EX-3(ii)
AGREEMENT OF LIMITED PARTNERSHIP
OF
IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP
00 XXXXX XXXX
XXXXX, XX 00000
JANUARY 31, 1997
TABLE OF CONTENTS
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PARTNERSHIP CONTINUATION AND IDENTIFICATION . . . . . . . . . . . . . . . . . 7
Name, Office and Registered Agent . . . . . . . . . . . . . . . . . . . 7
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Term and Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Filing of Certificate and Perfection of Limited Partnership . . . . . . 9
Certificates Describing Partnership Units . . . . . . . . . . . . . . . 9
BUSINESS OF THE PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . 9
CAPITAL CONTRIBUTIONS AND ACCOUNTS . . . . . . . . . . . . . . . . . . . . . 10
Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 10
Additional Capital Contributions and Issuances of Additional
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . 10
Issuance of Additional Partnership Interests . . . . . . . . . . . 10
Certain Deemed Contributions of Proceeds of Issuance
IRET Shares . . . . . . . . . . . . . . . . . . . . . . . . . 11
Minimum Limited Partnership Interest . . . . . . . . . . . . . . . 11
Additional Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 12
No Interest on Contributions . . . . . . . . . . . . . . . . . . . . . . 12
Return of Capital Contributions . . . . . . . . . . . . . . . . . . . . 12
No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . . . 12
PROFITS AND LOSSES; DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 13
Allocation of Profit and Loss . . . . . . . . . . . . . . . . . . . . . 13
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Minimum Gain Chargeback . . . . . . . . . . . . . . . . . . . . . . 13
Qualified Income Offset . . . . . . . . . . . . . . . . . . . . . . 13
Capital Account Deficits . . . . . . . . . . . . . . . . . . . . . 14
Allocations Between Transferor and Transferee . . . . . . . . . . . 14
Definition of Profit and Loss . . . . . . . . . . . . . . . . . . . 14
Distribution of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IRET Distribution Requirements . . . . . . . . . . . . . . . . . . . . . 15
No Right to Distributions in Kind . . . . . . . . . . . . . . . . . . . 16
Limitations on Return of Capital Contributions . . . . . . . . . . . . . 16
Distributions upon Liquidation . . . . . . . . . . . . . . . . . . . . . 16
Substantial Economic Effect . . . . . . . . . . . . . . . . . . . . . . 16
RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER . . . . . . . . . . . . 17
Management of the Partnership . . . . . . . . . . . . . . . . . . . . . 17
Delegation of Authority . . . . . . . . . . . . . . . . . . . . . . . . 20
Indemnification and Exculpation of Indemnitees . . . . . . . . . . . . . 20
Liability of the General Partner . . . . . . . . . . . . . . . . . . . . 21
Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Outside Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Conflicts of Interest and Investment Restrictions . . . . . . . . . . . 23
General Partner Participation . . . . . . . . . . . . . . . . . . . . . 23
Title to Partnership Assets . . . . . . . . . . . . . . . . . . . . . . 24
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
CHANGES IN GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . . . . . 24
Transfer of the General Partner's Partnership Interest . . . . . . . . . 24
Admission of a Substitute or Additional General Partner . . . . . . . . 25
Effect of Bankruptcy, Withdrawal, Death or Dissolution
of a General Partner . . . . . . . . . . . . . . . . . . . . . . . 26
Removal of a General Partner . . . . . . . . . . . . . . . . . . . . . . 27
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS . . . . . . . . . . . . . . . 28
Management of the Partnership . . . . . . . . . . . . . . . . . . . . . 28
Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Limitation on Liability of Limited Partners . . . . . . . . . . . . . . 29
Ownership by Limited Partner of Corporate General
Partner or Affiliate . . . . . . . . . . . . . . . . . . . . . . . 29
Exchange Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS . . . . . . . . . . . . . . . . . 32
Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . 32
Restrictions on Transfer of Limited Partnership Interests . . . . . . . 33
Admission of Substitute Limited Partner . . . . . . . . . . . . . . . . 34
Rights of Assignees of Partnership Interests . . . . . . . . . . . . . . 35
Effect of Bankruptcy, Death, Incompetence or Termination
of a Limited Partner . . . . . . . . . . . . . . . . . . . . . . . 35
Joint Ownership of Interests . . . . . . . . . . . . . . . . . . . . . . 36
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS . . . . . . . . . . . . . . . . . 36
Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Custody of Partnership Funds; Bank Accounts . . . . . . . . . . . . . . 36
Fiscal and Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . 37
Annual Tax Information and Report . . . . . . . . . . . . . . . . . . . 37
Tax Matters Partner; Tax Elections; Special Basis Adjustments . . . . . 37
Reports to Limited Partners . . . . . . . . . . . . . . . . . . . . . . 38
AMENDMENT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Survival of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
AGREEMENT OF LIMITED PARTNERSHIP
OF
IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP
This limited partnership agreement is made between IRET, Inc., a North
Dakota corporation, of 12 South Main, Minot, North Dakota, as the general
partner, and by the initial limited partner whose name is appended to this
agreement, to be effective on January 31, 1997, for the purpose of forming of
IRET PROPERTIES, a North Dakota Limited Partnership, under the provisions of
Chapter 45-10.1 of the North Dakota Century Code.
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the meanings
specified below:
"Act" means the North Dakota Uniform Limited Partnership Act (Chapter
45-10.1 of the North Dakota Century Code), as it may be amended from time to
time.
"Additional Funds" has the meaning set forth in Section 4.03 hereof.
"Additional Limited Partner" means a Person admitted to this Partnership
as a Limited Partner pursuant to Section 4.02 hereof.
"Additional Securities" means any additional IRET Shares (other than
IRET Shares issued in connection with an exchange pursuant to Section 8.05
hereof) or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase IRET Shares, as
set forth in Section 4.02.
"Administrative Expenses" means (i) all administrative and operating
costs and expenses incurred by the Partnership, (ii) those administrative
costs and expenses of the General Partner and IRET, including advisory fees
and trustee fees of the General Partner and IRET, and any accounting and
legal expenses of the General Partner and IRET, which expenses, the Partners
have agreed, are expenses of the Partnership and not the General Partner or
IRET, and (iii) to the extent not included in clause (ii) above, all other
IRET Expenses.
"Affiliate" means, (i) any Person that, directly or indirectly, controls
or is controlled by or is under common control with such Person, (ii) any
other Person that owns, beneficially, directly or indirectly, 1O% or more of
the outstanding capital stock, shares or equity interests of such Person, or
(iii) any officer, director, employee, partner or trustee of such Person or
any Person controlling, controlled by or under common control with such
Person (excluding trustees and persons serving in similar capacities who are
not otherwise an Affiliate of such Person). For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities or partnership interests or
otherwise.
"Agreed Value" means the fair market value of a Partner's non-cash
Capital Contribution as of the date of contribution as agreed to by the
Partners. For purposes of this Partnership Agreement, the Agreed Value of a
Partner's non-cash Capital Contribution shall be equal to the number of
Partnership Units received by such Partner in exchange for Property or an
interest therein or in connection with the merger of a partnership of which
such person is a partner with and into the Partnership, or for any other
non-cash asset so contributed,
multiplied by the "Market Price, calculated in accordance with the second and
third sentences of the definition of "Cash Amount." The names and addresses
of the Partners, number of Partnership Units issued to each Partner, and the
Agreed Value of non-cash Capital Contributions as of the date of contribution
is set forth on Exhibit A.
Agreement means this Agreement of Limited Partnership.
"Articles of Incorporation" means the Articles of Incorporation of the
General Partner filed with the Secretary of State of North Dakota, as amended
or restated from time to time.
"Capital Account" has the meaning provided in Section 4.04 hereof.
"Capital Contribution" means the total amount of cash, cash equivalents,
and the Agreed Value of any Property or other asset contributed or agreed to
be contributed, as the context requires, to the Partnership by each Partner
pursuant to the terms of the Agreement. Any reference to the Capital
Contribution of a Partner shall include the Capital Contribution made by a
predecessor holder of the Partnership Interest of such Partner.
"Capital Transaction" means the refinancing, sale, exchange,
condemnation, recovery of a damage award or insurance proceeds (other than
business or rental interruption insurance proceeds not reinvested in the
repair or reconstruction of Properties), or other disposition of any Property
(or the Partnership's interest therein).
"Cash Amount" means an amount of cash per Partnership Unit equal to the
value of the IRET Shares Amount on the date of receipt by IRET of a Notice of
Exchange. The value of the IRET Shares Amount shall be based on the average
of the daily market price of IRET Shares for the ten consecutive trading days
immediately preceding the date of such valuation. The market price for each
such trading day shall be: (i) if the IRET Shares are listed or admitted to
trading on any securities exchange, the sale price, regular way, on such day,
or if no such sale takes place on such day the average of the closing bid and
asked prices regular way, on such day, (ii) if the IRET Shares are not listed
or admitted to trading on any securities exchange, the last reported sale
price on such day or, if no sale takes place on such day, the average of the
closing bid and asked prices on such day, as reported by a reliable quotation
source designated by IRET, or (iii) if the IRET Shares are not listed or
admitted to trading on any securities exchange and no such last reported sale
price or closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported by a reliable
quotation source designated by IRET, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten days prior to the date in
question) for which prices have been so reported; provided that if there are
no bid and asked prices reported during the ten days prior to the date in
question, the value of the IRET Shares shall be determined by IRET acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the IRET
Shares Amount includes rights that a holder of IRET Shares would be entitled
to receive, then the value of such rights shall be determined by IRET acting
in good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate.
"Certificate" means any instrument or document that is required under
the laws of the State of North Dakota, or any other jurisdiction in which the
Partnership conducts business, to be signed and sworn to by the Partners of
the Partnership (either by themselves or pursuant to the power-of-attorney,
granted to the General Partner in Section 8.02 hereof) and filed for
recording in the appropriate public offices within the State of North Dakota
or such other jurisdiction to perfect or maintain the Partnership as a
limited partnership, to effect the admission, withdrawal, or substitution of
any Partner of the Partnership, or to protect the limited liability of the
Limited Partners as limited partners under the laws of the State of North
Dakota or such other jurisdiction.
"Code" means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time. Reference to any particular provision of
the Code shall mean that provision in the Code at the date hereof and any
successor provision of the Code.
"Commission" means the U.S. Securities and Exchange Commission.
"Conversion Factor" means 1.0, provided that in the event that IRET (i)
declares or pays a dividend on its outstanding IRET Shares in IRET Shares or
makes a distribution to all holders of its outstanding IRET Shares in IRET
Shares, (ii) subdivides its outstanding IRET Shares, or (iii) combines its
outstanding IRET Shares into a smaller number of IRET Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction,
the numerator of which-shall be the number of IRET Shares issued and
outstanding on the record date for such dividend, distribution, subdivision
or combination (assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the denominator
of which shall be the actual number of IRET Shares (determined without the
above assumption) issued and outstanding on such date. Any adjustment to the
Conversion Factor shall become effective immediately after the effective date
of such event retroactive to the record date, if any, for such event;
provided, however, that if IRET receives a Notice of Exchange after the
record date, but prior to the effective date of such dividend, distribution,
subdivision or combination, the Conversion Factor shall be determined as if
IRET had received the Notice of Exchange immediately prior to the record date
for such dividend, distribution, subdivision or combination.
