AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
JUSTICE INVESTORS
A CALIFORNIA LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP ("Agreement")
is effective as of November 30, 2010 ("Effective Date"), by and among
PORTSMOUTH SQUARE, INC., a California corporation (the "Managing General
Partner"), XXXX CORPORATION, a California corporation (the "Co-General
Partner") (Managing General Partner and, together with Co-General Partner,
each a "General Partner", together, the "General Partners") and those
individuals and entities listed on Exhibit A hereto (collectively, the
"Limited Partners" and individually a "Limited Partner").
RECITALS
A. On July 10, 1967, certain Partners formed Justice Investors, a
California limited partnership (the "Partnership"), by filing a Certificate
of Limited Partnership with the Office of the Recorder of the City and County
of San Francisco. The General Partners and the Limited Partners
(collectively, the "Partners," and individually, a "Partner") have heretofore
entered into and are subject to that certain Limited Partnership Agreement
dated July 10, 1967, as amended by that certain Amended Limited Partnership
Agreement dated March 20, 1968, as amended and restated by that certain
Amended Limited Partnership Agreement dated January 1, 1979, as amended by
that certain Amendment of Partnership Agreement dated as of June 27, 2005,
and as amended by that certain Amendment to the Limited Partnership Agreement
dated as of December 1, 2008 (collectively, the "Partnership Agreement").
The Partners have agreed to amend and restate the Partnership Agreement in
its entirety pursuant to this Agreement in order to comply with the
provisions of the California Corporations Code known as the "Uniform Limited
Partnership Act of 2008" (the "Act")..
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the parties hereto do hereby agree as follows:
1. CONTINUATION OF LIMITED PARTNERSHIP; ELECTION OF GOVERNING LAW. The
partners hereby elect to continue the existence of the partnership. The
partners hereby elect for the partnership to be governed by and subject to
the provisions of the act.
2. NAME AND PLACE OF BUSINESS. The business of the Partnership shall be
conducted under the name of JUSTICE INVESTORS, a California limited
partnership; provided, however, that the General Partners may, in their
absolute and sole discretion, change the name of the Partnership at any time
and from time to time, except that in no event shall the name of the
Partnership include the name or initials of any Limited Partner or any name
or initials which are substantially similar thereto. The principal office of
the Partnership shall continue to be 000 Xxxxxx Xxxxxx, Xxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 ("Partnership Office"), unless changed by both
the Managing General Partner and the Co-General Partner by giving written
notice to the Limited Partners of any change in location not less than ten
(10) days preceding any such change.
3. PURPOSE. The business and purpose of the Partnership is limited to the
acquisition, development, management, operation, leasing and sale of the real
property commonly known as the Hilton San Francisco Financial District in the
City and County of San Francisco, California. A description of said property
is attached hereto, marked Exhibit B, and made a part hereof. The
Partnership shall not engage in any other business or activity which is not
directly or indirectly related to such primary purpose.
4. TERM OF PARTNERSHIP; RECORDINGS; AGENT FOR SERVICE OF PROCESS.
4.1 Term. The Partnership commenced on July 10, 1967 by filing a
Certificate of Limited Partnership with the Office of the Recorder of the
City and County of San Francisco, State of California, and shall continue
until indefinitely, unless sooner terminated as herein provided or by
operation of law.
4.2 Certificate of Limited Partnership. The Certificate of Limited
Partnership ("Certificate") of the Partnership has been executed and filed on
September 30, 1985 with the Secretary of State of California in accordance
with the Act.
4.3 Agent for Service of Process. The name and address of the agent for
service of process of the Partnership to be designated on the Certificate is
Xxxxxxxx X. Xxxxxxx, 000 Xxxxxx Xxxxxx, Xxxx 000, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000. The agent for service of process of the Partnership may be changed
from time to time by the Managing General Partner in its sole and absolute
discretion, subject to applicable law.
5. DEFINITIONS. When used in this Agreement, the following terms shall have
the meanings set forth below:
5.1 Adjusted Capital Contribution. "Adjusted Capital Contribution" of a
Partner shall mean the aggregate of such Partner's Capital Contributions,
reduced, but not below zero, by distributions to such Partner pursuant to
Paragraph 8.1 (Distribution of Distributable Cash) hereof.
5.2 Capital Account. "Capital Account" shall mean each Partner's
Original Capital Contribution which shall be:
5.2.1 Increased by:
(a) The amount of any additional Capital Contributions by
such Partner, including the amount of Partnership liabilities assumed by such
Partner or secured by any Partnership property distributed by the Partnership
to such Partner;
(b) The fair market value of any property contributed by
such Partner to the Partnership (net of liabilities secured by such property
which are considered to be assumed or taken "subject to" by the Partnership);
and
(c) Items of book income and gain which are allocated to
such Partner; and
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5.2.2 Decreased by:
(a) The amount of cash distributed to such Partner by the
Partnership, including the amount of liabilities of such Partner assumed by
the Partnership or secured by any property contributed by such Partner to the
Partnership;
(b) The fair market value of any property distributed by the
Partnership to such Partner (net of liabilities secured by such property
which are considered to be assumed or taken "subject to" by such Partner);
(c) Items of expense described in Section 705(a)(2)(B) of
the Code allocated to such Partner;
(d) Items of book loss and deduction which are allocated to
such Partner; and
(e) By any Section 754 adjustment, or any other specially
allocated tax adjustment.
The foregoing provisions are intended to comply with Section 1.704-1(b) of
the Regulations and shall be applied and interpreted accordingly. The
Capital Accounts shall be adjusted in order to reflect allocations of
depreciation, amortization, and gain and loss as computed for book purposes.
Upon the transfer of any Partner's interest in the Partnership, the Capital
Account of the transferor Partner shall carry over to the transferee Partner.
5.3 Capital Contribution. "Capital Contribution" shall mean any money
which a Partner contributes to the Partnership as capital in that Partner's
capacity as a Partner.
5.4 Cash Reserves. "Cash Reserves" shall mean such amounts as may be
reasonably estimated by the General Partners for payment of costs, expenses
and liabilities incident to the business of the Partnership and for which the
cash to make such payments will not, in the sole opinion of the General
Partners, be expected to be available to the Partnership at or about the time
such payments are required to be made, and which therefore, in the opinion of
the General Partners, require that cash be set aside periodically to make
such payments.
5.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
5.6 Co-General Partner. "Co-General Partner" shall mean Xxxx
Corporation, a California corporation.
5.7 Distributable Cash. "Distributable Cash" shall mean for any period
such portion of the cash in the Partnership's bank accounts that, in the
reasonable exercise of discretion by the General Partners, is available for
distribution to the Partners after a reasonable provision has been made for
Cash Reserves.
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5.8 Effective Date. "Effective Date" shall have the meaning set forth
in the preamble to this Agreement.
5.9 Fiscal Year. "Fiscal Year" of the Partnership shall mean the
calendar year finishing December 31.
5.10 General Partner. "General Partner" shall mean each of Portsmouth
Square, Inc., a California corporation, and Xxxx Corporation, a California
corporation, or any other person or entity who has been admitted to the
Partnership as a General Partner in accordance with this Agreement, or a
person or entity who has been admitted as a General Partner pursuant to
applicable law.
5.11 Limited Partner. "Limited Partner" shall mean those individuals and
entities listed on Exhibit A hereto or any other person or entity who has
been admitted to the Partnership as either a Limited Partner in accordance
with this Agreement, or an assignee of a Partnership interest in the
Partnership who has become a Limited Partner pursuant to applicable law.
5.12 Majority In Interest. A "Majority In Interest" shall mean more than
fifty percent (50%) of the aggregate Participation Percentages of the
Partners.
5.13 Majority In Interest of Limited Partners. "Majority In Interest of
Limited Partners" shall mean those Limited Partners owning more than fifty
percent (50%) of the Participation Percentages of all Limited Partners.
5.14 Managing General Partner. "Managing General Partner" shall mean
Portsmouth Square, Inc., a California corporation.
5.15 Net Profits and Net Losses. "Net Profits" and "Net Losses" shall
mean the net profits or net losses, respectively, of the Partnership as
determined on the basis of the accounting method selected by the General
Partners at the close of the Partnership's Fiscal Year by the Partnership's
accountants in accordance with federal income tax principles consistently
applied, and as set forth on the information return filed by the Partnership
for federal income tax purposes. Net Profits and Net Losses shall not
include Nonrecourse Deductions or Partner Nonrecourse Deductions.
