EXHIBIT 10.18
FORM OF
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE PONDS OF PEMBROKE LIMITED PARTNERSHIP,
AN ILLINOIS LIMITED PARTNERSHIP
TABLE OF CONTENTS
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PAGE
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ARTICLE I
CERTAIN DEFINITIONS............................................. 2
1.1 "Act".................................................... 2
1.2 "Adjusted Capital Account Deficit"....................... 2
1.3 "Affiliate".............................................. 3
1.4 "Agreement" or "Partnership Agreement"................... 3
1.5 "Assignee"............................................... 3
1.6 "Available Cash Flow".................................... 3
1.7 "BHI".................................................... 4
1.8 "BLC".................................................... 4
1.9 "Capital Account"........................................ 4
1.10 "Capital Contributions".................................. 5
1.11 "Certificate"............................................ 6
1.12 "Code"................................................... 6
1.13 "Depreciation"........................................... 6
1.14 "General Partner"........................................ 6
1.15 "Gross Asset Value"...................................... 6
1.16 "Interest"............................................... 7
1.17 "Limited Partner"........................................ 7
1.18 "Nonrecourse Deductions"................................. 8
1.19 "Nonrecourse Liability".................................. 8
1.20 "Partner Minimum Gain"................................... 8
1.21 "Partner Nonrecourse Debt"............................... 8
1.22 "Partner Nonrecourse Deductions"......................... 8
1.23 "Partners"............................................... 8
1.24 "Partnership"............................................ 8
1.25 "Partnership Minimum Gain"............................... 9
1.26 "Percentage Interest".................................... 9
1.27 "Person"................................................. 9
1.29 "Project"................................................ 10
1.30 "Property"............................................... 10
1.31 "Recapture Gain"......................................... 10
1.32 "Regulations"............................................ 10
1.33 "Tax Matters Partner".................................... 10
1.34 "Transfer"............................................... 10
ARTICLE II
THE PARTNERSHIP................................................. 10
2.1 Organization............................................. 10
2.2 Partnership Name......................................... 10
2.3 Purpose.................................................. 11
2.4 Principal Place of Business.............................. 11
2.5 Term..................................................... 11
2.6 Filings; Agent for Service of Process.................... 11
2.7 Reservation of Other Business Opportunities.............. 12
ARTICLE III
PARTNERS' CAPITAL CONTRIBUTIONS;
ADDITIONAL FINANCING AND CONTRIBUTIONS.......................... 12
3.1 General Partner......................................... 12
3.2 Limited Partners........................................ 12
3.3 Additional Financing.................................... 12
3.4 Other Matters........................................... 13
ARTICLE IV
ALLOCATIONS.................................................... 13
4.1 Profits................................................. 13
4.2 Losses.................................................. 13
4.3 Special Allocations..................................... 13
4.4 Curative Allocations.................................... 15
4.5 Other Allocation Rules.................................. 17
4.6 Tax Allocations; Code Section 704(c).................... 17
ARTICLE V
DISTRIBUTIONS.................................................. 19
5.1 Distributions of Available Cash Flow.................... 19
5.2 Withholding............................................. 19
ARTICLE VI
MANAGEMENT OF PARTNERSHIP...................................... 20
6.1 Management of Partnership............................... 20
6.2 [Intentionally Omitted.]................................ 22
6.3 Compensation and Expense Reimbursement of Partners...... 22
6.4 Limitation of Liability................................. 22
6.5 Indemnification......................................... 22
6.6 No Participation in Management.......................... 23
6.7 No Personal Liability................................... 23
ARTICLE VII
BOOKS AND RECORDS.............................................. 23
7.1 Books and Records....................................... 23
7.2 Bank Accounts........................................... 23
7.3 Tax Returns............................................. 24
7.4 Tax Decisions and Elections............................. 24
7.5 Tax Examination......................................... 24
ARTICLE VIII
TRANSFER OR ASSIGNMENT OF PARTNERSHIP INTERESTS................ 24
8.1 Restrictions on Transfer................................ 24
8.2 Admission of Transferees................................ 25
ARTICLE IX
DISSOLUTION AND WINDING UP..................................... 25
9.1 Liquidating Events...................................... 25
9.2 Winding Up.............................................. 25
9.3 Liquidating Trust....................................... 26
ARTICLE X
MISCELLANEOUS.................................................. 27
10.1 Notices................................................... 27
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10.2 Binding Effect........................................... 28
10.3 Creditors................................................ 28
10.4 Remedies Cumulative...................................... 28
10.5 Construction............................................. 29
10.6 Headings................................................. 29
10.7 Severability............................................. 29
10.8 Incorporation by Reference............................... 29
10.9 Further Action........................................... 29
10.10 Variation of Pronouns.................................... 29
10.11 Governing Law............................................ 29
10.12 Waiver of Action for Partition........................... 29
10.13 Counterpart Execution.................................... 29
EXHIBIT A - PARTNERS' CAPITAL CONTRIBUTIONS
EXHIBIT B - PROJECT DESCRIPTION
-iii-
FORM OF
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
THE PONDS OF PEMBROKE LIMITED PARTNERSHIP,
AN ILLINOIS LIMITED PARTNERSHIP
-------------------------------
This AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") is entered into this _______ day of ________________, 1997, by and
between Brookdale Holdings, Inc., a Delaware corporation ("BHI"), as the General
Partner, and Brookdale Living Communities, Inc., a Delaware corporation ("BLC"),
as the Limited Partner, pursuant to the provisions of the Illinois Revised
Uniform Limited Partnership Act, as amended, on the following terms and
conditions:
WITNESSETH:
WHEREAS, KILICO Realty Corporation, an Illinois corporation
("KILICO"), The Prime Group, Inc., an Illinois corporation ("Prime") and Xxxxxx
X. Xxxxx, an individual, ("Xxxxx"), entered into that certain Agreement of
Limited Partnership of The Ponds of Pembroke Limited Partnership, dated as of
December 11, 1987, as amended as of December 11, 1990 and as further amended as
of August 15, 1991, as of December 31, 1991, as of March 22, 1994 and as of
August 31, 1994 (as so amended, the "Original Agreement");
WHEREAS, among other things, the amendments referred to in the
immediately preceding recital effected (i) the transfer of the interest of Xxxxx
in the Partnership (as hereinafter defined) from Xxxxx to Xxxxxx Investors Life
Insurance Company, an Illinois insurance corporation ("Xxxxxx"), (ii) the
withdrawal of Xxxxx as a limited partner of the Partnership; and (iii) the
admission of Xxxxxx as a limited partner of the Partnership;
WHEREAS, pursuant to that certain Formation Agreement, dated as of the
date hereof (the "Formation Agreement"), by and among BLC, Xxxx X. Xxxxxxx, an
individual, Prime and Prime Group Limited Partnership, an Illinois limited
partnership, Prime is assigning, as of the date hereof, a one percent (1%)
limited partner Interest (as hereafter defined) in the Partnership to BHI (the
"BHI Assignment")(it being understood that BHI shall be admitted to the
Partnership as the General Partner);
WHEREAS, pursuant to that certain letter agreement, dated September
17, 1996, by and among Prime, KILICO and Xxxxxx, as amended, (i) KILICO is
assigning, as of the date hereof immediately after the BHI Assignment, a fifty
percent (50%) general partner Interest in the Partnership to Prime and (ii)
Xxxxxx is assigning, as of the date hereof immediately after the BHI Assignment,
a twenty-five percent (25%) limited partner Interest in the Partnership to Prime
(such assignment, together with the assignment
by KILICO described in clause (i) of this recital, is referred to herein as the
"Xxxxxx Assignment");
WHEREAS, pursuant to the Formation Agreement, Prime is assigning, as
of the date hereof immediately after the Xxxxxx Assignment, a ninety-nine
percent (99%) Interest in the Partnership (consisting of its then remaining
twenty-four percent (24%) limited partner Interest and the Interests acquired by
Prime pursuant to the Xxxxxx Assignment) to BLC (it being understood that BLC
shall be admitted to the Partnership as the Limited Partner):
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety, and desire to reflect herein, among other things, (i)
the withdrawal of Prime, KILICO and Xxxxxx as partners of the Partnership, (ii)
the admission of BHI as the General Partner of the Partnership; (iii) the
admission of BLC as the Limited Partner of the Partnership; and (iv) certain
other amendments to the Original Agreement so that the Original Agreement, as
amended and restated, reads, in its entirety, as follows:
ARTICLE I
CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth in this Article I (such meanings to be equally applicable in
both the singular and plural forms of the term defined).
