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Exhibit 99.18
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CORPORATE PROPERTY ASSOCIATES 6
(A CALIFORNIA LIMITED PARTNERSHIP)
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of CORPORATE
PROPERTY ASSOCIATES 6, a California limited partnership (the "Partnership"),
which amends and restates the Amended Agreement of Limited Partnership dated as
of July 23, 1984, as amended as of November 26, 1984, April 14, 1988 and
___________,1997 is made and entered into as of the ______ day of __________,
1997 by and between ▇▇▇▇▇ DIVERSIFIED, LLC, a Delaware limited liability
company, as general partner and as limited partner, and ▇▇▇▇▇ CORPORATE
PROPERTY, INC., a Delaware corporation, as limited partner, ▇▇▇▇▇ MANAGEMENT
LLC, as Corporate Special Partner, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Individual Special
Partner, those Persons set forth on Schedule A hereto, as limited partners, and
all persons and entities admitted as Limited Partners as provided herein.
ARTICLE I
FORMATION OF PARTNERSHIP
The parties hereby continue the Partnership under the provisions of the
California Revised Limited Partnership Act (the "Act") and the rights and
liabilities of the Partners shall be as provided in such law and as herein
expressly provided. In the event that it shall be necessary for the Partnership
to exist in or qualify to do business under the laws of any state or states
other than or in addition to the State of California, the parties hereby agree
that the Partnership shall take such action as may be necessary to exist or
qualify to do business in any state in which such existence or qualification
shall be required, provided that in any such event the Partnership shall at all
times continue to be a limited partnership formed under and governed by the
provisions of the Act.
ARTICLE II
NAME
The business of the Partnership shall be conducted under the name
"Corporate Property Associates 6 - a California limited partnership" or under
"Corporate Property Associates 6" in any state or other jurisdiction which does
not permit the term "limited" to be a part of the Partnership's name or under
such
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other name as the General Partner shall hereafter designate in writing to the
other Partners.
ARTICLE III
DEFINITIONS
"Acquisition Expenses" means the expenses of the Partnership related to
the selection and acquisition of properties by the Partnership, whether or not
such properties are acquired, including but not limited to legal fees and
expenses, travel and communications expenses, costs of appraisals,
non-refundable option payments on property not acquired, accounting fees and
expenses, costs of title reports and title insurance, transfer and recording
taxes and miscellaneous expenses. Acquisition Expenses shall not include
Acquisition Fees.
"Acquisition Fees" means the total of all fees and commissions paid by any
party in connection with the purchase or development of property by the
Partnership, except a development fee paid to a person not an Affiliate of the
Partnership in connection with the actual development of a project after the
Partnership's acquisition of the land. Included in the computation of such fees
or commissions shall be any real estate commission, selection fee, development
fee (other than as described above), nonrecurring management fee, or any fee of
a similar nature, however designated, but not any loan fee ("points").
Acquisition Fees shall not include Acquisition Expenses.
"Act" means the California Revised Limited Partnership Act.
"Affiliate" means, with respect to any Partner, (i) any person directly or
indirectly controlling, controlled by or under common control with such Partner,
(ii) any person owning or controlling 10% or more of the outstanding voting
securities of such Partner, (iii) any officer, director or partner of such
Partner or of any person specified in (i) or (ii) above and (iv) any company in
which any officer, director or partner of any person specified in (iii) above is
an officer, director or partner; provided, however, that for purposes of this
definition the term "Affiliate" shall not be deemed to include any person
providing legal, underwriting or financial or investment advisory services to
the Partnership, the General Partner or any Affiliate of any of them from time
to time.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership as hereafter amended from time to time.
"Appraisal Date" means December 31, 2001.
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"Capital Account" means, in respect of any Partner, the account maintained
for such Partner in accordance with Article XII.
"Cash From Financings" means the net cash proceeds realized by the
Partnership from the financing of Partnership property or the refinancing of any
Partnership indebtedness.
"Cash From Sales" means the net cash proceeds realized by the Partnership
from the sale, exchange or other disposition of any of its assets. Cash From
Sales shall not include net cash proceeds realized from the financing of
Partnership property or the refinancing of any Partnership indebtedness.
"Code" means the Internal Revenue Code of 1986.
"Consolidation and Offering Expenses" means all expenses incurred in
connection with the formation and qualification of the Subsidiary Partnership,
the Merger and in offering the Shares to the former limited partners of the
Partnership in exchange for their Partnership Interests under applicable Federal
and state law, and any other expenses actually incurred and directly related to
the offering of the Shares, including such expenses as: (i) the preparing,
printing, filing and delivering of the Registration Statement and the Prospectus
(including any amendments thereof or supplements thereto), (ii) the preparing
and printing of this Agreement, other solicitation material and related
documents and the filing and/or recording of such certificates or other
documents necessary to comply with the laws of the State of California for the
formation of a limited partnership, the merger of a limited partnership into
another limited partnership and for the continued good standing of a limited
partnership, (iii) the qualification or registration of the limited liability
company interests under state securities or "Blue Sky" laws, (iv) any escrow
arrangements, including any compensation to an escrow agent, (v) the filing fees
payable to the United States Securities and Exchange Commission and to the
National Association of Securities Dealers, Inc. and any costs payable to the
New York Stock Exchange for the listing of the Listed Shares, (vi) the fees of
the Partnership's counsel, (vii) all advertising expenses incurred in connection
therewith, including the cost of all sales literature and the costs related to
investor and broker/dealer sales and information meetings and marketing
incentive programs and (viii) selling commissions and wholesaling expenses
incurred in connection with the sale of the Shares.
"Contribution" means any money, property or services rendered, or a
promissory note or other binding obligations to contribute money or property, or
to render services as permitted by Section 15651 of the Act, which a Partner
contributes to the Partnership as capital in that Partner's capacity as Partner
pursuant to this Partnership Agreement or any other agreement among the
Partners, including any agreement as to value.
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"Corporate Special Partner" means ▇▇▇▇▇ Management LLC, a Delaware limited
liability company.
"CPA Partnership" means Corporate Property Associates, a California
limited partnership, Corporate Property Associates 2, a California limited
partnership, Corporate Property Associates 3, a California limited partnership,
Corporate Property Associates 4, a California limited partnership, Corporate
Property Associates 5, a California limited partnership, Corporate Property
Associates 7, a California limited partnership, Corporate Property Associates 8,
L.P., a Delaware limited partnership, Corporate Property Associates 9, L.P., a
Delaware limited partnership, the Partnership and any other real estate limited
partnerships sponsored by W.P. ▇▇▇▇▇ & Co., Inc. or its Affiliates with
investment objectives substantially similar to the Partnership's.
"Distributable Cash From Operations" means cash receipts from the ordinary
day-to-day operations of the Partnership (including all interest on Partnership
investments and mortgages held by the Partnership) without deduction for the
management fee authorized by Paragraph G(3) of Article X payable to an Affiliate
of the General Partner or for depreciation and amortization of intangibles such
as organization, underwriting and debt placement costs but after deducting all
other expenses and debt amortization and provisions for reserves by the General
Partner which it deems to be reasonably required for the proper operation of the
business of the Partnership. "Distributable Cash From Operations" shall not
include cash proceeds realized from the sale, exchange or other disposition of
assets of the Partnership or from financing of Partnership property or the
refinancing of any Partnership indebtedness.
"Distribution" means any transfer of money or property by the Partnership
to a Partner without consideration.
"Fiscal Quarter" means the three-month period ending on the last day of
the third, sixth, ninth and twelfth calendar months of each Fiscal Year of the
Partnership.
"Fiscal Year" means the Fiscal Year specified in Article XIII.
"Front-End Fees" means all fees and expenses paid by any party for any
services rendered in connection with the organizational or acquisition phase of
the Partnership, including Consolidation and Offering Expenses, Acquisition
Fees, Acquisition Expenses and any other similar fees, however designated.
"General Partner" means any person or entity in his, her or its capacity
as general partner of the Partnership and whose name and address are set forth
in Article V, or any successor thereto appointed or elected hereunder.
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"Individual Special Partner" means ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Investment in Properties" means the amount of gross proceeds of the
Offering paid or allocated to the purchase, development, construction or
improvement of properties acquired by the Partnership, including the purchase of
properties, investments in stock, interests, warrants or other rights as
permitted by Paragraph G(7) of Article X hereof, working capital reserves
(except that working capital reserves in excess of 5% of the gross proceeds of
the Offering shall not be included) and other cash payments such as interest,
financing fees, taxes and other similar items, but excluding Front-End Fees.
"Limited Partner" means any person or entity in his, her or its capacity
as a limited partner of the Partnership and whose name and address are set forth
on the books and records of the Partnership.
"Mandatory Distribution Event" means (a) the sale or disposition of a
Partnership property to a third party unaffiliated with the Partnership or the
General Partner, not including the pledge, mortgage or encumbrance of a
property, or of any interest therein, in connection with the financing,
refinancing or other leveraging of such property or otherwise or any assignment
of any leases or rents related to such property, or (b) the mandatory
distribution to holders of Partnership Interests following the Appraisal Date.
"Merger" means the merger of the Subsidiary Partnership into the
Partnership.
"Merger Agreement" means the Agreement of Merger pursuant to which the
Subsidiary Partnership is merged with and into the Partnership.
"Minimum Gain" shall mean and refer to, at any time, the excess, if any,
of the outstanding principal balance of all nonrecourse debt of the Partnership
that is secured by an interest in Partnership assets, over the adjusted basis of
such assets to the Partnership for Federal income tax purposes. For purposes of
the preceding sentence, the term "nonrecourse debt" shall mean a liability of
the Partnership with respect to which no Partner has any personal liability.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
"Net Lease" means a lease in which the tenant undertakes to pay all or
substantially all the cash expenses, excluding debt service, related to the
leased property.