5.16 Nonrecourse Deductions. "Nonrecourse Deductions" shall mean the
Partnership deductions that are characterized as "nonrecourse deductions"
pursuant to the Regulations promulgated under Section 704(b) of the Code.
5.17 Original Capital Contribution. "Original Capital Contribution"
shall mean each Partner's Capital Contribution as set forth on Exhibit A
attached hereto and incorporated herein by reference.
5.18 Participation Percentage. "Participation Percentage" of a Partner
shall mean that percentage, as determined by dividing those number of Units
held by such Partner by the total number of Units issued and outstanding, as
adjusted from time to time pursuant to the terms of this Agreement. The
initial Participation Percentage of each Partner is set forth opposite such
Partner's name on Exhibit A hereto.
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5.19 Parties. "Party" shall mean a Partner or the Partnership. The
term "Parties" shall refer collectively to the Partners and to the
Partnership.
5.20 Partner. "Partner" shall mean a General Partner or a Limited
Partner. The term "Partners" shall refer collectively to the General Partner
and to the Limited Partners.
5.21 Partner Nonrecourse Deductions. "Partner Nonrecourse Deductions"
shall mean the Partnership deductions that are characterized as "partner
nonrecourse deductions" pursuant to the Regulations promulgated under Section
704(b) of the Code.
5.22 Partnership Minimum Gain. "Partnership Minimum Gain" shall have
the meaning set forth in the Regulations promulgated under Section 704(b) of
the Code.
5.23 Property. "Property" shall mean the real property described on
Exhibit B hereto and all improvements located thereon.
5.24 Regulations. "Regulations" shall mean the Income Tax Regulations
promulgated under the Code, including Temporary and Proposed Regulations, as
such Regulations may be amended from time to time, including corresponding
provisions of succeeding Regulations.
5.25 Super Majority In Interest. A "Super Majority In Interest" shall
mean more than seventy-two percent (72%) of the aggregate Participation
Percentages of the Partners.
5.26 Transfer. "Transfer" shall mean any encumbrance, gift, assignment,
pledge, hypothecation, sale or other transfer of all or any portion of a
Partnership interest.
5.27 Unit. "Unit" means a unit of interest in the Partnership held by a
Partner and shall be a whole number. No fraction of a Unit may be issued or
transferred under this Agreement.
6. PARTNERSHIP CAPITAL CONTRIBUTIONS AND LOANS.
6.1 Capital Contribution of the General Partner. Each General Partner
has made or shall be credited with, as of the date of this Agreement, the
Capital Account, Units, and Participation Percentage in the amount set forth
in Exhibit A.
6.2 Capital Contribution of the Limited Partners. The Limited Partners
have made, or shall be credited with, as of the date of this Agreement, the
Capital Account, Units, and Participation Percentage in the amount set forth
in Exhibit A.
6.3 Additional Capital Contributions. Upon the consent of both General
Partners and a Super Majority In Interest, the Partnership may sell
additional classes or series of Units of the Partnership. Each Partner shall
have the preemptive right to purchase such classes or series of Units in
accordance with such Partner's Participation Percentage; provided, however,
that a Partner shall not be allowed to purchase additional Units if such
purchase reasonably could result in a Material Reassessment of the Property
(as defined in section 10.2 below).
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6.4 Capital Accounts. The Partnership shall maintain an individual
Capital Account for each Partner in accordance with Section 5.2 above.
6.5 Interest on Contributions. No interest shall be paid by the
Partnership on any Capital Contribution made by any Partner to the
Partnership.
6.6 Use of Capital Contributions. Except as otherwise provided herein,
the cash portion of the Capital Contributions of each Partner shall be
deposited in a checking, savings and/or money market or similar account, to
be established and maintained in the name of the Partnership, or invested in
government securities or certificates of deposit issued by any bank.
Thereafter, such amounts shall be utilized for the conduct of the Partnership
business pursuant to the terms of this Agreement.
6.7 Limited Liability of Limited Partners. Except as may otherwise be
provided in this Agreement, or under applicable law, no Limited Partner shall
be bound by, or personally liable for, the expenses, liabilities or
obligations of the Partnership.
6.8 Role of Limited Partners. Except as may otherwise be provided in
this Agreement, no Limited Partner shall, in the capacity of a Limited
Partner, take part in or interfere in any manner with the conduct or control
of the business of the Partnership, or have any right or authority to act for
or on behalf of the Partnership.
6.9 Return of Capital. Except as otherwise provided in this Agreement,
no Partner shall have the right to withdraw or reduce such Partner's Capital
Contribution or to receive any distributions, except as a result of
dissolution. No Partner shall have the right to demand or receive property
other than cash in return for such Partner's Capital Contributions.
6.10 Loans by a Partner. Loans by a Partner to the Partnership shall not
be considered Capital Contributions for purposes of this Agreement, increase
such Partner's Capital Account or entitle such Partner to any greater share
of the Net Profits, Net Losses or distributions of the Partnership than such
Partner is otherwise entitled to under this Agreement. The interest rate and
payment terms on loans by a Partner to the Partnership shall be at least as
favorable to the Partnership as those generally charged by third party
lenders to the Partnership at the time the loan is made and shall be approved
by both General Partners.
6.11 Foreign Partners. In the event the Partnership is required to
withhold taxes with respect to the Net Profits of a Partner who is a foreign
person or entity, the General Partners may require an additional Capital
Contribution (without adjustment to Exhibit A) of such Partner in the amount
of the required withholding amount.
7. ALLOCATIONS.
7.1 Allocation of Net Profits. Net Profits for each Fiscal Year shall
be allocated to the Partners in accordance with their respective
Participation Percentages.
7.2 Allocation of Net Losses. Net Losses for each Fiscal Year shall be
allocated to the Partners in accordance with their respective Participation
Percentages.
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7.3 Allocation of Nonrecourse Deductions. Nonrecourse Deductions for
each Fiscal Year shall be allocated to the Partners in accordance with their
respective Participation Percentages.
7.4 Allocation of Partner Nonrecourse Deductions. After application of
Paragraphs 7.1 (Allocation of Net Profits), 7.2 (Allocation of Net Losses),
and 7.3 (Allocation of Nonrecourse Deductions) hereof, Partner Nonrecourse
Deductions for each Fiscal Year shall be allocated among the Partners as
required by the Regulations promulgated under Section 704(b) of the Code.
7.5 Allocation of Tax Credits. Except as may otherwise be required by
law, any tax credits to which the Partnership may be entitled shall be
allocated to the Partners in accordance with their respective Participation
Percentages.
7.6 Qualified Income Offset. Except as provided in Paragraph 7.7
(Minimum Gain Chargeback) hereof, in the event any Partner unexpectedly
receives an adjustment, allocation or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain shall
be specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, any
deficit in said Partner's Capital Account as quickly as possible. For
purposes of this Paragraph 7.6 (Qualified Income Offset), the Partner's
Capital Account, as of the end of the relevant Fiscal Year, shall take into
account the adjustments described in Regulations Sections 1.704-
1(b)(2)(ii)(d)(4), (5) and (6), any amount of any deficit Capital Account
balance which the Partner is obligated to restore, and any amount of any
deficit Capital Account balance which the Partner is deemed obligated to
restore pursuant to the Regulations promulgated under Section 704(b) of the
Code.
7.7 Minimum Gain Chargeback. Prior to any allocation hereunder, in the
event that there is a net decrease in the Partnership Minimum Gain during a
Partnership taxable year, each Partner shall be allocated items of income and
gain in accordance with the Regulations promulgated under Section 704(b) of
the Code and its requirements for a "minimum gain chargeback." In the event
that there is a net decrease in minimum gain attributable to debt associated
with Partner Nonrecourse Deductions, income and gain shall be allocated to
the Partners in accordance with the Regulations.
7.8 Allocations of Book Items. All items of book income, gain, loss and
deduction shall be allocated among the Partners in the same percentage that
Net Profits, Net Losses, Nonrecourse Deductions and Partner Nonrecourse
Deductions are allocated for the same Fiscal Year, or as otherwise provided
by the Regulations promulgated under Section 704(b) of the Code.
8. DISTRIBUTIONS.
8.1 Distribution of Distributable Cash. Distributable Cash (other than
in dissolution of the Partnership as hereafter provided in Paragraph 11.1
(Dissolution of Partnership) and subparagraph 11.1.1 hereof) shall be
distributed to the Partners during each Fiscal Year in accordance with their
respective Participation Percentages.