1.1 "Act" means the Illinois Revised Uniform Limited Partnership
Act, as amended from time to time (or any corresponding provisions of succeeding
law).
1.2 "Adjusted Capital Account Deficit" means, with respect to any
Limited Partner, the deficit balance, if any, in such Limited Partner's Capital
Account as of the end of the relevant fiscal year, after giving effect to the
following adjustments:
(i) Credit to such Capital Account any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or
pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be
obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-
1(b)(2)(ii)(d)(6).
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The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
1.3 "Affiliate" means any (i) Person owning a majority interest in
any corporate Partner; (ii) Person owning an interest as a general partner of
any Partner or a majority interest as a limited partner of any Partner; (iii)
Person who is an officer, director, trustee, partner or stockholder of any
Partner or of any Person described in the preceding clause (ii); or (iv) Person
that is controlling, controlled by or under common control with a Partner or any
Person described in the preceding clauses (i), (ii) or (iii).
1.4 "Agreement" or "Partnership Agreement" means this Amended and
Restated Agreement of Limited Partnership, as amended from time to time. Words
such as "herein," "hereinafter," "hereof," and "hereunder" refer to this
Agreement as a whole, unless the context otherwise requires.
1.5 "Assignee" means any Person who has acquired a beneficial
interest in the Interest of a Partner in the Partnership.
1.6 "Available Cash Flow" means, with respect to the applicable
period of measurement (i.e., any period beginning on the first day of the fiscal
year or other period commencing immediately after the last day of the
calculation of Available Cash Flow which was distributed, and ending on the last
day of the month, quarter or other applicable period immediately preceding the
date of calculation, the excess, if any, of the gross cash receipts of the
Partnership for such period from all sources whatsoever, including, without
limitation, the following:
(a) (i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any entity in which the
Partnership has an interest; (ii) all proceeds and revenues received on
account of any sales of property of the Partnership as a refinancing for
payments of principal, interest, costs, fees, penalties or otherwise on
account of any loans made by the Partnership or, financings or refinancings
of any property of the Partnership; (iii) the amount of any insurance
proceeds and condemnation awards of property of the Partnership; (iv) all
Capital Contributions received by the Partnership from its Partners; (v)
all cash amounts previously reserved by the Partnership, if the specific
purposes for which such amounts were reserved are no
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longer applicable; and (vi) the proceeds of liquidation of the
Partnership's property in accordance with this Agreement:
over the sum of:
(b) (i) all operating costs and expenses of the Partnership and
capital expenditures made during such period (without deduction, however,
for any capital expenditures, charges for depreciation or other expenses
not paid in cash or expenditures from reserves described in (vii) below);
(ii) all costs and expenses expended or payable during such period in
connection with the sale or other disposition, or financing or refinancing,
of property of the Partnership or the recovery of insurance or condemnation
proceeds; (iii) all fees provided for under this Agreement; (iv) all debt
service, including principal and interest, paid during such period on all
indebtedness of the Partnership; (v) all Capital Contributions, advances,
reimbursements or similar payments made to any Person (whether a
partnership, corporation or other entity) in which the Partnership has an
interest; (vi) all loans made by the Partnership to any Person in which the
Partnership has an interest (whether a partnership, corporation or other
entity); and (vii) any reserves reasonably determined by the General
Partner for working capital, capital improvements, payments of periodic
expenditures, debt service or other purposes.
1.7 "BHI" means Brookdale Holdings, Inc., a Delaware corporation.
1.8 "BLC" means Brookdale Living Communities, Inc., a Delaware
corporation
1.9 "Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:
(i) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of
Profits and any items in the nature of income or gain which are specially
allocated pursuant to Sections 4.3 or 4.4 hereof, and the amount of any
Partnership liabilities assumed by such Partner or which are secured by any
Property distributed to such Partner.
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to
such Partner pursuant to any provision of this Agreement, such Partner's
distributive share of Losses and any items in the nature of expenses or
losses which are
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specially allocated pursuant to Sections 4.3 or 4.4 hereof, and the amount
of any liabilities of such Partner assumed by the Partnership.
(iii) In determining the amount of any liability for purposes of the
foregoing subparagraphs (i) and (ii), there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership,
General Partner or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification, provided that
it is not likely to have a material adverse effect on the amounts distributable
to any Partner pursuant to Article IX hereof upon the dissolution of the
Partnership. The General Partner also shall (i) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in accordance with
Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate
modifications in the event unanticipated events might otherwise cause this
Agreement not to comply with Regulations Sections 1.704-1(b) or 1.704-2.
1.10 "Capital Contributions" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money), net of the amount of any debt to which such property is subject,
contributed to the Partnership with respect to the Interest in the Partnership
held by such Partner. The principal amount of a promissory note which is not
readily tradable on an established securities market and which is contributed to
the Partnership by the maker of the note shall not be included in the Capital
Account of any Person until the Partnership makes a taxable disposition of the
note or until (and to the extent) such Partner makes principal payments on the
note, all in accordance with Regulations Section 1.704-1(b)(2)(iv)(d)(2).
1.11 "Certificate" shall mean the Certificate of Limited Partnership
of the Partnership filed with the Secretary of State of Illinois in accordance
with the Act or the applicable predecessor
5
statute thereof, as such Certificate may be amended from time to time.
