funds to the Partnership or, after his Capital Contribution
has been fully paid, to make any further capital contribution to the
Partnership, nor shall any Limited Partner or Investor be liable for or have any
obligation to restore any negative balance in his Capital Account.
C. Subject to the provisions of Sections 3.1 and 5.9 of this Agreement, the
General Partner shall not have any personal liability for the repayment of the
Capital Contribution or the Preferred Return of any Limited Partner or Investor
or be required to repay to the Partnership all or any portion of any negative
balance of the Capital Accounts of the Limited Partners or the Investors.
ARTICLE IV
ALLOCATIONS, DISTRIBUTIONS AND APPLICABLE RULES
Section 4.1 Allocation of Profit or Loss from a Sale
A. Profit from any Sale (and Profit from any deemed Sale pursuant to
Section 4.5) shall be allocated in the following order of priority:
(i) First, if one or more Investors or Partners has a negative balance in
his Capital Account, to such Investors or Partners, in proportion to their
negative Capital Accounts, until all such Capital Accounts have zero balances;
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(ii) Second, 99% to the Investors and 1% to the General Partner until the
Capital Account of each Investor is equal to the sum of his Adjusted Capital
Balance plus his unpaid Preferred Return, if any;
(iii) Third, to the Subordinated Limited Partner, an amount of Profit equal
to the amount of Net Proceeds from such Sale to which the Subordinated Limited
Partner is entitled to receive pursuant to Section 4.2A(iii) or would have been
entitled to receive if the Sale Proceeds were distributed pursuant to Section
4.2A rather than Section 4.2B, and
(iv) Fourth, any remaining Profit shall be allocated 99% to the Investors
and 1% to the General Partner.
B. Loss from any Sale (and Loss from any deemed Sale pursuant to Section
4.5) shall be allocated 99% to the Investors and 1% to the General Partner.
C. All Profit or Loss allocated pursuant to Section 4.1 hereof with respect
to any Unit which is transferred during a taxable year of the Partnership shall
be allocated to the Persons recognized (in accordance with Section 7.4 hereof)
as Investors as of the first business day of the month that includes the date on
which the Sale occurs; provided, however, that all such Profit or Loss which is
attributable to an installment or other deferred Sale shall be allocated to the
Persons recognized (in accordance with Section 7.4 hereof) as Investors as of
the first business day of the month that includes the date on which the deferred
Net Proceeds from such Sale are received by the Partnership, and the allocable
cash basis items with respect thereto shall be allocated as required under
Section 706(d) of the Code and the Income Tax Regulations thereunder.
Section 4.2 Distribution of Net Proceeds of Sale or Financing
A. Upon a Financing and upon a Sale that does not constitute a Sale of all
or substantially all of the Properties, Net Proceeds from the Financing or Sale
shall be distributed, credited and applied in the following order of priority:
(i) First, 99% to the Investors in proportion to their respective unpaid
Preferred Returns and 1% to the General Partner until each Investor has received
an amount equal to his unpaid Preferred Return, if any.
(ii) Second, 99% to the Investors in proportion to their respective
Adjusted Capital Balances and 1% to the General Partner until each Investor has
received an amount equal to his Adjusted Capital Balance.
(iii) Third, except as provided in Section 4.2D below, any remaining Net
Proceeds of Sale or Financing shall be distributed 90% to the Investors, 9% to
the Subordinated Limited Partner, and 1% to the General Partner.
B. Upon the Sale of all or substantially all of the Properties, Net
Proceeds from the Sale shall be allocated to the Partners and Investors, in
proportion to their positive Capital Accounts, after the allocation of Profit
and Loss pursuant to Sections 4.1A and 4.1B, until all such Capital Accounts
have been reduced to zero.
C. All Net Proceeds of Sale or Financing distributable with respect to any
Unit which is transferred during a taxable year of the Partnership shall be
distributed to the Persons recognized (in accordance with Section 7.4 hereof) as
Investors as of the first business day of the month that includes the date on
which the Sale or Financing occurs; provided, however, that all Net Proceeds
from a Sale received by the Partnership as a result of an installment or other
deferred Sale shall be distributed to the Persons recognized (in accordance with
Section 7.4 hereof) as Investors as of the first business day of the month that
includes the date on which the deferred Net Proceeds from a Sale are received by
the Partnership.
D. To the extent in any fiscal year the Subordinated Limited Partner
receives a distribution pursuant to Section 4.2A(iii) in excess of the amount of
Profit allocated to the Subordinated Limited Partner pursuant to Section
4.1A(iii), such excess shall constitute the equivalent of a "guaranteed
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payment"pursuant to Section 707(c) of the Code and the deduction attributable
thereto shall be specially allocated 1% to the General Partner and 99% to the
Investors.
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss
from Operations
A. Net Cash Flow shall be distributed 99% to the Investors and 1% to the
General Partner. The General Partner will endeavor to distribute Net Cash Flow
on a quarterly basis, within approximately sixty (60) days after the close of
each calendar quarter.
B. Profit and Loss from Operations for each fiscal year shall be allocated
99% to the Investors and 1% to the General Partner.
C. For each fiscal year, all Profit and Loss allocated pursuant to Section
4.3B to the Investors shall be allocated among the Persons that are recognized
as Investors during such year by determining the Profit and Loss attributable to
each month during such year and by allocating the amount of such Profit and Loss
among Persons who are recognized as Investors on the books of the Partnership on
the first business day of such month. The Profit or Loss attributable to each
month of the fiscal year shall be determined by dividing the Profit or Loss for
such year by the number of days in such year, and then multiplying such per diem
amount by the number of days in each month.
D. All Net Cash Flow distributable to the Investors shall be distributed
among the Persons recognized as Investors on the books of the Partnership on the
first business day of the month in which the distribution occurs.
E. Notwithstanding Sections 4.3C and 4.3D, the Partnership shall adopt the
daily proration method of allocating Profit and Loss among persons who become
Investors pursuant to a closing of the sale of the Units on or before the
Termination Date of the Offering. Accordingly, each Investor shall be allocated
Profit and Loss beginning on the date he is recognized on the books of the
Partnership.
Section 4.4 Liquidation or Dissolution
A. If the Partnership is liquidated or dissolved, the net proceeds from
such liquidation, as provided in Article VIII, shall be distributed first to
creditors, including Partners who are creditors, to the extent otherwise
permitted by law (whether by payment or by establishment of reserves), other
than liabilities for distributions to Partners and Investors, and any remaining
net proceeds shall be distributed in proportion to the Capital Accounts of the
Partners and Investors, determined after the allocations in Sections 4.IA and
4.IB.
B. All distributions under this Section 4.4 shall be made by the end of the
taxable year of liquidation of the Partnership or, within ninety (90) days of
the date of liquidation, whichever is later.
Section 4.5 General and Special Rules
A. Except as otherwise provided herein, the timing and amount of all
distributions shall be determined by the General Partner. Notwithstanding any
other provision of this Agreement, the General Partner shall have authority to
make the following distributions to certain of the Investors: First, if the
Partnership has realized a savings on Sales Commissions payable by the
Partnership with respect to the purchase of Units (as more fully set forth in
the Prospectus), the General Partner shall make a distribution to such Investor
equal to the amount of such savings realized by the Partnership. Second, if any
interest is earned on an Investor's Capital Contribution while it is held in
escrow pending recognition as an Investor under Article VII, such interest shall
be paid by the Partnership to such Investor and Profit attributable to such
interest shall be allocated in the same manner.
B. Subject to all of the special rules of this Section 4.5, if any property
or assets of the Partnership are distributed to the Partners in kind, such
property or assets first shall be valued on the basis of the fair market value
thereof to determine the Profit or Loss that would have resulted if such
property or assets had been sold, and then such Profit or Loss shall be
allocated as provided Section 4.1A and Section 4.1B, and shall be properly
credited or charged to the Capital Accounts in accordance with Income Tax Reg.
ss.1.704-1(b)(2)(iv)(e) or any successor provision thereto. Any Partner entitled
to any
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interest in such property or assets shall receive such interest as a
tenant-in-common with all other Partners so entitled. The fair market value of
such property or assets shall be determined by an independent appraiser who
shall be selected by the General Partner. This Section 4.5B governs income tax
consequences only and shall not be read or construed as authorizing the
distribution in kind of property or assets of the Partnership.
C. Notwithstanding Sections 4.1 and 4.3 hereof, if an allocation of Loss
(or item thereof) to an Investor or Partner, other than the General Partner,
would cause or increase a deficit balance in his or its Capital Account in
excess of his proportionate share of Minimum Gain (such excess being referred to
hereafter as the "Excess Deficit Balance"), plus, in the case of the
Subordinated Limited Partner, any amount which it agrees to contribute to the
capital of the Partnership pursuant to Section 3.1, then the allocation shall
not be made to such Investor or Partner. Instead, such Loss (or item thereof)
shall be allocated first to the Partners and Investors having positive Capital
Accounts, in proportion to such positive Capital Accounts, until all such
positive Capital Accounts have been reduced to zero, and any additional Loss (or
item thereof) shall be allocated to the General Partner. For purposes of making
the determination set forth above, each Investor's and each Partner's Capital
Account balance shall be reduced by reasonably expected allocations or
adjustments of loss (or item thereof) including Loss from a Sale under Income
Tax Regulation ss.ss.1.704-1(b)(2)(ii)(a)(4) and (5), and by reasonably expected
distributions to the extent not offset by reasonably expected Capital Account
increases ("Account Reduction Items"). For purposes of calculating reasonably
expected Capital Account increases, the value of the Partnership's assets shall
be presumed to be equal to their adjusted basis for federal income tax purposes.
D. Notwithstanding Sections 4.1 and 4.3 hereof, in accordance with Income
Tax Regulation ss.ss.1.704-1(b)(2)(ii)(a) and 1.704-1(b)(4)(iv)(e), (i) if, in
any fiscal year of the Partnership, an Account Reduction Item unexpectedly
causes or increases an Investor's or Partner's Excess Deficit Balance, or (ii)
if there is a net decrease in Minimum Gain during a taxable year, then all
Investors or Partners with an Excess Deficit Balance at the end of such year
shall be specially allocated Profit and, to the extent necessary, gross income
(as defined in Section 61 of the Code) to the extent of such Excess Deficit
Balances, in proportion to the Excess Deficit Balance of each Investor or
Partner. Any remaining Profit or Loss, after adjustment has been made for
allocation of income or gain pursuant to this Section 4.5D, shall be allocated
in accordance with Sections 4.l and 4.3 hereof. The General Partner shall be
authorized to interpret and apply this Section 4.5D so as to satisfy the
requirements of Income Tax Regulation ss.ss.1.704-1(b)(2)(11)(d) and
1.704-,1(b)(4)(iv)(e) and any successor provisions.
E. Any special allocations of Profit, Loss or gross income under Section
4.5D shall be taken into account in computing subsequent allocations of Profit
or Loss, so that to the extent possible, the aggregate amounts of Profit or Loss
allocated to each Partner or Investor will be equal to the aggregate amounts
that would have been allocated to them in the absence of the unexpected Account
Reduction Items.
F. In the event that any Investor fails to furnish to the General Partner
evidence, in form and substance satisfactory to the General Partner,
establishing that the General Partner has no obligation under Section 1445 of
the Code with respect to such Investor to withhold and pay over an amount to the
Internal Revenue Service, the General Partner may, in its sole discretion,
withhold with respect to such Investor the amount it would be required to
withhold pursuant to Section 1445 of the Code if such Investor were not a U.S.