"Declaration of Trust" means the Declaration of Trust of IRET, as
amended or restated from time to time.
"Event of Bankruptcy" as to any Person means the filing of a petition
for relief as to such Person under Federal Bankruptcy statutes or appointment
of a receiver under the law of any jurisdiction (except if such petition is
has been dismissed within 90 days); insolvency as finally determined by a
court proceeding; commencement of any proceedings relating to such Person as
a debtor under any other reorganization, arrangement, insolvency, adjustment
of debt or law of any jurisdiction, whether now in existence or hereinafter
in effect, either by such Person or by another, provided that if such
proceeding is commenced by another, such Person indicates his approval of
such proceeding, consents thereto or acquiesces therein, or such proceeding
is contested by such Person and has not been finally dismissed within 90 days.
"Exchange Amount" means either the Cash Amount or the IRET Shares
Amount, as selected by the General Partner or IRET in its sole discretion
pursuant to Section 8.05(b) hereof.
"Exchange Right" has the meaning provided in Section 8.05(a) hereof.
"Exchanging Partner" has the meaning provided in Section 8.05(a) hereof.
"General Partner" means IRET, Inc., a North Dakota corporation, and any
Person who becomes a substitute or additional General Partner as provided
herein, and any of their successors as General Partner.
"General Partnership Interest" means a Partnership Interest held by the
General Partner that is a general partnership interest.
"Indemnitee" means (i) any Person made a party to a proceeding by reason
of its status as IRET, the General Partner or a trustee, director, officer or
employee of IRET, the Partnership or the General Partner, and (ii) such other
Persons (including Affiliates of IRET, General Partner or the Partnership) as
the General Partner may designate from time to time, in its sole and absolute
discretion.
"Independent Trustee" means a trustee of IRET who is not an officer,
member, affiliate or employee of Xxxxx-Xxxxx & Associates, L.L.C., the
advisor to IRET.
"Initial Properties" means those properties listed on Exhibit B hereto.
"IRET" means Investors Real Estate Trust, a North Dakota business trust
whose address is 12 South Main, Minot, North Dakota.
"IRET Expenses" means (i) costs and expenses relating to the formation
and continuity of existence and operation of IRET and any Subsidiaries
thereof, including Pine-Cone IRET, Inc., West-Stonehill IRET, Inc., and
Miramount IRET, Inc. , (which Subsidiaries shall, for purposes hereof, be
included within the definition of IRET), including taxes, fees and
assessments associated therewith, any and all costs, expenses or fees payable
to any trustee, officer, or employee of IRET, (ii) costs and expenses
relating to the public offering and registration of securities by IRET and
all statements, reports, fees and expenses incidental thereto, including
underwriting discounts and selling commissions applicable to any such
offering of securities, (iii) costs and expenses associated with the
preparation and filing of any periodic reports by IRET under federal, state
or local laws or regulations, including filings with the Commission, (iv)
costs and expenses associated with compliance by IRET with laws, rules and
regulations promulgated by any regulatory body, including the Commission, and
(v) all other operating or administrative costs of IRET incurred in the
ordinary course of its business on behalf of or in connection with the
Partnership.
"IRET Share" means a share of beneficial interest of IRET.
"IRET Shares Amount" shall mean a number of IRET Shares equal to the
product of the number of Partnership Units offered for exchange by an
Exchanging Partner, multiplied by the Conversion Factor as adjusted to and
including the Specified Exchange Date; provided that in the event IRET issues
to all holders of IRET Shares rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to subscribe for or
purchase IRET Shares, or any other securities or property (collectively, the
"rights"), and the rights have not expired at the Specified Exchange Date,
then the IRET Shares Amount shall also include the rights issuable to a
holder of the IRET Shares Amount of IRET Shares on the record date fixed for
purposes of determining the holders of IRET Shares entitled to rights.
"Limited Partner" means any Person named as a Limited Partner on Exhibit
A attached hereto, and any Person who becomes a Substitute or Additional
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means the ownership interest of a Limited
Partner in the Partnership at any particular time, including the right of
such Limited Partner to any and all benefits to which such Limited Partner
may be entitled as provided in this Agreement and in the Act, together with
the obligations of such Limited Partner to comply with all the provisions of
this Agreement and of such Act.
"Loss" has the meaning provided in Section 5.01(f) hereof.
"Notice of Exchange" means the Notice of Exercise of Exchange Right
substantially in the form attached as Exhibit C hereto.
"Offer" has the meaning set forth in Section 7.01(c) hereof.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's share of Partner Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations Section
1.704-2(i)(5).
"Partnership Interest" means an ownership interest in the Partnership
held by either a Limited Partner or the General Partner and includes any and
all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(d). In accordance with Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is determined by first computing, for each
Partnership nonrecourse liability, any gain the Partnership would realize if
it disposed of the property subject to the liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. A Partner's share of Partnership Minimum Gain
shall be determined in accordance with Regulations Section 1.704-2(g)(1).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of cash pursuant to Section 5.02 hereof,
which record date shall be the same as the record date established by the
IRET for a distribution to its shareholders of some or all of its portion of
such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder. The allocation of
Partnership Units among the Partners shall be as set forth on Exhibit A, as
may be amended from time to time.
"Percentage Interest" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership Units
owned by a Partner by the total number of Partnership units then outstanding.
The Percentage Interest of each Partner shall be as set forth on Exhibit A,
as may be amended from time to time.
"Person" means any individual, partnership, corporation, joint venture,
trust or other entity.
"Profit" has the meaning provided in Section 5.01(f) hereof.
"Property" means any residential, office or industrial property or other
investment in which the Partnership holds an ownership interest.
"Regulations" means the Federal Income Tax Regulations issued under the
Code, as amended and as hereafter amended from time to time. Reference to any
particular provision of the Regulations shall mean that provision of the
Regulations on the date hereof and any successor provision of the Regulations.
"REIT" means a real estate investment trust under Sections 856 through 860
of the Code.
"Service" means the Internal Revenue Service.
"Specified Exchange Date" means the first business day of the month that
is at least 60 business days after the receipt by IRET of the Notice of
Exchange.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Subsidiary Partnership" means any partnership of which the majority of
the limited or general partnership interests therein are owned, directly or
indirectly, by the Partnership.
"Substitute Limited Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to Section 9.03 hereof.
"Surviving General Partner" has the meaning set forth in Section 7.01(d)
hereof.
"Transaction" has the meaning set forth in Section 7.01(c) hereof.
"Transfer" has the meaning set forth in Section 9.02(a) hereof.
ARTICLE II
PARTNERSHIP CONTINUATION AND IDENTIFICATION
2.01 NAME, OFFICE AND REGISTERED AGENT. The name of the Partnership is
IRET PROPERTIES, a North Dakota Limited Partnership. The specified office
and place of business of the Partnership shall be 00 Xxxxx Xxxx Xxxxxx,
Xxxxx, Xxxxx Xxxxxx 00000. The General Partner may at any time change the
location of such office, provided the General Partner gives notice to the
Partners of any such change. The name and address of the Partnership's
registered agent is Xxxxx-Xxxxx & Associates, L.L.C., a North Dakota Limited
Liability Company, 00 Xxxxx Xxxx Xxxxxx, Xxxxx, XX 00000.
2.02 PARTNERS.
(a) The General Partner of the Partnership is IRET, Inc., a North
Dakota corporation. Its principal place of business shall be the
same as that of the Partnership.
(b) Attached as Exhibit A is the name and addresses of the Limited
Partners as of the date hereof. The Limited Partners shall be those
Persons identified as Limited Partners on Exhibit A hereto, as
amended from time to time.
2.03 TERM AND DISSOLUTION.
(a) The term of the Partnership shall continue in full force and effect
until April 30, 2050, except that the Partnership shall be dissolved
upon the first to occur of any of the following events:
(i) dissolution, death, removal or withdrawal of a General Partner
unless the business of the Partnership is continued pursuant to
Section 7.03(b) hereof; provided that if a General Partner is
on the date of such occurrence a partnership, the dissolution
of such General Partner as a result of the dissolution, death,
withdrawal, removal or Event of Bankruptcy of a partner in such
partnership shall not be an event of dissolution of the
Partnership if the business of such General Partner is continued
by the remaining partner or partners, either alone or with
additional partners, and such General Partner an such partners
comply with any other applicable requirements of this Agreement;
(ii) The passage of 90 days after the sale or other disposition of
all or substantially all of the assets of the Partnership
(provided that if the Partnership receives an installment
obligation as consideration for such sale or other disposition,
the Partnership shall
continue, unless sooner dissolved under the provisions of this
Agreement, until such time as such note or notes are paid in
full);
(iii) The exchange of all Limited Partnership Interests; or
(iv) The election by the General Partner that the Partnership should
be dissolved.
(b) Upon dissolution of the Partnership (unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof), the
General Partner (or its trustee, receiver, successor or legal
representative) shall amend or cancel the Certificate and liquidate
the Partnership's assets and apply and distribute the proceeds
thereof in accordance with Section 5.06 hereof. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer
liquidation of, or withhold from distribution for a reasonable time,
any assets of the Partnership (including those necessary to satisfy
the Partnership's debts and obligations), or (ii) distribute the
assets to the Partners in kind.
2.04 FILING OF CERTIFICATE AND PERFECTION OF LIMITED PARTNERSHIP. The
General Partner shall execute, acknowledge, record and file at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Partnership to be treated as a
limited partnership under, and otherwise to comply with, the laws of each
state or other jurisdiction in which the Partnership conducts business.
2.05 CERTIFICATES DESCRIBING PARTNERSHIP UNITS. At the request of a
Limited Partner, the General Partner, at its option, may issue a certificate
summarizing the terms of such Limited Partner's interest in the Partnership,
including the number of Partnership Units owned and the Percentage Interest
represented by such Partnership Units as of the date of such certificate. Any
such certificate (i) shall be in form and substance as approved by the
General Partner, (ii) shall not be negotiable and (iii) shall bear a legend
to the following effect:
"This certificate is not negotiable. The Partnership Units represented
by this certificate are governed by and transferable only in accordance with
the provisions of the Partnership Agreement of IRET Properties, a North
Dakota Limited Partnership, as from time to time amended and restated."
ARTICLE III
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by
a limited partnership organized pursuant to the Act, provided, however, that
such business shall be limited to and conducted in such a manner as to permit
IRET at all times to qualify as a REIT, unless IRET otherwise ceases to
qualify as a REIT, (ii) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing: In connection with the
foregoing, and without limiting IRET's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that IRET's current status as
a REIT inures to the benefit of all the Partners and not solely to IRET. The
General Partner shall also be empowered to do any and all acts and things
necessary or prudent to ensure that the Partnership will not be classified as
a "publicly traded partnership" for purposes of Section 7704 of the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.01 CAPITAL CONTRIBUTIONS. IRET shall, through the General Partner,
its wholly owned subsidiary, contribute to the capital of the Partnership all
of its assets subject to all of its liabilities as specified on Exhibit A
hereof. The Limited Partners shall contribute to the capital of the
Partnership interests in one or more of the Properties or the partnerships
owning such Properties, each with values as set forth opposite their names on
Exhibit A. The Agreed Values of such Limited Partners' ownership interests in
the Properties that are contributed to the Partnership are as set forth
opposite their names on Exhibit A.