1.12 "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
1.13 "Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that,
if the Gross Asset Value of an asset differs from its adjusted basis for federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that, if the federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner; and
provided, further, however, that to the extent the "remedial" method described
in Regulations Section 1.704-3 is elected pursuant to the terms of this
Agreement, Depreciation will be determined in a manner consistent therewith.
1.14 "General Partner" means any Person which (i) is referred to as
such in the first paragraph of this Agreement or has become a General Partner
pursuant to the terms of this Agreement and (ii) has not ceased to be a General
Partner pursuant to the terms of this Agreement.
1.15 "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset, as determined by the contributing Partner and the Partnership;
(ii) The Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as reasonably
determined by the General Partner, as of the following times: (a) the
acquisition of an additional Interest in the Partnership by any new or
existing Partner in exchange for more than a de minimis Capital
Contribution; (b) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership assets, including money, as
consideration for an Interest in the Partnership; and (c) the
6
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
clauses (a) and (b) above shall be made only if the General Partner
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Partners in the Partnership;
(iii) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be the gross fair market value of such asset on the date
of distribution; and
(iv) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Code Sections 734(b) or 743(b), but only to the extent
that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and the
definition of "Capital Account" hereof; provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subparagraph (iv) to the
extent the General Partner determines that an adjustment pursuant to the
foregoing subparagraph (ii) of this definition hereof is necessary or
appropriate in connection with a transaction that would otherwise result in
an adjustment pursuant to this subparagraph (iv).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
any of the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset Value
shall thereafter be adjusted by the Depreciation taken into account with respect
to such asset for purposes of computing Profits and Losses.
1.16 "Interest" means a Partner's ownership interest in the
Partnership, including any and all benefits to which the holder of such an
Interest may be entitled as provided in this Agreement, together with all
obligations of such Partner to comply with the terms and provisions of this
Agreement.
1.17 "Limited Partner" means the Person (i) the name of which is set
forth on Exhibit A attached hereto and designated as such or who has become a
Limited Partner pursuant to the terms of this Agreement and (ii) who holds an
Interest. "Limited Partners" means all such Persons if at any time there shall
be more than one Limited Partner. All references in this Agreement to a
majority in interest or a specified percentage of the Limited Partners shall
mean Limited Partners whose combined Percentage Interests represent more than
50% or such specified percentage, respectively, of the Percentage Interests then
held by all Limited Partners.
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1.18 "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions for a
Partnership fiscal year equals the excess, if any, of the net increase, if any,
in the amount of Partnership Minimum Gain during that fiscal year over the
aggregate amount of any distributions during that fiscal year of proceeds of a
Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain, determined according to the provisions of Regulations Section 1.704-2(c).
1.19 "Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.704-2(b)(3).
1.20 "Partner Minimum Gain" has the meaning set forth in the
definition of "partner nonrecourse debt minimum gain" in Regulations Section
1.704-2(i)(2), and will be computed as provided in Regulations Section 1.704-
2(i)(3).
1.21 "Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
1.22 "Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i). The amount of Partner Nonrecourse Deductions
with respect to a Partner Nonrecourse Debt for a Partnership fiscal year equals
the excess, if any, of the net increase, if any, in the amount of Partnership
Minimum Gain attributable to such Partner Nonrecourse Debt during that fiscal
year over the aggregate amount of any distributions during that fiscal year to
the Partner that bears the economic risk of loss for such Partner Nonrecourse
Debt to the extent such distributions are from the proceeds of such Partner
Nonrecourse Debt and are allocable to an increase in Partnership Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i).
1.23 "Partners" means the General Partner and the Limited Partners,
where no distinction is required by the context in which the term is used
herein. "Partner" means any one of the Partners. All references in this
Agreement to a majority interest or a specified percentage of the Partners shall
mean Partners whose combined Percentage Interests represent more than 50% or
such specified percentage, respectively, of the Percentage Interests then held
by all Partners.
1.24 "Partnership" means the partnership formed pursuant to the
Original Agreement and continued pursuant to this Agreement and the partnership
continuing the business of this Partnership in the event of dissolution as
herein provided.
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1.25 "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and will be computed as provided in
Regulations Section 1.704-2(d).
1.26 "Percentage Interest" means the percentage set forth for the
General Partner and Limited Partners on Exhibit A hereto.
1.27 "Person" means any individual, general partnership, limited
partnership, corporation, trust or other association or entity.
1.28 "Profits" and "Losses" and reference to any item of income,
gain, loss or deduction thereof, mean, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss for such year or
period, determined in accordance with Code Section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:
(i) Any income of the Partnership that is exempt from federal income
tax and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) or (iv) of the definition of Gross
Asset Value hereof, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of
computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of property with
respect to which gain or loss is recognized for federal income tax purposes
shall be computed by reference to the Gross Asset Value of the property
disposed of notwithstanding that the adjusted tax basis of such property
differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account
9
Depreciation for such fiscal year or other period, computed in accordance
with the definition of Depreciation herein; and
(vi) Notwithstanding any other provision of this definition of
"Profits" and "Losses," any items which are specially allocated pursuant to
Sections 4.3 or 4.4 hereof shall not be taken into account in computing
Profits or Losses.
1.29 "Project" means the senior and assisted living facility
described in Exhibit B attached hereto and all of the Partnership's interest
therein, including all real estate related thereto and buildings and
improvements thereon.
1.30 "Property" means all real and personal property acquired by the
Partnership and any improvements thereto and shall include both tangible and
intangible property.
1.31 "Recapture Gain" has the meaning set forth in Section 4.6(e).
1.32 "Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
1.33 "Tax Matters Partner" shall mean BHI or any successor General
Partner.
1.34 "Transfer" means, as a noun, any voluntary or involuntary
transfer, sale, pledge, hypothecation or other disposition or encumbrance and,
as a verb, voluntarily or involuntarily to transfer, sell, pledge, hypothecate
or otherwise dispose of or encumber.
ARTICLE II
THE PARTNERSHIP
2.1 Organization. The Partners hereby agree to (i) continue the
Partnership as a limited partnership pursuant to the provisions of the Act and
upon the terms and conditions set forth in this Agreement and (ii) amend and
restate herein the Partnership Agreement in its entirety.
2.2 Partnership Name. The name of the Partnership shall be "The
Ponds of Pembroke Limited Partnership" and all business of the Partnership shall
be conducted in such name or such other name as the General Partner shall
determine. The Partnership
10
shall hold all of its property in the name of the Partnership and not in the
name of any Partner.
2.3 Purpose. The purpose and business of the Partnership shall be to
own real property, including, without limitation, the Project, to acquire,
lease, own, mortgage or otherwise encumber personal property, fixtures and real
property to accomplish the foregoing; to operate, manage, lease (or cause the
operation, management and leasing by independent contractors including a Partner
or its Affiliates) any Property owned by the Partnership, and otherwise deal in
and with the business and assets of the Partnership; and to do any and all other
acts which may be necessary or incidental to any of the foregoing or the
promotion or conduct of the business of the Partnership or any of the
Partnership Property, including, without limitation, being a partner in another
partnership or other partnerships.