Person, and any amount so withheld shall be treated as a distribution under
Sections 4.2 or 4.3 of this Agreement, as the case may be, and shall reduce the
amount otherwise distributable to such Investor thereunder. Alternatively, the
General Partner may at its option loan the Investor an amount equal to the tax
to be withheld (at an interest rate equal to the Escrow Agent's announced "prime
rate" plus two percentage points), such loan to be repaid by retaining such
Investor's distributions. In addition, the General Partner is authorized to
withhold from any distribution made to an Investor the amount of tax paid or to
be paid by the Partnership under Section 1446 of the Code with respect to such
Investor.
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G. Notwithstanding anything to the contrary that may be expressed or
implied in this Agreement, if at any time the allocation provisions of this
Article IV do not result in the allocation to the General Partner of at least 1%
of the Profit or Loss being allocated, the General Partner shall be allocated 1%
thereof.
H. It is the intent of the General Partner that each Investor's and
Partner's distributive share of Profit and Loss shall be determined and
allocated in accordance with this Article IV to the fullest extent permitted by
Sections 704(b) and 706 of the Code. Therefore, if the Partnership is advised by
the Accountants or the Partnership's legal counsel, that the allocations
provided in Article IV of this Agreement are unlikely to be respected for
federal income tax purposes, the General Partner has been granted the power in
Section 12.11.B hereof to amend the allocation provisions of this Agreement, on
advice of the Accountants or the Partnership's legal counsel, to the minimum
extent necessary to conform to Sections 704(b) and 706 of the Code the plan of
allocations and distributions of Profit and Loss, Net Cash Flow and Net Proceeds
of Sale or Financing provided in this Agreement.
I. Notwithstanding any other provision of this Agreement, the General
Partner may, after giving ninety (90) days prior Notification to the Investors,
(i) adopt any other method for determining, in the event of transfers of Units,
the Investors entitled to distributions of Net Cash Flow or Net Proceeds from a
Sale or Financing that the General Partner, subject to the review and approval
of the Accountants, determines is reasonable, and (ii) allocate Profit or Loss
among the Investors during the taxable year in any other manner that the General
Partner, determines satisfies the requirements of Section 706 of the Code, but
only to the extent such allocation of Profit and Loss incorporates the minimum
changes required to comply with such section and is supported by an opinion of
counsel to the Partnership.
J. Allocations and distributions to Investors as a class shall be made to
each Investor entitled to such allocation or distribution based upon the ratio
of the number of Units owned by each such Investor to the number of Units owned
by all Investors entitled to such allocation or distribution.
K. In accordance with Section 704(c) of the Code and the Income Tax
Regulations thereunder, income, gain, loss, and deduction (including
depreciation) with respect to any property contributed to the capital of the
Partnership shall be allocated among the Investors and Partners so as to take
account of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its fair market value on the
date of contribution. In the event the value at which Partnership assets are
carried on its balance sheet maintained under the terms of this Agreement are
adjusted pursuant to Income Tax Reg. ss.1.704-1(b)(2)(iv)(f), subsequent
allocations of income, gain, loss and deduction with respect to such assets
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and the value carried on such balance sheet in the
same manner as under Section 704(c) of the Code and the Income Tax Regulations
thereunder. Any elections or other decisions relating to such allocations shall
be made by the General Partner in any manner that reasonably reflects the
purpose and intention of this Agreement. Allocations pursuant to this Section
are solely for purposes of federal, state and local taxes and shall not affect,
or in any way be taken into account in computing, any Investor's or Partner's
Capital Account or share of Profit, Loss, Net Cash Flow, Net Proceeds from a
Sale, Net Proceeds from a Financing, or other distributions pursuant to any
provision of this Agreement.
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ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 5.1 Management and Control of the Partnership; Tax Matters Partner
A. Subject to the Majority Vote of the Investors when required by this
Agreement, the General Partner shall have the exclusive right to manage and
control the business of the Partnership.
B. No Limited Partner or Investor (except one who may also be a General
Partner, and then only in his capacity as General Partner) shall have the right
to participate in the control of the business of the Partnership, or have any
authority or right to act for or bind the Partnership.
C. The General Partner is hereby designated to serve as the Partnership's
Tax Matters Partner and shall have all of the powers and responsibilities of
such position as provided in Sections 6221 et seq. of the Code. All third party
costs and expenses incurred by the General Partner in performing its duties as
Tax Matters Partner shall be home by the Partnership, as shall all expenses
incurred by the Partnership and/or the Tax Matters Partner in connection with
any tax audit or tax-related administrative or judicial proceeding. Each Partner
and Investor shall be responsible for all costs incurred by such Partner or
Investor with respect to any tax audit or tax related administrative or judicial
proceeding in connection with such Partner's or Investor's tax returns and all
costs incurred by any such Partner or Investor who participates in any tax audit
or tax-related administrative or judicial proceeding of or against the
Partnership or any Partner. Each Partner and Investor hereby (i) expressly
authorizes the Tax Matters Partner to enter into any settlement with the
Internal Revenue Service with respect to any tax matter, tax item, tax issue,
tax audit, or judicial proceeding, which settlement shall be binding on all
Partners and Investors; (ii) waives the right to participate in any
administrative or judicial proceeding in which the tax treatment of any
Partnership item is to be determined; and (iii) agrees to execute such consents,
waivers or other documents as the Tax Matters Partner may determine are
necessary to accomplish the provisions of this Section 5. 1C. The Tax Matters
Partner shall have no liability to any Partner or Investor or the Partnership,
and shall be indemnified by the Partnership to the full extent provided by law,
for any act or omission performed or omitted by it within the scope of the
authority conferred on it by this Agreement, except for acts of negligence or
for damages arising from any misrepresentation or breach of any other agreement
with the Partnership. The liability and indemnification of the Tax Matters
Partner shall be determined in the same manner as is provided in Sections 5.9
and 5.10 hereof.
Section 5.2 Authority of General Partner
A. Except to the extent otherwise provided herein, including, without
limitation, Sections 5.3A, 5.4 and 5.5, the General Partner for, and in the name
of, and on behalf of, the Partnership is hereby authorized:
(i) to enter into any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to the
accomplishment of the purposes of the Partnership, so long as said activities
and contracts may be lawfully carried on or performed by a limited partnership
under applicable laws and regulations;
(ii) to engage Persons, including a Sponsor as provided in Article IX, to
provide services or goods to the Partnership, upon such terms as the General
Partner deems fair and reasonable and in the best interest of the Partnership,
provided, however, that, as to services or goods provided by a Sponsor (except
for those services for which compensation is specifically authorized in Sections
9.1 and 9.2 of this Agreement), (a) the goods or services must be necessary to
the prudent operation of the Partnership, (b) the compensation, price or fee
must be equal to either (1) the lesser of (A) the cost of such services or goods
to such Sponsor or (B) ninety percent (90%) of the competitive price that would
be charged by non-affiliated persons or entities rendering similar services in
the same or comparable geographic location or (C) ninety percent (90%) of the
compensation, price or fee charged by such Sponsor for rendering comparable
services or selling or leasing comparable goods on competitive terms or (2) if
at least ninety-five percent (95%) of gross revenues attributable to the
business of rendering such services or selling or leasing such
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goods are derived from persons or entities other than Affiliates, the
compensation, price or fee charged by any non-affiliated persons or entities who
is rendering comparable services or selling or leasing comparable goods on
competitive terms in the same geographic location; (c) all such transactions
shall be embodied in a written contract that precisely describes the services or
goods to be provided and the compensation to be paid, which contract may only be
modified by the Majority Vote of the Investors, and which contract shall permit
termination without penalty on sixty (60) days notice; (d) the goods and
services to be provided and the written contract referred to in subparagraph (c)
above and the compensation and other terms of such contracts must be fully
disclosed in the Prospectus; (e) the Sponsor must have been previously engaged
in the business of rendering such services or selling or leasing such goods as
an ordinary and ongoing business for a period of at least three years; (f) the
Sponsor must receive at least thirty-three percent (33%) of gross revenues for
such goods or services from persons or entities other than Affiliates; and (g)
except for those services to be provided pursuant to Subsection
5.2(A)(ii)(a)-(f) above and under agreements providing the compensation referred
to in Sections 9.1 and 9.2 of this Agreement, any additional goods and services
provided by a Sponsor will be provided only (1) under extraordinary
circumstances, (2) if the compensation, price or fee is competitive with the
compensation, price or fee of any non-affiliated persons or entities who is
rendering comparable services or selling or leasing comparable goods on
competitive terms which could not reasonably be made available to the
Partnership, (3) if the fees and other terms of the contract are fully
disclosed, (4) if the Sponsor has been previously engaged in the business of
rendering such services or selling or leasing such goods, independently of the
Partnership and as an ordinary and ongoing business, (5) if the compensation to
be paid to the Sponsor equals the lesser of the cost of such services or goods
to such Sponsor or ninety percent (90%) of the competitive price that would be
charged by non-affiliated persons or entities rendering similar types and
quality of services in the same or comparable geographic locations, (6) and if
there is compliance with Subsection 5.2(A)(ii)(a) and (c) above;
(iii) to acquire by lease or purchase, improve, develop, own, construct,
finance, maintain, mortgage, lease or exchange incident to a tax-free swap any
real estate and any personal property necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership, including without limitation,
any Property;
(iv) to grant options with respect to, sell, convey, or assign any
Partnership Property or any other real estate or personal property necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership;
(v) to execute any and all agreements, contracts, documents, certifications
and instruments necessary or convenient in connection with the acquisition,
development, construction, management, maintenance and operation of any
Partnership Property, including without limitation, the Parking Consulting
Agreement and the Leases;
(vi) to borrow funds secured by any or all of the Partnership Properties;
to mortgage, pledge or otherwise hypothecate a portion or all of the Partnership
Properties in connection with such borrowings, including without limitation to
secure the same by deed of trust, mortgage, security interest, pledge or other
lien or encumbrance on any Partnership Property or any other assets of the
Partnership; to borrow funds on the general credit of the Partnership; to issue
evidences of indebtedness; and to take any action and enter into any agreement
necessary or advisable in connection with such borrowings; such funds may be
borrowed from the General Partner, the Consultant, or any of their Affiliates,
banks, other institutional lenders or private lenders, in order to complete the
investment of the Net Proceeds of the Offering, to supplement working capital
reserves, to make distributions to Investors, for use in the business of the
Partnership or in furtherance of any or all of the purposes of the Partnership,
including without limitation, to repurchase Units as long as such repurchase
does not materially impair the capital or operation of the Partnership;
(vii) to repay in whole or in part, negotiate, refinance, recast, increase,
renew, modify or extend any secured, or other indebtedness affecting any
Property and in connection therewith to
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execute any extensions, renewals or modifications of any evidences of
indebtedness secured by deeds of trust, mortgages, security interests, pledges
or other encumbrances covering any Property or assets, provided, however, that
it is the Partnership's objective to acquire the Properties on an all-cash basis
and the General Partner does not anticipate that it will be necessary to borrow
money to acquire the Properties (although the General Partner may obtain
financing and place mortgages on the Properties at a later date);
(viii) to engage a person (including a Sponsor or the Consultant) to sell
any Property or assets or portions thereof upon such terms and conditions as are
deemed fair and reasonable by the General Partner and to be in the best interest