4.02 ADDITIONAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF ADDITIONAL
PARTNERSHIP INTERESTS. Except as provided in this Section 4.02 or in Section
4.03, the Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Partnership. The General Partner may
contribute additional capital to the Partnership, from time to time, and
receive additional Partnership Interests in respect thereof, in the manner
contemplated in this Section 4.02.
(a) Issuance of Additional Partnership Interests.
General. The General Partner is hereby authorized to cause the
Partnership to issue such additional Partnership Interests in the
form of Partnership Units for any Partnership purpose at any time or
from time to time, to the Partners (including the General Partner and
IRET) or to other Persons for such consideration and on such terms
and conditions as shall be established by the General Partner in its
sole and absolute discretion, all without the approval of any
Limited Partners. Any additional Partnership Interests issued thereby
may be issued in one or more classes, or one or more series of any of
such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties,
including rights, powers and duties senior to Limited Partnership
Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited
Partner, subject to North Dakota law, including, without limitation,
(i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership
Interests; (ii) the right of each such class or series of Partnership
Interests to share in Partnership distributions; and (iii) the rights
of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided, however,
that no additional Partnership Interests shall be issued to the
General Partner or IRET unless either:
(1) the additional Partnership Interests are issued in connection
with an issuance of IRET Shares of or other interests in IRET,
which shares or interests have designations, preferences and
other rights, all such that the economic interests are
substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the
General Partner or IRET by the Partnership in accordance with
this Section 4.02 and the General Partner or IRET shall make a
Capital Contribution to the Partnership in an amount equal to
the proceeds raised in connection with the issuance of such
shares of stock of or other interests in IRET, or
(2) the additional Partnership Interests are issued to all Partners
in proportion to their respective Percentage Interests. Without
limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units
for less than fair market value, so long as the General Partner
concludes in good faith that such issuance is in the best
interests of the General Partner and the Partnership.
(b) In connection with any and all issuances of IRET Shares, IRET and the
General Partner, as IRET determines, shall make Capital Contributions
to the Partnership of the proceeds therefrom, provided that if the
proceeds actually received and contributed by IRET, directly or
through the General Partner, are less than the gross proceeds of such
issuance as a result of any underwriter's discount or other expenses
paid or incurred in connection with such issuance, then the General
Partner and IRET shall be deemed to have made Capital Contributions
to the Partnership in the aggregate amount of the gross proceeds of
such issuance and the Partnership shall be deemed simultaneously to
have paid such offering expenses in accordance with Section 6.05
hereof and in connection with the required issuance of additional
Partnership Units to the General Partner and IRET for such Capital
Contributions pursuant to Section 4.02(a) hereof.
4.03 ADDITIONAL FUNDING. If the General Partner determines that it is
in the best interests of the Partnership to provide for additional
Partnership funds ("Additional Funds") for any Partnership purpose, the
General Partner may (i) cause the Partnership to obtain such funds from
outside borrowings, or (ii) elect to have the General Partner or IRET provide
such Additional Funds to the Partnership through loans or otherwise.
4.04 CAPITAL ACCOUNTS. A separate capital account (a "Capital
Account") shall be established and maintained for each Partner in accordance
with Regulation Section 1.704-1(b)(2)(iv). If (i) a new or existing Partner
acquires an additional Partnership Interest in exchange for more than a de
minimis Capital Contribution, (ii) the Partnership distributes to a Partner
more than a de minimis amount of Partnership property as consideration for a
Partnership Interest, or (iii) the Partnership is liquidated within the
meaning of Regulation Section 1.704-1(b)(2)(ii)(g), the General Partner shall
revalue the property of the Partnership to its fair market value (as
determined by the General Partner, in its sole discretion, taking into
account Section 7701(g) of the Code) in accordance with Regulation Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is revalued by the
General Partner, the Capital Accounts of the Partners shall be adjusted in
accordance with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which
generally require such Capital Accounts to be adjusted to reflect the manner
in which the unrealized gain or loss inherent in such property (that has not
been reflected in the Capital Accounts previously) would be allocated among
the Partners pursuant to Section 5.01 if there were a taxable disposition of
such property for its fair market value (as determined by the General
Partner, in its sole discretion, and taking into account Section 7701(g) of
the Code) on the date of the revaluation.
4.05 PERCENTAGE INTERESTS. If the number of outstanding Partnership
Units increases or decreases during a taxable year, each Partner's Percentage
Interest shall be adjusted by the General Partner effective as of the
effective date of each such increase or decrease to a percentage equal to the
number of Partnership Units held by such Partner divided by the aggregate
number of Partnership Units outstanding after giving effect to such increase
or decrease. If the Partners' Percentage Interests are adjusted pursuant to
this Section 4.O5, the Profits and Losses for the taxable year in which the
adjustment occurs shall be allocated between the part of the year ending on
the day when the Partnership's property is revalued by the General Partner
and the part of the year beginning on the following day either (i) as if the
taxable year had ended on the date of the adjustment or (ii) based on the
number of days in each part. The General Partner, in its sole discretion,
shall determine which method shall be used to allocate Profits and Losses for
the taxable year in which the adjustment occurs. The allocation of Profits
and Losses for the earlier part of the year shall be based on the Percentage
Interests before adjustment, and the allocation of Profits and Losses for the
later part shall be based on the adjusted Percentage Interests.
4.06 NO INTEREST ON CONTRIBUTIONS. No Partner shall be entitled to
interest on its Capital Contribution.
4.07 RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall be entitled to
withdraw any part of its Capital Contribution or its Capital Account or to
receive any distribution from the Partnership, except as specifically
provided in this Agreement. Except as otherwise provided herein, there shall
be no obligation to return to any
Partner or withdrawn Partner any part of such Partner's Capital Contribution
for so long as the Partnership continues in existence.
4.08 NO THIRD PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the
right or obligation of any Partner to make Capital Contributions or loans or
to pursue any other right or remedy hereunder or at law or in eity, it being
understood and agreed that the provisions of this Agreement shall be solely
for the benefit of, and may be enforced solely by, the parties hereto and
their respective successors and assigns. None of the rights or obligations of
the Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by
any creditor or other third party, nor may such rights or obligations be
sold, transferred or assigned by the Partnership or pledged or encumbered by
the Partnership to secure any debt or other obligation of the Partnership or
of any of the Partners. In addition, it is the intent of the parties hereto
that no distribution to an-v Limited Partner shall be deemed a return of
money or other property in violation of the Act. However, if any court of
competent Jurisdiction holds that, notwithstanding the provisions of this
Agreement, any Limited Partner is obligated to return such money or property,
such obligation shall be the obligation of such Limited Partner and not of
the General Partner. without limiting the generality of the foregoing, a
deficit Capital Account of a Partner shall not be deemed to be a liability of
such Partner nor an asset or property of the Partnership.
ARTICLE V
PROFITS AND LOSSES; DISTRIBUTIONS
5.01 ALLOCATION OF PROFIT AND LOSS.
(a) General. Profit and Loss of the Partnership for each fiscal year of
the Partnership shall be allocated among the Partners in accordance
with their respective Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to the
contrary, (i) any expense of the Partnership that is a "nonrecourse
deduction" within the meaning of Regulations Section 1.704-2(b)(1)
shall be allocated in accordance with the Partners' respective
Percentage Interests, (ii) any expense of the Partnership that is a
"partner nonrecourse deduction" within the meaning of Regulations
Section 1.704-2(i)(2) shall be allocated to the Partner that bears
the "economic risk of loss" of such deduction in accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net decrease
in Partnership Minimum Gain within the meaning of Regulations
Section 1.704-2(f)(1) for any Partnership taxable year, then, subject
to the exceptions set forth in Regulations Section 1.704-2(f)(2),
(3), (4) and (5), items of gain and income shall be allocated among
the Partners in accordance with Regulations Section 1.704-2(f) and
the ordering rules contained in Regulations Section 1.704-2(j), and
(iv) if there is a net decrease in Partner Nonrecourse Debt Minimum
Gain within the meaning of Regulations Section 1.704-2(i)(4) for any
Partnership taxable year, then, subject to the exceptions set forth
in Regulations Section 1.704(2)(g), items of gain and income shall
be allocated among the Partners in accordance with Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Regulations
Section 1.704-2(j). A Partner's "interest in partnership profits" for
purposes of determining its share of the nonrecourse liabilities the
Partnership within the meaning of Regulations Section 1.752-3(a)(3)
shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Limited Partner receives in any
taxable year an adjustment, allocation, or distribution described in
subparagraphs (4), (5), or (6) of Regulations
Section 1.704-1(b)(2)(ii)(d) that causes or increases a deficit
balance in such Partner's Capital Account that exceeds the sum of
such Partner's shares of Partnership Minimum Gain and
Partner Nonrecourse Debt Minimum Gain, as determined in accordance
with Regulations Sections 1.704-2(g) and 1.704-2(i), such Partner
shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount
and manner sufficient to eliminate such deficit Capital Account
balance as quickly as possible as provided in Regulations
Section 1.704-l(b)(2)(ii)(d). After the occurrence of an allocation
of income or gain to a Limited Partner in accordance with this
Section 5.01(c), to the extent permitted by Regulations
Section 1.704-1(b), items of expense or loss shall be allocated to
such Partner in an amount necessary to offset the income or gain
previously allocated to such Partner under this Section 5.01(c).
(d) Capital Account Deficits. Loss shall not be allocated to a Limited
Partner to the extent that such allocation would cause a deficit in
such Partner's Capital Account (after reduction to reflect the items
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and
(6)) to exceed the sum of such Partner's shares of Partnership
Minimum Gain and Partner Nonrecourse Debt Minimum Gain. Any Loss in
excess of that limitation shall be allocated to the General Partner.
After the occurrence of an allocation of Loss to the General
Partner in accordance with this Section 5.01(d), to the extent
permitted by Regulations Section 1.704-1(b), Profit shall be
allocated to such Partner in an amount necessary to offset the Loss
previously allocated to such Partner under this Section 5.01(d).
(e) Allocations Between Transferor and Transferee. If a Partner
transfers any part or all of its Partnership Interest, the
distributive shares of the various items of Profit and Loss allocable
among the Partners during such fiscal year of the Partnership shall
be allocated between the transferor and the transferee Partner either
(i) as if the Partnership's fiscal year had ended on the date of the
transfer, or (ii) based on the number of days of such fiscal year
that each was a Partner without regard to the results of Partnership
activities in the respective portions of such fiscal year in which
the transferor and the transferee were Partners. The General Partner,
in its sole discretion, shall determine which method shall be used to
allocate the distributive shares of the various items of Profit and
Loss between the transferor and the transferee Partner.