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8.2 To Whom Distributions are Made. Unless named in this Agreement or
unless admitted as a Substitute Limited Partner as provided herein, no person
or entity shall be considered a Partner in the Partnership. All Transfers of
interests by the Limited Partners shall be subject to Section 10
(Restrictions on Transfer) hereof, and, until admitted as a Substitute
Limited Partner thereunder, no assignee shall have any right as a Limited
Partner herein, including, but not limited to, the right to acquire any
information on account of the transactions of the Partnership, or to inspect
the Partnership books, whether or not such assignee is otherwise entitled to
distributions as assignee. Any payment by the Partnership to the person
shown on the Partnership records as a Limited Partner, or to such Limited
Partner's legal representatives, or to a named assignee of the right to
receive distributions, shall acquit the Partnership and the General Partners
of all liability to any other person who may be interested in such payment by
reason of an assignment by a Limited Partner or for any other reason.
9. POWERS AND DUTIES OF THE PARTNERS.
9.1 Powers and Duties of the Managing General Partner. The Managing
General Partner shall devote such time to the Partnership as shall be
necessary to conduct the Partnership business. Subject to the remaining
provisions of this Agreement, the Managing General Partner shall be
responsible for the management of the Partnership business and shall have all
rights, powers and duties generally conferred by law or necessary, advisable
or consistent in connection therewith, or in connection with the business of
the Partnership. Without limiting the foregoing, and subject to any
restrictions set forth in this Agreement (including, without limitation, any
consulting and participation rights of Xxxx as set forth in Paragraph 9.3
(Powers and Duties of the Co-General Partner), the approval rights of Xxxx as
set forth in Paragraph 9.4 (Decisions of Both General Partners), and the
requirements of Paragraph 9.5 (Asset Manager) as to the asset manager, the
Managing General Partner shall have the following rights and obligations:
9.1.1 Expenditures. To expend the capital and revenues of the
Partnership in furtherance of the Partnership business, in accordance with
the budget approved by both General Partners.
9.1.2 Agreements and Other Documents. To enter into and carry out
agreements of any kind and to do any and all other acts and things necessary,
proper or convenient to carry out the Partnership purpose; and to prepare,
execute, acknowledge, record, file and/or deliver any and all reports,
instruments or documents and to take all actions, required or deemed
necessary, reasonable or desirable by the Managing General Partner to
effectuate any of the foregoing, to comply with requirements of applicable
law or to comply with the provisions of this Agreement.
9.1.3 Insurance. To acquire and enter into any contract of
insurance of any type which the Managing General Partner deems necessary or
desirable for the protection of the Partnership, for the conversion of its
assets, for compliance with loan covenants made by the Partnership, or for
any purpose convenient or beneficial to the Partnership.
9.1.4 Employment of Personnel. To employ or engage persons in the
operation and management of the Partnership business or assets, including but
not limited to supervisory managing agents, building contractors, engineers,
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appraisers, insurance brokers, real estate brokers and loan brokers, on such
terms and for such compensation as the Managing General Partner shall
determine.
9.1.5 Investments. To invest Partnership cash or, pending other
investment in furtherance of the Partnership's purpose, the proceeds derived
from the sale of Partnership interests, in United States Treasury
obligations, prime quality commercial paper, certificates of deposit, deposit
or other obligations of insured commercial banks, savings banks or savings
and loan associations, or in any other similar interim investments; provided
that such investments are generally considered to be safe, cash-equivalent
liquid investments. Partnership funds shall not be used to make any
speculative investments or purchase any equity interests.
9.1.6 Partnership Expenses. To pay Partnership expenses (including
expenses in connection with an audit or review of Partnership tax returns or
a Partnership matter in a Partner's tax return) and to make all decisions
relative to Partnership accounting, including without limitation, determining
the source of Partnership disbursements, and whether disbursements are to be
made from Partnership operating income or from some other source such as
Partnership reserves, proceeds from the sale of Partnership interests, or
proceeds from the sale or refinancing of Partnership property.
9.1.7 Reimbursable Expenses. To be reimbursed by, or to charge,
the Partnership for reasonable expenses incurred by the Managing General
Partner on behalf of the Partnership, provided such expenses were included in
the approved budget or are otherwise approved by the Co-General Partner. The
Managing General Partner will endeavor to have such Partnership expenses
billed directly to the Partnership whenever feasible. The foregoing
notwithstanding, the Managing General Partner shall not charge to the
Partnership, and shall reimburse the Partnership for, any legal, accounting
or other costs incurred by the Managing General Partner or the Partnership
due to requirements of the Managing General Partner (including but not
limited to costs related to the public reporting and/or Xxxxxxxx-Xxxxx
requirements applicable to the Managing General Partner), but only to the
extent those costs exceed the costs that would be incurred by the Partnership
if the Managing General Partner had no such requirements.
9.2 Duty to Cooperate with Co-General Partner. In addition to its other
obligations, the Managing General Partner shall inform and coordinate with
the Co-General Partner as follows:
9.2.1 Information. The Managing General Partner has the obligation
to inform the Co-General Partner of all significant operational matters
concerning the Partnership and the Property with enough time and sufficient
detail to permit the Co-General Partner to carry out and perform the Co-
General Partner's fiduciary duties as a General Partner. Specifically, and
not by way of limitation, the Managing General Partner, directly or by
direction to the Asset Manager (a) will prepare and deliver to the Co-General
Partner notices of any of the matters set forth in Paragraph 9.4 (Decisions
of Both General Partners) or joint decisions identified in Paragraph 9.5
(Asset Manager) within a reasonable time after learning of a matter requiring
a joint decision; (b) will provide the Co-General Partner with timely and
thorough copies of any reports received by the Managing General Partner about
Hotel and Garage operations, including, without limitation, the results of
audits, auditor's recommendation letters,
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financial projections, hotel management reports, proposed budgets,
significant proposals to change a budget that has been previously adopted,
materials prepared for meetings with the Managing General Partner, notices by
any governmental entity, and any legal notices, which reports shall include
the same level of detail as the reports that have been made available to the
Managing General Partner; (c) will provide the Co-General Partner with
complete copies of any written materials that Managing General Partner
prepares concerning the Hotel and Garage operations, including meeting
agendas and materials; (d) upon request by the Co-General Partner, will
prepare and deliver to the Co-General Partner reports concerning the
Partnership, the Property and the operations of the Hotel and Garage within a
reasonable time after such request; and (e) upon request by the Co-General
Partner, will facilitate the Co-General Partner's access to senior staff of
the Hotel and Garage within a reasonable time after such request.
9.2.2 Meetings. The Managing General Partner shall meet with the
Co-General Partner on at least a quarterly basis. The Managing General
Partner and the Co-General Partner shall set a schedule of regular meetings
to facilitate the Co-General Partner's participation in management decisions
which shall include, without limitation, decisions concerning budgets
(including forecasts and other budget updates) and capital improvements. The
Managing General Partner will provide the Co-General Partner with reasonable
advance notice of any meeting with the Asset Manager or the managers or
operators of the Hotel and Garage, to the extent that those meetings relate
to a change in senior staff of the Hotel or Garage or a material change (a)
in Hotel or Garage operations or (b) in the use or management of the
Property.
9.3 Powers and Duties of the Co-General Partner. The Co-General Partner
shall devote such time to the Partnership as shall be necessary to conduct
the Partnership business. The Co-General Partner shall consult with the
Managing General Partner and participate in decisions that require the
consent of both General Partners, which are listed below in Paragraphs 9.4
(Decisions of Both General Partners) and, as applicable, 9.5 (Asset Manager).
Without limiting the foregoing, and subject to the Managing General Partner's
primary responsibility for the management of the Partnership's business, the
Co-General Partner has the following obligations and express rights, as
applicable, to participate in the following activities of the Partnership:
9.3.1 Documents. When required by this Agreement or applicable
law, the Co-General Partner shall execute and deliver partnership documents
on behalf of the Partnership in a timely fashion;
9.3.2 Service Providers. The Co-General Partner has the right to
participate (through oversight and consultation) in supervising and
evaluating the work of all persons necessary to provide services for the
management and operation of the Hotel and Garage and, as set forth in
subparagraph 9.4.1 (Senior Hotel and Garage Managers) below, to participate
in making decisions concerning the employment of senior Hotel and Garage
staff.
9.3.3 Reports. The Co-General Partner shall have the right to
participate (through oversight and consultation) in preparing or causing to
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be prepared all reports to be provided to the Partners or lenders on a monthly,
quarterly, or annual basis consistent with the requirements of this
Agreement.