2.4 Principal Place of Business. The principal place of business of
the Partnership shall be c/o The Prime Group, Inc., 00 Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000 or such other location as may be designated from time to
time.
2.5 Term. The term of the Partnership commenced on the date on
which the Certificate was filed in the office of the Secretary of State of
Illinois in accordance with the Act and shall continue until the winding up and
liquidation of the Partnership and its business is completed, as provided in
Article IX hereof.
2.6 Filings; Agent for Service of Process.
(a) The Certificate has been filed in the office of the Secretary of
State of Illinois in accordance with the provisions of the Act. The General
Partner shall take any and all other actions reasonably necessary to perfect and
maintain the status of the Partnership as a limited partnership under the laws
of the State of Illinois. The General Partner shall cause amendments to the
Certificate to be filed whenever required by the Act. Such amendments may be
executed by the General Partner only.
(b) The General Partner shall execute and cause to be filed original
or amended Certificates and shall take any and all other actions as may be
reasonably necessary to perfect and maintain the status of the Partnership as a
limited partnership or similar type of entity under the laws of any other states
or jurisdictions in which the Partnership engages in business.
(c) The agent for service of process on the Partnership in the State
of Illinois, and the address of such agent, shall initially be Xxxxx X. Xxxxxx,
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 or any successor as
appointed by the
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General Partner. The General Partner, in it sole and absolute discretion, may
change the registered agent and appoint successor registered agents.
(d) Upon the dissolution of the Partnership, the General Partner (or,
in the event there is no remaining General Partner, the Person responsible for
winding up and dissolution of the Partnership pursuant to Article IX hereof)
shall promptly execute and cause to be filed certificates of dissolution in
accordance with the Act and the laws of any other states or jurisdictions in
which the Partnership has filed certificates.
2.7 Reservation of Other Business Opportunities. No business
opportunities other than those actually exploited by the Partnership pursuant to
Section 2.3 shall be deemed the property of the Partnership, and any Partner or
its Affiliate may engage in or possess an interest in any other business
venture, independently or with others, of any nature or description; and neither
any other Partner nor the Partnership shall have any rights by virtue hereof in
and to such other business ventures, or to the income or profits derived
therefrom. The provisions of this Section 2.7 shall be subject to, and not in
any way affect the enforceability of, any separate agreement by a Partner or any
Affiliate thereof restricting or prohibiting certain business activities of such
Partner or Affiliate.
ARTICLE III
PARTNERS' CAPITAL CONTRIBUTIONS;
ADDITIONAL FINANCING AND CONTRIBUTIONS
3.1 General Partner. The name, address, Capital Contribution and
Percentage Interest of the General Partner is set forth on Exhibit A hereto.
3.2 Limited Partners. The name, address, initial Capital
Contribution and Percentage Interest of the Limited Partners are set forth on
Exhibit A attached hereto.
3.3 Additional Financing. The sums of money required to finance the
business and affairs of the Partnership shall be derived from the Capital
Contributions made by the Partners to the Partnership, from funds generated from
the operation and the business of the Partnership and from any loans, bond
financing or other indebtedness which the General Partner may, in its
discretion, approve for the Partnership. No additional Capital Contributions
shall be made to the Partnership except at the direction of the General Partner.
3.4 Other Matters.
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(a) Except as otherwise provided in this Agreement, no Partner shall
demand or receive a return of its Capital Contributions from the Partnership
without the consent of the other Partners. Under circumstances requiring a
return of any Capital Contributions, no Partner shall have the right to receive
property other than cash except as may be specifically provided herein.
(b) No Partner shall receive any interest, salary or drawing with
respect to its Capital Contributions or its Capital Account or for services
rendered on behalf of the Partnership or otherwise in its capacity as a Partner,
except as otherwise provided in this Agreement or with the consent of the other
Partner.
ARTICLE IV
ALLOCATIONS
4.1 Profits. Subject to the allocation rules of Sections 4.3 and
4.4 hereof, Profits for any fiscal year will be allocated among Partners in
proportion to their respective Percentage Interests.
4.2 Losses. Subject to the allocation rules of Sections 4.3 and 4.4
hereof, Losses for any fiscal year will be allocated among Partners in
proportion to their respective Percentage Interests.
4.3 Special Allocations. The following special allocations will be
made in following order and priority:
(a) If there is a net decrease in Partnership Minimum Gain during
any fiscal year, each Partner will be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
proportion to, and to the extent of, an amount equal to such Partner's share of
the net decrease in Partnership Minimum Gain determined in accordance with
Regulations Section 1.704-2(g)(2). The items to be allocated will be determined
in accordance with Regulations Section 1.704-2(f). This Section 4.3(a) is
intended to comply with such Sections of the Regulations and will be interpreted
consistently therewith.
(b) The allocations otherwise required pursuant to Section 4.3(a)
hereof will not apply to a Partner to the extent that: (i) such Partner's share
of the net decrease in Partnership Minimum Gain is caused by a guaranty,
refinancing or other change in the instrument evidencing a nonrecourse debt of
the Partnership which causes such debt to become a partially or wholly recourse
debt or a Partner Nonrecourse Debt, and such Partner bears the economic risk of
loss (within the meaning of Regulations Section
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1.752-2) for such changed debt; (ii) such Partner's share of the net decrease in
Partnership Minimum Gain results from the repayment of a nonrecourse liability
of the Partnership, which repayment is made using funds contributed by such
Partner to the capital of the Partnership; (iii) the Service, pursuant to
Regulations Section 1.704-2(f)(4), waives the requirement of such allocation in
response to a request for such waiver made by the General Partner on behalf of
the Partnership (which request the General Partner may or may not make, in their
discretion, if it determines that the Partnership would be eligible therefor);
or (iv) additional exceptions to the requirement of such allocation are
established by revenue rulings issued by the Internal Revenue Service pursuant
to Regulations Section 1.704-2(f)(5), which exceptions apply to such Partner, as
determined by the General Partner in its discretion.
(c) Except as provided in Section 4.3(a) hereof, if there is a
net decrease in Partner Minimum Gain attributable to Partner Nonrecourse Debt
during any fiscal year, determined in accordance with Regulations Section 1.704-
2(i)(3), then, except as provided in Regulations Section 1.704-2(i)(4), each
Partner who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations Section 1.704-
2(i)(5), will be allocated items of income and gain for such fiscal year (and,
if necessary, subsequent fiscal years) equal to such Partner's share of the net
decrease in Partner Minimum Gain. The items to be allocated will be determined
in accordance with Regulations Section 1.704-2(j)(2). This Section 4.3(c) is
intended to comply with Regulations Section 1.704-2(i) and will be applied and
interpreted in accordance with such regulation.
(d) Any item of Partnership loss, deduction or expenditure under
Code Section 705(a)(2)(b) attributable to Partner Nonrecourse Debt will be
allocated in accordance with Regulations Section 1.704-2(i) to the Partner who
bears the economic risk of loss for such debt.