(f) Definition of Profit and Loss. "Profit" and "Loss" and any items of
income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting
principles, as modified by Regulations Section 1.704-1(b)(2)(iv),
except that Profit and Loss shall not include items of income, gain
and expense that are specially allocated pursuant to Section 5.01(b),
5.01(c), or 5.01(a). All allocations of income, Profit, gain, Loss,
and expense (and all items contained therein) for federal income tax
purposes shall be identical to all allocations of such items set
forth in this Section 5.01, except as otherwise required by
Section 704(c) of the Code and Regulations Section 1.704-1(b)(4). The
General Partner shall have the authority to elect the method to be
used by the Partnership for allocating items of income, gain, and
expense as required by Section 704(c) of the Code and such election
shall be binding on all Partners.
5.02 DISTRIBUTION OF CASH.
(a) The Partnership shall distribute cash on a quarterly (or, at the
election of the General Partner, more frequent) basis, in an amount
determined by the General Partner in its sole discretion, to the
Partners who are Partners on the Partnership Record Date with respect
to such quarter (or other distribution period) in accordance with
their respective Percentage Interests on the Partnership Record Date;
provided, however, that if a new or existing Partner acquires an
additional Partnership Interest in exchange for a Capital
Contribution on any date other than a Partnership Record Date, the
cash distribution attributable to such additional Partnership
Interest relating to the Partnership Record Date next following the
issuance of such additional Partnership Interest shall be reduced in
the proportion that the number of days that such additional
Partnership Interest is held by such Partner bears to the number of
days between such Partnership Record Date and the immediately
preceding Partnership Record Date.
(b) Notwithstanding any other provision of this AGREEMENT, the General
Partner is authorized to take any action that it determines to be
necessary or appropriate to cause the Partnership to comply with any
withholding requirements established under the Code or any other
federal, state or local law including, without limitation, pursuant
to Sections 1441, 1442, 1445 and 1446 of the Code. To the extent
that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or
distribution of income to the Partner or assignee (including by
reason of Section 1446 of the Code), the amount withheld shall be
treated as a distribution of cash in the amount of such withholding
to such Partner.
(c) In no event may a Partner receive a distribution of cash with respect
to a Partnership Unit if such Partner is entitled to receive a cash
dividend as the holder of record of a IRET Share for which all or
part of such Partnership Unit has been or will be exchanged.
5.03 IRET DISTRIBUTION REQUIREMENTS. The General Partner shall use its
reasonable efforts to cause the Partnership to distribute amounts sufficient
to enable IRET to pay shareholder dividends that will allow IRET to (i) meet
its distribution requirement for Qualification as a REIT as set forth in
Section 857(a)(1) of the Code and (ii) avoid any federal income or excise tax
liability imposed by the Code.
5.04 NO RIGHT TO DISTRIBUTIONS IN KIND. No Partner shall be entitled
to demand property other than cash in connection with any distributions by the
Partnership.
5.05 LIMITATIONS ON RETURN OF CAPITAL CONTRIBUTIONS. Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make, a
distribution that includes a return of all or part of a Partner's Capital
Contributions, unless after giving effect to the return of a Capital
Contribution, the sum of all Partnership liabilities, other than the
liabilities to a Partner for the return of his Capital Contribution, does not
exceed the fair market value of the Partnership's assets.
5.06 DISTRIBUTIONS UPON LIQUIDATION.
(a) Upon liquidation of the Partnership, after payment of, or adequate
provision for, debts and obligations of the Partnership, including
any Partner loans, any remaining assets of the Partnership shall he
distributed to all Partners with positive Capital Accounts in
accordance with their respective positive Capital Account balances.
For purposes of the preceding sentence, the Capital Account of each
Partner shall be determined after all adjustments made in accordance
with Sections 5.01 and 5.02 resulting from Partnership operations
and from all sales and dispositions of all or any part of the
Partnership's assets. To the extent deemed advisable by the General
Partner, appropriate arrangements (including the use of a liquidating
trust) may be made to assure that adequate funds are available to pay
any contingent debts or obligations.
(b) If the General Partner has a negative balance in its Capital Account
following a liquidation of the Partnership, as determined after
taking into account all Capital Account adjustments in accordance
with Sections 5.01 and 5.02 resulting from Partnership operations and
from all sales and dispositions of all or any part of the
Partnership's assets, the General Partner shall contribute to the
Partnership an amount of cash equal to the negative balance in its
Capital Account and such cash shall be paid or distributed by the
Partnership to creditors, if any, and
then to the Limited Partners in accordance with Section 5.06(a). Such
contribution by the General Partner shall be made by the end of the
Partnership's taxable year in which the liquidation occurs (or, if
later, within 90 days after the date of the liquidation).
5.07 SUBSTANTIAL ECONOMIC EFFECT. It is the intent of the Partners
that the allocations of Profit and Loss under the Agreement have substantial
economic effect (or be consistent with the Partners' interests in the
Partnership in the case of the allocation of losses attributable to
nonrecourse debt) within the meaning of Section 704(b) of the Code as
interpreted by the Regulations promulgated pursuant thereto. Article V and
other relevant provisions of this Agreement shall be interpreted in a manner
consistent with such intent.
ARTICLE VI
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.01 MANAGEMENT OF THE PARTNERSHIP.
(a) Except as otherwise expressly provided in this Agreement, the General
Partner shall have full, complete and exclusive discretion to manage
and control the business of the Partnership for the purposes herein
stated, and shall make all decisions affecting the business and
assets of the Partnership. Subject to the restrictions specifically
contained in this Agreement, the powers of the General Partner shall
include, without limitation, the authority to take the following
actions on behalf of the Partnership:
(i) to acquire, purchase, own, operate, lease and dispose of any
real property and any other property or assets that the General
Partner determines are necessary or appropriate or in the best
interests of the business of the Partnership;
(ii) to construct buildings and make other improvements on the
properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any
Partnership Interests or any securities (including secured and
unsecured debt obligations of the Partnership, debt obligations
of the Partnership convertible into any class or series of
Partnership Interests, or options, rights, warrants or
appreciation rights relating to any Partnership Interests) of
the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive
evidences of indebtedness in connection therewith, refinance,
increase the amount of, modify, amend or change the terms of,
or extend the time for the payment of, any such indebtedness,
and secure such indebtedness by mortgage, deed of trust, pledge
or other lien on the Partnership's assets;
(v) to guarantee or become a comaker of indebtedness of IRET or any
Subsidiary thereof, refinance, increase the amount, modify or
change the terms of, or extend the time for the payment of, any
such guarantee or indebtedness, and secure such guarantee or
indebtedness by mortgage, deed of trust, pledge or other lien on
the Partnership's assets;
(vi) to use assets of the Partnership (including, without limitation,
cash on hand) for any purpose consistent with this Agreement,
including, without limitation, payment, either directly or by
reimbursement, of all operating costs and general administrative
expenses of IRET, the General Partner, the Partnership or any
Subsidiary of either, to third parties or to the General Partner
as set forth in this Agreement;
(vii) to lease all or any portion of any of the Partnership's assets,
whether or not the terms of such leases extend beyond the
termination date of the Partnership and whether or not any
portion of the Partnership's assets so leased are to be
occupied by the lessee, or, in turn, subleased in whole or
in part to others, for such consideration and on such terms
as the General Partner may determine;
(viii) to prosecute, defend, arbitrate, or compromise any and all
claims or liabilities in favor of or against the Partnership,
on such terms and in such manner as the General Partner may
reasonably determine, and similarly to prosecute, settle or
defend litigation with respect to the Partners, the Partnership,
or the Partnership's assets; provided, however, that the
General Partner may not, without the consent of all of the
Partners, confess a judgment against the Partnership;
(ix) to file applications, communicate, and otherwise deal with any
and all governmental agencies having jurisdiction over, or in
any way affecting, the Partnership's assets or any other aspect
of the Partnership business;
(x) to make or revoke any election permitted or required of the
Partnership by any taxing authority;
(xi) to maintain such insurance coverage for public liability, fire
and casualty, and any and all other insurance for the
protection of the Partnership, for the conservation of
Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such
types, as it shall determine from time to time;
(xii) to determine whether or not to apply any insurance proceeds for
any property to the restoration of such property or to
distribute the same;
(xiii) to establish one or more divisions of the Partnership, to hire
and dismiss employees of the Partnership or any division of the
Partnership, and to retain legal counsel, accountants,
consultants, real estate brokers, and such other persons, as
the General Partner may deem necessary or appropriate in
connection with the Partnership business and to pay therefor
such reasonable remuneration as the General Partner may deem
reasonable and proper;
(xiv) to retain other services of any kind or nature in connection
with the Partnership business, and to pay therefor such
remuneration as the General Partner may deem reasonable and
proper;
(xv) to negotiate and conclude agreements on behalf of the
Partnership with respect to any of the rights, powers and
authority conferred upon the General Partner;
(xvi) to maintain accurate accounting records and to file promptly all
federal, state and local income tax returns on behalf of the
Partnership;
(xvii) to distribute Partnership cash or other Partnership assets in
accordance with this Agreement;
(xviii) to form or acquire an interest in, and contribute property to,
any further limited or general partnerships, joint ventures or
other relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the
contributions of property to IRET, its Subsidiaries and any
other Person in which it has an equity interest from time to
time);
(xix) to establish Partnership reserves for working capital, capital
expenditures, contingent liabilities, or any other valid
Partnership purpose; and
(xx) to take such other action, execute, acknowledge, swear to or
deliver such other documents and instruments, and perform any
and all other acts that the General Partner deems necessary or
appropriate for the formation, continuation and conduct of the
business and affairs of the Partnership (including, without
limitation, all actions consistent with allowing IRET at all
times to qualify as a IRET unless IRET voluntarily terminates
its REIT status) and to possess and enjoy all of the rights and
powers of a general partner as provided by the Act.
(b) Except as otherwise provided herein, to the extent the duties of
the General Partner require expenditures of funds to be paid to
third parties, the General Partner shall not have any obligations
hereunder except to the extent that partnership funds are
reasonably available to it for the performance of such duties, and
nothing herein contained shall be deemed to authorize or require
the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any
individual liability or obligation on behalf of the Partnership.
6.02 DELEGATION OF AUTHORITY. The General Partner may delegate any or
all of its powers, rights and obligations hereunder, and may appoint, employ,
contract or otherwise deal with any Person for the transaction of the
business of the Partnership, which Person may, under supervision of the
General Partner, perform any acts or services for the Partnership as the
General Partner may approve.
6.03 INDEMNIFICATION AND EXCULPATION OF INDEMNITEES.
(a) The Partnership shall indemnify an Indemnitee from and against any
and all losses, claims, damages, liabilities, joint or several,
expenses (including reasonable legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any
and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the
operations of the Partnership as set forth in this Agreement in
which any Indemnitee may be involved, or is threatened to be
involved, as a party or otherwise, unless it is established that:
(i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and either was committed in
bad faith or was the result of active and deliberate dishonesty;
(ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any
criminal proceeding, the Indemnitee had reasonable cause to
believe that the act or omission was unlawful. The termination of
any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The
termination of any proceeding by conviction or upon a plea of nolo
contenders or its equivalent, or an entry of an order of probation
prior to judgment, creates a rebuttable presumption that the
Indemnitee acted in a manner contrary to that specified in this
Section 6.03(a). Any indemnification pursuant to this Section 6.03
shall be made only out of the assets of the Partnership.