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"Offering" means the offering of the Shares made pursuant to the
Prospectus.
"Partner" means the General Partner, the Corporate Special Partner, the
Individual Special Partner and any Limited Partner where no distinction is
required by the context in which the term is used.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(4).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Treasury
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Debt
for the Partnership taxable year shall be determined in accordance with the
rules of Treasury Regulations Section 1.704-2(i)(2).
"Partnership" means Corporate Property Associates 6 - a California limited
partnership.
"Partnership Interest" means the interest of each Partner in the profits,
losses, distributions, capital and assets of the Partnership.
"Partnership Minimum Gain" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership taxable year shall be determined in accordance with the rules of the
Treasury Regulations.
"Prospectus" means the final prospectus of the General Partner pursuant to
which the Partnership will offer up to 23,654,898 Shares as the same may at any
time and from time to time be amended or supplemented after the effective date
of the Registration Statement.
"Proxy" means a written authorization signed by a Partner or the Partner's
attorney-in-fact giving another person the power to vote with respect to the
Partnership Interest of that Partner. "Signed," for the purpose of this
paragraph, means the placing of the Partner's name on the proxy (whether by
manual signature, typewriting, telegraphic transmission or otherwise) by the
Partner or the Partner's attorney-in-fact.
"Registration Statement" means the General Partner's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission in the
form in which it becomes effective, as
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the same may at any time and from time to time thereafter be amended or
supplemented.
"Shares" means the Shares of the General Partner.
"Special Partners" means the Corporate Special Partner and the Individual
Special Partner.
"Subsidiary Partnership" means Sixth Subsidiary, L.P., a California
limited partnership, which is a subsidiary of the General Partner.
ARTICLE IV
PURPOSE
The business and purpose of the Partnership is to carry on any business
that a California partnership without limited partners may carry on (except the
banking, insurance or trust company business), and more particularly to invest
in and own real property or interests therein (including leasehold estates) or
appurtenances thereto as well as personal or mixed property connected therewith
which is income producing or capable of becoming income producing within a
reasonable time after acquisition. The Partnership may enter into ventures,
partnerships and other business arrangements with respect to real property as
deemed prudent by the General Partner in order to achieve successful operations
for the Partnership. Operations of the Partnership may be conducted wherever, in
the opinion of the General Partner and not in violation of the general
restrictions described in Paragraph H of Article X, the factors involved appear
to be favorable for the Partnership and the Partners.
ARTICLE V
NAMES AND ADDRESSES OF PARTNERS
The General Partner of the Partnership shall be ▇▇▇▇▇ Diversified LLC, a
Delaware limited liability company having an office at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
The names and addresses of the Limited Partners of the Partnership shall
be as set forth on the books and records of the Partnership and shall be kept at
the principal place of business of the Partnership and a copy of which shall be
kept at the Partnership's California office.
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ARTICLE VI
PRINCIPAL PLACE OF BUSINESS; CALIFORNIA OFFICE
The principal place of business of the Partnership shall be ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Partnership shall also maintain an office
in California at Transamerica Pyramid, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partner may from time to time change the principal
place of business of the Partnership or its California office and, in either
such event, the General Partner shall notify the Partners in writing within ten
days after the effective date of such change; provided, however, that no such
change shall be effected unless the General Partner determines that such change
is in the best interests of the Partnership after giving consideration to any
material adverse state or local income, estate or inheritance tax consequences
to the Partners, or any adverse effect on the limited liability of the Limited
Partners, as a result of such change and provided further that the Partnership
shall always maintain at least one office in California. The General Partner may
establish additional places of business of the Partnership when and where
required by the business of the Partnership. The Partnership at all times shall
maintain in California an agent for service of process upon the Partnership.
ARTICLE VII
CAPITAL CONTRIBUTIONS
The Partnership is authorized to issue and sell up to $90,000 of limited
partner interests.
No interest shall be paid on any contribution to the capital of the
Partnership.
Loans by a Partner to the Partnership shall not be considered
contributions to the capital of the Partnership. Any Partner, including any
additional or substituted Partner, who shall acquire a Partnership Interest or
whose Partnership Interest is increased by means of a transfer to him of all or
a part of the Partnership Interest of another Partner, shall succeed to the
Capital Account, or portion thereof, in respect of the Partnership Interest
received.
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ARTICLE VIII
PROFITS AND LOSSES
A. Determination of Profits and Losses. The profits and losses of the
Partnership shall be determined for each Fiscal Year of the Partnership in
accordance with generally accepted accounting principles and procedures applied
in a consistent manner and for federal income tax purposes, by additionally
making such adjustments as are necessary to include other items of income,
expense, deduction and allowance as are permitted or required under the Code and
the regulations promulgated thereunder. Except as otherwise provided herein,
whenever a proportionate part of the Partnership profit or loss is credited or
charged to a Partner's Capital Account, every item of income, gain, loss or
deduction entering into the computation of such profit or loss shall be
considered either credited or charged, as the case may be, to such Partner's
Capital Account and every item of credit or tax preference related to such
profit or loss and applicable to the period during which such profit or loss was
realized shall be allocated to such Partner in the same proportion. Every
recapture of deduction or credit shall be allocated among the Partners in the
same proportion as the items of deduction or credit subject to recapture were
allocated among the Partners. Any increase or decrease in the amount of any item
of income, gain, loss or deduction attributable to any adjustment to the basis
of Partnership assets made pursuant to a valid election under Sections 734, 743
and 754 of the Code and pursuant to corresponding provisions of applicable state
and local income tax laws shall be charged or credited, as the case may be, and
any increase or decrease in the amount of any item of credit or tax preference
attributable to any such adjustment shall be allocated, to the Partners entitled
thereto under such laws. Profits and losses allocated to a particular class of
Partnership Interests shall be allocated among the holders of record of such
class of Partnership Interests at the end of each Fiscal Year (or such shorter
period as may be provided herein) of the Partnership in proportion to their
respective Partnership Interests; provided, however, that any such, profits and
losses attributable to a limited partner interest assigned during such Fiscal
Year of the Partnership shall be allocated among the holders of such limited
partner interests during such Fiscal Year in proportion to the number of months
(for purposes of such allocation ownership of limited partner interests for each
month will be determined as of the fifteenth day of each month) that each such
holder was recognized as the owner of such limited partner interest during such
Fiscal Year, without regard to the results of Partnership operations during the
period in which each such holder was recognized as the owner thereof and without
regard to the date, amount or recipient of any distributions which may have been
made with respect to such limited partner interest.
B. Allocation of Profits and Losses.
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1. Except as provided below, 1% of the profits and losses of the
Partnership (other than gains or losses from the sale, exchange or other
disposition of Partnership assets) shall be allocated to the General Partner, 5%
of such profits and losses shall be allocated to the Corporate Special Partner,
1% of such profits and losses shall be allocated to the Individual Special
Partner and 95% of such profits and losses shall be allocated to the Limited
Partners.
a. If certain Partners' Capital Accounts are negative and other
Partners' Capital Accounts are positive or will be so as a result of an
allocation of Partnership losses, losses shall not be allocated to any
Partner in excess of the positive balance of his Capital Account until the
balances of all Partners' Capital Accounts are first reduced to zero.
Capital Accounts shall be determined prior to the application of the
preceding sentence, after applying subparagraph (b) hereof, and after
applying subparagraph 5 of this Paragraph B.
b. If as of the end of any fiscal year (i) the excess, if any, of
(x) the aggregate principal balance of Partnership non-recourse
indebtedness secured by Partnership assets over (y) the adjusted basis for
Federal income tax purposes of such assets is less than (ii) the aggregate
negative amount attributable to such non-recourse indebtedness in
proportion to the negative amounts attributable of the Capital Accounts of
all Partners whose Capital Accounts are negative. Such Partners shall be
allocated Partnership income to the extent recognized by the Partnership
in an amount equal to such difference. Such Partnership income shall be
allocated among the Partners whose Capital Accounts are negatives as a
result of non-recourse indebtedness. Solely for purposes of this Paragraph
b, the Capital Accounts of each Partner shall be reduced by such Partner's
share of any Partnership expenditure which would be treated as if it were
an expenditure described under Section 705 (a)(2)(B) of the Code, shall be
reduced or increased, as appropriate, by other amount required by the then
applicable regulations under Section 704 of the Code.
2. Subject to subparagraph 1(a) above, losses arising from a sale,
exchange or other disposition of Partnership assets shall be allocated 1% to the
General Partner, 5% to the Corporate Special Partner, 1% to the Individual
Special Partner and 93% to the Limited Partners as follows:
a. First, in proportion to and to the extent of the minimum amounts
that must be allocated to equalize the Capital Accounts of each Limited
Partner in proportion to percentage of partnership interest held of record
by such Limited Partner; and
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b. Then, the balance to each Limited Partner in proportion to the
percentage of partnership interest held of record by such Limited Partner.
For purposes of this subparagraph 2, Capital Accounts shall be determined
after applying the allocations provided in subparagraphs 1 and 4 of this
Paragraph B, and after applying subparagraph 5 of this Paragraph B.