9.3.4 Coordination. The Co-General Partner shall have the right to
participate (through oversight and consultation) in coordinating all present
and future development, construction, or rehabilitation of the Property.
9.3.5 Compliance. The Co-General Partner shall have the right to
assist the Managing General Partner in monitoring compliance with all
government regulations and files and to assist in supervising the filing of
all required documents with government agencies in a timely fashion.
9.3.6 Communications with Managers. Except as prohibited or
otherwise restricted by the Hotel Management Agreement, the Garage Management
Agreement, other written agreements between the Partnership and a manager or
lessee of a portion of the Property or of the business of the Partnership and
any and all successor agreements, the Co-General Partner shall have the right
to communicate directly with senior staff of the Hotel and Garage and to
request and to receive the same information from such persons as is provided
by them to the Managing General Partner.
9.3.7 Reimbursable Expenses. To be reimbursed by, or to charge,
the Partnership for reasonable expenses incurred by the Co-General Partner on
behalf of the Partnership, provided such expenses were included in the
approved budget or are otherwise approved by the Managing General Partner.
The Co-General Partner will endeavor to have such Partnership expenses billed
directly to the Partnership whenever feasible. The foregoing notwithstanding,
the Co-General Partner shall not charge to the Partnership, and shall reimburse
the Partnership for, any legal, accounting or other costs incurred by the Co-
General Partner or the Partnership due to requirements of the Co-General
partner, but only to the extent those costs exceed the costs that would be
incurred by the Partnership if the Co-General Partner had no such requirements.
9.4 Decisions of Both General Partners. Notwithstanding any other
provision of this Agreement to the contrary, the following matters, as well
as any joint decisions related to the Asset Manager identified in Paragraph
9.5 (Asset Manager), require the approval of both the Managing General
Partner and the Co-General Partner in a timely fashion:
9.4.1 Senior Hotel and Garage Managers. To determine the duties
of, to engage, to retain, and/or to terminate the employment of the Hotel's
General Manager and the Garage's senior manager;
9.4.2 Hotel and Garage Agreements. To enter into, amend or
terminate the Hotel Management Agreement or Garage Management Agreement and
any subsequent management agreements relating to the Hotel and Garage.
9.4.3 Leasing Decisions. To enter into, amend or terminate any
lease of any portion of the Property.
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9.4.4 Legal Matters. To initiate or undertake any legal action, to
confess any judgment against the Partnership or to settle any legal matter
for an amount in excess of ten thousand dollars ($10,000.00);
9.4.5 New Partners. To admit any person as a General Partner or a
Limited Partner, except as permitted by Section 10 (Restrictions on Transfer)
of this Agreement.
9.4.6 Bankruptcy, Etc. To file a bankruptcy case, to execute or
deliver any assignment for the benefit of the creditors of the Partnership,
or otherwise take any act or action to seek protection from the Partnership's
creditors;
9.4.7 Transfer of General Partner Interest. To transfer a General
Partner's interest as the General Partner in the Partnership, except as
permitted in this Agreement;
9.4.7 Borrowing. To borrow money from any lender, including any
Partner; to mortgage or subject to any other security device any portion of
the Property or any other property of the Partnership; to obtain replacements
of any mortgage or other security device; and to prepay in whole or in part,
refinance, increase, modify, consolidate or extend any mortgage or other
security device, all of the foregoing on such terms, in such amounts and by
such means identified in such security devices or modifications thereto;
9.4.9 Appraisals. To approve the draft of any appraisal of the
Partnership or the Property;
9.4.10 Budgets. To approve the annual budgets for the Hotel, the
Garage and the Partnership, including, without limitation, capital
improvements, reserves and partnership distributions, insurance coverage,
material contracts and expenditures, and engagement of consultants, and any
revisions or reforecasts thereto;
9.4.11 Reserves and Distributions. To establish cash reserves for
contingencies and to make distributions of Partnership income, provided,
however, that the General Partners may jointly elect not to make a
distribution in any calendar year if they reasonably determine that by doing
so the Partnership would not be able to maintain adequate reserves;
9.4.12 Development, Construction or Rehabilitation. To approve
major decisions concerning the present or future development, construction or
rehabilitation of the Property;
9.4.13 Non-Recurring Expenditures. To approve any non-recurring
expenditure or contract in excess of twenty thousand dollars ($20,000);
9.4.14 Modifications. To approve any modification of a non-
recurring expenditure or contract in excess of ten thousand dollars
($10,000); and
9.4.15 Tax Elections. To make elections (or revocations thereof)
under federal or state tax law.
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9.5 Asset Manager. The Partners agree as follows with respect to the
asset manager engaged by the Partnership to oversee the Property and the day-
to-day operations of the Partnership (including any service providers engaged
in the future to perform any of the functions currently being performed by
the Asset Manager) (the "Asset Manager"):
9.5.1 Partnership Employee. The Asset Manager will be employed by
the Partnership, rather than by either of the General Partners, and may not
be an employee or director of either of the General Partners unless the other
General Partner gives its consent.
9.5.2 Employment of Asset Manager. The Managing General Partner
will be responsible for interviewing candidates, negotiating and recommending
compensation agreements and employment terms commensurate with the Asset
Manager's job description and with industry standards, and for making
recommendations as to hiring and compensation decisions. Decisions to
determine or change the duties or compensation of, to engage, to retain,
and/or to terminate the employment of the Asset Manager will be made by
mutual consent of both General Partners. The General Partners have hired
Xxxxxxxx X. Xxxxxxx as the initial Asset Manager on such terms and for such
compensation as the General Partners shall jointly determine.
9.5.3 Supervision and Evaluation. The Managing General Partner
shall have the obligation to supervise and evaluate the work of the
Partnership's Asset Manager, and the Co-General Partner shall have the right
to assist the Managing General Partner in such supervision and evaluation.
9.5.4 Communication with Co-General Partner. The Co-General
Partner shall have the right to communicate directly with the Asset Manager
and to receive the same information from the Asset Manager as is provided by
the Asset Manager to the Managing General Partner.
9.6 Management Decisions. With respect to the management, conduct and
operation of the Partnership business, and subject to the exceptions set
forth in Paragraph 9.4 (Decisions of Both General Partners) and, as
applicable, Paragraph 9.5 (Asset Manager), the decisions of the Managing
General Partner shall prevail.
9.7 Independent Activities of Partners. Except as provided elsewhere
herein, any of the Partners may engage in or possess an interest in other
business ventures of every nature and description, independently or with
others, including, but not limited to, the ownership, financing, leasing,
operation, management, syndication, brokerage and development of real
property; and neither the Partnership nor the other Partners shall have, and
each of them hereby expressly waives, relinquishes and renounces any right by
virtue of this Agreement in and to such independent ventures or to the income
or profits derived therefrom.
9.8 Tax Matters Partner. The Managing General Partner shall be the
designated Tax Matters Partner of the Partnership, as that term is defined in
the Code.
9.9 Execution of Documents. Except as otherwise specifically provided
by this Agreement, or as otherwise authorized by the Managing General
Partner, each check, contract, deed, lease, promissory note, deed of trust,
escrow
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instruction, bond, release or any other documents of any nature whatsoever,
in any way pertaining to this Partnership or on behalf of the Partnership,
shall be signed by the Managing General Partner. Such signature authority
may be delegated by the Managing General Partner to the Asset Manager.
9.10 Liability Indemnification. The General Partners shall not be
liable, responsible or accountable in damages or otherwise to the Partnership
or to the Limited Partners for any acts performed within the scope of the
authority conferred on such General Partners by this Agreement, except for
such General Partners' gross negligence or willful misconduct in carrying out
such General Partners' obligations hereunder. The General Partners shall be
indemnified by the Partnership for all losses, judgments, settlements
(including legal fees) incurred as a result of actions against any or all of
the General Partners in its capacity as a general partner of the Partnership,
except to the extent it is determined by a court of law that the actions of
such General Partner constituted gross negligence or willful misconduct, or
were in intentional violation of this Agreement.
9.11 Compensation of General Partners. The General Partners shall be
entitled to receive reasonable compensation for services rendered to the
Partnership consistent with past practices. The General Partners are hereby
authorized to enter into a Compensation Agreement for the purpose of setting
the compensation that the General Partners shall be entitled to receive. The
Compensation Agreement may be amended, modified and restated by agreement of
the General Partners. In the event that there is only one (1) General
Partner, the Compensation Agreement may be amended only with approval of at
least seventy-five percent (75.0 %) of the interests of the Limited Partners.