(b) The Partnership shall reimburse an Indemnitee for reasonable
expenses incurred by an Indemnitee who is a party to a proceeding
in advance of the final disposition of the proceeding upon receipt
by the Partnership of (i) a written affirmation by the Indemnitee
of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in
this Section 6.03 has been met, and (ii) a written undertaking by
or on behalf of the Indemnitee to repay the amount if it shall
ultimately be determined that the standard of conduct has not been
met.
(c) The indemnification provided by this Section 6.03 shall be in
addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue
as to an Indemnitee who has ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership
would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) For purposes of this Section 6.03, the Partnership shall be deemed
to have requested an Indemnitee to serve as fiduciary of an
employee benefit plan whenever the performance by it of its duties
to the Partnership also imposes duties on, or otherwise involves
services by, it to the plan or participants or beneficiaries of the
plan; excise taxes assessed on an Indemnitee with respect to an
employee benefit plan pursuant to applicable law shall constitute
fines within the meaning of this Section 6.03; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan
in the performance of its duties for a purpose reasonably believed
by it to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set
forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.03 because the Indemnitee had an interest
in the transaction with respect to which the indemnification
applies if the transaction was otherwise permitted by the terms of
this Agreement.
(h) The provisions of this Section 6.03 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of
any other Persons.
6.04 LIABILITY OF THE GENERAL PARTNER.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary
damages to the Partnership or any Partners for losses sustained or
liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith. The
General Partner shall not be in breach of any duty that the General
Partner may owe to the Limited Partners or the Partnership or any
other Persons under this Agreement or if any duty stated or implied
by law or equity provided the General Partner, acting in good
faith, abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership, IRET and the Company's
shareholders collectively, that the General Partner is under no
obligation to consider the separate interests of the Limited
Partners (including, without limitation, the tax consequences to
Limited Partners or the tax consequences of same, but not all, of
the Limited Partners) in deciding whether to cause the Partnership
to take (or decline to take) any actions. In the event of a
conflict between the interests of the shareholders of IRET on one
hand and the Limited Partners on the other, the General Partner
shall endeavor in good faith to resolve the conflict in a manner
not adverse to either the shareholders of IRET or the Limited
Partners; provided, however, that for so long as IRET, directly or
the General Partner owns a controlling interest in the Partnership,
any such conflict that cannot be resolved in a manner not adverse
to either the shareholders of IRET or the Limited Partners shall be
resolved in favor of the shareholders. The General Partner shall
not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners
in connection with such decisions, provided that the General
Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set forth
in Section 6.01 hereof, the General Partner may exercise any of the
powers granted to it under this Agreement and perform any of the
duties imposed upon it hereunder either directly or by or through
its agents. The General Partner shall not be responsible for any
misconduct or negligence on the part of any such agent appointed by
it in good faith.
(d) Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on
behalf of the Partnership, undertaken in the good faith belief that
such action or omission is necessary or advisable in order (i) to
protect the ability of IRET to continue to qualify as a REIT or
(ii) to prevent IRET from incurring any taxes under Section 857,
Section 4981, or any other provision of the Code, is expressly
authorized under this Agreement and is deemed approved by all of
the Limited Partners.
(e) Any amendment, modification or repeal of this Section 6.04 or any
provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 6.04 as in
effect immediately prior to such amendment, modification or repeal
with respect to matters occurring, in whole or in part, prior to
such amendment, modification or repeal, regardless of when claims
relating to such matters may arise or be asserted.
6.05 REIMBURSEMENT. The General Partner is hereby authorized to pay
compensation for accounting, administrative, legal, technical, management and
other services rendered to the Partnership. All of the aforesaid expenditures
(including Administrative Expenses) shall be obligations of the Partnership, and
the General Partner shall be entitled to reimbursement by the Partnership for
any expenditure (including Administrative Expenses) incurred by it on behalf of
the Partnership which shall be made other than out of the funds of the
Partnership.
6.06 OUTSIDE ACTIVITIES. Subject to Section 6.08 hereof, the Articles of
Incorporation and any agreements entered into by the General Partner or its
Affiliates with the Partnership or a Subsidiary, any officer, director,
employee, agent, trustee, Affiliate or shareholder of the General Partner, the
General Partner shall be entitled to and may have business interests and engage
in business activities in addition to those relating to the Partnership,
including business interests and activities substantially similar or identical
to those of the Partnership. Neither the Partnership nor any of the Limited
Partners shall have any rights by virtue of this Agreement in any such business
ventures, interest or activities. None of the Limited Partners nor any other
Person shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any such business ventures, interests or
activities, and the General Partner shall have no obligation pursuant to
this Agreement to offer any interest in any such business ventures, interests
and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any
Limited Partner, could be taken by such Person.
6.07 CONFLICTS OF INTEREST AND INVESTMENT RESTRICTIONS. The Partnership
shall not purchase any property, sell or lease any property, borrow or loan any
money nor invest in any joint ventures with any Trustee, Director, employee or
any affiliate (including the Advisor) of IRET, except in connection with a
transaction approved by a majority of the Independent Trustees of IRET who are
not themselves in any way involved in the transaction as being a fair,
competitive and commercially reasonable transaction which is no less favorable
to the Partnership than a similar transaction between unaffiliated parties under
the same circumstances.
6.08 GENERAL PARTNER PARTICIPATION. The General Partner agrees that all
business activities of the General Partner, including activities pertaining to
the acquisition, development or ownership of office or industrial property or
other property, shall be conducted through the Partnership or one or more
Subsidiary Partnerships; provided, however, that IRET is allowed to make a
direct acquisition, but if and only if, such acquisition is made in connection
with the issuance of Additional Securities, which direct acquisition and
issuance have been approved and determined to be in the best interests of IRET
and the Partnership by a majority of the Independent Trustees.
6.09 TITLE TO PARTNERSHIP ASSETS. Title to Partnership assets, whether
real, personal or mixed and whether tangible or intangible, shall be deemed to
be owned by the Partnership as an entity, and no Partner, individually or
collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner, IRET or one or more
nominees, as the General Partner may determine, including Affiliates of the
General Partner. The General Partner hereby declares and warrants that any
Partnership assets for which legal title is held in the name of the General
Partner or any nominee or Affiliate of the General Partner shall be held by the
General Partner for the use and benefit of the Partnership in accordance with
the provisions of this Agreement; provided, however, that the General Partner
shall use its best efforts to cause beneficial and record title to such assets
to be vested in the Partnership as soon as reasonably practicable. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.
6.10 MISCELLANEOUS. In the event IRET redeems any IRET Shares, then the
General Partner shall cause the Partnership to purchase from the General Partner
and IRET a number of Partnership Units as determined based on the application of
the Conversion Factor on the same terms that IRET exchanged such IRET Shares.
Moreover, if IRET makes a cash tender offer or other offer to acquire IRET
Shares, then the General Partner shall cause the Partnership to make a
corresponding offer to the General Partner and IRET to acquire an equal number
of Partnership Units held by the General Partner and IRET. In the event any IRET
Shares are exchanged by IRET pursuant to such offer, the Partnership shall
redeem an equivalent number of the General Partner's and IRET Partnership Units
for an equivalent purchase price based on the application of the Conversion
Factor.
ARTICLE VII
CHANGES IN GENERAL PARTNER
7.01 TRANSFER OF THE GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner shall not transfer all or any portion of its
General Partnership Interest or withdraw as General Partner except as provided
in Section 7.01(c) or in connection with a transaction described in
Section 7.01(d).
(b) The General Partner agrees that it and IRET will at all times own
in the aggregate at least 20% of the Partnership.
(c) Except as otherwise provided in Section 6.06(b) or Section 7.01(d)
hereof, IRET shall not engage in any merger, consolidation or other combination
with or into another Person or sale of all or substantially all of its assets,
or any reclassification, or any recapitalization or change of outstanding IRET
Shares (a "Transaction"), unless (i) the Transaction also includes a merger of
the Partnership or sale of substantially all of the assets of the Partnership as
a result of which all Limited Partners will receive for each Partnership Unit an
amount of cash, securities, or other property equal to the product of the
Conversion Factor and the greatest amount of cash, securities or other property
paid in the Transaction to a holder of one IRET Share in consideration of one
IRET Share, provided that if, in connection with the Transaction, a purchase,
tender or exchange offer ("Offer") shall have been made to and accepted by the
holders of more than 50% of the outstanding IRET Shares, each holder of
Partnership Units shall be given the option to exchange its Partnership Units
for the greatest amount of cash, securities, or other property which a Limited
Partner would have received had it (A) exercised its Exchange Right and
(B) sold, tendered or exchanged pursuant to the Offer the IRET Shares received
upon exercise of the Exchange Right immediately prior to the expiration of the
Offer; and (ii) no more than 75% of the equity securities of the acquiring
Person in such Transaction is owned, after consummation of such Transaction, by
IRET, the General Partner or Persons who were Affiliates of the Company, the
Partnership or the General Partner immediately prior to the date on which the
Transaction is consummated.
(d) Notwithstanding Section 7.01(c), IRET or the General Partner may
merge with or into or consolidate with another entity if immediately after such
merger or consolidation (i) substantially all of the assets of the successor or
surviving entity (the "Survivor"), other than Partnership Units held by IRET or
the General Partner, are contributed, directly or indirectly, to the Partnership
as a Capital Contribution in exchange for Partnership Units with a fair market
value equal to the value of the assets so contributed as determined by the
Survivor in good faith and (ii) the Survivor expressly agrees to assume all
obligations of the General Partner or IRET, as appropriate, hereunder. Upon such
contribution and assumption, the Survivor shall have the right and duty to amend
this Agreement as set forth in this Section 7.01(d). The Survivor shall in good
faith arrive at a new method for the calculation of the Cash Amount, the IRET
Shares Amount and Conversion Factor for a Partnership Unit after any such merger
or consolidation so as to approximate the existing method for such calculation
as closely as reasonably possible. Such calculation shall take into account,
among other things, the kind and amount of securities, cash and other property
that was receivable upon such merger or consolidation by a holder of IRET Shares
or options, warrants or other rights relating thereto, and to which a holder of
Partnership Units could have acquired had such Partnership Units been exchanged
immediately prior to such merger or consolidation. Such amendment to this
Agreement shall provide for adjustment to such method of calculation, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for with respect to the Conversion Factor. The Survivor also shall in good faith
modify the definition of IRET Shares and make such amendments to Section 8.05
hereof so as to approximate the existing rights and obligations set forth in
Section 8.05 as closely as reasonably possible. The above provisions of this
Section 7.01(d) shall similarly apply to successive mergers or consolidations
permitted hereunder.