of the Partnership, and to pay reasonable compensation for such services;
provided, however, that the total compensation paid to all persons (including
the Consultant) shall be limited to a Competitive Real Estate Commission, not to
exceed six percent (6%) of the contract price for the Sale of any Partnership
Property or assets, and, in addition, if a Sponsor provides substantial amount
of the services in the sales effort, to pay the Sponsor up to one-half of the
Competitive Real Estate Commission, not to exceed 1.5%, provided, however, that
the payment of such real estate commission to the Sponsor shall be subordinated
to the payment to Investors of their Adjusted Capital Balance plus a six percent
(6%) annual cumulative return; if the Sponsor participates with an independent
broker on resale, the subordination requirement shall apply only to the
commission earned by the Sponsor;
(ix) to recognize transferees of Units as Investors and to admit substitute
Limited Partners in accordance with the terms described in the Prospectus and
Article VII of this Agreement;
(x) pending the investment of the Partnership's assets in the Properties,
to invest the Part- nership's assets in Interim Investments as determined by the
General Partner in its sole discretion and to similarly invest the Working
Capital Reserves;
(xi) to purchase and cancel or otherwise retire or dispose of the
Partnership Interests or Units of any Partner or Investor according to the
provisions of this Agreement and as described in the Prospectus;
(xii) to execute and deliver all documents necessary or appropriate (a) for
the sale of Units, including the Prospectus and filings under the Securities Act
of 1933 and any other federal and state laws relating to the sale of securities
and (b) to file state and local income tax returns at the Partnership level on
behalf of the Investors and Partners;
(xiii) to require Investors to become Limited Partners (in which case the
General Partner shall have the power to amend this Agreement without the
Majority Vote of the Investors) and to take such other action with respect to
the manner in which Units are being or may be transferred or traded as may be
necessary or appropriate to preserve the tax status of the Partnership as a
partnership for federal income tax purposes and the tax treatment of the
Investors as Partners (but such action shall be taken only to the minimum extent
determined advisable pursuant to an opinion of Counsel and only with the
Majority Vote of Investors if the changes would adversely affect the Investors);
(xiv) to take such steps (including amendment of this Agreement) as the
General Partner determines are advisable or necessary and will not result in any
material adverse effect on the economic position of a majority in interest of
the Investors with respect to the Partnership in order to preserve the tax
status of the Partnership as a partnership for federal income tax purposes and
the tax treatment of the Investors as Partners, including, without limitation,
removing the Units from public trading markets and imposing restrictions on
transfers of Units or Interests (provided such restrictions on transfers do not
cause the Partnership's assets to be deemed "plan assets" within the meaning of
ERISA) (but such action shall be taken only to the minimum extent determined
advisable pursuant to an opinion of Counsel and only with the Majority Vote of
Investors if the changes would adversely affect the Investors);
(xv) to establish and maintain the Working Capital Reserves described in
Section 3.3E;
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(xvi) to pay or reimburse any reasonable out-of-pocket expenses incurred by
the General Partner or any of its Affiliates in connection with any report
pursuant to Section 10.3, provided that such payment or reimbursement shall not
exceed the lesser of (a) the cost of such services to the General Partner or
such Affiliate or (b) ninety percent (90%) of the amount the Partnership would
be required to pay to independent parties for comparable report preparation in
the same geographic location and no profit shall be made by the General Partner
or any Affiliate in connection with any such report;
(xvii) upon the Majority Vote of the Investors to the matters set forth in
Sections 5.4A(xvi), 5.4A(xvii) or 5.4A(xviii), to take any actions to the extent
authorized by the Investors to facilitate the purposes described in such
sections, including, without limitation, amendments to this Agreement to change
the dates upon which transfers of Units will be recognized, and the General
Partner shall give prior written notice to the Investors of any such amendment;
(xviii) to take such steps as the General Partner determines are advisable
or necessary and will not result in any material adverse effect on the economic
position of a majority in interest of the Investors with respect to the
Partnership to restructure the Partnership and its activities to obtain a
prohibited transaction exemption from the Department of Labor or to comply with
any exemption in final plan asset regulations adopted by the Department of
Labor, including, but not limited to, establishing a fixed percentage of Units
permitted to be held by qualified plans or other tax-exempt investors or
discontinuing sales to such entities after a given date, in the event that
either the assets of the Partnership constitute "plan assets" for purposes of
ERISA or the transactions contemplated hereunder constitute prohibited
transactions under ERISA or the Code;
(xix) invest in general partnerships or joint ventures with non-Affiliates
that own or operate one or more particular properties if the Partnership, alone
or together with any publicly registered Affiliate of the Partnership meeting
the requirements of Subsection 5.2(A)(xx) below, acquires a controlling interest
in such general partnership or joint venture, but in no event shall duplicate
fees be permitted. For purposes of this Subsection 5.2(A)(xix) and Subsection
5.2(A)(xxii) below, "controlling interest" means an equity interest possessing
the power to direct or cause the direction of the management and policies of the
general partnership or joint venture, including the authority to: (a) review all
contracts entered into by the general partnership or joint venture that will
have a material effect on its business or property; (b) cause a sale or
refinancing of the property or its interest therein subject in certain cases
where required by the partnership or joint venture agreement, to limits as to
time, minimum amounts and/or a right of first refusal by the joint venture
partner or consent of the joint venture partner; (c) approve budgets and major
capital expenditures, subject to a stated minimum amount; (d) veto any sale or
refinancing of the property, or, alternatively, to receive a specified
preference on sale or refinancing proceeds; and (e) exercise a right of first
refusal on any desired sale or refinancing by the joint venture partner of its
interest in the property except for transfer to an Affiliate of the joint
venture partner.
(xx) invest in general partnerships or joint ventures with other publicly
registered Affiliates of the Partnership ("Related Venturer") only if all of the
following conditions are met: (a) the Partnership and the Affiliate have
substantially identical investment objectives; (b) there are no duplicate fees;
(c) the compensation to the General Partner of the Partnership is substantially
identical to that of the general partners of the Related Venture; (d) the
Partnership and the Affiliate each has a right of first refusal to buy in the
event the other wishes to sell property held in the joint venture; and (e) the
investment of each of the Partnership and the Affiliate is on substantially the
same terms and conditions;
(xxi) invest in general partnerships or joint ventures with Affiliates
other than publicly registered Affiliates of the Partnership only under the
following conditions: (a) the investment is necessary to relieve the General
Partner or an Affiliate from any commitment to purchase a property in its own
name temporarily to facilitate its acquisition by the Partnership, which
commitment was entered into prior to the Termination Date of the Offering; (b)
there are no
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duplicate fees; (c) the investment of each entity is on substantially the same
terms and conditions; and (d) the Partnership has a right of first refusal to
buy in the event the General Partner or an Affiliate wishes to sell property
held in the joint venture;
(xxii) Invest in general partnerships interests of limited partnerships
only under the following conditions: (a) the Partnership alone or with any
publicly registered Affiliate of the Partnership meeting the requirements of
Subsection 5.2(A)(xx) above, acquires a "controlling interest" as defined in
Subsection 5.2(A)(xix) above; (b) there are no duplicate fees; (c) there is no
additional compensation beyond that permitted by Section IV of the NASAA
guidelines as in effect in September, 1990 (the "NASAA Guidelines"); and (d) the
Partnership complies with Section V of the NASAA Guidelines; and
(xxiii) Invest in limited partnership interests of other limited
partnerships (the "Lower-Tier Partnerships") only if all of the following
conditions are met:
(a) If the general partner of the Lower-Tier Partnership is a Sponsor of
the Partnership:
(1) the Partnership shall not invest in such Lower-Tier Partnership unless
the partner- ship agreement of the Lower-Tier Partnership contains provisions
complying with Section IX.F of the NASAA Guidelines and provisions acknowledging
privity between the Lower- Tier Partnership's general partner and the
Unitholders; and
(2) compensation payable in the aggregate from both partnership levels
shall not exceed the amounts permitted under Section IV of the NASAA Guidelines.
(b) If the general partner of the Lower-Tier Partnership is not a Sponsor
of the Partnership:
(1) the Partnership shall not invest in the Lower-Tier Partnership unless
the partnership agreement of the Lower-Tier Partnership contains provisions
complying with Sections II.E. and F.; VII.A.-D.,H. and J., and IX.C. of the
NASAA Guidelines; and
(2) compensation payable at both tiers shall not exceed the amounts
permitted under Section IV of the NASAA Guidelines.
(c) Each Lower-Tier Partnership shall have as its limited partners only
publicly registered partnerships; provided, however, that special limited
partners not affiliated with the Sponsor shall be permitted if the interests
taken result in no diminution in the control exercisable by the other limited
partners.
(d) No investment may be structured with more than two partnership tiers.
(e) Duplicate fees shall be prohibited.
(f) Notwithstanding anything herein to the contrary, Unitholders can, upon
the vote of the majority in interest of the Unitholders and without the
concurrence of the Sponsors, direct the General Partner of the Partnership
(acting on behalf of the Partnership) to take any action permitted to a limited
partner (e.g., the Partnership) in the Lower-Tier Partnership.
(g) The Partnership's prospectus must fully and prominently disclose the
two-tiered arrangement and any risks related thereto.
B. Any person dealing with the Partnership or the General Partner may rely
upon a certificate signed by the General Partner, as to: (i) the identity of any
General Partner or any Limited Partner; (ii) the existence or non-existence of
any fact or facts that constitute conditions precedent to acts by the General
Partner or in any other manner are germane to the affairs of the Partnership;
(iii) the Persons who are authorized to execute and deliver any instrument or
document of the Partnership; or (iv) any act or failure to act by the
Partnership or as to any other matter whatsoever involving the Partnership or
any Partner.
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Section 5.3 Authority of Investors
A. By the Majority Vote of the Investors, the Investors, without the
consent of the General Partner, may:
(i) amend this Agreement; provided that such amendment (a) shall not in any
manner allow the Investors to take part in the control of the Partnership's
business in a manner which would subject them to liability as general partners
under the Act or any other applicable law, and (b) shall not, without the
consent of the General Partner affected, alter the rights, powers, or duties of
the General Partner or its interest in Profit and Loss, Net Cash Flow, Net
Proceeds of Sale or Financing, or alter any of the provisions of Section 8.2
hereof;
(ii) dissolve or terminate the Partnership prior to the expiration of its
term;
(iii) remove the General Partner and, pursuant to Section 6.2, elect a new
General Partner;
(iv) approve or disapprove of the Sale of all or substantially all of the
Partnership Property; or
(v) terminate, upon 60 days notice, any contract between the Partnership
and the General Partner or any Affiliate thereof.
B. Any action taken pursuant to Section 5.3A hereof shall be void ab
initio, if prior to or within sixty (60) days after such vote either (i) the
Partnership shall have received an opinion of counsel, which counsel is approved
by the Majority Vote of the Investors, that such action may not be effected
without subjecting the Investors to liability as general partners under the Act
or under the laws of such other jurisdiction in which the Partnership owns
properties or is doing business, or (ii) a court of competent jurisdiction shall
have entered a final judgment to the foregoing effect. For purposes of this
paragraph, counsel will be deemed approved by the Majority Vote of the Investors
if proposed by the General Partner and affirmatively approved in writing within
thirty (30) days; provided, that if the holders of 10% or more of the
outstanding Units proposed counsel for this purpose, such proposed counsel, and
not counsel proposed by the General Partner shall be submitted for such approval
by the Investors. The existence of such an opinion of counsel or court judgment
with respect to a particular contemplated Partnership action shall not affect
the rights of the Investors to vote on other future actions or the existence of
such rights. If the opinion of counsel or court judgment referred to above has
not been obtained the vote shall proceed as scheduled and it shall not be
delayed or postponed for any reason except as otherwise permitted by the Act.