9.12 Voting Rights of Limited Partners.
9.12.1 New General Partner. Except where there is no remaining
General Partner, a Majority In Interest of the Limited Partners shall have
the right, by vote or by written consent, to admit a new General Partner
provided, however, that every vote or written consent to admit a General
Partner also requires the written consent of any remaining General Partner.
9.12.2 Dissolution and Termination of the Partnership. The General
Partners shall not dissolve and terminate the Partnership without the consent
of a Super Majority In Interest of the Limited Partners as provided in
Paragraph 11.1 (Dissolution of Partnership) and subparagraph 11.1.1 hereof.
9.12.3 Sale of the Property. The Property shall not be sold without
the written consent of the General Partners and a Super Majority In Interest
of the Partners.
9.12.4 Amendment of Agreement. Amendments to this Agreement may be
made only if approved by the General Partners and at least seventy-five
percent (75%) interest of the Limited Partners in accordance with the
provisions of Section 15 (Amendments) hereof.
9.12.5 Additional Limited Partners. Except as set forth in Section
10 (Restrictions on Transfers), the General Partners shall not admit
additional Limited Partners without the consent of a Majority In Interest of
the Limited Partners.
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9.12.6 Election of New General Partner and Election to Continue
Business. Where there is no remaining General Partner after removal of a
General Partner as provided in subparagraph 9.12.7 (Removal of General
Partner) hereof, a Majority In Interest of the Limited Partners shall have
the right to elect a new General Partner and to make an election to continue
the business of the Partnership. After a General Partner ceases to be a
General Partner other than by removal, the Super Majority In Interest vote of
the Limited Partners shall be required to elect a new General Partner and to
make an election to continue the business of the Partnership.
9.12.7 Removal of General Partner. A General Partner may be removed
only upon the consent of at least seventy-five percent (75%) of the interests
of the Limited Partners. Upon removal, the removed General Partner
automatically converts to Limited Partner unless otherwise provided.
9.12.8 No Additional Voting Rights. Except as otherwise provided
herein, Limited Partners shall not have any rights to vote on any other
matters including but not limited to the matters described in Section
15903.03 of the Act.
9.13 Withdrawal of General Partner. A General Partner may withdraw from
the Partnership.
10. RESTRICTIONS ON TRANSFER. The interest of a Limited Partner is
transferable (including transfers to a Permitted Transferee) only with the
consent of both General Partners, which consent shall not be unreasonably
withheld. For purposes of this Section 10 (Restrictions on Transfer), a
"Permitted Transferee" is: (i) the spouse or member of the family of the
Limited Partner; (ii) a custodian, trustee (including a trustee of a voting
trust), executor, or other fiduciary for the account of the Limited Partner,
the spouse of the Limited Partner or members of the family of the Limited
Partner; or (iii) a trust for the benefit of the Limited Partner. No
fraction of a Unit may be transferred under this Agreement.
10.1 Representations by Portsmouth and Proposed Transferee. When any
transfer of a Limited Partner interest is proposed (other than a transfer to
a Permitted Transferee), Portsmouth and the Proposed Transferee each shall
separately provide the Partnership and Xxxx with affirmative written
representations (a) that to the knowledge of the party making the
representation, the proposed transferee is not an Affiliate of Portsmouth
(b) that the party making the representation has not entered into and it does
not presently intend to enter into any agreement by which such interest will
be transferred to Portsmouth, or an Affiliate of Portsmouth, and (c) that the
party making the representation is not aware of any other reason that the
proposed transfer reasonably could result in a Material Reassessment of the
Property. For purposes of this Section 10 (Restrictions on Transfer), an
"Affiliate" of Portsmouth is any party that is 50% or more owned by
Portsmouth or any Affiliate of Portsmouth.
10.2 Withholding Consent. Within ten business (10) days after
Portsmouth and the Proposed Transferee have delivered the written
representation described in Paragraph 10.1 (Representations by Portsmouth and
Proposed Transferee), either General Partner may withhold consent to a
proposed transfer of a Limited Partner interest. The non-consenting General
Partner shall provide, at the time such consent is withheld, a written
explanation to the other General Partner specifying in reasonable detail
(including specific citations to applicable
15
legal authority and factual evidence) the reasons why consent was withheld.
The written explanation will also include any specific information that the
non-consenting General Partner reasonably needs in order to provide its
approval. The withholding of consent is not unreasonable if the objecting
General Partner reasonably believes that the proposed transfer would
materially harm the Partnership or the Property or if the proposed transfer
reasonably could result in a Material Reassessment of the Property.
"Material Reassessment of the Property" shall mean that as a result of the
proposed transfer, the Property is subject to reassessment and that such
reassessment would result in a material increase in property taxes assessed
against the Property that are payable by the Partnership in any year or
years.
10.3 Materially Harm Partnership; Material Reassessment Risk. If a
General Partner withholds consent to a proposed transfer on grounds that the
proposed transfer would materially harm the Partnership or a Material
Reassessment of the Property reasonably could result, the refusal of such
General Partner to consent to the proposed transfer shall be reasonable
unless the proposed transferee or the other General Partner has provided to
the objecting General Partner written materials (including specific citations
to applicable legal authority and factual evidence) reasonably satisfactory
to the objecting General Partner demonstrating that the proposed transfer
will not materially harm the Partnership or result in a Material Reassessment
of the Property. In the event that such written materials are delivered to
the objecting General Partner, the consent of the objecting General Partner
shall be presumed to have been given unless, within ten business (10) days
after receipt of such written materials, the objecting General Partner
notifies the other General Partner of its continuing objection. In such
event, either General Partner may pursue dispute resolution as provided in
Section 16 (Resolution of Disputes) of this Agreement.
10.4 New Partners to Be Bound by Partnership Agreement. Notwithstanding
any other provision in this Agreement, a transferee shall be admitted as a
Limited Partner only upon the transferee's agreement to being bound by the
terms of this Partnership Agreement.
10.5 Assignment of Distribution Rights. Notwithstanding any other
provision in this Agreement, each Limited Partner shall have the right to
assign his, her or its right to distributions from the partnership.
10.6 Examination Rights. Each Partner shall have the right to examine
the books and records of the Partnership upon reasonable notice to the
General Partners.
10.7 Obligations of Transferees. The transfer of an interest of Partner
not made in accordance with the terms of Section 10 (Restrictions of
Transfer) shall be void.
10.8 Substitute Partners. A transferee of any Partner's interest may
become a "Substitute Partner" (Limited or General, as the case may be) in
place of his transferor if, in addition to satisfying all of the applicable
requirements set forth herein, the transferor and any transferee shall have
executed, acknowledged and delivered to the Managing General Partner such
instruments of transfer, assignment and agreement to be bound by the terms of
this Partnership as are satisfactory to the General Partners.
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10.9 Rights of Assignee. An assignee who does not become a Substitute
Partner has no right to require any information or account of the Partnership
transactions, to inspect the Partnership books, or to vote on any of the
matters as to which a Limited Partner would be entitled to vote pursuant to
this Agreement. A mere assignee shall be entitled only to receive the
allocations of Net Profits, Net Losses and other items and share of cash
distributions to which his transferor would otherwise be entitled.
10.10 Division of Allocations and Distributions. If any Partnership
interest, or part thereof, is transferred during any accounting period in
compliance with the provisions of this Agreement, Net Profits, Net Losses,
each item thereof and all other items attributable to such interest for such
period shall be divided and allocated between the transferor and the
transferee by taking into account their varying interests during the period
in accordance with Code Section 706(d), using any convention permitted by law
selected by the Managing General Partner. All distributions on or before the
date of such Transfer shall be made to the transferor, and all distributions
thereafter shall be made to the transferee. Solely for purposes of making
such allocations and distributions, the Partnership shall recognize such
Transfer not later than the end of the calendar month during which the
provisions of Paragraph 10.8 (Substitute Partners) are satisfied, provided
that if the Partnership does not receive (a) a notice stating the date such
interest was transferred, and (b) such other information as the Managing
General Partner may reasonably require, within thirty (30) days after the end
of the accounting period during which the Transfer occurs, then all of such
items shall be allocated and all distributions shall be made to the persons
who according to the books and records of the Partnership on the last day of
the accounting period during which the Transfer occurred was the owner of the
Partnership interest. Neither the Partnership nor any General Partner shall
incur any liability for making allocations and distributions in accordance
with the provisions of this Paragraph 10.10 (Division of Allocations and
Distributions), whether any General Partner or the Partnership has knowledge
of any Transfer of ownership of any Partnership interest.