7.02 ADMISSION OF A SUBSTITUTE OR ADDITIONAL GENERAL PARTNER. A Person
shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:
(a) a majority in interest of the Limited Partners (other than IRET)
shall have consented in writing to the admission of the substitute
or additional General Partner, which consent may be withheld in the
sole discretion of such Limited Partners;
(b) the Person to be admitted as a substitute or additional General
Partner shall have accepted and agreed to be bound by all the terms
and provisions of this Agreement by executing a
counterpart thereof and such other documents or instruments as may
be required or appropriate in order to effect the admission of such
Person as a General Partner, and a certificate evidencing the
admission of such Person as a General Partner shall have been filed
for recordation and all other actions required by Section 2.05
hereof in connection with such admission shall have been performed;
(c) if the Person to be admitted as a substitute or additional General
Partner is a corporation or a partnership it shall have provided
the Partnership with evidence satisfactory to counsel for the
Partnership of such Person's authority to become a General Partner
and to be bound by the terms and provisions of this Agreement; and
(d) counsel for the Partnership shall have rendered an opinion
(relying on such opinions from other counsel and the state or any
other jurisdiction as may be necessary) that the admission of the
person to be admitted as a substitute or additional General Partner
is in conformity with the Act, that none of the actions taken in
connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be
classified other than as a partnership for federal income tax
purposes, or (ii) the loss of any Limited Partner's limited
liability.
7.03 EFFECT OF BANKRUPTCY, WITHDRAWAL, DEATH OR DISSOLUTION OF A GENERAL
PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof or the
death, withdrawal, removal or dissolution of a General Partner
(except that, if a General Partner is on the date of such
occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership
shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining
partner or partners), the Partnership shall be dissolved and
terminated unless the Partnership is continued pursuant to
Section 7.03(b) hereof.
(b) Following the occurrence of an Event of Bankruptcy as to a General
Partner (and its removal pursuant to Section 7.04(a) hereof or the
death, withdrawal, removal or dissolution of a General Partner
(except that, if a General Partner is on the date of such
occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership
shall be deemed not to be a dissolution of such General Partner if
the business of such General Partner is continued by the remaining
partner or partners), the Limited Partners, within 90 days after
such occurrence, may elect to reconstitute the Partnership and
continue the business of the Partnership for the balance of the
term specified in Section 2.04 hereof by selecting, subject to
Section 7.02 hereof and any other provisions of this Agreement, a
substitute General Partner by unanimous consent of the Limited
Partners. If the Limited Partners elect to reconstitute the
Partnership and admit a substitute General Partner, the
relationship with the Partners and of any Person who has acquired
an interest of a Partner in the Partnership shall be governed by
this Agreement.
7.04 REMOVAL OF A GENERAL PARTNER.
(a) Upon the occurrence of an Event of Bankruptcy as to, or the
dissolution of, a General Partner, such General Partner shall be
deemed to be removed automatically; provided, however, that if a
General Partner is on the date of such occurrence a partnership,
the withdrawal, death, dissolution, Event of Bankruptcy as to or
removal of a partner in such partnership shall be deemed not to
be a dissolution of the General Partner if the business of such
General Partner is continued by the remaining partner or partners.
(b) If a General Partner has been removed pursuant to this Section 7.04
and the Partnership is continued pursuant to Section 7.03 hereof,
such General Partner shall promptly transfer and assign its General
Partnership Interest in the Partnership to the substitute General
Partner approved by a majority in interest of the Limited Partners
in accordance with Section 7.03(b) hereof and otherwise admitted to
the Partnership in accordance with Section 7.02 hereof. At the
time of assignment, the removed General Partner shall be entitled
to receive from the substitute General Partner the fair market
value of the General Partnership Interest of such removed General
Partner as reduced by any damages caused to the Partnership by such
General Partner. Such fair market value shall be determined by an
appraiser mutually agreed upon by the General Partner and a
majority in interest of the Limited Partners within 10 days
following the removal of the General Partner. In the event that the
parties are unable to agree upon an appraiser, the removed General
Partner and a majority in interest of the Limited Partners each
shall select an appraiser. Each such appraiser shall complete an
appraisal of the fair market value of the removed General Partner's
General Partnership Interest within 30 days of the General
Partner's removal, and the fair market value of the removed General
Partner's General Partnership Interest shall be the average of the
two appraisals; provided, however, that if the higher appraisal
exceeds the lower appraisal by more than 20% of the amount of the
lower appraisal, the two appraisers, no later than 40 days after
the removal of the General Partner, shall select a third appraiser
who shall complete an appraisal of the fair market value of the
removed General Partner's General Partnership Interest no later
than 60 days after the removal of the General Partner. In such
case, the fair market value of the removed General Partner's
General Partnership Interest shall be the average of the two
appraisals closest in value.
(c) The General Partnership Interest of a removed General Partner,
during the time after default until transfer under Section 7.04(b),
shall be converted to that of a special Limited Partner; provided,
however, such removed General Partner shall not have any rights to
participate in the management and affairs of the Partnership, and
shall not be entitled to an portion of the income, expense, profit,
gain or loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such
removed General Partner shall receive and be entitled only to
retain distributions or allocations of such items that it would
have been entitled to receive in its capacity as General Partner,
until the transfer is effective pursuant to Section 7.04(b).
(d) All Partners shall have given and hereby do give such consents,
shall take such actions and shall execute such documents as shall
be legally necessary and sufficient to effect all the foregoing
provisions of this Section.
ARTICLE VIII
RIGHTS AND OBLIGATIONS
OF THE LIMITED PARTNERS
8.01 MANAGEMENT OF THE PARTNERSHIP. The Limited Partners shall not
participate in the management or control of Partnership business nor shall they
transact any business for the Partnership, nor shall they have the power to sign
for or bind the Partnership, such powers being vested solely and exclusively in
the General Partner.
8.02 POWER OF ATTORNEY. Each Limited Partner hereby irrevocably appoints
the General Partner its true and lawful attorney-in-fact, who may act for each
Limited Partner and in its name, place and stead, and for its use and benefit to
sign, acknowledge, swear to, deliver, file and record, at the appropriate public
offices, any and all documents, certificates, and instruments as may be deemed
necessary or desirable by the General
Partner to carry out fully the provisions of this Agreement and the Act in
accordance with their terms, which power of attorney is coupled with an interest
and shall survive the death, dissolution or legal incapacity of the Limited
Partner, or the transfer by the Limited Partner of any part or all of its
Partnership Interest.
8.03 LIMITATION ON LIABILITY OF LIMITED PARTNERS. No Limited Partner
shall be liable for any debts, liabilities, contracts or obligations of the
Partnership. A Limited Partner shall be liable to the Partnership only to make
payments of its Capital Contribution, if any, as and when due hereunder. After
its Capital Contribution is fully paid, no Limited Partner shall, except as
otherwise required by the Act, be required to make any further Capital
Contributions or other payments or lend any funds to the Partnership.
8.04 OWNERSHIP BY LIMITED PARTNER OF CORPORATE GENERAL PARTNER OR
AFFILIATE. No Limited Partner shall at any time, either directly or indirectly,
own any stock or other interest in the General Partner or in any Affiliate
thereof if such ownership by itself or in conjunction with other stock or other
interests owned by other Limited Partners would, in the opinion of counsel for
the Partnership, jeopardize the classification of the Partnership as a
partnership for federal income tax purposes. The General Partner shall be
entitled to make such reasonable inquiry of the Limited Partners as is required
to establish compliance by the Limited Partners with the provisions of this
Section.
8.05 EXCHANGE RIGHT.
(a) Subject to Sections 8.05(b), 8.05(c), 8.05(d) and 8.05(e), on or
after the date which is one year after the acquisition of such
units, each Limited Partner, other than IRET, shall have the right
(the "Exchange Right") to require the Partnership to redeem on a
Specified Exchange Date all or a portion of the Partnership Units
held by such Limited Partner at an exchange price equal to and in
the form of the Cash Amount to be paid by the Partnership. The
Exchange Right shall be exercised pursuant to a Notice of Exchange
delivered to the Partnership (with a copy to the General Partner)
by the Limited Partner who is exercising the Exchange Right (the
"Exchanging Partner"); provided, however, that the Partnership
shall not be obligated to satisfy such Exchange Right if IRET
and/or the General Partner elects to purchase the Partnership
Units subject to the Notice of Exchange pursuant to
Section 8.05(b); and provided, further, that no Limited Partner
may deliver more than two Notices of Exchange during each calendar
year. A Limited Partner may not exercise the Exchange Right for
less than 1,000 Partnership Units or, if such Limited Partner holds
less than 1,000 Partnership Units, all of the Partnership Units
held by such Partner. The Exchanging Partner shall have no right,
with respect to any Partnership Units so exchanged, to receive any
distribution paid with respect to Partnership Units if the record
date for such distribution is on or after the Specified Exchange
Date.
(b) Notwithstanding the provisions of Section 8.05(a), a Limited
Partner that exercises the Exchange Right shall be deemed to have
offered to sell the Partnership Units described in the Notice of
Exchange to the General Partner and IRET, and either of the General
Partner or IRET (or both) may, in its sole and absolute discretion,
elect to purchase directly and acquire such Partnership Units by
paying to the Exchanging Partner either the Cash Amount or the IRET
Shares Amount, as elected by the General Partner or IRET (in its
sole and absolute discretion), on the Specified Exchange Date,
whereupon the General Partner or IRET shall acquire the Partnership
Units offered for exchange by the exchanging Partner and shall be
treated for all purposes of this Agreement as the owner of such
Partnership Units. If the General Partner and/or IRET shall elect
to exercise its right to purchase Partnership Units under this
Section 8.05(b) with respect to a Notice of Exchange, they shall so
notify the Exchanging Partner within five Business Days after the
receipt b the General Partner of such Notice of Exchange. Unless
the General Partner and/or IRET (in its sole and absolute
discretion) shall exercise its right to purchase Partnership Units
from the Exchanging Partner
pursuant to this Section 8.05(b), neither the General Partner nor
IRET shall have any obligation to the Exchanging Partner or the
Partnership with respect to the Exchanging Partner's exercise of
the Exchange Right. In the event the General Partner or IRET shall
exercise its right to purchase Partnership Units with respect to
the exercise of a Exchange Right in the manner described in the
first sentence of this Section 8.05(b), the Partnership shall have
no obligation to pay any amount to the Exchanging Partner with
respect to such Exchanging Partner's exercise of such Exchange
Right, and each of the Exchanging Partner, the Partnership, and the
General Partner or IRET, as the case may be, shall treat the
transaction between the General Partner or IRET, as the case may
be, and the Exchanging Partner for federal income tax purposes as
a sale of the Exchanging Partner's Partnership Units to the General
Partner or IRET, as the case may be. Each Exchanging Partner agrees
to execute such documents as the General Partner may reasonably
require in connection with the issuance of IRET Shares upon
exercise of the Exchange Right.