3. Gains arising from a sale, exchange or other disposition of Partnership
assets shall be allocated in the following order to priority:
a. If each Partner's Capital Account is negative and the gains are
less than the aggregate negative amounts in the Capital Accounts, in the
ratio that the Capital Accounts bear to each other;
b. If each Partner's Capital Account is negative and the gains are
greater than the aggregate negative amounts in the Capital Accounts (i)
first in an amount sufficient to bring each Partner's Capital Account to
zero, and (ii) then to the Partners in the percentage by which Cash From
Sales and Cash From Financings is then being distributed pursuant to the
provisions of Paragraph E of Article IX hereof;
c. If certain Partner's Capital Accounts are positive and other
Partner's Capital Accounts are negative (i) first in an amount to bring
the Capital Account of each Partner whose Capital Accounts which are
negative to zero (or if gains are less than the aggregate negative amounts
of the Capital Accounts which are negative, to such Partners in the ratio
that such negative Capital Accounts bear to each other), and (ii) then to
the Partners in the percentage by which Cash From Sales and Cash From
Financings is then being distributed pursuant to the provisions of
Paragraph E of Article IX hereof;
d. If each Partner's Capital Account is positive, in the percentages
by which Cash From Sales and Cash From Financings is then being
distributed pursuant to the provisions of Paragraph E of Article IX
hereof;
For purposes of this subparagraph 3, Capital Accounts shall be determined
after applying the allocations provided in subparagraphs 1, 2 and 4 of this
Paragraph B and after applying subparagraph 5 of Paragraph B. In no event shall
the allocation of gains from the sale, exchange or disposition of Partnership
assets be allocated in an amount less than 1% to the Limited Partners in the
aggregate.
4. To the extent that any amount paid to a Limited Partner or its
Affiliates pursuant to the provisions of Paragraphs G(2), (3), (4), (5), or (6)
of Article X hereof, or as Front-End Fees,
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is treated as a distributive share of Partnership income to the Limited Partner
for Federal income tax purposes, the Limited Partner affected shall be allocated
gross income of the Partnership at a time and in an amount equal to the amount
of such payment, and the Capital Account of the Limited Partner so affected
shall be adjusted to reflect such allocation and payment. If the Partnership's
gross income for a Fiscal Year is less than the amount of such payment, the
Limited Partner so affected shall be allocated gross income in each succeeding
Fiscal Year until the total amount so allocated equals the total amount of such
payment.
5. For purposes of subparagraphs 1(a), 2 and 3 of this Paragraph B,
distributions to the Partners pursuant to Paragraphs A and E of Article IX
hereof shall be treated as having been made and charged to the Capital Accounts
of the Partners prior to the allocations of income, gains and losses provided
therein.
6. Solely for purposes of this Paragraph B, the Capital Accounts of each
Partner shall be reduced by such Partner's share of any Partnership expenditure
which would be treated as it were an expenditure described under Section
705(a)(2)(B) of the Code, and shall be reduced or increased by any other amount
required by the then applicable regulations under Section 704 of the Code.
7. Notwithstanding anything to the contrary in this Article VIII, if any
Partner receives an adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner shall be
specially allocated a pro rata portion of each item of Partnership income,
including gross income, and gain in an amount and manner sufficient to
eliminate, as quickly as possible, any deficit balance in such Partner's Capital
Account created by such adjustment, allocation or distribution in excess of the
sum of (i) the amount such Partner is obligated to restore pursuant to any
provision of this Agreement and (ii) the amount such Limited Partner is deemed
to be obligated to restore pursuant to the penultimate sentence of Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) (as amended in 1986). This subparagraph
8 of Paragraph B is intended to constitute a "qualified income offset" within
the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
8. Except as otherwise provided in Section 1.704-2(f) of the Treasury
Regulations, if there is a net decrease in Partnership Minimum Gain for any
Partnership fiscal year, each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary subsequent years)
in an amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain to the extent required by Treasury Regulations Section 1.704-2(f).
The items to be so allocated shall be determined in accordance with Section
1.704-2(f) and (i) of the Treasury Regulations. This subparagraph is intended to
comply with the minimum gain chargeback requirement in said
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section of the Treasury Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph shall be made in proportion
to the respective amounts required to be allocated to each Partner pursuant
hereto.
9. Except as otherwise provided in Section 1.704-2(i)(4) of the Treasury
Regulations, if there is a net decrease in Partner Minimum Gain attributable to
a Partner Nonrecourse Debt during any fiscal year, each Partner who has a share
of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations,
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt to the extent and in the manner required by Section 1.704-2(i)
of the Treasury Regulations. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i) of the Treasury Regulations. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(i)(4) and
(j)(2) of the Treasury Regulations. This subparagraph is intended to comply with
the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Treasury Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph shall be made
in proportion to the respective amounts to be allocated to each Partner pursuant
hereto.
10. To the extent any Partner has an Adjusted Capital Account Deficit at
the end of any Partnership Fiscal Year, each such Partner shall be specially
allocated items of Partnership income (including gross income) and gain in the
amount of such excess as quickly as possible, provided that an allocation
pursuant to this Paragraph 8(B)(11) shall be made if and only to the extent that
such Partners would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section have been tentatively made as if this
Paragraph 8(B)(11) were not in the Agreement.
11. Partner Nonrecourse Deductions for any fiscal year or other applicable
period with respect to a Partner Nonrecourse Debt shall be specially allocated
to the Partners that bear the economic risk of loss for such Partner Nonrecourse
Debt (as determined under Sections 1.704-2(b)(4) and 1.704-2(i)(1) of the
Treasury Regulations).
C. Power of the General Partner to Vary Allocations of Profits and Losses.
It is the intent of the Partners that each Partner's distributive share of
income, gains, losses, deductions and credits shall be determined and allocated
in accordance with this Article VIII to the fullest extent permitted by Section
704(b) of the Code. If the Partnership is advised that the allocations
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provided in this Article VIII are unlikely to be respected for Federal income
tax purposes, the General Partner has been granted power in Paragraph B(2)(a) of
Article XVI of this Agreement to amend the allocation provisions of this
Agreement, on advice of accountants and legal counsel, to the minimum extent
necessary to effect the plan of allocations and distributions provided in this
Agreement.
D. Allocations of Profits and Losses Among Limited Partners. Except as
otherwise provided in this Article VIII, profits and losses shall be allocated
among the Limited Partners in the same manner as distributions are allocated in
Paragraph D of Article IX hereof.
E. Consent of Partners to Allocation of Profits and Losses. The methods
hereinabove set forth by which profits and losses of the Partnership are
determined and allocated are hereby consented to by each Partner as a condition
to becoming a Partner.
ARTICLE IX
DISTRIBUTIONS
A. Distributable Cash From Operations. The General Partner shall
distribute as soon after the close of each Fiscal Quarter as is reasonably
feasible all of the Distributable Cash From Operations for such Fiscal Quarter
in the following manner: 1% to the General Partner, 5% to the Corporate Special
Partner, 1% to the Individual Special Partner and 93% to the Limited Partners.
(i) Cash From Sales. The General Partner shall distribute, as soon after
the close of each Fiscal Quarter as is reasonably feasible, all Cash From Sales
realized by the Partnership during such Fiscal Quarter in accordance with the
provisions of Paragraph E of this Article IX.
B. Cash From Financings. The General Partner shall distribute, as soon
after the close of each Fiscal Quarter as is reasonably feasible, all of the
Cash From Financings realized by the Partnership during such Fiscal Quarter in
accordance with the provisions of Paragraph E of this Article IX.
C. Allocation of Distributions Among Limited Partners. Distributions of
cash to the Limited Partners shall be apportioned among the holders of record of
limited partner interests in the ratio in which the number of limited partner
interests held of record by each of them bears to the number of limited partner
interests held of record by all Limited Partners as of the first day of the
Fiscal Quarter with respect to which such distribution is made.
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D. Distributions of Cash From Sales and Cash From Financings. The General
Partner shall distribute Cash From Sales and Cash From Financings in the
following manner: 1% to the General Partner, 1% to the Individual Special
Partner and 98% to the Limited Partners, and thereafter, 100% to the Limited
Partners until such time as $461,454 is distributed to the Individual Special
Partner pursuant to this Paragraph E of Article IX. Thereafter, Cash From Sales
and Cash From Financings shall be distributed 1% to the General Partner and 99%
to the Limited Partners.
E. Return of Capital Contributions. To the extent that, at the end of any
Fiscal Quarter, the total cash distributions to the Limited Partners made
pursuant to this Article IX exceed the profits of the Partnership for such
Fiscal Quarter, such excess shall be charged to each Limited Partner's Capital
Account and shall be regarded as a rightful return of capital contributions.
F. No Distributions Under Certain Circumstances. Notwithstanding any other
provision of this Article IX, no distribution shall be made if, after giving
effect to the distribution, all liabilities of the Partnership (other than
liabilities to Partners on account of their interest in the Partnership and
liabilities as to which recourse of creditors is limited to specified property
of the Partnership) exceed the fair value of the Partnership's assets, provided
that the fair value of any asset that is subject to a liability as to which the
recourse of creditors is so limited shall be included in the Partnership's
assets only to the extent that the fair value of the property exceeds such
liability. No Partner shall have the right to receive property other than money
upon any distribution. No Partner may be compelled to accept a distribution of
any asset in kind in lieu of a proportionate distribution of money being made to
other Partners.
G. Consent of Partners to Allocation of Distributions. The methods
hereinabove set forth by which Cash From Operations, Cash From Sales and Cash
From Financings are allocated and distributed are hereby consented to by each
Partner as a condition to becoming a Partner.
ARTICLE X
MANAGEMENT AND OPERATION OF BUSINESS
A. Management of Business. The Partnership shall be managed by the General
Partner and the conduct of the Partnership's business shall be controlled and
conducted by the General Partner in accordance with this Agreement.