10.11 Agreement Applies to Transferred Interest. Each Partner agrees
that notwithstanding the provisions for the Transfer of any interest
contained herein, the interest, when and if transferred, shall remain subject
to all of the terms and conditions of this Agreement.
10.12 Heirs, Devisees and Legatees. The heirs, devisees and legatees of
a deceased Partner shall have the rights of a transferee of a living Partner,
subject to administration of such deceased Partner's estate, and may become
Substitute Partners in lieu of the deceased Partner upon compliance with all
of the conditions of this Agreement required for such substitution.
10.13 No Dissolution. If a Partner Transfers all or any part of his
interest without complying with the provisions of this Agreement, such action
shall not cause or constitute a dissolution of the Partnership.
11. DISSOLUTION AND WINDING UP OF THE PARTNERSHIP.
11.1 Dissolution of Partnership. The Partnership shall be dissolved upon
the happening of any of the following events:
11.1.1 The vote or written consent of a Super Majority In Interest
of the Limited Partners together with the written consent of each General
Partner;
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11.1.2 The date of receipt in cash by the Partnership of the entire
proceeds from a sale or other disposition by the Partnership of all, or
substantially all, the Partnership's property, provided that if such a sale
is made for consideration payable in whole or part over a period of time,
such date shall be the date upon which all payments therefor shall have been
received;
11.1.3 orThe entering of an order for relief in a bankruptcy case,
legal incapacity, disability, death, dissolution, or termination of the last
General Partner, unless, within sixty (60) days after the occurrence of any
such event, a successor General Partner is elected pursuant to subparagraph
9.12.1 (New General Partner) hereof, which successor elects to continue the
business of the Partnership. In the event of the election of a successor
General Partner who elects to continue the business of the Partnership, a new
or amended Certificate of Limited Partnership shall be filed, if required, in
the manner required by law.
11.2 Continuation of Partnership. If a successor General Partner is
elected to continue the business of the Partnership, the business of the
Partnership shall continue in a reconstituted form as a successor limited
partnership upon the same terms and conditions as set forth in this
Agreement; and each Limited Partner hereby agrees to such continuation and/or
reconstitution if a successor General Partner is elected as provided for
herein. In connection therewith, the successor General Partner shall assume
the obligations of the predecessor General Partners and shall indemnify the
predecessor General Partners and hold each harmless from and against any and
all loss, damage, liability and expense, including costs and reasonable
attorneys' fees, to which the predecessor General Partners may be put or
which they may incur by reason of or in connection with any of the debts,
obligations or liabilities of the Partnership theretofore or thereafter made,
incurred or created by any loss, damage, liability or expense resulting from
the willful or negligent act or omission of the successor General Partner.
11.3 Winding Up of the Partnership. Upon dissolution of the
Partnership, the Managing General Partner shall wind up the affairs and
liquidate the assets of the Partnership in accordance with the provisions of
this Paragraph. Net Profits, Net Losses, Nonrecourse Deductions, Partner
Nonrecourse Deductions and all other Partnership items shall be allocated
until the liquidation is completed in the same ratio as such items were
allocated prior thereto. The proceeds from liquidation of the Partnership
when and as received by the Partnership shall be utilized, paid and
distributed in the following order:
11.3.1 First, to pay expenses of liquidation and the debts of the
Partnership to third parties other than the Partners;
11.3.2 Next, to pay the debts of the Partnership owing to creditors
who are Partners;
11.3.3 Next, to the establishment of any Cash Reserves;
11.3.4 Next, to the Partners, in accordance with the respective
Original Capital Contribution, on a pro-rata basis; and
11.3.5 Thereafter, to the Partners, in accordance with their
Participation Percentages.
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11.4 Right to Receive Property. The Limited Partners shall have no
right to demand or receive property other than cash in return for their
Capital Contributions to the Partnership, and each Limited Partner agrees to
and shall look solely to the assets of the Partnership for the return of such
Limited Partner's Capital Contributions. If the assets of the Partnership
remaining after discharge of the debts and liabilities of the Partnership are
insufficient to return the then unreimbursed Capital Contributions of a
Limited Partner, such Limited Partner shall not have, and hereby waives, any
recourse against the General Partners. All allocations and distributions of
sums pursuant to the winding up of the Partnership shall be subject to the
review and approval of the Co-General Partner, which approval shall not be
unreasonably withheld or delayed. Subject to the foregoing, the winding-up
of the affairs of the Partnership and the distribution of its assets shall be
conducted exclusively by the Managing General Partner, who is hereby
authorized to do any and all acts and things authorized by law for such
purposes at the expense of the Partnership. If there is no General Partner,
the winding-up of the affairs of the Partnership shall be conducted as
otherwise provided by law.
12. BOOKS, RECORDS, AND OFFICE SPACE.
12.1 Books of Account. The Managing General Partner shall, at the
Partnership's sole cost and expense, keep in accordance with California Corp.
Code 15901.11 adequate books of account of the Partnership wherein shall be
recorded and reflected, in accordance with a method of accounting determined
by the Managing General Partner, all of the Capital Contributions and all of
the income, expenses and transactions of the Partnership and a list of the
names and addresses, and interests in the Partnership held by the Partners in
alphabetical order.
12.2 Accounting and Reports. The Managing General Partner shall, at the
Partnership's sole cost and expense, cause federal and state returns for the
Partnership to be prepared and filed with the appropriate authorities, and
shall furnish to the Limited Partners, within ninety (90) days after the
close of each Fiscal Year of the Partnership, such financial information with
respect to each Fiscal Year as shall be reportable for federal and state
income tax purposes.
12.3 Banking. All funds of the Partnership shall be deposited in a
separate bank account or accounts as shall be determined by the Managing
General Partner. All withdrawals therefrom shall be made upon checks signed
by the Managing General Partner.
12.4 Accountants. The General Partners shall select the accountants for
the Partnership.
12.5 Partnership Office. Each General Partner shall have access to the
Partnership office and the Property. The furniture, fixtures, and equipment
currently located at the Partnership Office shall remain the property of the
Partnership. At the sole cost of the Partnership, each General Partner shall
be provided with a computer terminal, desk, file space, access to all
Partnership office equipment, and incidental assistance from the Partnership
clerical staff as may be necessary to assist such General Partner in the
performance of such General Partner's duties.
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13. ADJUSTMENT OF BASIS ELECTION. In the event of a Transfer of a Partner's
interest in the Partnership, or upon the death of a Partner, or in the event
of a distribution of the property of the Partnership to any Partner hereto,
or in the event of any Transfer of an interest in any Partnership which is a
Partner in this Partnership, the General Partners, in their sole discretion
may, at the request of the transferee Partner, file an election, in
accordance with Section 754 of the Code and applicable Treasury Regulations,
to cause the basis of the Partnership's property to be adjusted for federal
income tax purposes, as provided in Sections 734, 743 and 754 of the Code.
14. WAIVER OF ACTION FOR PARTITION. Each of the Partners hereby irrevocably
waives, during the term of the Partnership, any right such Partner may have
to maintain any action for partition with respect to any property of the
Partnership, including without limitation, the Property.
15 AMENDMENTS. Amendments to this Agreement may be made only if approved by
the General Partners and at least seventy-five percent (75%) of the interests
of the Limited Partners.
16. RESOLUTION OF DISPUTES.
16.1 Mediation. If a dispute, controversy or claim: (i) occurs, in law
or in equity; (ii) involves any of the Parties; and (iii) arises under, out
of, in connection with, or in relation to the Partnership, the Property, this
Agreement, any amendments to this Agreement or a breach of this Agreement,
the disputing Parties agree first to try in good faith to settle the dispute
by mediation under the mediation rules of JAMS or its successor organization
before resorting to arbitration. The disputing Parties agree that mediation
shall be completed within thirty (30) days of a notification of a dispute,
unless otherwise agreed by such Parties in writing.
16.2 Arbitration of Disputes. If the mediation provided by Paragraph
16.1 (Mediation) under the time period provided under Paragraph 16.1
(Mediation) does not resolve the dispute, the disputing Parties agree that
neutral binding arbitration shall decide and settle such dispute. The
disputing Parties agree to hold the arbitration in San Francisco, California,
and to follow the rules then applicable of JAMS or its successor
organization. The disputing Parties agree that the arbitration shall be
completed within one hundred twenty (120) days of the completion of the
mediation under Paragraph 16.1 (Mediation).