(c) Notwithstanding the provisions of Section 8.05(a) and 8.05(b), a
Limited Partner shall not be entitled to exercise the Exchange
Right if the delivery of IRET Shares to such Partner on the
Specified Exchange Date by the General Partner or IRET pursuant to
Section 8.05(b) (regardless of whether or not the General Partner
or IRET would in fact exercise its rights under Section 8.05(b))
would (i) result in such Partner or any other person owning,
directly or indirectly, IRET Shares in excess of the ownership
Limitation (as defined in IRET's Declaration of Trust) and
calculated in accordance therewith, except as provided in IRET's
Declaration of Trust, (ii) result in IRET Shares being owned by
fewer than 100 persons (determined without reference to any rules
of attribution), except as provided in IRET's Declaration of Trust,
(iii) result in IRET being "closely held" within the meaning of
Section 856(h) of the Code, (iv) cause IRET to own, directly or
constructively, 10% or more of the ownership interests in a tenant
of the General Partner's, the Partnership's, or a Subsidiary
Partnership's, real property, within the meaning of
Section 856(d)(2)(D) of the Code, or (v) cause the acquisition of
IRET Shares by such Partner to be "integrated" with any other
distribution of IRET Shares for purposes of complying with the
registration provisions of the Securities Act of 1933, as amended
(the "Securities Act"). The General Partner or IRET, in their
sole discretion, may waive the restriction on exchange set forth in
this Section 8.05(c); provided, however, that in the event such
restriction is waived, the Exchanging Partner shall be paid the
Cash Amount.
(d) Any Cash Amount to be paid to an Exchanging Partner pursuant to
this Section 8.05 shall be paid on the Specified Exchange Date;
provided, however, that IRET or the General Partner may elect to
cause the Specified Exchange Date to be delayed for up to an
additional 180 days to the extent required for IRET to cause
additional IRET Shares to be issued to provide financing to be used
to make such payment of the Cash Amount. Notwithstanding the
foregoing, IRET and the General Partner agree to use their best
efforts to cause the closing of the acquisition of exchanged
Partnership Units hereunder to occur as quickly as reasonably
possible.
(e) Notwithstanding any other provision of this Agreement, the General
Partner shall place appropriate restrictions on the ability of the
Limited Partners to exercise their Exchange Rights as and if deemed
necessary to ensure that the Partnership does not constitute a
"publicly traded partnership" under section 7704 of the Code. If
and when the General Partner determines that imposing such
restrictions is necessary, the General Partner shall give prompt
written notice thereof (a "Restriction Notice") to each of the
Limited Partners, which notice shall be accompanied by a copy of
an opinion of counsel to the Partnership which states that, in the
opinion of such counsel, restrictions are necessary in order to
avoid the Partnership being treated as a "publicly traded
partnership" under section 7704 of the Code.
8.06 REGISTRATION.
(a) Shelf Registration of the IRET Shares. Prior to or on the first
date upon which the Partnership Units owned by any Limited Partner
may be exchanged (or such other date as may be required under
applicable provisions of the Securities Act), the Company agrees to
file with the Securities and Exchange Commission (the "Commission)
a shelf registration statement on Form S-3 under Rule 415 of the
Securities Act (a "Registration Statement"), or any similar rule
that may be adopted by the Commission, with respect to all of the
IRET Shares that may be issued upon exchange of such Partnership
Units pursuant to Section 8.05 hereof ("Exchange Shares"). IRET
will use its best efforts to have the Registration Statement
declared effective under the Securities Act. IRET need not file a
separate Registration Statement, but may file one Registration
Statement covering Exchange Shares issuable to more than one
Limited Partner. IRET further agrees to supplement or make
amendments to each Registration Statement, if required by the
rules, regulations or instructions applicable to the registration
form utilized by IRET or by the Securities Act or rules and
regulations thereunder for such Registration Statement.
(b) If a Registration Statement under subsection (a) above is not
available under the securities laws or the rules of the Commission,
or if required to permit the resale of Exchange Shares by
"Affiliates" (as defined in the Securities Act), IRET agrees to
file with the Commission a Registration Statement covering the
resale of Exchange Shares by Affiliates or others whose Exchange
Shares are not covered by a Registration Statement filed pursuant
to subsection (a) above. IRET will use its best efforts to have the
Registration Statement declared effective under the Securities Act.
IRET need not file a separate Registration Statement, but may file
one Registration Statement covering Exchange Shares issuable to
more than one Limited Partner. IRET further agrees to supplement or
make amendments to each Registration Statement, if required by the
rules, regulations or instructions applicable to the registration
form utilized by IRET or by the Securities Act or rules and
regulations thereunder for such Registration Statement.
(c) Listing on Securities Exchange. If IRET shall list or maintain
the listing of any of its shares of Beneficial Interest on any
securities exchange or national market system, it will, as
necessary to permit the registration and sale of the Exchange
Shares hereunder, list thereon, maintain and, when necessary,
increase such listing to include such Exchange Shares.
ARTICLE IX
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.01 PURCHASE FOR INVESTMENT.
(a) Each Limited Partner hereby represents and warrants to the
General Partner, to IRET and to the Partnership that the
acquisition of his Partnership Interests is made as a principal
for its account for investment purposes only and not with a view to
the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or
otherwise transfer his Partnership Interest or any fraction
thereof, whether voluntarily or by operation of law or at judicial
sale or otherwise, to any Person who does not make the
representations and warranties to the General Partner set forth in
Section 9.01(a) above and similarly agree not to sell, assign or
transfer such
Partnership Interest or fraction thereof to any Person who does
not similarly represent, warrant and agree.
9.02 RESTRICTIONS ON TRANSFER OF LIMITED PARTNERSHIP INTERESTS.
(a) Subject to the provisions of 9.02(b), (c) and (d), a Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise
transfer all or any portion of his Limited Partnership Interest, or
any of such Limited Partner's economic rights as a Limited Partner,
whether voluntarily or by operation of law or at judicial sale or
otherwise (collectively, a "Transfer") with or without the consent
of the General Partner. The General Partner may require, as a
condition of any Transfer, that the transferor assume all costs
incurred by the Partnership in connection therewith.
(b) No Limited Partner may effect a Transfer of its Limited
Partnership Interest, in whole or in part, if, in the opinion of
legal counsel for the Partnership, such proposed Transfer would
require the registration of the Limited Partnership Interest under
the Securities Act of 1933, as amended, or would otherwise violate
any applicable federal or state securities or blue sky law
(including investment suitability standards).
(c) No transfer by a Limited Partner of its Partnership Units, in whole
or in part, may be made to any Person if (i) in the opinion of
legal counsel for the Partnership, the transfer would result in the
Partnership's being treated as an association taxable as a
corporation (other than a qualified IRET subsidiary within the
meaning of Section 856(i) of the Code), (ii) in the opinion of
legal counsel for the Partnership, it would adversely affect the
ability of IRET to continue to qualify as a REIT or subject IRET
to any additional taxes under Section 857 or section 4981 of the
Code, or (iii) such transfer is effectuated through an "established
securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the
Code.
(d) No transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of
Regulations Section 1.752-4(b)) to any lender to the Partnership
whose loan constitutes a nonrecourse liability (within the meaning
of Regulations Section 1.752-1(a)(2)), without the consent of the
General Partner, which may be withheld in its sole and absolute
discretion, provided that as a condition to such consent the lender
will be required to enter into an arrangement with the Partnership
and the General Partner to exchange or redeem for the Cash Amount
any Partnership Units in which a security interest is held
simultaneously with the time at which such lender would be deemed
to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code.
(e) Any Transfer in contravention of any of the provisions of this
Article IX shall be void and ineffectual and shall not be binding
upon, or recognized by, the Partnership.
9.03 ADMISSION OF SUBSTITUTE LIMITED PARTNER.
(a) Subject to the other provisions of this Article IX, an assignee of
the Limited Partnership Interest of a Limited Partner (which shall
be understood to include any purchaser, transferee,
donee, or other recipient of any disposition of such Limited
Partnership Interest) shall be deemed admitted as a Limited Partner
of the Partnership only upon the satisfactory completion of the
following:
The assignee shall have accepted and agreed to be bound by the
terms and provisions of this Agreement by executing a counterpart
or an amendment thereof, including a revised Exhibit A, and such
other documents or instruments as the General Partner may require
in order to effect the admission of such Person as a Limited
Partner.
(ii) To the extent required, an amended Certificate evidencing
the admission of such Person as a Limited Partner shall
have been signed, acknowledged and filed for record in
accordance with the Act.
(iii) The assignee shall have delivered a letter containing the
representation set forth in Section 9.01(a) hereof and
the agreement set forth in Section 9.01(b) hereof.
(iv) If the assignee is a corporation, partnership or trust,
the assignee shall have provided the General Partner with
evidence satisfactory to counsel or the Partnership of
the assignee's authority to become a Limited Partner
under the terms and provisions of this Agreement.
(v) The assignee shall have executed a power of attorney
containing the terms and provisions set forth in
Section 8.02 hereof.
(vi) The assignee shall have paid all reasonable legal fees of
the Partnership and the General Partner and filing and
publication costs in connection with its substitution as
a Limited Partner.
(vii) The assignee has obtained the prior written consent of
the General Partner to its admission as a Substitute
Limited Partner, which consent may be given or denied
in the exercise of the General Partner's sole and
absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing
cash received by the Partnership, a Substitute Limited Partner
shall be treated as having become, and appearing in the records
of the Partnership as, a Partner upon the filing of the Certificate
described in Section 9.03(a)(ii) hereof or, if no such filing is
required, the later of the date specified in the transfer documents
or the date on which the General Partner has received all necessary
instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to
become a Substitute Limited Partner by preparing the documentation
required by this Section and making all official filings and
publications. The Partnership shall take all such action as
promptly as practicable after the satisfaction of the conditions
in this Article-IX to the admission of such Person as a Limited
Partner of the Partnership.
9.04 RIGHTS OF ASSIGNEES OF PARTNERSHIP INTERESTS.
(a) Subject to the provisions of Sections 9.01 and 9.02 hereof, except
as required by operation of law, the Partnership shall not be
obligated for any purposes whatsoever to recognize the assignment
by any Limited Partner of its Partnership Interest until the
Partnership has received notice thereof.
(b) Any Person who is the assignee of all or any portion of a Limited
Partner's Limited Partnership Interest, but does not become a
Substitute Limited Partner and desires to make a further assignment
of such Limited Partnership Interest, shall be subject to all the
provisions of this Article IX to the same extent and in the same
manner as any Limited Partner desiring to make an assignment of
its Limited Partnership Interest.
9.05 EFFECT OF BANKRUPTCY, DEATH, INCOMPETENCE OR TERMINATION OF A LIMITED
PARTNER. The occurrence of an Event of Bankruptcy as to a Limited Partner, the
death of a Limited Partner or a final adjudication that a Limited Partner is
incompetent (which term shall include, but not be limited to, insanity) shall
not cause the termination or dissolution of the Partnership, and the business of
the Partnership shall continue if an order for relief in a bankruptcy proceeding
is entered against a Limited Partner, the trustee or receiver of his estate or,
if he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, shall have the
rights of such Limited Partner for the purpose of settling or managing his
estate property and such power as the bankrupt, deceased or incompetent Limited
Partner possessed to assign all or any part of his Partnership Interest and to
join with the assignee in satisfying conditions precedent to the admission of
the assignee as a Substitute Limited Partner.