Section 5.4 Restrictions on Authority
A. The General Partner and its Affiliates shall have no authority to
perform any act in violation of any applicable laws or regulations thereunder,
nor shall the General Partner as such have any authority:
(i) to purchase or acquire property other than as described in the
Prospectus or to invest more than 10% of the Proceeds available for investment
of the Offering in unimproved, non-income producing property;
(ii) except as permitted in this Agreement, to do an act required to be
approved by the Investors under the Act;
(iii) to reinvest in Properties any Net Cash Flow or Net Proceeds from a
Sale or Financing;
(iv) except with respect to the Interim Investments, to invest in or
underwrite securities of any type or kind for any purpose, or make investments
other than in the Properties and the operations related and incidental thereto;
(v) to do any act in contravention of this Agreement;
(vi) to do any act that would make it impossible to carry on the ordinary
business of the Partnership;
A-20
(vii) to confess a judgment against the Partnership;
(viii) to offer Interests or Units in exchange for property;
(ix)to possess any property, or assign the Partnership's rights in same,
for other than the exclusive use of the Partnership;
(x) to operate in such a manner as to be classified as an "investment
company" under the meaning of the Investment Company Act of 1940;
(xi) to purchase or lease any property from or sell or lease property to
the General Partner, its Affiliates or any program or partnership in which the
General Partner or its Affiliates have any interest (provided however that the
General Partner or an Affiliate (but not a program or partnership in which the
General Partner or an Affiliate has an interest) may purchase a Property in its
own name (and assume loans in connection therewith) and temporarily hold title
thereto (but in no event purchase a Property held for a period in excess of 12
months prior to the date of the Prospectus), for the purpose of facilitating the
acquisition of the Property, or the borrowing of money or obtaining of financing
for the Partnership, or any other purpose related to the business of the
Partnership, provided that the Property is purchased by the Partnership for a
price no greater than the cost of the Property to the Sponsor, except
compensation in accordance with the NASAA Guidelines, and provided there is no
difference in interest rates of the loans secured by the Property at the time
acquired by the Sponsor and the time acquired by the Partnership, nor any other
benefit arising out of such transaction to the Sponsor apart from compensation
otherwise permitted under the NASAA Guidelines; accordingly, all income
generated and expenses associated with the Property shall be treated as
belonging to the Partnership; the Sponsor shall not sell a Property to the
Partnership pursuant to this section 5.4.A(xi) if the cost of the Property
exceeds the funds reasonably anticipated to be available to the Partnership to
purchase the Property; if the cost of the Properties acquired by the Sponsor on
behalf of the Partnership exceeds Partnership funds available, the General
Partner shall determine the Properties to be acquired by the Partnership based
solely upon fulfilling the Partnership's objectives of obtaining a diversified
portfolio of Properties believed to have significant future potential for
eventual sale as development sites;
(xii) to admit a Person as a General Partner, except as provided in this
Agreement;
(xiii) to admit a Person as an Investor or Limited Partner, except as
provided in this Agreement;
(xiv) to create a total indebtedness incurred by the Partnership in excess
of 50% of the fair market value of the assets of the Partnership at the time the
debt is incurred as determined by an independent appraisal; provided, however,
that the foregoing term "indebtedness" shall include the principal of any loan
together with any interest that may be deferred pursuant to the terms of the
loan agreement which exceeds 5% per annum of the principal balance of such
indebtedness (excluding contingent participations in income or appreciation in
the value of the property) and shall exclude any indebtedness incurred by the
Partnership for necessary working capital;
(xv) make loans of any kind, except to the extent of receiving purchase
money obligations in connection with the Sale of any Property;
(xvi) without the Majority Vote of the Investors, to cause or facilitate
the merger or consolidation of the Partnership with other partnerships,
including, but not limited to, mergers or consolidations in which the Investors
receive in exchange for their Units interests in the surviving entity, with the
objective of listing the interests of the surviving entity on a national or
regional securities-exchange or NASDAQ (provided that no Units owned by the
General Partner or its Affiliates shall be entitled to vote with respect to such
transaction);
(xvii) subject to Section 7.2.A, without the Majority Vote of the
Investors, to list the Units on a securities exchange or enable the Units to be
traded in the over-the-counter market, or otherwise facilitate the establishment
of a market for the trading of Units, or (except as set forth in Section
5.2A(xiv)) to withdraw the Units from such listing;
A-21
(xviii) without the Majority Vote of the Investors, to restructure the
Partnership as a real estate investment trust ("REIT") for federal income tax
purposes; or
(xix) to obtain mortgage financing which is not fully amortized over not
more than 30 years or which requires balloon payments due sooner than seven
years from the date the Partnership acquires the Property securing such
financing; provided, however, that the foregoing do not apply to financing
representing 25% or less of the purchase price of the Properties acquired or to
interim financing. B. The General Partner shall not take any action which, for
federal tax purposes, shall cause the
Partnership to terminate or to be treated as an association taxable as a
corporation.
Section 5.5 Authority of Partners and Affiliated Persons to Deal with
Partnership
A. The General Partner may, for, in the name of, and on behalf of, the
Partnership, acquire property from, borrow money from, enter into agreements,
contracts or the like (in addition to those set forth herein) with, or reimburse
for reasonable out-of-pocket expenses incurred in connection with the
preparation of reports by, any Sponsor in an independent capacity, as
distinguished from such capacity (if any) as a Sponsor, as if such Sponsor were
an independent contractor; provided, however, that any such agreement shall be
subject to the conditions set forth in Section 5.2A(ii) herein.
B. Neither the General Partner nor any Affiliate thereof shall have the
authority:
(i) to receive any compensation, fee or expense not otherwise permitted to
be paid to it under the terms of this Agreement or the Prospectus;
(ii) to cause the Partnership to acquire a Property, or to grant options
with respect to, sell, convey, or assign such Property to the Consultant or the
Parking Lot Operator, without first having obtained an appraisal prepared by a
competent, independent appraiser which supports the real property acquisition or
sale by the Partnership;
(iii) to commingle the Partnership's funds with those of any other Person,
or to invest any of the Net Proceeds of the Offering in junior mortgages, junior
deeds of trust or other similar obligations, except that funds of the
Partnership may be temporarily retained by agents of the Partnership pursuant to
contracts for the rendering of services to the Partnership by such agents or
held in accounts established and maintained for the purpose of making the
Interim Investments and/or computerized disbursements;
(iv) to cause the Partnership to lend money or other\ assets to the General
Partner or any Affiliate thereof; (v) to grant to the General Partner or any
Affiliate thereof an exclusive listing for the Sale of any assets of the
Partnership; (vi) to receive any rebate or give-up, or to participate in any
reciprocal business arrangement with the General Partner or an Affiliate thereof
which would circumvent the provisions of this Agreement or the NASAA Guidelines;
(vii) to cause the Partnership to acquire a Property that is under
construction without completion bonds, fixed price guarantees or other
satisfactory arrangements; or
(viii) to cause the Partnership to pay directly or indirectly, a commission
or fee (except as provided under Section 5.2.A.(viii)) to a Sponsor in
connection with the distribution of the proceeds of the Sale or Financing of the
Properties.
C. If a loan is made to the Partnership by the General Partner, the General
Partner may not receive interest or similar charges or fees in excess of the
amount which would be charged by unrelated lending institutions on comparable
loans for the same purpose, in the same locality of the property if the loan is
made in connection with a particular property. No prepayment charge or penalty
shall be required by the General Partner on a loan to the Partnership secured by
either a first or a junior or all-inclusive trust deed, mortgage or encumbrance
on the property, except to the extent
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that such prepayment charge or penalty is attributable to the underlying
encumbrance. Notwithstanding the foregoing, the General Partner shall not
provide Financing to the Partnership.
Section 5.6 Duties and Obligations of the General Partner
A. The General Partner shall take all action that may be necessary or
appropriate (i) for the continuation of the Partnership's existence as a limited
partnership under the Act (and under the laws of each other jurisdiction in
which such existence is necessary to protect the limited liability of the
Investors and the Limited Partners or to enable the Partnership to conduct the
business in which it is engaged), and (ii) for the acquisition, maintenance,
preservation and operation of the Properties in accordance with the Prospectus,
the provisions of this Agreement and applicable laws and regulations. The
General Partner shall devote to the Partnership such time as may be necessary
for the proper performance of its duties hereunder, but neither the General
Partner nor any of its Affiliates shall be expected to devote its full time to
the performance of such duties. The General Partner or its Affiliates may act as
general or managing partners for other partnerships engaged in businesses
similar to that conducted by the Partnership. Nothing herein shall limit the
General Partner or its Affiliates from engaging in any such business activities,
or any other activities which may be competitive with the Partnership (unless
such competitive activity would have a material adverse effect upon the business
of the Partnership).
B. The General Partner shall at all times conduct its affairs, the affairs
of all its Affiliates and the affairs of the Partnership in such a manner that
no Limited Partner or Investor (except a Limited Partner or Investor who is also
a General Partner) will have any personal liability for Partnership debts except
as otherwise set forth herein and in the Prospectus.
C. The General Partner shall prepare or cause to be prepared, and shall
file, on or before the due date (or any extension thereof), any federal, state
or local tax returns required to be filed by the Partnership. The General
Partner shall cause the Partnership to pay any taxes payable by the Partnership
to the extent same are not payable by any other party. Prior to the commencement
of the Offering, the General Partner shall have a net worth of at least
$500,000, and at all times during the Offering and thereafter during the term of
the Partnership, the General Partner shall have and will use its best efforts to
maintain a net worth equal to at least (i) 10% of the Capital Contributions
until $10,000,000 of Capital Contributions have been raised, (ii) $1,000,000
thereafter until $20,000,000 of Capital Contributions have been raised and (iii)
5% of the Capital Contributions thereafter until $25,000,000 of Capital
Contributions have been raised, or such other minimum net worth as may be
necessary or appropriate in accordance with the advice of counsel to the
Partnership (such net worth in each instance to be exclusive of the General
Partner's interest in the Partnership and any notes and accounts receivable from
or notes and accounts payable to the Partnership).
D. The General Partner shall cause to be obtained and kept in force during
the term hereof, fire and extended coverage, workmen's compensation, and public
liability insurance in favor of the Partnership with such insurers and in such
amounts as the General Partner deems advisable.
E. The General Partner shall be under a fiduciary duty to conduct the
affairs of the Partnership in the best interests of the Partnership, including
the safekeeping and use of all Partnership funds and assets, whether or not in
the General Partner's possession or control, and the use thereof by any person
or entity in any manner except for the exclusive benefit of the Partnership. The
General Partner shall not enter into any contract or agreement, relieving it of
its common law fiduciary duty. The General Partner shall at all times act in
good faith and exercise due diligence in all activities relating to the conduct
of the business of the Partnership. The General Partner shall treat the
Investors as a group and shall not favor the interests of any particular
Investor.
F. The General Partner shall cause the Partnership to commit a percentage
of the Gross Proceeds of the Offering to Investment in Properties of at least
84.5%. Any proceeds of the Offering not invested within the later of two (2)
years after the date of the Prospectus or one (1) year after the Termination
Date of the Offering (except for necessary operating capital) and any offering
and organizational expenses attributable to such returned proceeds shall be
distributed pro rata to the
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Investors as a return of capital so long as the adjusted Investment in
Properties is in compliance with the preceding sentence.
G. Except for payment of the Sales Commissions and the re-allowance of all
or part of the Due Diligence Expense Reimbursement Fee and the Offering and
Organization Expense Fee, the General Partner shall not directly or indirectly
pay or award any commission or other compensation to any Person engaged by a
potential Investor for investment advice as an inducement to such advisor to
advise the purchase of Units.
Section 5.7 Compensation of General Partner
Except as expressly provided in Articles IV and IX herein, the General
Partner shall receive no fees, salaries, profits, distributions, reimbursement
or other compensation for serving as General Partner.
Section 5.8 Other Businesses of Partners
Neither the Partnership nor any Partner or Investor shall have any rights
or obligations, by virtue of this Agreement, in or to any independent ventures
of any nature or description, or the income or profits derived therefrom, in
which a Partner or Investor may engage, including, without limitation, the
ownership, operation, management, syndication and development of other real
estate projects.