B. Authority of General Partner. In addition to and not in limitation of
any rights and powers conferred by law or other provisions of this Agreement,
the General Partner shall have and may exercise on behalf of the Partnership all
powers and rights
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necessary, proper, convenient or advisable to effectuate and carry out the
purposes, business and objectives of the Partnership. Such powers shall include,
without limitation, the following powers:
1. To acquire, hold and dispose of any real property (or any interests
therein, including leasehold estates) and appurtenances thereto as well as
personal or mixed property connected therewith, including the purchase, lease,
development, improvement, maintenance, exchange, trade or sale of such property
at such price, rental or amount, for cash, securities or other property and upon
such terms, as the General Partner deems to be in the best interests of the
Partnership;
2. Subject to the provisions of Paragraph H (12) of this Article X, to
borrow money and, if security is required therefor, to mortgage or subject to
any other security device any portion of the assets 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, provided, however, that loans from Affiliates
of the General Partner shall be made in accordance with the provisions of
Paragraphs G(5) of this Article X;
3. To invest the Partnership's funds in United States Government
securities, certificates of deposit other time or demand deposits of United
States commercial banks, savings banks, savings and loan associations or similar
institutions which have a net worth of at least $100,000,000 or in which such
certificates or deposits are fully insured by any federal or state government
agency, Eurodollar deposits in foreign branches of United States banks, which
banks have a net worth of at least $100,000,000 bank repurchase agreements
covering securities of the United States Government or governmental agencies,
bankers' acceptances, public no-load money market funds or other similar
short-term highly liquid investments; to invest any working capital or other
reserves retained by the General Partner for the operation of the Partnership in
like manner; and to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in any manner consistent with the provisions of this
Agreement;
4. To bring and defend actions at law or in equity;
5. To employ persons in the operation and management of the Partnerships'
business, including but not limited to supervisory managing agents, building
management agents, real property developers and real estate brokers;
6. To place record title to, or the right to use, Partnership assets in
the name or names of a non-operating nominee or nominees, including an Affiliate
of the General
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Partner, for any purpose convenient or beneficial to the Partnership.
7. To perform all acts and file all documents, including tax returns and
registration statements, necessary to comply with federal, state and local laws,
rules and regulations applicable to the Partnership or the conduct of the
Partnership's business;
8. To enter into and carry out contracts and agreements and any or all
documents and instruments and to do and perform all such other things as may be
in furtherance of Partnership purposes or necessary or appropriate to the
conduct of Partnership's activities;
9. To execute, acknowledge, deliver, seal, file, record and vote any and
all instruments which may be deemed necessary or convenient to effect the
foregoing; and
10. To cause the Partnership to make or revoke any of the elections
required or permitted to be made by the Partnership under the Code;
11. To determine the appropriate accounting method or methods to be used
by the Partnership (the Partnership intends initially to utilize the accrual
method of accounting in maintaining its books and records and the cash receipts
and disbursements method of accounting in reporting its profits and losses for
Federal, state and local income tax purposes); and
12. To designate ▇▇▇▇▇ Diversified LLC, the General Partner, as the "Tax
Matters Partner" in accordance with Section 6231(a)(7) of the Code and, as such,
the General Partner shall have all powers necessary to so perform including,
without limitation, the power to retain attorneys and accountants of its choice
and the right to settle any audits without the consent of the Limited Partners,
except as otherwise required by the Code. The designation provided for herein is
expressly consented to by each Partner as an express condition to becoming a
Partner.
C. Restrictions on Authority of General Partner. In addition to other acts
expressly prohibited or restricted by this Agreement or by law, the General
Partner shall have no authority to act on behalf of the Partnership with respect
to, and are expressly prohibited from undertaking, the following:
1. Doing any act in contravention of this Agreement;
2. Except as provided in this Agreement and except in connection with the
liquidation and winding up of the business of the Partnership upon its
termination and dissolution, doing any act which would make it impossible to
carry on the ordinary business of the Partnership;
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3. Confessing a judgment against the Partnership in connection with any
threatened or pending legal action;
4. Possessing Partnership property or assigning the rights of the
Partnership in specific Partnership property for other than a Partnership
purpose;
5. Admitting a person as a Limited Partner except as provided in this
Agreement;
6. Except as provided in this Agreement and except in connection with the
liquidation and winding up of business of the Partnership upon its termination
and dissolution or a Mandatory Distribution Event, selling substantially all the
assets of the Partnership at a single sale or in multiple sales in the same
12-month period without the prior written consent of Limited Partners, which
approval shall be conditional on the receipt by the General Partner of the
written approval of holders of Limited Partner Interests holding more than fifty
percent (50%) of the then outstanding Limited Partner Interests, with the same
proportionate vote as provided in paragraph (d) of Article XI;
7. Pledging or encumbering substantially all the properties of the
Partnership at one time or from time to time in a series of related
transactions, unless the lien of such pledge or encumbrance arises in connection
with the acquisition or improvement of properties or the initial financing of
properties acquired free and clear of encumbrances or the refinancing of
previous obligations and such lien is limited to the properties so acquired,
improved, financed or refinanced;
8. Obtaining any loan or any mortgage loan on any residential property
made or guaranteed by any federal, state or local government or municipality or
any agency of any Federal, state or local government or municipality;
9. Performing any act (other than an act required by this Agreement or any
act taken in good faith in reliance upon counsel's opinion) which would, at the
time such act occurred, subject any Limited Partner to liability as a general
partner in any jurisdiction;
10. Prepaying any interest on any Partnership indebtedness; provided that
the payment of any amount commonly referred to as "points" shall not be deemed a
prepayment of interest; or
11. Assessing any Partner for an additional capital contribution.
D. Fiduciary Obligations of General Partner. The General Partner shall act
at all times as a fiduciary with respect to the Partnership, the Limited
Partners and the Partnership property and assets.
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E. Obligations of the General Partner. The General Partner shall:
1. Devote such of its time to the business of the Partnership as it shall,
in its discretion, exercised in good faith, determine to be necessary to conduct
the business of the Partnership for the benefit of the Partnership and the
Limited Partners;
2. File and publish all certificates, statements or other instruments
required by law for formation, qualification and operation of the Partnership
and for the conduct of its business in all appropriate jurisdictions;
3. Use its best efforts to cause the Partnership and the Partners to be
protected by adequate public liability, property damage and other insurance;
4. Employ attorneys to represent the Partnership, which attorneys may also
serve as counsel to the General Partner and any of its Affiliates; and
5. Use its best efforts to maintain the status of the Partnership as a
"partnership" for federal income tax purposes.
F. Limitation on Liability of General Partner; Indemnification.
1. The General Partner shall have no liability, responsibility or
accountability in damages or otherwise to any other Partner or the Partnership
for, and the Partnership agrees to indemnify, pay, protect and hold harmless the
General Partner (on the demand of and to the satisfaction of the General
Partner) from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including without limitation all
costs and expenses of defense, appeal, and settlement of any and all suits,
actions or proceedings instituted against the General Partner or the Partnership
and all costs of investigation in connection therewith) which may be imposed on,
incurred by or asserted against the General Partner or the Partnership in any
way relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Partnership or on the part of the General
Partner as a General Partner to the Partnership which the General Partner has
determined, in good faith, was in the best interest of the Partnership;
provided, that the General Partner shall be liable, responsible and accountable,
and the Partnership shall not be liable to the General Partner, for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, proceedings, costs, expenses and disbursements resulting from
the General Partner's own fraud, bad faith, negligence, misconduct or other
breach of fiduciary duty to the Partnership
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or any Partner. If any action, suit or proceeding shall be pending or threatened
against the Partnership or the General Partner relating to or arising, or
alleged to relate to or arise, out of any such action or inaction the General
Partner shall have the right to employ, at the expense of the Partnership,
separate counsel of the General Partner's choice in such action, suit or
proceeding. The satisfaction of the obligations of the Partnership under this
Section 1 shall be from and limited to the assets of the Partnership and no
Partner shall have any personal liability on account thereof. The General
Partner shall have the right to ▇▇▇▇ the Partnership for, or otherwise request
the Partnership to pay, at any time and from time to time after the General
Partner has become obligated to make payment therefor, any and all amounts for
which the General Partner believes in good faith that the General Partner is
entitled to indemnification for under this Section 1. The Partnership shall pay
any and all such bills and honor any and all such requests for payment within 60
days after such ▇▇▇▇ or request is received by the General Partner. In the event
that a final determination is made that the Partnership is not so obligated in
respect of any amount paid by it to the General Partner, the General Partner
will refund such amount within 180 days of such final determination.
2. The Partnership shall indemnify to the extent of the Partnership assets
each Limited Partner against any claims of liability asserted against a Limited
Partner solely because he is a Limited Partner in the Partnership.
3. Notwithstanding the foregoing, neither the General Partner nor any
officer, director, employee, agent, subsidiary or assignee of the General
Partner or of the Partnership shall be indemnified from any liability, loss or
damage incurred by them in connection with (i) any claim or settlement involving
allegations that the Securities Act of 1933 was violated by the General Partner
or by any such other person or entity unless: (a) the General Partner or other
persons or entities seeking indemnification are successful in defending such
action; and (b) such indemnification is specifically approved by a court of law
which shall be advised as to the current position of the Securities and Exchange
Commission and the California Commissioner of Corporations regarding
indemnification for violations of securities laws; or (ii) any liability imposed
by law, including liability for fraud, bad faith or negligence.