(e) In the event any Partner unexpectedly receives any
adjustments, allocations or distributions described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) resulting in an Adjusted Capital Account
Deficit for such Partner, items of income and gain will be specially allocated
to such Partner in any amount and manner sufficient to eliminate, to the extent
required by the Regulations, such Adjusted Capital Account Deficit as quickly as
possible. The items to be allocated will be determined in accordance with
Regulations Section 1.704-1(b)(2)(ii)(d)(6). This Section 4.3(e) is intended to
comply with Regulations Section 1.704-1(b)(2)(ii)(d) and will be applied and
interpreted in accordance with such regulation.
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(f) No items of loss or deduction will be allocated to any
Partner to the extent that any such allocation would cause the Partner to have
an, or increase the amount of an existing, Adjusted Capital Account deficit at
the end of any Fiscal Year. All items of loss or deduction in excess of the
limitation set forth in this Section 4.3(f) will be allocated among such other
Partners, which have positive Adjusted Capital Account balances, pro rata, in
proportion to such Adjusted Capital Account balances, until each Partner's
positive Adjusted Capital Account balance is reduced to zero. Thereafter , any
remaining items of loss or deduction will be allocated to the Partners, pro
rata, in proportion to their relative aggregate Capital Contributions.
(g) In the event any Partner has an Adjusted Capital Account
Deficit at the end of any fiscal year, each such Partner will be specially
allocated items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income and gain) as quickly as possible to eliminate
such Adjusted Capital Account Deficit, provided that an allocation pursuant to
this Section 4.3(g) will be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit in excess of such sum after all
other allocations provided for in this Article IV have been tentatively made.
(h) To the extent an adjustment to the adjusted tax basis of any
Property pursuant to Sections 734(b) or 743(b) of the Code is required, pursuant
to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts will be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss will be specially allocated among the Partners in a manner
consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Regulations.
4.4 Curative Allocations.
(a) The "Regulatory Allocations" consist of the "Basic Regulatory
Allocations," as defined in Section 4.4(b) hereof, the "Nonrecourse Regulatory
Allocations," as defined in Section 4.4(c) hereof, and the "Partner Nonrecourse
Regulatory Allocations," as defined in Section 4.4(d) hereof.
(b) The "Basic Regulatory Allocations" consist of allocations pursuant
to Sections 4.3(e), 4.3(f), 4.3(g) and 4.3(h) hereof. Notwithstanding any other
provision of this Agreement, other than the Regulatory Allocations, the Basic
Regulatory Allocations shall be taken into account in allocating items of
income, gain, loss and deduction among the Partners so that, to the
15
extent possible, the net amount of such allocations of the Basic Regulatory
Allocations and such other items to each Partner shall be equal to the net
amount that would have been allocated to each such Partner as if the Basic
Regulatory Allocations had not occurred. For purposes of applying the foregoing
sentence, allocations pursuant to this Section 4.4(b) shall only be made with
respect to allocations pursuant to Section 4.3(h) hereof to the extent the
General Partner reasonably determines that such allocations will otherwise be
inconsistent with the economic agreement among the parties to this Agreement.
(c) The "Nonrecourse Regulatory Allocations" consist of all
allocations pursuant to Sections 4.3(a) hereof. Notwithstanding any other
provision of this Agreement, other than the Regulatory Allocations, the
Nonrecourse Regulatory Allocations shall be taken into account in allocating
items of income, gain, loss and deduction among the Partners so that, to the
extent possible, the net amount of such allocations of the Nonrecourse
Regulatory Allocations and such other items to each Partner shall be equal to
the net amount that would have been allocated to each such Partner if the
Nonrecourse Regulatory Allocations had not occurred. For purposes of applying
the foregoing sentence, no allocations pursuant to this Section 4.4(c) shall be
made prior to the Partnership fiscal year during which there is a net decrease
in Partnership Minimum Gain, and then only to the extent necessary to avoid any
potential economic distortions caused by such net decrease in Partnership
Minimum Gain.
(d) The "Partner Nonrecourse Regulatory Allocations" consist of all
allocations pursuant to Sections 4.3(c) and 4.3(d) hereof. Notwithstanding any
other provision of this Agreement, other than the Regulatory Allocations, the
Partner Nonrecourse Regulatory Allocations shall be taken into account in
allocating items of income, gain, loss and deduction among the Partners so that,
to the extent possible, the net amount of such allocations of the Partner
Nonrecourse Regulatory Allocations and such other items to each Partner shall be
equal to the net amount that would have been allocated to each such Partner if
the Partner Nonrecourse Regulatory Allocations had not occurred. For purposes of
applying the foregoing sentence (i) no allocations pursuant to this Section
4.4(d) shall be made with respect to allocations pursuant to Section 4.3(c)
relating to a particular Partner Nonrecourse Debt prior to the Partnership
fiscal year during which there is a net decrease in Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, and then only to the extent
necessary to avoid any potential economic distortions caused by such net
decrease in Partner Minimum Gain, and (ii) allocations pursuant to this Section
4.4(d) shall be deferred with respect to allocations pursuant to Section 4.3(d)
hereof relating to a particular Partner Nonrecourse Debt to the extent the
General Partner reasonably determines that
16
such allocations are likely to be offset by subsequent allocations pursuant to
Section 4.3(c) hereof.
(e) The General Partner shall have reasonable discretion, with respect
to each Partnership fiscal year, to (i) apply the provisions of Sections 4.4(b),
4.4(c) and 4.4(d) hereof in whatever order is likely to minimize the economic
distortions that might otherwise result from the Regulatory Allocations and (ii)
divide all allocations pursuant to Sections 4.4(b), 4.4(c) and 4.4(d) hereof
among the Partners in a manner that is likely to minimize such economic
distortions.
4.5 Other Allocation Rules.
(a) For purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the General
Partners using any permissible method under Code Section 706 and the Regulations
thereunder.
(b) For purposes of Regulations Section 1.752-3(a)(3), the Partners
agree that Nonrecourse Liabilities of the Partnership in excess of the sum of
(A) the amount of Partnership Minimum Gain and (B) the total amount of built-in
gain (as defined in Regulations Section 1.752-3(a)(2)) shall be allocated among
the Partners in accordance with their respective Percentage Interests.
(c) In the event Interests are transferred in accordance with the
provisions of Article VIII hereof during any fiscal year, the distributive share
of Partnership income, gain, loss and deductions attributable to such
transferred Interests for that year shall be apportioned between the transferor
and the transferee in proportion to the number of days during such fiscal year
that each was the owner of the Interests transferred, but subject to the
constraints and limitations imposed by Code Section 706. Distributions with
respect to Interests transferred shall be made only to Partners of record on a
date designated by the General Partner as the date of such distribution.