Section 5.9 Liability of General Partner and Affiliates to Limited Partners
or Investors
The General Partner and its Affiliates performing certain services on
behalf of the Partnership shall not be liable, responsible, or accountable, in
liabilities, damages or otherwise, to any Investor, Limited Partner or the
Partnership for any loss, judgment, liability, expense or amount paid in
settlement of any claims sustained which arise out of any conduct, act or
omission performed or omitted to be performed by any or all of them on behalf of
or for the Partnership within the scope of the authority conferred on them by
this Agreement, provided that the General Partner determines, in good faith,
that such conduct, act or omission was in the best interests of the Partnership,
except for acts of negligence or misconduct. The Partnership shall not incur the
cost of that portion of any liability insurance which insures the General
Partner or its Affiliates against any liability as to which the General Partner
or its Affiliates may not be indemnified under Section 5.10 herein.
Section 5.10 Indemnification
A. The General Partner, Affiliates of the General Partner performing
certain services on behalf of the Fund and any person acting as a broker/dealer
shall be indemnified to the full extent provided by law for any loss, judgment,
liability, expense or amount paid in settlement of any claims sustained by them
which arise out of any conduct, act or omission performed or omitted to be
performed by any or all of them on behalf of or for the Partnership within the
scope of the authority conferred on them by this Agreement, if the General
Partner determines, in good faith, that such conduct, act or omission was in the
best interests of the Partnership and that such act or omission did not
constitute negligence or misconduct, provided that any indemnity under this
Section shall be provided out of and to the extent of Partnership assets only,
and no Investor or Limited Partner shall have any personal liability on account
thereof.
B. Notwithstanding Section 5.10A, the General Partner, Affiliates of the
General Partner performing certain services on behalf of the Fund and any person
acting as a broker/dealer shall not be indemnified by the Partnership for any
loss, liability, or expense arising from or out of an alleged violation of
federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving securities laws violations,
(ii) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction or (iii) a court of competent jurisdiction approves a
settlement of the claims and finds that indemnification of the settlement and
related costs should be made, after being advised as to the current position of
the Securities and Exchange Commission, the Massachusetts Securities Division,
the California Commissioner of Corporations,
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the Pennsylvania Securities Commission, the Tennessee Securities Commission, the
Missouri Securities Division (and such other state securities administrators as
shall be required by such court) regarding indemnification for violations of
securities law.
ARTICLE VI
TRANSFERABILITY OF THE GENERAL PARTNERS INTEREST
Section 6.1 Removal, Voluntary Retirement or Withdrawal of the General
Partner; Transfer of Interests
A. The General Partner may be removed in the manner specified in Section
5.3A herein.
B. The General Partner may not voluntarily withdraw or retire from its
position as a General Partner of the Partnership unless another General Partner
(including any Additional or Successor General Partner admitted pursuant to
Section 6.2) remains, and unless (i) counsel for the Partnership is of the
opinion that such voluntary retirement or withdrawal from the Partnership will
not cause the Partnership (a) to be dissolved under the Act, (b) to be
classified other than as a partnership for federal income tax purposes or (c) to
terminate for federal income tax purposes; and (ii) the approval of the
remaining General Partners, if any, and the Majority Vote of the Investors to
such voluntary retirement or withdrawal is obtained.
C. If the General Partner voluntarily retires or withdraws from the
Partnership in violation of this Section 6.1, the General Partner shall be and
remain liable to the Partnership and the Partners for damages resulting from the
General Partner's breach of this Agreement, and, without limitation of remedies,
the Partnership may offset such damages against the amounts otherwise
distributable to the General Partner.
D. The General Partner shall not have the right to sell, exchange, or
otherwise dispose of all or any portion of its Interest unless the proposed
assignee or transferee of all or a portion of the Interest of the General
Partner is admitted as a Successor or Additional General Partner to the
Partnership pursuant to the provisions of Section 6.2 prior to any such sale,
exchange or other disposition.
E. The voluntary retirement or withdrawal of the General Partner shall
become effective only upon (i) receipt by the Partnership of the opinions of
counsel referred to in Section 6. 1 B(i), (ii) receipt by the Partnership of the
approval and consent referred to in Section 6.1B(ii) and (iii) the recordation
of an amendment of the Partnership's Certificate to reflect such withdrawal or
retirement.
Section 6.2 Election and Admission of Successor or Additional General
Partners
A. The General Partner may at any time designate additional persons to be
Successor or Additional General Partners, provided that the conditions of
Section 6.2B are satisfied.
B. Except as otherwise expressly provided herein, no Person shall be
admitted as a Successor or Additional General Partner unless (i) counsel for the
Partnership is of the opinion that the admission of such Successor or Additional
General Partner will not cause the Partnership to be classified other than as a
partnership for federal income tax purposes or cause the Partnership to
terminate for federal income tax purposes, (ii) the consent of the then
remaining General Partners, if any, is obtained and (iii) the Majority Vote of
the Investors to such admission has been obtained.
C. The admission of such Successor or Additional General Partner shall
become effective upon (i) receipt by the Partnership of the opinion referred to
in Section 6.2B(i), (ii) receipt by the Partnership of the consents referred to
in Section 6.2B(ii) and (iii), if applicable, and (iii) the recordation of an
amendment of the Certificate to reflect the admission of the Successor or
Additional General Partner.
Section 6.3 Events of Withdrawal of a General Partner
A. In addition to a voluntary withdrawal of the General Partner pursuant to
Section 6.lE, the General Partner shall be deemed to withdraw (i) if the General
Partner assigns all of its Interest in the
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Partnership, (ii) if the General Partner is removed pursuant to Section 5.3A,
and (iii) upon the filing of a certificate of dissolution, or its equivalent,
for the General Partner or the revocation of its charter. To the maximum extent
permitted by the Act, no other act or event shall be deemed an event of
withdrawal of the General Partner or serve to convert a General Partner to a
Limited Partner.
B. In the event of the withdrawal of the General Partner and if a Successor
or Additional General Partner has been admitted to the Partnership in accordance
with Section 6.2, the remaining General Partner or General Partners, including
such Successor or Additional General Partner, may elect to continue the
Partnership, and if such election is made, shall promptly give Notification of
such event and shall make and file such amendments to the Certificate as are
required by the Act to reflect the fact that the withdrawn General Partner, has
ceased to be a General Partner of the Partnership.
C. In the event of the withdrawal of the General Partner and no Successor
or Additional General Partner has been admitted to the Partnership to continue
the Partnership's existence, the withdrawn General Partner, or its successors,
representatives, heirs or assigns shall promptly give Notification of such
withdrawal to all remaining Partners and Investors. In such event, the
Partnership shall be dissolved unless, within One Hundred Twenty (120) days
after the withdrawal of the General Partner, the Investors, by the Majority Vote
of the Investors (or such higher percentage vote as may be required by the Act),
agree in writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal of the sole General Partner,
of one or more Additional General Partners. If the Investors elect to
reconstitute the Partnership and agree to admit an Additional General Partner,
the relationship of the Investors and of substitute General Partner in the
Partnership shall be governed by this Agreement.
Section 6.4 Liability of a Withdrawn General Partner
A. Any General Partner who withdraws from the Partnership shall be, and
remain, liable for all obligations and liabilities incurred by it as General
Partner prior to the time such withdrawal becomes effective. In addition, a
General Partner who voluntarily withdraws in violation of this Agreement shall
be subject to the liability described in Section 6.1C.
B. Upon the withdrawal of a General Partner, such General Partner shall
immediately cease to be a General Partner, and such General Partners Interest
shall be acquired by the Partnership pursuant to Section 6.5. For purposes of
this Section 6.4.B and Section 6.5, the Interest of the withdrawing General
Partner shall include the interest in the Partnership as a Subordinated Limited
Partner (if any) owned by an Affiliate of such withdrawing General Partner.
C. The personal representatives, heirs, successors or assigns of any
General Partner who withdraws from the Partnership shall be, and remain, liable
for all obligations and liabilities incurred by the General Partner prior to, or
in connection with, its withdrawal.
Section 6.5 Valuation of Partnership Interest of General Partner
Upon the withdrawal of a General Partner, the Partnership shall purchase
the Partnership Interest of the withdrawn General Partner. The price of the
withdrawn General Partner's Interest shall be such Interest's then present fair
market value as determined by mutual agreement or, if an agreement can not be
reached, by two (2) independent appraisers, one selected by the withdrawn
General Partner and one selected by the remaining General Partner, or if none is
remaining, by the Investors. If the two appraisers are unable to agree on the
value of the General Partner's Interest, they shall jointly appoint a third
independent appraiser whose determination shall be final and binding. The
Partnership shall then pay the withdrawn General Partner the price of its
Interest as a General Partner as so determined. The expense of the appraisals
shall be borne equally by the terminated General Partner and the Partnership. If
the withdrawal is involuntary, payment shall be made by delivery of a promissory
note bearing interest equal to the lowest rate permitted under the Code that
avoids the imputation of interest income to the withdrawn General Partner, such
note to have a term of five years and provide for equal annual installments of
principal and interest. If the withdrawal is voluntary, payment shall be made by
delivery of an unsecured promissory note bearing no interest, with principal
payable only from distributions which the withdrawn General Partner would have
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received under this Agreement had the General Partner not withdrawn. Immediately
upon receiving the note, the withdrawn General Partner shall cease to be a
Partner of the Partnership for all purposes, except that the withdrawn General
Partner shall continue to be subject to Section 6.4 hereunder. All amounts
received pursuant to this Section 6.5 shall constitute complete and full
discharge for all amounts owing to the withdrawn General Partner on account of
its Interest in the Partnership. Any disputes regarding valuation or payment
pursuant to this Section which are not resolved in a binding manner by the
provisions of this Section shall be resolved by arbitration in accordance with
the then current rules of the American Arbitration Association. The expense of
arbitration shall be borne equally by the terminated General Partner and the
Partnership.
ARTICLE VII
ASSIGNMENT OF ASSIGNEE UNITS TO INVESTORS;
TRANSFERABILITY OF LIMITED PARTNER INTERESTS AND UNITS
Section 7.1 Assignment of Assignee Units to Investors
A. Pursuant to Sections 3.2 and 7.1C hereof, the Assignor Limited Partner
shall assign to each Investor Assignee Units equal to the number of Units
purchased by each Investor in the Offering.
B. Except as provided in Section 7.1.A above, the Assignor Limited Partner
may not transfer a Limited Partnership Interest without the prior written
consent of the General Partner. The Assignor Limited Partner shall have no right
to vote or consent with respect to Units owned by the Assignor Limited Partner
for its own account and such Units shall not be considered outstanding Units for
purposes of determining whether the Majority Vote of the Investors or the
Consent of the Investors has occurred. The Assignor Limited Partner, by the
execution of this Agreement, acknowledges and agrees that the Assignor Limited
Partner's management will have fiduciary responsibility for the safekeeping and
use of all funds and assets of the Investors, whether or not in the Assignor
Limited Partner's management's possession or control, and that the management of
the Assignor Limited Partner will not employ, or permit another to employ such
funds or assets in any manner except for the exclusive benefit of the Investor.
The Assignor Limited Partner agrees not to contract away the fiduciary duty owed
to the Investors by the Assignor Limited Partner's management under the common
law of agency.
C. Except as set forth in Section 7.1F, the Assignor Limited Partner, by
the execution of this Agreement, irrevocably transfers and assigns to the
Investors all of the Assignor Limited Partner's rights and interest in and to
the Assigned Limited Partnership Interests, as of the time that payment for such
Assigned Limited Partnership Interests is received by the Partnership and such
Assigned Limited Partnership Interests are credited to the Assignor Limited
Partner on the books and records of the Partnership. The rights and interest so
transferred and assigned shall include, without limitation, the following: (i)
all rights to receive distributions of uninvested Capital Contributions pursuant
to Sections 3.2 and 3.3; (ii) all rights to receive cash distributions pursuant
to Article IV; (iii) all rights in respect to allocations of Profit and Loss
pursuant to Article IV; (iv) all other rights in respect of determinations of
allocations and distributions pursuant to Article IV; (v) all rights to consent
to the admission of Successor or Additional General Partners pursuant to
Sections 6.1 and 6.2; (vi) all rights to receive any proceeds of liquidation of
the Partnership pursuant to Section 8.2; (vii) all rights to inspect books and
records and to receive reports pursuant to Article X; (viii) all voting rights,
rights to attend or call meetings and other such rights; and(ix) all rights
which the Limited Partners have, or may have in the future, under the Act.