9.06 JOINT OWNERSHIP OF INTERESTS. A Partnership Interest may be acquired
by two individuals as joint tenants with right of survivorship, provided that
such individuals either are married or are related as spouse, child, grandchild,
parent or grandparent to one another. The written consent or vote of both
owners of an such jointly held Partnership Interest shall be required to
constitute the action of the owners of such Partnership Interest; provided,
however, that the written consent of only one joint owner will be required if
the Partnership has been provided with evidence satisfactory to the counsel for
the Partnership that the actions of a single joint owner can bind both owners
under the applicable laws of the state of residence of such joint owners. Upon
the death of one owner of a Partnership Interest held in a joint tenancy with a
right of survivorship, the Partnership Interest shall become owned solely by the
survivor as a Limited Partner and not as an assignee. The Partnership need not
recognize the death of one of the owners of a jointly-held Partnership Interest
until it shall have received notice of such death. Upon notice to the General
Partner from either owner, the General Partner shall cause the Partnership
Interest to be divided into two equal Partnership Interests, which shall
thereafter be owned separately by each of the former owners. Partnership
interests may also be owned as tenants in common.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.01 BOOKS AND RECORDS. At all times during the continuance of the
Partnership, the Partners shall keep or cause to be kept at the Partnership's
specified office true and complete books of account in accordance with generally
accepted accounting principles, including: (a) a current list of the full name
and last known business address of each Partner, (b) a copy of the Certificate
of Limited Partnership and all certificates of amendment thereto, (c) copies of
the Partnership's federal, state and local income tax returns and reports,
(d) copies of the Agreement and an financial statements of the Partnership for
the three most recent years and all documents and information required under
the Act. Any Partner or its duly authorized representative, upon paying the
costs of collection, duplication and mailing, shall be entitled to inspect or
copy such records during ordinary business hours.
10.02 CUSTODY OF PARTNERSHIP FUNDS; BANK ACCOUNTS.
(a) All funds of the Partnership not otherwise invested shall be
deposited in one or more accounts maintained in such banking or
brokerage institutions as the General Partner shall determine,
and withdrawals shall be made only on such signature or signatures
as the General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the operation of the
business of the Partnership may be invested by the General Partner
in investment grade instruments (or investment companies whose
portfolio consists primarily thereof), government obligations,
certificates of deposit, bankers' acceptances and municipal notes
and bonds. The funds of the Partnership shall not be commingled
with the funds of any other Person except for such commingling as
may necessarily result from an investment in those investment
companies permitted by this Section 10.02(b).
10.03 FISCAL AND TAXABLE YEAR. The fiscal and taxable year of the
Partnership shall be from May 1st to April 30th.
10.04 ANNUAL TAX INFORMATION AND REPORT. Within 75 days after the end of
each fiscal year of the Partnership, the General Partner shall furnish to each
person who was a Limited Partner at any time during such year the tax
information necessary to file such Limited Partner's individual tax returns as
shall be reasonably required by law.
10.05 TAX MATTERS PARTNER; TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS.
(a) The General Partner shall be the Tax Matters Partner of the
Partnership within the meaning of Section 6231(a)(7) of the Code.
As Tax Matters Partner, the General Partner shall have the right
and obligation to take all actions authorized and required,
respectively, by the Code for the Tax Matters Partner. The General
Partner shall have the Right to retain professional assistance in
respect of any audit of the Partnership by the Service and all
out-of-pocket expenses and fees incurred by the General Partner on
behalf of the Partnership as Tax Matters Partner shall constitute
Partnership expenses. In the event the General Partner receives
notice of a final Partnership adjustment under Section 6223(a)(2)
of the Code, the General Partner shall either (i) file a court
petition for judicial review of such final adjustment within the
period provided under Section 6226(a) of the Code, a copy of which
petition shall be mailed to all Limited Partners on the date such
petition is filed, or (ii) mail a written notice to all Limited
Partners, within such period, that describes the General Partner's
reasons for determining not to file such a petition.
(b) All elections required or permitted to be made by the Partnership
under the Code or any applicable state or local tax law shall be
made by the General Partner in its sole discretion.
(c) In the event of a transfer of all or any part of the Partnership
Interest of any Partner, the Partnership, at the option of the
General Partner, may elect pursuant to Section 754 of the Code to
adjust the basis of the Properties. Notwithstanding anything
contained in Article V of this Agreement, any adjustments made
pursuant to Section 754 shall affect only the successor in interest
to the transferring Partner and in no event shall be taken
into account in establishing, maintaining or computing Capital
Accounts for the other Partners for any purpose under this
Agreement. Each Partner will furnish the Partnership with all
information necessary to give effect to such election.
10.06 REPORTS TO LIMITED PARTNERS.
(a) As soon as practicable after the close of each fiscal quarter
(other than the last quarter of the fiscal year), the General
Partner shall cause to be mailed to each Limited Partner a
quarterly report containing financial statements of the Partnership
or of IRET if such statements are prepared solely on a consolidated
basis with IRET, for such fiscal quarter, presented in accordance
with generally accepted accounting principles. As soon as
practicable after the close of each fiscal year, the General
Partner shall cause to be mailed to each Limited Partner
an annual report containing financial statements of the
Partnership, or of IRET if such statements are prepared solely on
a consolidated basis with IRET, for such fiscal year, presented in
accordance with generally accepted accounting principles. The
annual financial statements shall be audited by accountants
selected by the General Partner.
(b) Any Partner shall further have the right to a private audit of the
books and records of the Partnership, provided such audit is made
for Partnership purposes, at the expense of the Partner desiring it
and is made during normal business hours.
ARTICLE XI
AMENDMENT OF AGREEMENT
The General Partner's consent shall be required for any amendment to this
Agreement. The General Partner, without the consent of the Limited Partners, may
amend this Agreement in any respect; provided, however, that the following
amendments shall require the consent of Limited Partners (other than IRET)
holding more than 50% of the Percentage Interests of the Limited Partners (other
than IRET):
(a) any amendment affecting the operation of the Conversion Factor or
the Exchange Right (except as provided in Section 8.05(d) or
7.01(d) hereof) in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the
Limited Partners to receive the distributions payable to them
hereunder, other than with respect to the issuance of additional
Partnership Units pursuant to Section 4.02 hereof;
(c) any amendment that would alter the Partnership's allocations of
Profit and Loss to the Limited Partners, other than with respect
to the issuance of additional Partnership Units pursuant to
Section 4.02 hereof; or
(d) any amendment that would impose on the Limited Partners any
obligation to make additional Capital Contributions to the
Partnership.
ARTICLE XII
GENERAL PROVISIONS
12.01 NOTICES. All communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been given when
delivered personally or upon deposit in the United States mail, registered,
postage prepaid return receipt requested, to the Partners at the addresses set
forth in Exhibit A attached hereto; provided, however, that any Partner may
specify a different address by notifying the General Partner in writing of such
different address. Notices to the Partnership shall be delivered at or mailed to
its specified office.
12.02 SURVIVAL OF RIGHTS. Subject to the provisions hereof limiting
transfers, this Agreement shall be binding upon and inure to the benefit of the
Partners and the Partnership and their respective legal representatives,
successors, transferees and assigns.
12.03 ADDITIONAL DOCUMENTS. Each Partner agrees to perform all further
acts and execute, swear to, acknowledge and deliver all further documents which
may be reasonable, necessary, appropriate or desirable to carry out the
provisions of this Agreement or the Act.
12.04 SEVERABILITY. If any provision of this Agreement shall be declared
illegal, invalid, or unenforceable in any jurisdiction, then such provision
shall be deemed to be severable from this agreement (to the extent permitted by
law) and in any event such illegality, invalidity or unenforceability shall not
affect the remainder hereof.
12.05 ENTIRE AGREEMENT. This Agreement and exhibits attached hereto
constitute the entire Agreement of the Partners and supersede all prior written
agreements and prior and contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof.
12.06 PRONOUNS AND PLURALS. When the context in which words are used in
the Agreement indicates that such is the intent, words in the singular number
shall include the plural and the masculine gender shall include the neuter or
female gender as the context may require.
12.07 HEADINGS. The Article headings or sections in this Agreement are for
convenience only and shall not be used in construing the scope of this Agreement
or any particular Article.
12.08 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original copy and all of
which together shall constitute one and the same instrument binding on all
parties hereto, notwithstanding that all parties shall not have signed the same
counterpart.
12.09 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Dakota.
GENERAL PARTNER
IRET, INC.
BY__________________________________
Xxxxxxx X. Xxxxxxxx, Secretary
INITIAL LIMITED PARTNER
____________________________________
Xxxxxx X. Xxxxx, Xx.
IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP
EXHIBIT A
INITIAL PARTNERS AND PERCENTAGE OWNERSHIP
Percentage
GENERAL PARTNER: Ownership
--------------- ----------
IRET, Inc.
00 Xxxxx Xxxx
Xxxxx, XX 00000
(As a "Qualified Real Estate Investment Trust
Subsidiary" of Investors Real Estate Trust, a
North Dakota Business Trust, whose tax
identification number is 00-0000000) *________%
INITIAL LIMITED PARTNER:
-----------------------
Xxxxxx X. Xxxxx, Xx.
000 0xx Xxxxxx XX
Xxxxx, XX 00000
ID# ###-##-#### **________%
100%
----
----
*Representing a contribution of properties with an agreed fair market value of
$____________, subject to liabilities of $______________, for a net contribution
of $______________.
**Representing a contribution of $1,000 cash.
IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP
EXHIBIT B
INITIAL ASSETS AND LIABILITIES OF THE PARTNERSHIP
The sum of $1,000 cash contribued by the initial limited partner and all of
the assets, subject to all of the liabilities, of Investors Real Estate Trust, a
North Dakota Business Trust, as the same shall exist at the close of business on
January 31, 1997.
IRET PROPERTIES, A NORTH DAKOTA LIMITED PARTNERSHIP
EXHIBIT C
EXCHANGE NOTICE
In accordance with Section 8.05 of the Agreement of Limited Partnership of
IRET PROPERTIES, a North Dakota Limited Partnership (the "Agreement"), the
undersigned hereby irrevocably (i) presents for exchange __________ Partnership
Units in IRET PROPERTIES, a North Dakota Limited Partnership, in accordance with
the terms of the Agreement and the Exchange Right referred to in Section 8.05
thereof, (ii) surrenders such Partnership Units and all right, title and
interest therein, and (iii) directs that the Cash Amount or IRET Shares Amount
(as defined in the Agreement) as determined by the General Partner deliverable
upon exercise of the Exchange Right be delivered to the address specified below,
and if IRET Shares (as defined in the Agreement) are to be delivered, such IRET
Shares be registered or placed in the name(s) and at the address(es) specified
below.
Dated: ___________________________
Names of Limited Partners:
____________________________________
(Signatures of Limited Partners)
If IRET Shares are to be issued,
issue to:
____________________________________
Name(s)
____________________________________
(Mailing Address)
____________________________________
(City) (State) (Zip Code)
Please insert Social Security or tax
identification number:
____________________________________
Signature Guaranteed by:
____________________________________