4.6 Tax Allocations; Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Regulations
thereunder, solely for income tax purposes, income, gain, loss and deduction
with respect to any property contributed to the capital of the Partnership
(including income, gain, loss and deduction determined with respect to the
alternative minimum tax) shall, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes (including such adjusted basis for
alternative minimum tax purposes) and its
17
initial Gross Asset Value, including, but not limited to, special allocations to
a contributing Partner that are required under Code Section 704(c) to be made
upon distribution of such property to any of the non-contributing Partners.
(b) In the event the Gross Asset Value of any Partnership asset
is adjusted pursuant to paragraph (ii) of the definition of "Gross Asset Value"
contained herein, solely for federal income tax purposes, subsequent allocations
of income, gain, loss and deduction with respect to such asset (including
income, gain, loss and deduction determined with respect to the alternative
minimum tax) will take account of any variation between the adjusted basis of
such asset (including such adjusted basis for alternative minimum tax purposes)
and its Gross Asset Value in the same manner as under Code Section 704(c) and
the Regulations thereunder.
(c) Any elections or other decisions relating to allocations
under this Section 4.6, including the selection of any allocation method
permitted under Regulations Section 1.704-3, will be made as approved by the
General Partner in any manner that reasonably reflects the purpose and intention
of this Agreement. Except as otherwise provided in this Section 4.6, all items
of Partnership income, gain, loss, deduction and credit will for tax purposes be
divided among the Partners in the same manner as they share correlative Profits,
Losses or Partnership items of income, gain, loss or deduction, as the case may
be, for the fiscal year. Allocations pursuant to this Section 4.6 are solely for
purposes of federal, state and local taxes and will not affect, or in any way be
taken into account in computing, any Partner's Capital Account or share of
Profits, Losses or other items or distributions pursuant to any provision of
this Agreement.
(d) If any taxable item of income or gain is computed differently
from the taxable item of income or gain which results for purposes of the
alternative minimum tax, then to the extent possible, without changing the
overall allocations of items for purposes of either the Partners' Capital
Accounts or the regular income tax (i) each Partner will be allocated items of
taxable income or gain for alternative minimum tax purposes taking into account
the prior allocations of originating tax preferences or alternative minimum tax
adjustments to such Partner (and its predecessors) and (ii) other Partnership
items of income or gain for alternative minimum tax purposes of the same
character that would have been recognized, but for the originating tax
preferences or alternative minimum tax adjustments, will be allocated away from
those Partners that are allocated amounts pursuant to clause (i) so that, to the
extent possible, the other Partners are allocated the same amount, and type, of
alternative minimum tax income and gain
18
that would have been allocated to them had the originating tax preferences or
alternative minimum tax adjustments not occurred.
(e) If any portion of gain recognized from the disposition of
property by the Partnership represents the "recapture" of previously allocated
deductions by virtue of the application of Code Section 1245 or 1250 ("Recapture
Gain"), such Recapture Gain will be allocated as follows:
First, to the Partners, pro rata, in proportion to the lesser of each
Partner's (i) allocable share of the total gain recognized from the disposition
of such Partnership property and (ii) share of depreciation or amortization with
respect to such property (as determined under Proposed Treasury Regulation
section 1.1245-1(e)(2)), until each such Partner has been allocated Recapture
Gain equal to such lesser amount; and
Second, the balance of Recapture Gain will be allocated among the Partners
whose allocable shares of total gain exceed their shares of depreciation or
amortization with respect to such property (as determined under Proposed
Treasury Regulation section 1.1245-1(e)(2)), in proportion to their shares of
total gain (including Recapture Gain) from the disposition of such property;
provided, however, that no Partner will be allocated Recapture Gain under this
Section 4.6(e) in excess of the total gain allocated to such Partner from such
disposition.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow. Except as otherwise provided
in Article IX hereof, Available Cash Flow, if any, shall be distributed, at such
times as the General Partner may determine to be appropriate, to the Partners in
accordance with their respective Percentage Interests.
5.2 Withholding. Notwithstanding any other provision of this
Agreement, the Tax Matters 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 any federal, state or local
tax law, including, without limitation, withholding on any distribution to any
Partner. For all purposes of this Article V, any amount withheld on any
distribution and paid over to the appropriate governmental body shall be treated
as if such amount had, in fact, been distributed to the Partner.
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ARTICLE VI
MANAGEMENT OF PARTNERSHIP
6.1 Management of Partnership.
(a) The exclusive management and control of the business and affairs
of the Partnership shall be vested in the General Partner. The powers of the
General Partner shall include all powers, statutory or otherwise, possessed by
or permitted to general partners under the laws of the State of Illinois. Each
Partner hereby waives any and all claims such Partner may have against the
Partnership or any other Partner for breach of fiduciary duty or other similar
responsibility or obligation. The General Partner shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partners, including, without limitation, the following:
(i) the making of any expenditures, the lending or borrowing of
money, the assumption, guarantee of or other contracting of indebtedness
and other liabilities, the issuance of evidences of indebtedness and the
incurring of any obligations it deems necessary for the conduct of the
activities of the Partnership;
(ii) the making of tax, regulatory and other filings or rendering
of periodic or other reports to governmental or other agencies having
jurisdiction over the Partnership or the business or assets of the
Partnership;
(iii) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets of the Partnership or
the merger or other combination of the Partnership with or into another
entity;
(iv) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose and on any terms it sees fit,
including, without limitation, the financing of the conduct of the
operations of the General Partner or the Partnership, the lending of funds
to other Persons and the repayment of obligations of the Partnership;
(v) the negotiation, execution and performance of any contracts,
conveyances or other instruments that the General Partner considers useful
or necessary to the conduct of the Partnership's operations or the
implementation of the General Partner's powers under this Agreement,
including management and development agreements with respect to the
Project;
20
(vi) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(vii) the selection and dismissal of employees of the Partnership
or the General Partner and agents, outside attorneys, accountants,
consultants and contractors of the General Partner or the Partnership and
the determination of their compensation and other terms of employment or
hiring;
(viii) the maintenance of insurance for the benefit of the
Partnership;
(ix) the formation of or acquisition of an interest in and the
contribution of property to any further limited or general partnerships,
joint ventures or other relationships that it deems desirable;
(x) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of litigation,
incurring of legal expense and settlement of claims and litigation and the
indemnification of any Person against liabilities and contingencies to the
extent permitted by law;
(xi) the undertaking of any action in connection with the
Partnership's direct or indirect investment in any other Person (including,
without limitation, the contribution or loan of funds by the Partnership to
such Persons); and
(xii) the determination of the fair market value of any
Partnership property distributed in kind using such reasonable method of
valuation as it may adopt.
(b) The Limited Partners agree that the General Partner is authorized
to execute, deliver and perform the above-mentioned agreements and transactions
on behalf of the Partnership without any further act, approval or vote of the
Limited Partners.
(c) Without limiting the generality of the authority granted to the
General Partner in Section 6.1(a), the General Partner shall provide accounting,
administrative, management, marketing and promotion, property management,
leasing, tenant coordination, development, construction management, renovation,
redevelopment and rehabilitation services to the Partnership in its capacity as
a Partner of the Partnership.