G. Specific Transactions Authorized. The General Partner is hereby
authorized to enter into, on behalf of the Partnership, the following specific
transactions:
1. The Partnership may purchase property from any Affiliate of the General
Partner provided (i) the property was acquired by such Affiliate for the purpose
of facilitating its purchase by the Partnership, facilitating the borrowing of
money or the obtaining of financing for the Partnership or any other
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purpose related to the business of the Partnership, (ii) the property is
purchased by the Partnership for a price no greater than the acquisition and
out-of-pocket carrying cost of the property to such Affiliate, (iii) there is no
adverse difference in the interest rates of the loans secured by the property at
the time acquired by such Affiliate and at the time purchased by the Partnership
nor any other benefit arising out of such transaction to the General Partner and
(iv) no compensation is paid by the Partnership or by any non-affiliated person
to any Affiliate of the General Partner in connection with the purchase of the
property by the Partnership.
2. The Partnership may contract (i) with Affiliates of the General Partner
to serve as real estate brokers and mortgage placement brokers in connection
with the investment of the Partnership assets and (ii) with Affiliates of the
General Partner to serve as real estate brokers in connection with the sale of
property by the Partnership. The amount of the real estate commissions payable
to Affiliates of the General Partner upon a sale of property by the Partnership
where such Affiliates have provided a substantial amount of services in the
sales effort may not exceed the lesser of (i) 3% of the sales contract price of
the property or (ii) 50% of the reasonable, customary and competitive rate for
similar services in light of the size, type and location of the property and the
total real estate commissions payable to such Affiliates and to other persons
may not exceed the lesser of (a) 6% of the contract price for the sale of the
property or (b) the reasonable, customary and competitive rate for similar
services in light of the size, type and location of the property. No Affiliate
of the General Partner may receive payment of a real estate commission with
respect to the sale of any property by the Partnership unless the total
consideration received by the Partnership upon such sale exceeds the amounts
actually paid by the Partnership for the purchase, development, construction or
improvement of the property and any fees and commissions paid by the Partnership
in connection therewith.
3. The Partnership may enter into a contract with an Affiliate of the
General Partner, in substantially the form of the Management Agreement between
the Partnership and ▇▇▇▇▇ Corporate Property Management, Inc., to perform
services relating to the management of property of the Partnership as described
in such Management Agreement. Such contract may provide that as compensation for
such services such Affiliate of the General Partner may receive a management fee
equal to (a) 1% of the gross revenues per annum from commercial and industrial
properties net leased for terms of 10 or more years; or (b) for leases of other
commercial and industrial properties (i) 6% of the gross revenues of such leases
where such Affiliate performs leasing, re-leasing and leasing related services,
or(ii) 3% of gross revenues of such leases where such services are not
performed; provided, however, that in no event shall such management fee exceed
an amount which is competitive for similar services in the same geographic area
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and further provided that bookkeeping services and fees paid to non-Affiliates
for management services shall be included in the management fee.
4. Affiliates of the General Partner may receive insurance premiums and
brokerage commissions with respect to insurance on property owned by the
Partnership only when the cost of such insurance is paid by tenants who net
lease such properties from the Partnership. No such Net Lease shall provide that
the lessee is required to purchase insurance through an Affiliate of the General
Partner.
5. At any time, the Partnership may borrow funds on a short-term basis
from an Affiliate of the General Partner or third parties to provide the debt
portion of the purchase price of any real properties if the Partnership is
unable to obtain a permanent loan or, in the judgment of the General Partner, it
is not in the best interests of the Partnership to obtain a permanent loan at
the interest rates then prevailing and (ii) the General Partner has reason to
believe that the Partnership will be able to obtain a permanent loan on or prior
to the end of the loan term. Any such short-term loans may be fully or partially
amortized, may provide for the payment of interest only during the term of the
loan or may provide for the payment of principal and interest only upon
maturity. Any such short term loans may be secured by a pledge of or security
interest in the net assets of the Partnership or, if the loan is obtained to pay
or provide the debt or equity portion of the purchase price of a property, by a
first or junior mortgage on the property to be acquired. Any short-term loans
from Affiliates of the General Partner will (i) bear interest at a rate equal to
the lesser of (A) one percent above the prime interest rate at the Bank of New
York or (B) the rate that would be charged to the Partnership by unrelated
lending institutions on comparable loans for the same purpose in the locality of
the property and (ii) have a term not exceeding one year. Such borrowings shall
be non-recourse to the Partnership, unless the General Partner shall otherwise
consent in writing.
6. All of the Partnership's expenses shall be billed directly to and paid
by the Partnership. The Partnership shall reimburse the General Partner or its
Affiliates for: (a) the actual cost to the General Partner or its Affiliates of
goods and materials used for and by the Partnership and obtained from
unaffiliated parties, and (b) the costs incurred by the General Partner or its
Affiliates in performing administrative services necessary to the prudent
operation of the Partnership; provided, however, that the amounts charged to the
Partnership for services performed pursuant to this clause (b) shall not exceed
the lesser of (1) the actual cost of such services, or (2) the amount which the
Partnership would be required to pay to independent parties for comparable
services in the same geographic location. No reimbursement shall be made to the
General Partner or its Affiliates for: (x) services for which the General
Partner or its
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Affiliates are entitled to compensation by way of a separate fee or (y) any of
the salaries, fringe benefits, travel expenses and other administrative items
incurred by or allocated to any controlling person(as defined herein) of the
General Partner or its Affiliates; provided, however, that the Partnership may
reimburse the General Partner or its Affiliates for the travel expenses of
controlling persons if such travel expenses are incurred for the evaluation of
properties being considered for acquisition or visits to executives of potential
tenants of properties being considered for acquisition to discuss current
financial results. The Partnership's annual report to the Limited Partners shall
contain a breakdown of the costs reimbursed to the General Partner or its
Affiliates. Within the scope of the annual audit of the General Partner's (or
such Affiliate's) financial statement, the independent certified public
accountant shall verify the allocation of such costs to the Partnership. The
method of review shall at minimum provide (1) a review of time records of
individual employees, the costs of whose services were reimbursed; and (2) a
review of the specific nature of the work performed by each such employee. The
methods of review shall be in accordance with generally accepted auditing
standards and shall accordingly include such tests of the accounting records and
such other auditing procedures which the General Partner's (or such Affiliate's)
independent certified public accountants consider appropriate in the
circumstances. The additional costs of such review shall be itemized by such
accountants on a partnership by partnership basis and may be reimbursed to the
General Partner (or such Affiliate) in accordance with this Paragraph G(6) only
to the extent that such reimbursement, when added to the cost for administrative
services rendered, does not exceed the competitive rate for such services as
determined in this Paragraph G(6).
As used herein, the term "controlling person" shall mean any person,
whatever his title, who performs executive or senior management functions for
the General Partner or Affiliate similar to those of executive or senior
management officers, directors or partners, or those holding 5% or more equity
interest in the General Partner or Affiliate or a person having the power to
direct or cause the direction of the management level employees and policies of
the General Partner or Affiliate, whether through the ownership of voting
securities, by contract or otherwise. For the purposes of this Paragraph G(6),
not every person who carries a title such as vice president or senior vice
president, corporate secretary or treasurer shall be considered a controlling
person, unless such person performs the functions or has the powers described
above, and even in the absence of a specific title, an executive in a senior
management position shall be considered a controlling person.
7. The Partnership may invest in unimproved or non-income producing real
property and the stock of or other interests in, or warrants or other rights to
purchase the stock of or other interests in, any tenant of the Partnership or
the parent or
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controlling person of any tenant. The Partnership will not exercise warrants or
other rights to purchase the stock of or other interests in a tenant or the
parent or controlling person of a tenant unless the Partnership will immediately
liquidate the stock or interest purchased at a price in excess of the exercise
price. Under such circumstances, payment of the exercise price shall not be
deemed an investment subject to the above limitation respecting the amount of
net proceeds derived from the sale of limited partner interests which the
Partnership may invest in unimproved or non-income producing real property or
stock, interests, warrants or other rights. The Partnership may borrow funds on
a short term basis to pay the exercise price on warrants or other rights may pay
such exercise price from funds held in the working capital reserve and will
repay the loan or replenish the reserve upon the sale of the securities or
interests purchased before it makes distributions to the Partners respecting the
proceeds of sale or reinvests such proceeds in real property.
H. General Restrictions.
1. The Partnership shall obtain a written evaluation report signed by an
independent appraiser prior to the purchase of any real property by the
Partnership and shall not purchase any such property if the purchase price and
all Acquisition Fees paid by the Partnership in connection with the acquisition
exceed the appraised value set forth in such report. All such appraisals,
whether or not the real property which is the subject of such appraisal is
purchased by the Partnership, shall be at the Partnership's expense or at the
expense of the seller, shall be retained for five years and shall be available
for inspection and duplication by the Limited Partners.
2. The Partnership may not sell any property in a transaction in which an
Affiliate of the General Partner acts as a real estate broker unless the
provisions of Paragraph G(2) of this Article X are complied with.
3. The Partnership shall not own any land where the buildings and
improvements thereon are owned by an Affiliate of a General Partner.
4. No more than 20% of the net proceeds derived from the sale of limited
partnership interests shall be applied to the purchase of land where the
Partnership's purchase is exclusive of the buildings and improvements thereon or
to be constructed thereon.
5. The Partnership may not acquire property in exchange for interests in
the Partnership.
6. The Partnership shall not give an Affiliate of a General Partner the
exclusive right to sell property for the Partnership.
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7. The Partnership shall not pay, directly or indirectly, any Acquisition
Fees to an Affiliate of the General Partner in connection with the purchase of
property by the Partnership. In addition, the Partnership shall not pay,
directly or indirectly, any Acquisition Fee to an Affiliate of the General
Partner in connection with the purchase of property acquired with proceeds
obtained from Cash From Sales and Cash From Financings.