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D. The General Partner, by the execution of this Agreement, irrevocably
consents to and acknowledges that (i) the foregoing transfer and assignment
pursuant to Section 7.1 by the Assignor Limited Partner to the Investors of the
Assignor Limited Partner's rights and interest in the Assigned Limited
Partnership Interests is effective, and (ii) the Investors are intended to be
and shall be third party beneficiaries of all rights and privileges of the
Assignor Limited Partner's in respect of the Assigned Limited Partnership
Interests. The General Partner covenants and agrees that, in accordance with the
foregoing transfer and assignment, all the Assignor Limited Partner's rights and
privileges in respect of Assigned Limited Partnership Interests may be exercised
by the Investors including, without limitation, those cited in Section 7.1.
E. In accordance with the transfer and assignment described in Section 7.1,
Investors shall have the same rights that the Limited Partners have under this
Agreement and under the Act.
F. Notwithstanding the assignment of the Assigned Limited Partnership
Interests referred to in this Section 7.1, the Assignor Limited Partner shall
retain legal title to and be and remain a Limited Partner of the Partnership.
Section 7.2 Transferability of Units
A. Units are generally transferable, provided, however, that a transfer of
Units shall be prohibited if one of the following restrictions applies and,
as. to (i), (ii), (iii) and (iv), the prohibition on transfer is supported by an
opinion of counsel:
(i) No sale or exchange of any Units shall be made if the Units sought to
be sold or exchanged, when added to the total of all other Units sold or
exchanged within a period of twelve (12) consecutive months prior thereto, would
result in the Partnership being considered to have terminated within the meaning
of Section 708(b)(1)(A) of the Code. The General Partner shall give Notification
to all Investors in the event that sales or exchanges should be suspended for
this reason. All deferred sales or exchanges shall be made (in chronological
order to the extent practicable) as of the first day of the fiscal year
beginning after the end of any such 12-month period, subject to the provisions
of this Article VII.
(ii) No transfer or assignment of any Unit shall be made if the transfer or
assignment would be in violation of any federal or state securities laws
(including any investment suitability standards) applicable to the Partnership
or would cause the Partnership to be classified other than as a partnership for
federal income tax purposes.
(iii) No transfer or assignment of any Unit shall be made if such transfer
would cause the Partnership to be treated as a "publicly traded partnership"
under Sections 7704 and 469(k) of the Code. Each Investor agrees not to
transfer, and agrees that the Partnership shall not recognize for any purpose
any transfer on or through a listing on a securities exchange, over-the-counter
market or secondary market or any transfer to or from a dealer in securities or
partnership interests or other market maker, or any transfer arranged through or
facilitated by means of an interdealer quotation system, information system or
other facility that may create the equivalent of a secondary market in
partnership interests, unless counsel to the Partnership is of the opinion that
such transfers will not result in the partnership becoming taxable as a
corporation or a publicly traded partnership.
(iv) No transfer or assignment of Units shall be made after which any
transferor or transferee would hold (a) a number of Units not evenly divisible
by four, or (b) less than 200 Units, except for Individual Retirement Accounts,
or (c) less than 80 Units in the case of Individual Retirement Accounts,
provided, however, that any such transferor may hold zero Units.
(v) No transfer or assignment of any Unit shall be made if it would result
in the assets of the Partnership being treated as "plan assets" or the
transactions contemplated hereunder to be prohibited transactions under ERISA or
the Code.
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(vi) No transfer or assignment of a Unit shall be made to a minor or
incompetent (unless such transfer or assignment shall be made to a legal
guardian on such person's behalf).
B. An Investor or Limited Partner desiring or intending to transfer such
Person's Units must provide Notification to the General Partner of such desire
or intent at least forty-five (45) days, or such other shorter period as the
General Partner in its sole discretion may permit, prior to such transfer.
C. In order to record a transfer on its books and records, the Partnership
may require such evidence of transfer or assignment and authority of the
transferor or assignor (including signature guarantees), evidence of the
transferee's suitability under state securities laws, and the written acceptance
and adoption by the transferee of the provisions of this Agreement, as the
General Partner may determine. The General Partner may charge a transfer fee
sufficient to cover all reasonable expenses connected with such transfer (with
no profit to any party in the transaction) which fee shall not exceed $200.
D. In no event shall an Investor be permitted to transfer a fraction of a
Unit.
E. Upon the transfer of any Units (other than the conversion to Limited
Partnership Interests pursuant to Section 7.5), the Preferred Return with
respect to such Units win be calculated as of the first day of the calendar
quarter following the final closing for the sale of Units. For purposes of this
Agreement, an assignment of any Units shall be deemed to be a transfer.
Section 7.3 Death, Bankruptcy or Adjudication of Incompetence of an
Investor or a Limited Partner
Upon the death of an Investor or a Limited Partner, his executor,
administrator, or trustee, or, if he is adjudicated incompetent or insane, his
committee, guardian, or conservator, or, if he becomes bankrupt, the trustee or
receiver of his estate, shall have all the rights of an Investor or a Limited
Partner for the purpose of settling or managing his estate and shall have
whatever power the deceased or incompetent Investor or Limited Partner possessed
to assign all or any part of his Units or Interest. The death, dissolution,
adjudication of incompetence, or bankruptcy of an Investor or a Limited Partner
shall not dissolve the Partnership.
Section 7.4 Effective Date
The Partnership shall recognize the transferee of Units as an Investor on
the Partnership's books and records on the first business day of the next
calendar month after the month in which the Partnership receives all necessary
documentation and consents required to effect the transfer of Units.
Section 7.5 Substitute Limited Partners
Any Investor may elect to become a Substitute Limited Partner upon (i)
signing a counterpart of this Agreement and any other instrument or instruments
deemed necessary by the General Partner, including a Power of Attorney in favor
of the General Partner as described in Section 12.1.A hereof, and (ii) paying a
fee equal to the actual costs and expenses incurred by the General Partner for
legal and administrative costs and recording fees. Investors who elect to become
Substitute Limited Partners will receive one Limited Partnership Interest for
each Unit they convert and will not be able to re-exchange their Limited
Partnership Interests for Units. The Capital Account attributable to the
converted Units shall be credited to the Capital Account of the Substitute
Limited Partner. Similarly, the Preferred Return will continue to be calculated
as of the first day of the calendar quarter following such Investor's admission
to the Partnership. The Partnership's Certificate will be amended no less often
than quarterly, if required by applicable law, to reflect the substitution of
Limited Partners.
Section 7.6 Retirement or Withdrawal of an Investor
A. No Investor shall have the right to voluntarily retire or withdraw from
the Partnership unless the General Partner shall have consented to such
voluntary retirement or withdrawal by an Investor. Upon the retirement or
withdrawal of an Investor (i) the Interest of such retiring or withdrawing
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Investor shall thereafter belong to the Partnership; (ii) such retiring or
withdrawing Investor shall not be entitled to receive distributions with respect
to any periods after the time of such retirement of withdrawal; and (iii) such
retiring or withdrawing Investor shall not be entitled to receive any amount for
the fair value of his Units as of the date of his retirement or withdrawal,
other than as agreed to by the General Partner and the withdrawing Investor. The
General Partner shall not consent to the voluntary retirement or withdrawal of
an Investor if the General Partner receives an opinion of counsel to the
Partnership that such retirement or withdrawal would cause the Partnership to be
classified other than as a partnership for federal income tax purposes, or cause
the Partnership to terminate for federal income tax purposes.
B. At any time after the Termination Date of the Offering, the Partnership
may, in its sole discretion and with or without the use of borrowed funds,
repurchase any or all of the Units of such Investor upon mutually agreeable
terms, provided that such repurchase does not materially impair the capital or
operation of the Partnership. The determination to repurchase Units will be made
in the sole discretion of the General Partner. The determination of the value of
the repurchased Units will be based upon, among other factors, the current fair
market value of the Properties and the assets of the Partnership, less all
Partnership debts and obligations. The Partnership will not repurchase Units
prior to the Termination Date of the Offering and is not obligated to repurchase
Units at any time. Units acquired by the General Partner and its Affiliates or
by the Assignor Limited Partner will not be eligible for repurchase by the
Partnership. Units purchased by the Partnership during any month shall be deemed
cancelled effective as of the first day of the month following the effective
date of such purchase.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE FUND
Section 8.1 Events Causing Dissolution
A. The Partnership shall dissolve and its affairs shall be wound up upon
the first to occur of the following events: (i) the expiration of its term; (ii)
the withdrawal of the General Partner, unless the Partnership is continued
pursuant to Sections 6.3B or 6.3C; (iii) the Sale of all of the Properties
(excepting (a) a disposition thereof which, in the opinion of counsel to the
Partnership, qualifies, in whole or in part, under Section 1031 or Section 1033
of the Code or (b) a Sale in which the purchase price is paid in one or more
installments, in which case the Partnership shall dissolve upon receipt of the
final payment thereunder); (iv) the election by the General Partner, with the
Majority Vote of the Investors, to dissolve the Partnership; (v) by the Majority
Vote of the Investors pursuant to Section 5.3A to dissolve the Partnership; or
(vi) the happening of any other event causing the dissolution of the Partnership
under applicable law.
B. Dissolution of the Partnership shall be effective on the day on which
the event occurs giving rise to the dissolution. A certificate of cancellation
shall be filed under the Act upon the dissolution and the commencement of
winding up of the Partnership; provided, however, that the Partnership shall not
terminate until the assets of the Partnership have been distributed as provided
in Section 8.2. Notwithstanding the dissolution of the Partnership, prior to the
termination of the Partnership, the business of the Partnership and the affairs
of the Partners, as such, shall continue to be governed by this Agreement.
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Section 8.2 Liquidation
A. As soon as practical after the dissolution of the Partnership, the
General Partner, or if there is no General Partner, any Limited Partner or the
liquidating trustee under the Act, as the case may be, shall give Notification
to all the Limited Partners and Investors of such fact and shall prepare a plan
as to whether and in what manner the assets of the Partnership shall be
liquidated. By the Majority Vote of the Investors, the assets of the
Partnership, subject to its liabilities (and the establishment of reserves, if
necessary, for such liabilities), may be transferred to a successor Entity, upon
such terms and conditions as are then agreed upon.
B. Unless the Investors agree to transfer the assets of the Partnership,
subject to its liabilities, to a successor Entity pursuant to Section 8.2A, upon
dissolution of the Partnership, the General Partner, any Limited Partner or the
liquidating trustee under the Act, as the case may be, shall liquidate the
assets of the Partnership, and apply and distribute the proceeds thereof in
accordance with Section 4.4.
C. Notwithstanding the provisions of Section 8.2B, in the event the General
Partner or any liquidating agent under the Act, as the case may be, shall
determine that an immediate sale of all or a portion of the assets of the
Partnership would cause undue loss to the Partners and Investors, the General
Partner or liquidating agent under the Act, as the case may be, in order to
avoid such loss, may, after having given Notification to all the Investors and
Limited Partners, either defer liquidation of, and withhold from distribution
for a reasonable time, any assets of the Partnership, or distribute the assets
in kind to a liquidating trust to be held for the benefit of the Investors and
Partners.