(d) At all times from and after the date hereof, the General Partner
may cause the Partnership to obtain and maintain casualty, liability and other
insurance on the properties of the Partnership.
21
(e) At all times from and after the date hereof, the General Partner
may cause the Partnership to establish and maintain working capital reserves in
such amounts as the General Partner, in its sole and absolute discretion, deems
appropriate and reasonable from time to time.
6.2 [Intentionally Omitted.]
6.3 Compensation and Expense Reimbursement of Partners.
(a) No payment will be made by the Partnership for the services of any
Partner or any member, employee, agent or partner of any Partner or an Affiliate
thereof, except as may be expressly approved by the General Partner.
(b) Each of the Partners, and all Affiliates thereof, shall, at the
request of each such Partner, be reimbursed by the Partnership for the
reasonable out-of-pocket expenses incurred by such Partner, or an Affiliate
thereof, on behalf of the Partnership in connection with the business and
affairs of the Partnership, including all legal, accounting, travel and other
similar expenses reasonably incurred by the Partners in connection with the
formation of the Partnership or the acquisition, development, renovation,
rehabilitation, repair, management or operation of the Partnership Property.
6.4 Limitation of Liability. Neither the Partners, nor any officer,
director, partner, employee or Affiliate of any Partner shall be liable,
responsible or accountable in damages or otherwise to the Partnership or any
Partner for any action taken or failure to act on behalf of the Partnership
within the scope of the authority conferred on such Person by this Agreement or
by law, unless such action or omission was performed or omitted fraudulently or
in bad faith or constituted gross negligence or willful misconduct.
6.5 Indemnification. The Partnership shall indemnify and hold
harmless the General Partner and the Limited Partners and each of their
respective partners, officers, directors, stockholders, employees, agents and
Affiliates (collectively the "Parties") from and against any loss, expense,
damage or injury suffered or sustained by the Parties (or any of them) by reason
of any acts, omissions or alleged acts or omissions arising out of its or their
activities on behalf of the Partnership or in furtherance of the interests of
the Partnership, including, but not limited to, any judgment, award, settlement,
reasonable attorney's fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim
provided that the acts, omissions or alleged acts or omissions upon which such
actual or threatened action, proceeding or claim is based was
22
performed or omitted in good faith and were not performed or omitted
fraudulently or in bad faith or as a result of gross negligence or willful
misconduct by any such Party and provided that such Party reasonably believed
that the acts, omissions, or alleged acts or omissions upon which such actual or
threatened action, proceeding or claim is based was in the best interests of the
Partnership. Such indemnification shall be made only to the extent of the assets
of the Partnership.
6.6 No Participation in Management. The Limited Partners shall not
participate in the management or control of the Partnership's business, nor
shall the Limited Partners transact any business for the Partnership or have the
power to act for or bind the Partnership, said powers being vested solely and
exclusively in the General Partner.
6.7 No Personal Liability. The Limited Partners shall not have any
personal liability whatsoever, whether to the Partnership, to the General
Partner or to the creditors of the Partnership for the debts, obligations,
expenses or liabilities of the Partnership or any of its losses, beyond the
Limited Partner's Capital Contribution.
ARTICLE VII
BOOKS AND RECORDS
7.1 Books and Records. The General Partner shall keep proper and
usual books and records pertaining to the Partnership's business on an accrual
basis in accordance with tax accounting principles or generally accepted
accounting principles consistently applied, showing all of its assets and
liabilities, receipts and disbursements, profits and losses, Partners' Capital
Contributions and distributions and all transactions entered into by the
Partnership. The books and records and all files of the Partnership shall be
kept at its principal office or such other place as the General Partner may
designate from time to time. The fiscal year of the Partnership shall end on
December 31 of each year.
7.2 Bank Accounts. Funds of the Partnership shall be deposited in
an account or accounts in the bank or banks designated by the General Partner.
Such account or accounts shall be in the name of the Partnership and shall be
subject to withdrawal only upon signatures of those Persons authorized from time
to time by the General Partner.
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7.3 Tax Returns. Federal, state and local tax returns of the
Partnership shall be prepared and timely filed by or at the direction of the
General Partner at the expense of the Partnership.
7.4 Tax Decisions and Elections. The General Partner is hereby
designated the "Tax Matters Partner" of the Partnership for all purposes under
this Agreement and as such term is defined under the Code. The Tax Matters
Partner shall make or revoke all elections and take all reporting positions
which, in its discretion, it deems necessary or desirable for the Partnership.
Each item of Partnership income and deduction shall be separately reported on
each Partner's income tax return, pursuant to Regulations Section 1.702-1(a).
The General Partner may, in its discretion, make the election under Code Section
754. Tax decisions and elections for the Partnership not provided for herein
shall be determined and made by the General Partner. The General Partner shall
provide all Partners with all tax information that the General Partner receives,
shall notify all Partners of any meetings with respect to the Partnership's
income tax returns and shall afford representatives of each Partner the
opportunity to be present at such meetings. No Partner shall take a position on
any income tax return which is inconsistent with any position taken by the
Partnership on the Partnership's income tax returns.
7.5 Tax Examination. Each Partner shall give prompt notice to the
other Partners upon receipt of notice that the Internal Revenue Service or any
state or local taxing authority intends to examine any Partnership income tax
returns. The Tax Matters Partner shall promptly notify the Partners of the
commencement of any administrative or judicial proceedings involving the tax
treatment of items of Partnership income, loss, deductions and credits, and
shall further keep the Partners fully informed of all material developments
involved in such proceedings.
ARTICLE VIII
TRANSFER OR ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Restrictions on Transfer. Each Partner may Transfer all or any
portion of its rights or Interest in the Partnership, but may not withdraw or
retire from the Partnership without the prior written consent of the General
Partner; provided, however, that no Transfer will be permitted until the
Transferee (a) delivers to the General Partner a written instrument evidencing
such Transfer; (b) executes a copy of this Agreement accepting and agreeing to
all of the terms, conditions and provisions of this Agreement; and (c) pays to
the Partnership its reasonable out-of-pocket costs and expenses incurred in
connection with such Transfer and the admission of the Transferee as a Partner.
24
8.2 Admission of Transferees. A Transferee of a Partner Interest in
accordance with the provisions of Section 8.1 of this Article VIII shall be
admitted as a Partner with respect to the Interest Transferred upon the
fulfillment of such provisions. Until such provisions are fulfilled, a
Transferee shall not be admitted to the Partnership or otherwise be recognized
by the Partnership as having any rights as a Partner, including any right to
receive distributions from the Partnership (directly or indirectly) or to
acquire an interest in the capital or profits of the Partnership.
ARTICLE IX
DISSOLUTION AND WINDING UP
9.1 Liquidating Events. The Partnership shall dissolve and commence
winding up and liquidating upon the first to occur of any of the following
("Liquidating Events"):
(a) December 31, 2047;
(b) the sale of all or substantially all of the Property;
(c) the unanimous agreement of all Partners;
(d) the happening of any other event that makes it unlawful,
impossible or impractical to carry on the business of the Partnership; or
(e) an event of dissolution required under the Act.