16.2.1 Selection of Arbitrators. The disputing Parties shall select
one (1) neutral arbitrator in accordance with the rules of JAMS. The
arbitrator shall have significant experience in commercial real estate and
management matters.
16.2.2 Decision of Arbitrator. The disputing Parties shall have a
mandatory pre-hearing document exchange. The arbitrator shall issue a
written decision which does not need to be a reasoned award. The decision in
writing of the arbitrator shall be final and binding on each and all of the
Parties. Judgment may be entered on such award in any court having
jurisdiction thereof.
16.3 Injunctive Relief and Remedies to Enforce Arbitration and Mediation.
The Parties recognize that each Party will have no adequate remedy at law for
breach by any of the other Party of any of the agreements contained in this
20
Agreement and, in the event of any such breach, the Parties agree and consent
that any of the other Parties shall be entitled to a judicial decree of
specific performance, mandamus or other appropriate remedy to enforce this
Agreement. The filing of a judicial action to enable the recording of a
notice of pending action, order of attachment, receivership, injunction or
other provisional remedy, shall not constitute a waiver of the right to
mediate or arbitrate under this Agreement. In no event shall a Party have
the right to demand mediation or arbitration after the date when institution
of legal or equitable proceedings based on such claim, dispute or other
matter in question would be barred by the applicable statute of limitations.
This agreement to mediate or arbitrate shall be specifically enforceable
under the prevailing mediation and arbitration laws.
16.4 Legal Fees and Costs. Notwithstanding any contrary language in any
prior documents relating to the management and operations of the Partnership
or the compensation of the Partnership's General Partners, any legal fees
and costs arising out of any dispute, controversy or claim of the type
described in Paragraph 16.1 (Mediation) above shall be borne by the party
that incurred such fees and costs.
17. NOTICES. Any and all notices, demands or other communications required
or desired to be given hereunder by any party shall be in writing and shall
be validly given or made to another party only if served either personally or
by facsimile transmission or if deposited in the United States first class
mail, certified or registered, postage prepaid. If such notice, demand or
other communication is served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice is sent by
facsimile transmission, service shall be conclusively deemed made at the time
of written confirmation of receipt which may be evidenced by return facsimile
transmission or by the sending party mailing a copy of the facsimile
transmission to the receiving party within twenty-four hours of the facsimile
transmission in the manner provided herein. If such notice, demand or other
communication is given by mail, such shall be conclusively deemed given
seventy two (72) hours after the deposit thereof in the United States mail
addressed to the party to whom such notice, demand or other communication is
to be given at the address set forth on Exhibit A attached hereto. Any party
hereto may change its address for the purpose of receiving notices, demands
and other communications as herein provided by a written notice given in the
manner aforesaid to the other party or parties hereto.
18. ATTORNEYS' FEES. Should any party hereto institute any action or
proceeding at law or in equity to enforce any provision hereof, including an
action for declaratory relief or for damages by reason of an alleged breach
of any provision of this Agreement, or otherwise in connection with this
Agreement, or any provision hereof, the prevailing party shall be entitled to
recover from the losing party or parties reasonable attorneys' fees and costs
for services rendered to the prevailing party in such action or proceeding.
19. SPECIAL POWER OF ATTORNEY.
19.1 Grant of Power. Each Limited Partner hereby constitutes and
appoints the Managing General Partner as attorney-in-fact for such Limited
Partner, with power and authority to act in such Limited Partner's name and
on such Limited Partner's behalf in the execution, acknowledgment and filing
of documents as follows:
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19.1.1 The Certificate and any amendments thereto made in accordance
with the terms of this Agreement, under the laws of the State of California
or the laws of any other states in which such a certificate is required to be
filed;
19.1.2 Any other instrument which may be required to be filed by the
Partnership under the laws of any state or by any governmental agency, or
which the General Partners deem advisable to file; and
19.1.3 Any documents which may be required to effect the
continuation of the Partnership, the admission of an additional or Substitute
Limited Partner or the dissolution and termination of the Partnership,
provided such continuation, admission or dissolution and termination is in
accordance with the terms of this Agreement and is authorized by the
requisite vote of Limited Partners and General Partners as provided herein.
19.2 Scope of Power. The power of attorney granted by each Limited
Partner to the Managing General Partner as hereinabove provided:
19.2.1 Is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death or disability of a Limited Partner, and
is limited to the matters as set forth in Paragraph 19.1 (Grant of Power)
hereof;
19.2.2 May be exercised by the Managing General Partner for each
Limited Partner by a facsimile signature of the Managing General Partner or
by listing each Limited Partner executing any instrument with a facsimile
signature of the Managing General Partner acting as attorney-in-fact for all
of the Limited Partners; and
19.2.3 Shall survive the delivery of an assignment by a Limited
Partner of the whole or any portion of such Limited Partner's interest in the
Partnership except that, where the assignee thereof has been approved for
admission to the Partnership as a Substitute Limited Partner, the special
power of attorney shall survive the delivery of such assignment for the sole
purpose of enabling the Managing General Partner to execute, acknowledge and
file any instrument necessary to effect such substitution.
20. PARTNERSHIP MEETINGS.
20.1 Call and Place of Meetings. Meetings of the Partners may be called
at the principal executive office of the Partnership or at any place
designated by the General Partners at the call and pursuant to the written
request of any General Partner or of Limited Partners representing more than
ten percent (10%) of the aggregate percentage interests of the Limited
Partners for consideration of any of the matters as to which Limited Partners
are entitled to vote pursuant to Paragraph 9.12 (Voting Rights of Limited
Partners) of this Agreement.
20.2 Notice of Meeting. Immediately upon receipt of a written request to
the General Partners requesting a meeting pursuant to Paragraph 20.1 (Call
and Place of Meetings) on a specific date (which date shall not be less than
fifteen (15) nor more than sixty (60) days after the receipt of the request
by the General Partners), the General Partners shall immediately give notice
to all Partners entitled to vote, as determined in accordance with Section 21
(Record Dates) of this Agreement. Valid notice shall be given less than ten
(10) nor
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more than sixty (60) days prior to the date of the meeting, and shall state
the place, date and hour of the meeting and the general nature of the
business to be transacted. No business other than the business stated in the
notice of the meeting may be transacted at the meeting. Notice shall be
given in accordance with the provisions of Section 17 (Notices) hereof.
20.3 Quorum. At any duly held or called meeting of Partners, a Majority
In Interest of Limited Partners represented in person or by proxy shall
constitute a quorum. The Partners present at a duly called or held meeting
at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of enough Limited Partners to
leave less than a quorum, if any action taken, other than adjournment, is
approved by the owners of the requisite percentage of the aggregate
percentage interests of the Limited Partners. Notwithstanding the existence
of a quorum, decisions by the Limited Partners shall require the requisite
percentage vote of all partnership interests (not merely those present in
person or proxy), as provided in Section 9.12 above.
20.4 Adjournment of Meetings. A Partnership meeting at which a quorum is
present may be adjourned to another time or place and any business which
might have been transacted at the original meeting may be transacted at the
adjourned meeting. If a quorum is not present at an original meeting, that
meeting may be adjourned by the vote of a Majority In Interest of the Limited
Partners represented either in person or by proxy. Notice of the adjourned
meeting need not be given to Partners entitled to notice if the time and
place thereof are announced at the meeting at which the adjournment is taken,
unless the adjournment is for more than forty-five (45) days or if, after the
adjournment, a new record date is fixed for the adjourned meeting, in which
case notice of the adjourned meeting shall be given to each Partner of record
entitled to vote at the adjourned meeting.
20.5 Meetings Not Duly Called, Noticed or Held. The transactions of any
meeting of Partners, however called and noticed, and wherever held, shall be
as valid as though consummated at a meeting duly held after regular call and
notice, if a quorum is present at that meeting, either in person or by proxy,
and if, either before or after the meeting, each of the persons entitled to
vote, not present in person or by proxy, signs either a written waiver of
notice, a consent to the holding of the meeting or an approval of the minutes
of the meeting.
20.6 Waiver of Notice. Attendance of a Partner at a meeting shall
constitute waiver of notice, except when that Partner objects, at the
beginning of the meeting, to the transaction of any business on the ground
that the meeting was not lawfully called or convened. Attendance at a
meeting is not a waiver of any right to object to the consideration of
matters required to be described in the notice of the meeting and not so
included, if the objection is expressly made at the meeting. Any Partner
approval at a meeting as to those matters specified in Paragraph 20.2 (Notice
of Meeting) hereof (other than unanimous approval by Limited Partners) shall
be valid only if the general nature of the proposal so approved is stated in
the notice of meeting or in any written waiver of notice.