8. The aggregate borrowings of the Partnership shall not exceed 66 2/3% of
the purchase price of all properties purchased by the Partnership on a combined
basis. The foregoing restriction may be waived or lessened by the General
Partner without the approval of the Limited Partners, but only with the prior
written consent of the Commissioner of Corporations of the Sate of California or
pursuant to a change in the published Rules of the Commissioner. In no event,
however, shall the aggregate borrowings of the Partnership exceed the sum of 85%
of the purchase price of all properties which have not been refinanced and 85%
of the aggregate fair market value of all refinanced properties.
9. Except as set forth in Paragraph G(7) of this Article X, all expenses
of the Partnership shall be billed directly to and paid by the Partnership.
10. The Partnership funds shall not be commingled with the funds of any
other natural person, partnership, corporation, association or other legal
entity.
11. The Partnership shall not finance the purchase of real property by use
of a wrap-around note and mortgage ("all -inclusive" note and deed of trust)
unless (a) neither the General Partner nor any Affiliate of the General Partner
receives interest on the amount of the underlying encumbrance in excess of that
payable to the lender on such underlying encumbrance, (b) the Partnership
receives credit on its obligation under the all-inclusive note for payments made
directly on the underlying encumbrance and (c) all payments on the underlying
encumbrance shall be made by the Partnership or, in the alternative, payments by
the Partnership on the wrap-around note are made to a third party collecting
agent which in turn disburses such payment, first to the holder of such
underlying encumbrance, and thereafter to the holder of the wrap-around note.
12. The Partnership shall not create or assume any indebtedness for
borrowed money unless the documents pursuant to which such indebtedness is
created or assumed provide, and the General Partner shall cause any and all such
documents assumed or entered into by or on behalf of the Partnership to provide,
that the parties thereto other than the Partnership (including any Affiliates of
the General Partner ) shall look only to the assets of the Partnership for
satisfaction of the liabilities and obligations of the Partnership under such
documents (including without limitation those arising from representations,
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warranties, covenants and agreements made in or in connection with such
documents) and that such other parties shall have no recourse to the Partners or
the separate assets of the Partners for the satisfaction of such liabilities and
obligations. The Partnership shall not incur any indebtedness including
indebtedness under a shared appreciation or similar mortgage wherein the lender
will have or acquire, at any time as a result of making the loan, any direct or
indirect interest in the profit, capital or property of the Partnership other
than as a creditor.
13. The Partnership shall not enter into any contracts with the General
Partner or with any Affiliates of the General Partner to construct or develop
Partnership properties or to render any services in connection with such
construction or development.
14. The Partnership shall not acquire any property which under
construction unless completion of the improvements on the property is guaranteed
at the contracted price by an adequate completion bond or other satisfactory
arrangement.
15. Unimproved or non-income producing property shall not be acquired
except in amounts and upon terms which can be financed from Distributable Cash
From Operations.
16. No Partnership assets may be invested in junior mortgages or deeds of
trust; provided, however, that the acquisition of a junior mortgage or deed of
trust in connection with the sale, financing or refinancing of real property
shall not be deemed to be investing in junior mortgagees or deeds of trust.
17. Any agreement entered into between the Partnership and the General
Partner or its Affiliates must be terminable by the Partnership, without
penalty, upon 60 days' notice.
I. Compensation of General Partner. The General Partner shall not, in its
capacity as General Partner, receive any salary, fees, profits or distributions
from the Partnership except profits, distributions, fees and allocations to
which they may be entitled under Articles VIII or IX.
J. Other Business of Partners. Except as otherwise specifically provided
herein, any of the Partners and any shareholder, officer, director, employee or
other person holding a legal or beneficial interest in an entity which is a
Partner 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
Partners shall have any right by virtue of this Agreement in and to such
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independent ventures or to the income or profits derived therefrom.
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ARTICLE XI
STATUS OF LIMITED PARTNERS
A. The Limited Partners and Special Partners shall not participate in the
management or control of the Partnership's business nor shall they transact any
business for the Partnership nor shall they have the power to sign for or bind
the Partnership, said powers being vested solely and exclusively in the General
Partner. The Limited Partners and Special Partners shall not be bound by, or be
personally liable for, the expenses, liabilities or obligations of the
Partnership, except to the extent of their Capital Accounts. The Partnership
Interest owned by a Limited Partner or Special Partner shall be fully paid and
nonassessable.
In addition to those described elsewhere in the Partnership Agreement, the
Limited Partners and Special Partners shall have the following rights, powers,
privileges, duties and liabilities:
(a) The Limited Partners and Special Partners shall have the right
to have full and true information of all things affecting the Partnership
and shall be entitled to such reports as are set forth in Article XII
hereof.
(b) The Limited Partners and Special Partners shall receive from the
Partnership the share of distributions provided for in this Agreement in
the manner and at the times provided for in this Agreement.
(c) A Limited Partner or a Special Partner shall have the right to
demand the return of his Capital Account only on the dissolution and
winding up of the Partnership in accordance with Article XVIII hereof. No
Limited Partner or Special Partner shall have priority over any other
Limited Partner either as to the return of his capital or as to profits,
losses or distributions. No Limited Partner shall have the right to bring
an action for partition against the Partnership.
(d) Limited Partners holding more than fifty percent (50%) of the
then outstanding Limited Partner Interests may (1) remove a General
Partner and (2) in the event that a vacancy shall occur in the office of
General Partner, subject to the provisions of paragraph B(5) of Article
XV, elect a successor General Partner upon the retirement, removal, death,
adjudication of incompetence to manage his person or estate, adjudication
of bankruptcy under Chapter 7 of the Bankruptcy Code (or any similar law
or provision enacted in lieu thereof), dissolution or other cessation to
exist as a legal entity of a General Partner.
(e) Upon written request to the Partnership for a purpose reasonably
related to such Partner's interest as a
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Limited Partner of the Partnership, each Limited Partner and Special
Partner shall have the right to a complete list of names and addresses and
interests of all Limited Partners as set forth in the records of the
Partnership, copies of the Certificate of Limited Partnership and all
amendments thereto, copies of this Agreement and all amendments thereto
and powers of attorney pursuant to which this Agreement was executed. A
reasonable charge for copy work may be charged by the Partnership.
ARTICLE XII
BOOKS OF ACCOUNT AND REPORTS
Proper books of account shall be kept by the General Partner wherein shall
be entered all transactions, matters and things relating to the Partnership's
business as are usually entered into books of account kept by persons engaged in
a business of a like character. The books of account for the current and past
three fiscal years shall be kept at the principal place of business of the
Partnership and at the Partnership's California office and each Partner (or any
duly constituted designee of a Partner) shall at all times during reasonable
business hours have free access to and the right to inspect and copy the same.
There shall also be kept at the Partnership's California office: a current
alphabetical list of the Partners' names, addresses, Contributions and Capital
Accounts; copies of the Certificate of Limited Partnership and all amendments
thereto; copies of the Partnership's Federal, state and local income tax or
information returns and reports for the six most recent tax years; copies of
this Partnership Agreement and all amendments thereto and powers of attorney
pursuant to which this Agreement was executed and the Partnership's financial
statements for the six most recent fiscal years.
There shall be established for each Partner on the books of the
Partnership a Capital Account which shall be maintained in accordance with
Federal income tax accounting principles and which shall show the amount of each
capital contribution made by such Partner (or his, her or its predecessor in the
case of an assignment of a Partnership Interest), adjusted to reflect such
Partner's proportion of profits and losses (determined according to Article
VIII) and of withdrawals and distributions and other items to the extent
properly creditable to or chargeable against such Capital Account.
Within 75 days after the end of each Fiscal Year, the General Partner
shall deliver to each Limited Partner adequate information to enable each
Limited Partner to complete and file his Federal tax return.
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Copies of each such report shall be distributed to each Limited Partner
within 60 days after the end of each quarter. If deemed appropriate by the
General Partner, such notice may be prepared and distributed to Limited Partners
more frequently than quarterly. The General Partner shall send such other
reports and information, if any, to the Limited Partners as the General Partner
may deem necessary or appropriate, including but not limited to reports
containing the name and address of each person who has had an unconditional
written offer to purchase Partnership property rejected by the Partnership (such
report shall also contain the price and terms offered). Copies of each such
report distributed to the Limited Partners shall, to the extent required by
applicable law, be filed concurrently with relevant state "Blue Sky"
authorities.
ARTICLE XIII
FISCAL YEAR
The Fiscal Year of the Partnership shall begin on the first day of January
and end on the thirty-first day of December in each year.
ARTICLE XIV
PARTNERSHIP FUNDS
The funds of the Partnership shall be deposited in such account or
accounts as shall be designated by the General Partner and all withdrawals
against such accounts shall be made only by one of the General Partner or by its
properly delegated agents.
ARTICLE XV
TRANSFER OF PARTNERSHIP INTEREST
A. In General. A Limited Partner or Special Partner may not sell, assign,
transfer or otherwise dispose of, or pledge, hypothecate or in any manner
encumber, his interest in the Partnership or any part thereof except as
permitted in this Article, and any act in violation of this Paragraph A shall
not be binding upon or recognized by the Partnership regardless of whether the
General Partner shall have knowledge thereof.
B. General Partner. 1. Upon the vote of Limited Partners holding more than
fifty percent (50%) of the then outstanding Limited Partner Interests, pursuant
to Paragraph (d) of Article XI and with the same proportionate vote as provided
therein, may
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remove a General Partner from the Partnership. Written notice of the removal of
the General Partner shall be served upon the General Partner either by certified
or registered mail, return receipt requested, or by personal service. Said
notice shall set forth the day upon which the removal is to become effective.