Section 8.3 Capital Contribution Upon Dissolution
Subject to the provisions of Section 5.9 of this Agreement, each Investor
and Partner shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership and his Capital Contribution and
shall have no recourse (upon dissolution or otherwise) against any Partner or
Investor; provided, however, that upon the dissolution and termination of the
Partnership, the General Partner will make the Capital Contributions referred to
in Section 3.1. All amounts so contributed by the General Partner shall be
distributed first to the Partnership's creditors entitled thereto, and the
balance to the Investors and Partners in proportion to the positive balances in
their Capital Accounts at the time of dissolution and termination of the
Partnership.
ARTICLE IX
CERTAIN PAYMENTS TO THE GENERAL PARTNER AND AFFILIATES
Section 9.1 Reimbursement of Certain Costs and Expenses of the General
Partner and its Affiliates
A. Subject to the provisions of Article V hereof, the Partnership shall be
permitted to reimburse the General Partner for the actual cost to the General
Partner or any of its Affiliates of the Partner- ship's operating expenses. In
determining the actual cost to the General Partner or an Affiliate of the
General Partner of goods and materials and administrative services, actual cost
means the actual cost to the General Partner or an Affiliate of the General
Partner of goods and materials used for or by the Partnership and obtained from
entities not affiliated with the General Partner, and actual cost of
administrative services means the pro rata cost of personnel as if such persons
were employees of the Partnership. The cost for administrative services to be
reimbursed to the General Partner or an Affiliate shall be at the lower of the
General Partner's or Affiliate's actual cost or ninety percent (90%) of the
amount the Partnership would be required to pay to independent parties for
comparable administrative services in the same geographic location. The General
Partner shall use its best efforts to cause all of the Partnership's expenses to
be billed directly to and paid by the Partnership to the extent practicable.
B. Subject to the foregoing, the Partnership shall pay all expenses (which
expenses shall be billed directly to the Partnership) of the Partnership which
may include but are not limited to: (a) all costs of personnel (excluding rent
or depreciation, utilities, capital equipment, and other administrative
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items) employed full-time or part-time by the Partnership and involved in the
business of the Partnership or who perform services on behalf of the Partnership
or its Affiliates and allocated pro rata to their administrative or professional
services performed on behalf of the Partnership, including Persons who may also
be officers or employees of the General Partner or its Affiliates (other than
Controlling Persons); (b) all costs of borrowed money, taxes and assessments on
Properties and other taxes applicable to the Partnership; (c) legal, audit,
accounting, brokerage and other fees; (d) printing, engraving and other expenses
and taxes incurred in connection with the issuance, distribution, transfer,
registration and recording of documents evidencing ownership of an Interest or
Unit or in connection with the business of the Partnership; (e) fees and
expenses paid to independent contractors, mortgage bankers, brokers and
servicers, leasing agents, consultants, on-site property managers and other
property management personnel (other than Controlling Persons and other officers
of the General Partner or its Affiliates), real estate brokers, insurance
brokers and other agents; (f) expenses in connection with the disposition,
replacement, alteration, repair, remodeling, refurbishment, leasing, refinancing
and operating of the Properties (including the costs and expenses of
foreclosures, insurance premiums, real estate brokerage and leasing commissions
and of maintenance of such Properties); (g) expenses of organizing, revising,
amending, converting, modifying or terminating the Partnership; and (h) the cost
of preparation and dissemination of the informational material and documentation
relating to potential sale, or other disposition of Properties or in connection
with any meetings or votes if the Investors.
C. Notwithstanding any other provision of this Agreement, no reimbursement
shall be permitted for services for which the General Partner is entitled to
compensation by way of a separate fee.
Section 9.2 Fees and Other Payments
A. The Partnership shall cause the following payments and fees to be paid
to the General Partner and its Affiliates: (i) to the Selling Agent, the Sales
Commissions and the Due Diligence Expense Reimbursement Fee; (ii) to the General
Partner or its Affiliates, the Offering and Organization Expense Fee; (iii) to
the General Partner or its Affiliates, the General Partner Acquisition Fee; (iv)
to the General Partner or its Affiliates, reimbursement of Acquisition Expenses,
if any, incurred by the General Partner or its Affiliates on behalf of the
Partnership in connection with the investigation or acquisition of the
Properties; (v) to the General Partner, the Asset Based Fee for each fiscal year
of the Partnership; and (vi) to the General Partner or its Affiliates, the
Disposition Advisory Fee.
B. The total of the fees owed to the General Partner and its Affiliates and
described in (i), (ii) and (iii) above shall in no event exceed 13% of the Gross
Proceeds of the Offering.
C. The total of all compensation paid to all persons (including the
Consultant) for Acquisition Expenses and Acquisition Fees shall be limited to
the lesser of such compensation customarily charged in arms' length transactions
by others rendering similar services as an ongoing public activity in the same
geographical location and for comparable property or an amount equal to 18% of
the Gross Proceeds of the Offering.
ARTICLE X
BOOKS AND RECORDS; BANK ACCOUNTS; REPORTS
Section 10.1 Books and Records A. The books and records of the Partnership
shall be maintained by the General Partner at the Partnership's principal place
of business. In all cases, said books and records shall be available for
examination and copying by any Limited Partner, Investor or his duly authorized
representatives, for
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any purpose related to the Limited Partner's or Investor's interest as a Limited
Partner or Investor, at the expense of such Limited Partner or Investor, at any
and all reasonable times. The Partnership shall keep at its principal place of
business, without limitation, the following records: true and full information
regarding the status of the business and financial condition of the Partnership;
promptly after becoming available, a copy of the Partnership's federal, state
and local income tax returns for each year; a current list of the names and last
known business, residence or mailing addresses of and the numbers of Units held
by each Partner and Investor; a copy of this Agreement and the Certificate and
all amendments thereto; and other information regarding the affairs of the
Partnership as is just and reasonable. The current list of the names and last
known business, residence or mailing addresses of each Partner and Investor
shall be mailed to any Investor who requests such information upon payment of a
reasonable charge for copy work.
B. The Partnership shall keep its books and records in accordance with the
accounting methods determined by the General Partner. The Partnership's taxable
year shall be a calendar year.
Section 10.2 Bank Accounts
A. The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in their immediate possession or control. The General Partner shall not employ,
or permit any other Person to employ, such funds in any manner except for the
benefit of the Partnership.
B. The bank accounts of the Partnership shall be maintained in such banking
institutions as the General Partner shall determine, and withdrawals shall be
made only in the regular course of Partnership business on the signature of the
General Partner or such other signature or signatures as the General Partner may
determine. All deposits and other funds may be deposited in interest bearing or
non-interest bearing accounts guaranteed by federal authorities, invested in
short-term United States Government or municipal obligations, or deposited with
a banking institution selected by the General Partner.
Section 10.3 Reports
A. No later than seventy-five (75) days after the end of each calendar
year, the General Partner will furnish each Person who was an Investor or
Limited Partner at any time during the fiscal year with all tax information
relating to the Partnership's performance for the preceding calendar year that
is necessary for the preparation of the Investor's and Limited Partner's federal
and state income tax return.
B. Within sixty (60) days after the end of each of the first three fiscal
quarters of each fiscal year of the Partnership, the General Partner will
furnish to each Person who was an Investor or Limited Partner at any time during
the fiscal quarter then ended, a report setting forth information with respect
to the progress of the Partnership's business, which report shall include: (i)
an unaudited balance sheet of the Partnership; (ii) an unaudited statement of
income for the quarter; (iii) an unaudited cash flow statement for the,quarter;
(iv) an unaudited statement setting forth the services rendered to, and fees
received from, the Partnership by any Sponsor; and (v) other pertinent
information concerning the Partnership and its activities during the quarter.
The various reports required pursuant to this Section 10.3.B may be sent earlier
than or separately from any of the other reports required pursuant to this
Section 10.3.B, and the information required to be contained in any of the
reports required pursuant to this Section 10.3.B may be contained in more than
one report.
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C. Within one hundred twenty (120) days after the end of each fiscal year,
the General Partner shall furnish an annual report to each Person who was a
Limited Partner or an Investor as of the last business day of the fiscal year
then ended. Such annual report will include:
(i) a balance sheet as of the end of the Partnership's fiscal year,
statements of income, Partners' equity and cash flow, which shall be prepared in
accordance with generally accepted accounting principles and accompanied by
(a)an auditor's report containing an opinion of an independent certified public
accountant and (b) a reconciliation to information furnished to Investors for
income tax purposes;
(ii) the breakdown of any Partnership costs reimbursed to a Sponsor and a
statement setting forth in detail the services rendered to, and fees received
from, the Partnership by any Sponsor as verified by a review of the time records
of and the specific nature of the work performed by, individual employees, the
cost of whose services were reimbursed (and within the scope of the annual audit
by the Accountants shall be the obligation to verify the allocations of the
costs reimbursed to the General Partner or Affiliate thereof);
(iii) a cash flow statement; and
(iv) a report of the activities of the Partnership during the fiscal year.
The annual report shall also set forth distributions to the Investors for the
period covered thereby and shall separately identify distributions from (a) Net
Cash Flow during the period, (b) Net Cash Flow during a prior period which had
been held as reserves, (c) Net Proceeds of Sale or Financing, and (d) Working
Capital Reserves.
D. Within forty-five (45) days after the end of each fiscal quarter in
which a Sale or Financing occurs, the General Partner shall send to each Person
who was an Investor as of the close of business on the first business day of the
month that includes the date of occurrence of the Sale or Financing, a report as
to the nature of the Sale or Financing and as to the Profit or Loss arising from
the Sale or Financing.
E. The General Partner shall prepare and timely file with appropriate
federal and state regulatory authorities all reports required to be filed with
such entities under then-applicable laws, rules and regulations. Such reports
shall be prepared on the accounting or reporting basis required by such
regulatory authorities. Upon request, copies of such reports will be furnished
to any Investor or Limited Partner for any purpose reasonably related to the
Investor's or Limited Partner's interest as an Investor or a Limited Partner. In
the event that any regulatory authority promulgates rules or amendments thereto
that would permit a reduction in any of the reporting requirements to which the
Partnership is subject under this Agreement at the time of the execution hereof,
the Partnership may cease to prepare and file any such reports in accordance
with such rules or amendments.
F. The General Partner shall maintain, (i) for a period of at least six (6)
years, a record of the information obtained to indicate that an Investor has met
the suitability standards set forth in the Prospectus; (ii) for a period of at
least five (5) years, records of the appraisals made of the Partnership
Properties, which appraisal records shall be available for inspection and
copying by any Investor or Limited Partner for any purpose reasonably related to
the Investor's or Limited Partner's interest as an Investor or a Limited Partner
and (iii) a list of the names and addresses of all Investors, which list shall
be made available to any Investor or Limited Partner or his representative who
requests such information in furtherance of Partnership business and at such
person's cost.
G. Within sixty (60) days after the end of each fiscal quarter during which
there have been Property acquisitions, a report (which may be part of the
quarterly report) shall be sent to all Limited Partners and Investors until the
Net Proceeds of the Offering are committed to Investment in Properties or
returned to the Investors. The report shall contain the following information:
(i.) the location and a description of the general character of all Properties
acquired or presently intended to be acquired by the Partnership during the
quarter;
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(ii.) the present or proposed use of the Properties and their suitability
and adequacy for such use; (iii.) the terms of any material lease affecting the
Property; and (iv.) a statement that title insurance has been or will be
obtained on all Properties acquired.
Section 10.4 Federal Tax Elections
The Partnership, in the sole discretion of the General Partner, may make
elections for federal tax purposes as follows:
(i) In case of a transfer of a Unit, the Partnership, in the sole
discretion of the General Partner, may timely elect pursuant to Section 754 of
the Code (or corresponding provisions of future law) and pursuant to similar
provisions of applicable state or local income tax laws, to adjust the basis of
the assets of the Partnership.