20.7 Consent to Action Without Meeting. Any action that may be taken at
any meeting of the Partners may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by Partners having not
less than the minimum number of votes that would be necessary to authorize or
take that
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action at a meeting at which all Partners entitled to vote thereon were
present and voted. In the event the Limited Partners are requested to
consent to a matter without a meeting, each Partner shall be given notice of
the matter to be voted upon in the manner described in Section 17 (Notices).
In the event that any General Partner, or Limited Partners representing more
than ten percent (10%) of the aggregate percentage interests of the Limited
Partners, within ten (10) days of the giving of said notice, request a
meeting for the purpose of discussing or voting on the matter so noticed,
notice of a meeting shall be given pursuant to Section 17 (Notices) hereof
and no action shall be taken until the meeting is held. Unless delayed by a
request for and the conduct of a meeting, any action taken without a meeting
shall be effective fifteen (15) days after the required minimum number of
voters have signed consents to action without a meeting.
20.8 Proxies.
20.8.1 Every Partner entitled to vote may authorize another person
or persons to act by proxy with respect to that Partner's interest in the
Partnership.
20.8.2 Any proxy purporting to have been executed in accordance
with this Paragraph 20.8 (Proxies) shall be presumptively valid.
20.8.3 No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Subject
to the foregoing and to subparagraphs 20.8.6, 20.8.7, and 20.8.8 below, every
proxy continues in full force and effect until revoked by the person
executing it. The dates contained on the proxy forms presumptively determine
the order of execution, regardless of the postmark dates on the envelopes in
which they are mailed.
20.8.4 A proxy is not revoked by the death or incapacity of the
person executing it, unless (except as provided in subparagraph 20.8.6
hereof), before the vote is counted, written notice of the death or
incapacity of the maker is received by the Partnership.
20.8.5 Revocation of a proxy is effected by a writing delivered to
the Partnership stating that the proxy is revoked or by a subsequent proxy
executed by the Partner who executed the proxy or, as to any meeting, by the
attendance and exercise of the right to vote at that meeting by the Partner
who executed the proxy.
20.8.6 A proxy that states that it is irrevocable is irrevocable
for the period specified therein when it is held by any creditor or creditors
of the Partnership or the Partner who extended or continued credit to the
Partnership or the Partner in consideration of the proxy if the proxy states
that it was given in consideration thereof and the name of the person
extending or continuing credit. In addition, a proxy may be made irrevocable
(notwithstanding subparagraph 20.8.4 hereof) if it is given to secure the
performance of a duty or to protect a title, either legal or equitable, until
the happening of events which, by its terms, discharge the obligations
secured by it.
20.8.7 Notwithstanding the period of irrevocability specified in
the proxy as provided in subparagraph 20.8.6 hereof, the proxy becomes
revocable when the debt of the Partnership or Partner is paid.
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20.8.8 A proxy may be revoked, notwithstanding a provision making
it irrevocable, by the assignment of the interest in the Partnership of the
Partner who executed the proxy to an assignee without knowledge of the
existence of the proxy and the admission of that assignee to the Partnership
as a Partner.
20.8.9 The General Partners may, in advance of any Partnership
meeting, prescribe additional regulations concerning the manner of execution
and filing of proxies and their validation.
21. RECORD DATES.
21.1 Setting Record Date for Meetings. The record date for determining
the Partners entitled to notice of meetings, the right to vote at any
meeting, or the right to take any other lawful action with respect to a
meeting or the conduct of a vote by the Partners shall be the date set by the
General Partners; however, that date may not be more than sixty (60) nor less
than ten (10) days prior to the date of the meeting nor more than sixty (60)
days prior to any other action.
21.2 Setting Record Date for Distributions. The record date for
determining the Partners entitled to any Distribution or the right to take
any other lawful action shall be not less than ten (10) days prior thereto or
more than sixty (60) days prior to any such action.
21.3 Automatic Record Date. In the absence of any action setting a
record date, the record date shall be determined as follows:
21.3.1 The record date for determining the Partners entitled to
notice of or to vote at a meeting shall be the close of business on the
business day preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day preceding the day on
which a meeting is held.
21.3.2 The record date for determining Partners entitled to give
consent to Partnership action in writing without a meeting shall be the day
on which the first written consent is given.
21.3.3 The record date for determining Partners for any other
purpose, including their entitlement to any distributions, shall be the close
of business on the day on which the General Partners adopt the record date,
or the sixtieth (60th) day prior to the date of action relating to that other
purpose, whichever is later.
21.3.4 The record date for adjourned meetings shall be the record
date set in determining the Partners entitled to notice of or to vote at the
original meeting; however, the Partners who called that meeting may fix a new
record date for the adjourned meeting and shall fix a new record date if the
meeting is adjourned for more than forty-five (45) days from the date set for
the original meeting.
21.3.5 Conduct of Meeting. The General Partners shall have full
power and authority concerning the manner of conducting any meeting of
Partners, including, without limitation, the determination of Limited
Partners entitled to vote at the meeting, the existence of a quorum, the
conduct of voting, the
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validity and effect of any proxies, and the determination of any
controversies, votes or challenges arising in connection with or during the
meeting. The General Partners shall designate a person to serve as chairman
of the meeting and shall further designate a person to take the minutes of
the meeting, in either case including, without limitation, a trustee,
partner, director or officer of the General Partners. All minutes shall be
kept with the records of the Partnership maintained by the General Partners.
22. MISCELLANEOUS
22.1 Applicable Law. This Agreement shall, in all respects, be governed
by the laws of the State of California applicable to agreements executed and
to be wholly performed within the State of California.
22.2 Severability. Nothing contained herein shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provisions contained herein and any present or future
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail; but the provision of this
Agreement which is affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law.
22.3 Further Assurances. Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and
shall do any and all acts and things reasonably necessary in connection with
the performance of their obligations hereunder to carry out the intent of the
parties hereto.
22.4 Successors and Assigns. All of the terms and provisions contained
herein shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives, successors and
assigns.
22.5 Number and Gender. In this Agreement, the masculine, feminine or
neuter gender, and the singular or plural number, shall each be deemed to
include the others whenever the context so requires.
22.6 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties with respect to its subject matter
and any and all prior agreements, understandings or representations with
respect to its subject matter are hereby terminated and cancelled in their
entirety and are of no further force or effect.
22.7 Non-Waiver; Consents. No waiver by any party hereto of any breach
of this Agreement or any provision hereof shall be deemed to be a waiver of
any preceding or succeeding breach of the same or any other provision hereof.
Any consent of the Limited Partner which is required under this Agreement
shall only be effective if given in writing by the Limited Partner.
22.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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22.9 Full Authority. Each of the parties and signatories to this
Agreement has the full right, power, legal capacity and authority to enter
into and perform the parties' respective obligations hereunder, and no
approvals or consents of any other person are necessary in connection
therewith.
22.10 Captions. The captions appearing at the commencement of the
Paragraphs hereof are descriptive only and for convenience in reference.
Should there be any conflict between any such caption and the Paragraph at
the head of which it appears, the Paragraph and not such caption shall
control and govern in the construction of this Agreement.
22.11 Expenses. Each of the Limited Partners shall pay all of such
Limited Partner's own costs, legal fees, accounting fees, and any other
expenses incurred or to be incurred by such Limited Partner in negotiating
and preparing this Agreement and closing and carrying out the transactions
contemplated by this Agreement.
22.12 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties and their respective
successors and assigns, nor is anything in this Agreement intended to relieve
or discharge the obligation or liability of any third persons to any party to
this Agreement, nor shall any provision give any third person any right of
subrogation or action over or against any party to this Agreement.
22.13 Dissenter's Rights. In the event of a "reorganization," as defined
in Section 15911.20 of the Act, provided that the conditions set forth
therein with respect to the Partnership are met and the dissenting Limited
Partner has complied with the dissent and notice requirements set forth
therein with respect to the exercise of dissenter's rights, the value of the
dissenting Limited Partner's interest shall be determined, and the purchase
price therefor shall be paid, in accordance with Section 16 (Resolution of
Disputes).
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[SIGNATURE PAGES AND EXHIBITS OMITTED]