The Partners hereby agree that, notwithstanding any provision of the Act or the
Illinois Uniform Partnership Act, the Partnership shall not dissolve prior to
the occurrence of a Liquidating Event. Furthermore, if an event specified in
Section 9.1(e) hereof occurs, the remaining Partners may, within ninety (90)
days of the date such event occurs, unanimously vote to elect a successor
General Partner (if necessary) and continue the Partnership business, in which
case the Partnership shall not dissolve and the occurrence of the event under
Section 9.1(e) shall not be deemed a Liquidating Event. The Partners further
agree that in the event the Partnership is dissolved prior to a Liquidating
Event, the Partnership may be continued upon the unanimous vote of the existing
Partners at such time to so continue the Partnership, provided such vote occurs
within thirty (30) days of the event triggering such dissolution.
9.2 Winding Up. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purpose of
25
winding up its affairs in an orderly manner, liquidating its assets and
satisfying the claims of its creditors and Partners. No Partner shall take any
action that is inconsistent with, or not necessary to or appropriate for, the
winding up of the Partnership's business and affairs. The General Partner (or,
in the event there is no General Partner, the Limited Partners or any Person
elected by a majority of the Limited Partners) shall be responsible for
overseeing the winding up and dissolution of the Partnership and shall take full
account of the Partnership's liabilities and the Partnership Property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom, to the extent sufficient, shall be applied and
distributed in the following order:
(a) First, to the payment and discharge of all of the Partnership's
debts and liabilities to creditors other than Partners;
(b) Second, to the payment and discharge of all of the Partnership's
debts and liabilities to Partners; and
(c) The balance, if any, to the General Partner and Limited Partners
in accordance with their respective Capital Accounts, after giving effect
to all contributions, distributions and allocations for all periods.
9.3 Liquidating Trust. In the discretion of the General Partner (or
such other Person responsible for overseeing the winding up and dissolution of
the Partnership), a pro rata portion of the distributions that would otherwise
be made to the General Partner and Limited Partners pursuant to this Article IX
may be:
(a) distributed to a trust established for the benefit of the General
Partner and the Limited Partners, provided such trust is a liquidating
trust or a grantor trust for federal income tax purposes, for the purpose
of liquidating Partnership assets, collecting amounts owed to the
Partnership and paying any contingent or unforeseen liabilities or
obligations of the Partnership or of the General Partner arising out of or
in connection with the Partnership. The assets of any such trust shall be
distributed to the General Partner and the Limited Partners from time to
time at such times and in such amounts as determined, in the reasonable
discretion of the General Partner (or such other Person responsible for
overseeing the winding up and dissolution of the Partnership), to be
appropriate in the same proportions as the amount distributed to such trust
by the Partnership would otherwise have been distributed to the General
Partner and the Limited Partners pursuant to this Agreement; or
26
(b) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion
of any installment obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the General Partner and the
Limited Partners as soon as practicable.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given on the date of service if served personally; three (3) business days after
the date of mailing, if mailed, by first class mail, registered or certified,
postage prepaid; one (1) business day after delivery to the courier if sent by
private receipt courier guaranteeing next day delivery, delivery charges
prepaid, and in each case, addressed as follows:
If to BLC, to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
27
and, if to BHI, to:
Brookdale Holdings, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
and to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
or at such other place as the respective Partner may, from time to time,
designate in a written notice to the other Partners. All communications among
Partners in the normal course of the Partnership business shall be deemed
sufficiently given if sent by regular mail, postage prepaid.
10.2 Binding Effect. Except as otherwise provided in this Agreement,
every covenant, term and provision of this Agreement shall be binding upon and
inure to the benefit of the Partners and their respective heirs, legatees, legal
representatives, successors, transferees and assigns.
10.3 Creditors. None of the provisions of this Agreement shall be
for the benefit of or enforced by any creditor of the Partnership or any
Partner.
10.4 Remedies Cumulative. No remedy herein conferred upon any party
is intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. No single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
28
10.5 Construction. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Partner.
10.6 Headings. Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or any
provision hereof.
10.7 Severability. Every provision of this Agreement is intended to
be severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
or legality of the remainder of this Agreement.
10.8 Incorporation by Reference. Every exhibit, schedule and other
appendix attached to this Agreement and referred to herein is hereby
incorporated in this Agreement by reference.
10.9 Further Action. Each Partner, upon the request of the General
Partner, agrees to perform all further acts and execute, acknowledge and deliver
any documents which may be reasonably necessary, appropriate or desirable to
carry out the provisions of this Agreement.
10.10 Variation of Pronouns. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine or neuter, singular or plural,
as the identity of the Person or Persons may require.
10.11 Governing Law. The laws of the State of Illinois shall govern
the validity of this Agreement, the construction of its terms, and the
interpretation of the rights and duties of the Partners, without regard to the
principles of conflicts of laws.
10.12 Waiver of Action for Partition. Each of the Partners
irrevocably waives any right that it may have to maintain any action for
partition with respect to any of the Partnership Property.
10.13 Counterpart Execution. This Agreement may be executed in any
number of counterparts with the same effect as if all of the Partners had signed
the same document. All counterparts shall be construed together and shall
constitute one agreement.
[signature pages follow]
29
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the day first above set forth.
WITHDRAWING PARTNERS:
--------------------
KILICO REALTY CORPORATION, an
Illinois corporation
By:
---------------------------------------------
Its:
-----------------------------------------
XXXXXX INVESTORS LIFE INSURANCE COMPANY, an
Illinois insurance corporation
By:
---------------------------------------------
Its:
-----------------------------------------
THE PRIME GROUP, INC., an Illinois corporation
By:
---------------------------------------------
Its:
30
GENERAL PARTNER:
---------------
BROOKDALE HOLDINGS, INC., a Delaware corporation
By:
---------------------------------------------
Its:
-----------------------------------------
LIMITED PARTNER:
---------------
BROOKDALE LIVING COMMUNITIES, INC., a Delaware
corporation
By:
---------------------------------------------
Its:
-----------------------------------------
31
EXHIBIT A
---------
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PONDS OF PEMBROKE LIMITED PARTNERSHIP,
AN ILLINOIS LIMITED PARTNERSHIP
GROSS ASSET VALUE OF PERCENTAGE
NAMES AND ADDRESSES CAPITAL CONTRIBUTIONS PROPERTY CONTRIBUTED INTERESTS
------------------- --------------------- -------------------- ----------
Brookdale Holdings, Inc. GENERAL PARTNER
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000 N/A N/A 1%
Brookdale Living LIMITED PARTNER
Communities, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000 N/A N/A 99%
---------- ----
TOTALS N/A 100%
=== ====
1
EXHIBIT B
---------
PROJECT DESCRIPTION
[legal description of the Devonshire facility
to be attached at closing]
1