Upon receipt of notice, the General Partner shall cause an accounting to be
prepared covering the transactions of the Partnership since the end of the
previous Fiscal Year and it shall not thereafter sell or dispose of or allow the
sale or disposition of any Partnership asset unless such sale or disposition was
the subject of a contract entered into by and binding upon the Partnership prior
to the date upon which the notice was received by the General Partner.
2. Until the dissolution of the Partnership otherwise occurs, the General
Partner shall not voluntarily take any step to dissolve itself nor shall the
General Partner voluntarily retire, provided, however, that nothing in this
Partnership Agreement shall be deemed to prevent the merger or reorganization of
▇▇▇▇▇ Diversified LLC into or with any other entity organized under the laws of
the United States or any state thereof or the transfer of all the limited
liability company interests of ▇▇▇▇▇ Diversified LLC and the assumption of
rights and duties of the General Partner by, in the case of a merger,
reorganization or consolidation, the surviving entity by operation of law.
3. Upon the removal, adjudication of bankruptcy under Chapter 7 of the
Bankruptcy Code (or any similar law or provision enacted in lieu thereof),
dissolution or other cessation to exist as a legal entity of the General
Partner, the General Partner's Partnership Interest and interest in
Distributable Cash From Operations and its subordinated interest in Cash From
Sales and Cash From Financings shall be purchased by the Partnership for a
purchase price equal to the fair market value thereof determined pursuant to the
provisions of Section 4 of this Paragraph B. The purchase price of such interest
shall be paid by the Partnership to the General Partner by the promissory note
of the Partnership, payable to the General Partner or its order, having a face
amount equal to such purchase price, containing provisions as would be usual and
customary in a commercial promissory note, bearing interest at a rate per annum
equal to one percent above the prime interest rate at The Bank of New York,
payable annually, with principal and all unpaid accrued interest subject to
mandatory prepayment from all Cash From Sales and Cash From Financings, and the
remaining unpaid principal balance and unpaid accrued interest on such
promissory note due and payable five years from the date of the General
Partner's retirement, expulsion, adjudication of bankruptcy or insolvency,
dissolution or other cessation to exist as a legal entity. The Partnership shall
also pay to the General Partner all amounts then accrued and owing to the
General Partner.
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4. The fair market value of the General Partner's interest purchased by
the Partnership pursuant to Section 3 of this Paragraph B shall be determined by
agreement between the General Partner and the Partnership (which agreement shall
require the approval of the Limited Partners holding more than fifty percent
(50%) of the outstanding Limited Partner Interests, with the same proportionate
vote as provided in paragraph (d) of Article XI). If the General Partner and the
Partnership cannot agree upon the fair market value of such Partnership Interest
within 30 days after the occurrence of the event upon which such interest of the
General Partner is to be purchased by the Partnership, the fair market value
thereof shall be determined by arbitration in accordance with the then current
rules of the American Arbitration Association. The results of such arbitration
shall be final and binding and may be enforced by legal proceedings. The expense
of arbitration shall be borne equally by the General Partner and the
Partnership. The fair market value of the General Partner's interest shall be
the amount the General Partner would receive upon dissolution and termination of
the Partnership assuming that such dissolution or termination occurred on the
date of the occurrence of the event upon which such interest of the General
Partner is to be purchased by the Partnership and the assets sold for their then
fair market value without any compulsion on the part of the Partnership to sell
such assets.
C. Limited Partners and Special Partners.
1. The General Partner may, pursuant to this Article XV, (a) admit
as a substituted Limited Partner or Special Partner any successor in interest to
a Limited Partner or Special Partner either deceased or under legal disability,
and (b) admit as substituted Limited Partners or Special Partners assignees of
Limited Partners or Special Partners.
2. A substituted Limited Partner or a Special Partner is a person
admitted to all the rights of a Limited Partner or a Special Partner. An
assignee is a person to whom a Limited Partner or Special Partner has assigned
his interest in the Partnership but who has not become a substituted Limited
Partner or Special Partner. An assignee shall have no right to require any
information or account of the Partnership's transactions or to inspect the
Partnership's books but shall only be entitled to receive the share of the
profits, or the return of the capital contribution, to which his assignor would
otherwise be entitled as set forth in Section 5 of this Paragraph C.
3. No assignee of the whole or any portion of a Limited Partner's or
Special Partner's interest in the Partnership shall have the right to become a
substituted Limited Partner or Special Partner in place of his assignor unless
all of the following conditions are satisfied:
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(a) The written consent of the General Partner to such substitution
shall be obtained, the granting or denial of which shall be within the
absolute discretion of the General Partner;
(b) The duly executed written instrument of assignment setting forth
the intention of the assignor that the assignee become a substituted
Limited Partner or Special Partner in his place shall have been filed with
the Partnership;
(c) The interests in the Partnership being acquired by the assignee
shall consist of at least five percent of the limited partner or special
partner interest and, if the assignor shall retain any limited partner or
special partner interest, such retention shall consist of at least five
percent of the limited partner or special partner interest;
(d) The assignor and assignee shall execute and acknowledge such
other instruments as the General Partner may deem necessary or desirable
to effect such assignment and admission, including the written acceptance
and adoption by the assignee of the provisions of this Agreement and his
execution, acknowledgment and delivery to the General Partner of a Power
of Attorney, the form and content of which are more fully described in
Article XIX hereof; and
(e) The assignee shall pay a transfer fee not to exceed $50.00 per
transaction to the Partnership.
The written consent or a notice of denial of consent shall be given to the
assignee not later that the last day of the calendar month following the month
the General Partner actually receives the instrument of assignment.
4. Any person admitted to the Partnership as a Partner shall be subject to
all of the provisions of this Agreement as if originally a party to it.
5. Subject to the provisions of Section 11 of this Paragraph C, compliance
with the suitability standards imposed by the Partnership, applicable "Blue Sky"
laws and the applicable rules of any other governmental authority, a Limited
Partner or Special Partner shall have the right to assign the whole or any
portion (but not less than five percent of the limited partner or special
partner interest (two percent of the limited partner or special partner interest
for an Individual Retirement Account or a Self Employed Retirement (▇▇▇▇▇)
Plan)) and, if he shall retain any limited partner or special partner interest,
subject to his retaining not less than five percent of the limited partner or
special partner interest (two percent of the limited partner or special partner
interest for an
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Individual Retirement Account or a Self Employed Retirement (▇▇▇▇▇) Plan) of his
Partnership Interest by a written assignment the terms of which are not in
contravention of any of the provisions of this Agreement, which assignment has
been executed by the assignor and received by the Partnership and recorded on
the books thereof. Any assignment in contravention of any of the provisions of
this Section 5 shall be of no force and effect and shall not be binding upon or
recognized by the Partnership.
(f) Except as provided in Subsection (c) below, Paragraph A of
Article VII hereof and Paragraph D of Article IX hereof, an assignee of a
Partnership Interest shall be entitled to receive distributions from the
Partnership attributable to the interest acquired by reason of such
assignment from and after the effective date of the assignment of such
interest to him. The effective date of an assignment of an interest in the
Partnership as used in this Subsection shall be the last day of the
quarter in which the written instrument of assignment, in form and
substance satisfactory to the General Partner, is received by the General
Partner.
(g) The net profits and net losses attributable to an interest in
the Partnership assigned during any year shall be divided among and
allocated in accordance with the provisions of Paragraph A of Article VIII
hereof.
(h) Anything herein to the contrary notwithstanding, both the
Partnership and the General Partner shall be entitled to treat the
assignor of such interest as the absolute owner thereof in all respects,
and shall incur no liability for distributions made in good faith to him,
until such time as the written assignment has been received by, and
recorded in the books of, the Partnership.
3. The General Partner may elect to treat an assignee who has not become a
substituted Limited Partner or Special Partner as a substituted Limited Partner
or Special Partner in the place of his assignor should it deem, in its absolute
discretion, that such treatment is in the best interests of the Partnership for
any of its purposes or for any of the purposes of this Agreement.
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4. No consent of any of the Limited Partners or Special Partners is
required to effect the substitution of a Limited Partner or Special Partner,
except that a Limited Partner or Special Partner who assigns his interest in the
Partnership must evidence his intention that his assignee be admitted as a
substituted Limited Partner or Special Partner in his place and must execute
such instruments as the General Partner may in its absolute discretion determine
to be necessary or desirable in connection therewith.
5. Upon the admission of a Limited Partner or Special Partner (whether as
a result of his purchase of a partner interest from the Partnership or his
admission as a substituted Limited Partner or Special Partner), the General
Partner shall make an appropriate amendment to the list of the Partner's names,
addresses, Contributions and Capital Accounts referred to in Article XII hereof.
6. Upon the death or adjudication of incompetence to manage his person or
estate of an individual Limited Partner or Special Partner, his personal
representative shall have all of the rights of a Limited Partner or Special
Partner for the purpose of setting or managing his estate, and such power as the
decedent or incompetent possessed to constitute a successor as an assignee of
its interest in the Partnership and to join with such assignee in making
application to substitute such assignee as a Limited Partner or Special Partner.
However, such personal representative shall not have the right to become a
substituted Limited Partner or Special Partner in the place of his predecessor
in interest unless the conditions of Section 2 of this Paragraph C (other than
the requirement that the assignor execute and acknowledge instruments) are first
satisfied.
7. Upon the adjudication of bankruptcy under Chapter 7 of the Bankruptcy
Code (or any similar law or provision enacted in lieu thereof), dissolution or
other cessation to exist as a legal entity of a Limited Partner or Special
Partner not an individual, the authorized representative of such entity shall
have all of the rights of a Limited Partner or Special Partner for the purpose
of effecting the orderly winding up and disposition of the business of such
entity and such power as such entity possessed to constitute a successor as an
assignee of its interest in the Partnership and to join with such assignee in
making the application to substitute such assignee as a Limited Partner or
Special Partner. However, such authorized representative shall not have the
right to become a substituted Limited Partner or Special Partner in the place of
his predecessor in interest unless the conditions of Section 2 of this Paragraph
C (other than the requirement that the assignor execute and acknowledge
instruments) are first satisfied.