(ii) The General Partner may elect accelerated depreciation methods under
the Code, or may elect straight-line depreciation over a period as,long as forty
(40) years if, in its sole discretion, the determination of the percentage of
tax-exempt Investors becomes too cumbersome.
(iii) All other elections required or permitted to be made by the
Partnership under the Code shall be made by the General Partner in such manner
as will, 'm its sole opinion, be most advantageous to a Majority of the
Investors. The Partnership shall, to the extent permitted by applicable law and
regulations, elect to treat as an expense for federal income tax purposes all
amounts incurred by it for real estate taxes, interest and other charges which
may, in accordance with applicable law and regulations, be considered as
expenses.
ARTICLE XI
MEETINGS OF INVESTORS
Section 11.1 Calling Meetings
Meetings of the Investors for any purpose may be called by the General
Partner and shall be called by the General Partner upon receipt of a request in
writing signed by Investors having in the aggregate more than 10% of the
outstanding Units. Upon receipt of a written request stating the purpose(s) of
the meeting, the General Partner shall provide all Investors within 10 days
after receipt of such request with notice as described in Section 11.2. The
meeting shall be held at a time and place convenient to the Investors.
Section 11.2 Notice; Procedure
If a meeting is called at the request of the Investors, the General Partner
shall provide all Investors with notice of such meeting given either personally
or by certified mail, which notice shall state the purpose thereof, such meeting
to be held on a date not less than fifteen (15) nor more than sixty (60) days
after the receipt by the General Partner of the request for the meeting. Notice
of any other meeting shall be given either personally or by certified mail, not
less than fifteen (15) days nor more than sixty (60) days before the date of the
meeting, to each Investor at his record mailing address. The notice shall be in
writing, and shall state the place, date, hour, and purpose of the meeting, and
shall indicate that it is being issued at or by the direction of the Partners or
Investors calling the meeting. If a meeting is adjourned to another time or
place, and if any announcement of the adjournment of time or place is made at
the meeting, it shall not be necessary to give notice of the adjourned meeting.
The presence in person or by proxy of the holders of more than 50% of the
outstanding Units shall constitute a quorum at all meetings of the Investors;
provided, however, that if there is no quorum present, holders of a majority in
interest of the Investors present or represented may adjourn the meeting from
time to time without further notice until a quorum is obtained. No notice of the
time, place or purpose of any meeting of Investors need be given to any Investor
who attends in person or is present by proxy (except when an Investor attends a
meeting for the express purpose of objecting at the beginning
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of the meeting to the transaction of any business on the ground that the meeting
is not lawfully called or convened), or to any Investor entitled to notice who,
in a writing executed and filed with the records of the meeting, either before
or after the time of the meeting, waives the notice requirement.
Section 11.3 Right to Vote
For the purpose of determining the Investors entitled to vote at any
meeting of the Partnership, the General Partner or the Investors requesting the
meeting may fix a date, in advance, as the record date for the determination of
Investors entitled to vote. This date shall be not more than fifty (50) days nor
less than ten (10) days before any meeting.
Section 11.4 Proxies; Rules
Each Investor may authorize any person or persons to act for him by proxy
in all matters in which an Investor is entitled to participate, whether by
waiving notice of any meeting, or voting or participating at a meeting. Every
proxy must be signed by the Investor or his attorney-in-fact. No proxy shall be
valid after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be recoverable at the pleasure of the
Investor executing it. At each meeting of Investors, the General Partner shall
appoint officers and adopt rules as they deem appropriate for the conduct of the
meeting.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Appointment of General Partner as Attorney-in-Fact
A. Each Limited Partner and Investor hereunder hereby irrevocably appoints
and empowers the General Partner his attorney-in-fact to consent to or ratify
any act listed in Subsections 5.4A(i) through (xviii) and Section 6.3C of this
Agreement after the Majority Vote of the Investors thereto has been obtained,
and to execute, acknowledge, swear to and deliver all agreements and instruments
and file all documents requisite to carrying out the intentions and purposes
contemplated in this Agreement, including, without limitation, the execution and
delivery of this Agreement and all amendments hereto, the filing of all business
certificates and necessary certificates of limited partnership and amendments
thereto from time to time in accordance with all applicable laws and any
certificates of cancellation.
B. The appointment by all Limited Partners and Investors of the General
Partner as attor- ney-in-fact shall be deemed to be a power coupled with an
interest, shall not be affected by the subsequent disability or incapacity of
the principal and shall survive the assignment by any Limited Partners or
Investors of the whole or any part of his Interests or Units in the Partnership.
C. The power of attorney granted by this Section 12.1 shall be governed by
the laws of the State of Delaware.
Section 12.2 Waiver of Partition
Each Partner and Investor, on behalf of himself, his successors,
representatives, heirs and assigns hereby waives any right of partition or any
right to take any other action which otherwise might be available to him for the
purpose of severing his relationship with the Partnership or his interest in the
assets held by the Partnership from the interest of the other Partners or
Investors.
Section 12.3 Notification
Any Notification, in order to be effective, shall be sent by registered or
certified mail, postage prepaid, if to a Partner or Investor, to the address of
the Partner or Investor set forth in the books and records of the Partnership,
and if to the Partnership or the General Partner, to the principal place of
business of the Partnership set forth in Section 2.2 (unless Notification of a
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change of the principal office is given) and addressed to the appropriate party,
the date of registry thereof or the date of the certification thereof being
deemed the date of receipt of Notification; provided, however, that any written
communication sent to a Partner or Investor or to the Partnership or the General
Partner and actually received by such Person shall constitute Notification for
all purposes of this Agreement.
Section 12.4 Word Meanings
In this Agreement, the singular shall include the plural and the masculine
gender shall include the feminine and neuter and vice versa, unless the context
otherwise requires.
Section 12.5 Binding Provisions
The covenants and agreements contained herein shall be binding upon, and
inure to the benefit of, the heirs, personal representatives, successors and
assigns of the respective parties hereto.
Section 12.6 Applicable Law
This Agreement shall be construed and enforced in accordance with the laws
of the State of Delaware, without regard to principles of conflict of laws.
Section 12.7 Counterparts
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Agreement shall become binding upon the date hereof. Each Additional or
Successor General Partner shall become a signatory hereof by signing such number
of counterparts of this Agreement and such other instrument or instruments, and
in such manner as the General Partner shall determine, and by so signing, shall
be deemed to have adopted and to have agreed to be bound by all the provisions
of this Agreement.
Section 12.8 Separability of Provisions
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed severable from the
remainder of this Agreement, and the remaining provisions contained in this
Agreement shall be construed to preserve to the maximum permissible extent the
intent and purposes of this Agreement. The invalidity or unenforce- ability of a
provision in any jurisdiction shall not, in and of itself, invalidate or render
unenforceable such provision in any other jurisdiction.
Section 12.9 Paragraph Titles
Paragraph titles are for descriptive purposes only and shall not control or
alter the meaning of this Agreement as set forth in the text.
Section 12.10 Entire Agreement
This Agreement and the exhibits and documents referred to herein constitute
the entire understanding and agreement among the parties hereto with respect to
the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written, except as herein contained. This Agreement may not be modified
or amended other than by an agreement in writing.
Section 12.11 Amendments
A. In addition to the amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the General Partner with the
Majority Vote of the Investors; provided, however, that without the consent of
the Partners or Investors to be
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adversely affected by the amendment, except as provided in Section 12.11B, this
Agreement may not be amended so as to (i) convert an Investor's interest into a
General Partner's interest; (ii) modify the limited liability of an Investor;
(iii) alter the interest of a Partner or Investor in Net Cash Flow, Profit or
Loss, or Net Proceeds from a Sale or Financing; (iv) increase the amount of the
Capital Contributions required to be paid by the Investors; or (v) extend the
Termination Date of the Offering.
B. In addition to the amendments otherwise authorized herein, amendments
may be made to this Agreement from time to time by the General Partner, without
the consent of any of the Investors,
(i) to add to the duties or obligations of the General Partner or surrender
any right or power granted to the General Partner herein, for the benefit of the
Investors;
(ii) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Agreement
which will not be inconsistent with the provisions of this Agreement;
(iii) to delete or add any provision of this Agreement required to be
deleted or added by the Staff of the Securities and Exchange Commission or other
federal agency or by a state securities commissioner or similar official and
deemed by the commission, agency, commissioner, or official to be for the
benefit or protection of the Investors;
(iv) to take any actions necessary to cause the assets of the Partnership
to come within the exclusion from the definition of "plan assets" contained in
Section 2550.40lb-1 of Title 29 of the Code of Federal Regulations; and
(v) to give effect to any action permitted pursuant to Section 5.2;
provided, however, that no amendment shall be adopted pursuant to this Section
12.11B unless its adoption (1) is not adverse to the interests of the Investors;
(2) is consistent with Section 5.2; (3) does not affect the distribution of Net
Cash Flow or Net Proceeds of Sale or Financing or the allocation of Profit or
Loss among the Investors as a class and the General Partner, except as provided
below; and (4) does not affect the limited liability of the Investors or the
status of the Partnership as a partnership for federal income tax purposes. In
addition to the amendments otherwise authorized herein, amendments may be made
to this Agreement to amend provisions of Article IV of this Agreement relating
to the allocations of Profit or Loss and to distributions of Net Cash Flow or
Net Proceeds of Sale or Financing among the Partners and Investors if the
Partnership is advised at any time by the Partnership's Accountants and counsel
that the allocations provided in Article IV of this Agreement are unlikely to be
respected for federal income tax purposes. The General Partner is empowered to
amend the distribution and allocation provisions of Article IV pursuant to
Section 12.11B to the minimum extent necessary in accordance with the advice of
the Partnership's Accountants and counsel to effect the plan of distribution of
Net Cash Flow and Net Proceeds of Sale or Financing, and, consistent therewith,
the allocations of Profit and Loss provided in this Agreement. New allocations
made by the General Partner in reliance upon the advice of the Partnership's
Accountants and counsel shall be deemed to be made pursuant to the fiduciary
obligation of the General Partner to the Partnership and the Investors. This
Section 12.11 shall be subject to the provisions of Section 5.9 of this
Agreement.
C. If this Agreement is amended as a result of adding or substituting a
Limited Partner or increasing the investment of a Limited Partner, the
amendment, shall be signed by the General Partner and by the Person to be
substituted or added, or the Limited Partner increasing his investment in the
Partnership, and, if a Limited Partner is to be substituted, by the assigning
Limited Partner. If this Agreement is amended to reflect the designation of an
Additional General Partner, the amendment shall be signed by the other General
Partner or General Partners and by the Additional General Partner. If this
Agreement is amended to reflect the withdrawal of a General Partner when the
business of the Partnership is being continued, the amendment shall be signed by
the withdrawing General Partner and by the remaining or successor General
Partner or General Partners.
D. In making any amendments, there shall be prepared and filed for
recordation by the General Partner all documents and certificates required to be
prepared and filed under the Act and under the laws of the other jurisdictions
under the laws of which the Partnership is then formed or qualified.
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IN WITNESS WHEREOF, parties hereto have executed this Agreement
under seal as of the date first above written.
GENTERAL PARTNER
ATTEST: REALTY PARKING COMPANY II, INC.
By: (SEAL)
Name: Name:
Title: Title:
SUBORDINATED LIMITED PARTNER
WITNESS: REALTY ASSOCIATES LIMITED
PARTNERSHIP
By: RESIDUAL INVESTMENT ASSOCIATES,
A Maryland limited partnership,
General Partner
By: A.B. RESIDUAL, INC.,
General Partner
By: (SEAL)
Name:
Title:
ASSIGNOR LIMITED PARTNER
ATTEST: PARKING PROPERTIES HOLDING
CO., INC.
By: (SEAL)
Name: Name:
Title: Title:
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