8. (a) No assignment or transfer of an interest in the Partnership may be
made which would result in Limited Partners or Special Partners and assignees of
Limited Partners or Special Partners owning, directly or indirectly,
individually or in the aggregate, more than twenty percent (20%) of the equity
interests of a General Partner or any Affiliate of a General Partner as defined
in Section 1504(a) of the Code. If any such assignment or transfer would
otherwise be made by bequest, inheritance or operation of law, the transferee
shall not become a Partner and the interest in the Partnership transferred shall
be automatically redeemed by the Partnership immediately prior
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to such transfer in the same manner as provided in Subsection (b)(4) of this
Section 11.
(b) Anything to the contrary contained herein notwithstanding:
(1) Except in the case of the Merger, in any twelve (12)
consecutive month period no assignment or transfer of a limited partner
interest may be made if as a result thereof the aggregate total of limited
partner interests assigned and/or transferred in such period would exceed
forty percent (40%) of the outstanding limited partner interests. This
limitation is hereinafter referred to as the "forty percent (40%)
limitation".
(2) A Limited Partner may assign or transfer his Partnership
Interest to: (i) his spouse (unless legally separated), child or ancestor,
or (ii) a corporation, partnership, trust or other entity, fifty-one
percent (51%) of the equity interest of which is owned by such Limited
Partner and/or any of the persons specified in clause (i) so related to
such Limited Partner, provided, however, that such transfers are subject
to the forty percent (40%) limitation.
(3) Subsection (b)(1) of this Section 11 shall not apply to a
transfer by gift, bequest or inheritance, or a transfer to the Partnership
and, for purposes of the forty percent (40%) limitation, any such transfer
shall not be treated as such.
(4) If, after the forty percent (40%) limitation is reached in
any consecutive twelve (12) month period, a transfer of the Partnership
Interest would otherwise take place by operation of law (but not including
any transfer referred to in Subsection (b)(3) of this Section 11), then
the transferee shall not become a Limited Partner and such Partnership
Interest shall be automatically redeemed by the Partnership immediately
prior to such transfer for a price equal to the fair market value of said
interest on such date of transfer. The price shall be paid within ninety
(90) days after the date of the transfer and redemption. If the
Partnership and the transferor do not agree upon the fair market value of
the Partnership Interest, the purchase price shall be determined by
arbitration. The purchase price shall be paid in cash within ten (10) days
after such determination.
(c) No transfer or assignment of any limited partner interest
shall be made if it would result in the Partnership's being treated as an
association taxable as a corporation for tax purposes. The General
Partner, in its sole discretion, may, on behalf of the Partnership, impose
any restrictions or transfers or assignments of limited
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partner interests it may deem appropriated to give effect to the preceding
sentence. The General Partner shall incur no liability to any Limited
Partner, prospective investor or assignee for any action or inaction in
connection with the foregoing, provided that the General Partner acted in
good faith and such course of conduct did not constitute negligence or
misconduct of the General Partner.
3. The General Partner, in its absolute discretion, may cause the
Partnership to make, refrain from making, or once having made, to revoke, the
election referred to in Section 754 of the Code, and any similar election
provided by state or local law, or any similar provision enacted in lieu
thereof.
4. Until the dissolution of the Partnership, the General Partner shall not
take any voluntary steps to dissolve itself nor shall the General Partner
voluntarily withdraw or resign.
5. No Limited Partner or Special Partner shall be entitled to withdraw
from the Partnership except on transfer of all his partner interest pursuant to
this Article XV.
6. Each Limited Partner or Special Partner shall immediately notify the
Partnership of any assignment of any Unit in the Partnership and shall provide
the name, address and identification number of the assignee.
ARTICLE XVI
MEETINGS AND AMENDMENT OF LIMITED PARTNERSHIP
CERTIFICATE AND AGREEMENT
A. Amendment of Limited Partnership Certificate. The General Partner shall
amend and record the Certificate of Limited Partnership of the Partnership
without additional consent of Limited Partners, when, pursuant to the terms of
this Partnership Agreement:
1. There is a change in the name of the Partnership;
2. The General Partner withdraws, is removed, is adjudicated bankrupt
under Chapter 7 of the Bankruptcy Code (or any similar law or provision enacted
in lieu thereof), is adjudicated incompetent to manage his person or estate or
dies, or a person is admitted as the General Partner;
3. There is a false or erroneous statement in the Certificate;
4. A time is fixed for dissolution of the Partnership or the return of
contributions and such time has not been specified in the Certificate;
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5. The Partners desire to make a change in any other statement in the
Certificate in order that it shall accurately represent the agreement among
them;
6. There is a change in the address of the Partnership's principal place
of business or its California office;
7. There is a change in the time as stated in the Certificate for the
dissolution of the Partnership or for the return of a contribution; and
8. There is a change in the address of the California agent for service of
process designated in the Certificate of Limited Partnership (unless such agent
is a corporation) or a new agent for service of process is appointed.
If the General Partner is required to file a certificate of amendment and
fails after demand to do so within 30 days of such demand or if it refuses to do
so, any Limited Partner may, unless otherwise precluded by applicable law,
prepare, execute and file an appropriate certificate of amendment.
B. Amendments to the Agreement.
1. Amendments to this Partnership Agreement may be proposed by the General
Partner or by Limited Partners holding ten percent (10%) or more of the then
outstanding Limited Partner Interests, with the same proportionate vote as
provided in paragraph (d) of Article XI. Following such proposal, the General
Partner shall submit to the Limited Partners a verbatim statement of any
proposed amendment and an opinion of counsel, who may be counsel to the
Partnership, as to the legality of such amendment and the effect of such
amendment on the liability of Limited Partners for the debts of the Partnership.
The General Partner shall include in any such submission the General Partner's
recommendations as to the proposed amendment. The amendment shall become
effective only upon the written consent or affirmative vote of holders of
Limited Partner Interests holding more than fifty percent (50%) of the then
outstanding Limited Partner Interests, with the same proportionate vote as
provided in paragraph (d) of Article XI.
2. Any provision to the contrary herein notwithstanding, the General
Partner may, without the consent of the Limited Partners, make the following
amendments to this Agreement:
a. Any amendments to Article VIII and/or Article IX of this
Agreement if the Partnership is advised by its accountants or legal
counsel at any time that the allocations provided in those Articles are
not likely to be respected for Federal income tax purposes, either because
of the promulgation of Treasury Regulations under Section 704 of the Code
or other developments in the law. The General Partner is empowered to
amend such provisions to
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the minimum extent necessary in accordance with the advice of the
accountants and counsel to effect the allocations provided in this
Agreement. New allocations made by the General Partner in reliance upon
the advice of the accountants or counsel described above shall be deemed
to be made pursuant to the fiduciary obligation of the General Partner to
the Partnership and the Limited Partners, and no such new allocation shall
give rise to any claim or cause of action by any Limited Partner, provided
that the General Partner acted in good-faith; and
b. In the event that the State of California amends the California
Revised Limited Partnership Act in any manner and, as a result of such
amendment, counsel to the Partnership is unable to give the Partnership an
opinion to the effect that the Partnership will be treated as a
partnership for Federal income tax purposes and not as an association
taxable as a corporation, then in the sole discretion of the General
Partner, to reconstitute the Partnership under the laws of another state.
3. Any provision to the contrary contained herein notwithstanding, the
General Partner may, without the consent of the Limited Partners, amend this
Agreement (a) to add to the representations, duties or obligations of a General
Partner or to surrender any right or power granted to a General Partner herein,
for the benefit of the Limited Partners, (b) to cure any ambiguity, to correct
or supplement any provision herein which may be inconsistent with any other
provision herein or to make any other provision with respect to matters or
questions arising under this Agreement which will not be inconsistent with the
provisions of this Agreement, (c) to delete any provision from this Agreement or
to add any provision to this Agreement required to be so deleted or added by the
Staff of the Securities and Exchange Commission or by a State "Blue Sky"
Commissioner or similar such official, which addition or deletion is deemed by
such Commission or official to be for the benefit or protection of the Limited
Partners, and (d) to change administrative or other provisions of this Agreement
in a manner which, in the opinion of the General Partner, will permit the most
profitable and/or efficient operation of the Partnership; provided, however,
that no amendment shall be adopted pursuant to this Section 3 unless the
adoption thereof (i) is for the benefit of, or not adverse to, the interests of
the Limited Partners, (ii) is consistent with Article IV and Paragraph A of
Article X hereof, (iii) does not affect the distribution of Distributable Cash
From Operations, Cash From Sales and Cash From Financings or the allocation of
profits and losses among the Limited Partners or between the Limited Partners
and the General Partner and (iv) does not affect the limited liability of the
Limited Partners or the status of the Partnership as a partnership for Federal
income tax purposes.
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4. Upon amendment of this Agreement, the Certificate of Limited
Partnership shall also be amended if necessary to reflect such change.
5. Any amendment to the Partnership Agreement which modifies the
compensation or distributions to which a General Partner is entitled or which
affects the duties of a General Partner must be consented to by the General
Partner before becoming effective.
C. Meetings of the Partnership. Meetings of the Partnership may be called
by the General Partner and shall be called by them upon the written request of
Limited Partners holding ten percent (10%) or more of the then outstanding
Limited Partner Interests, with the same proportionate vote as provided in
paragraph (d) of Article XI. Upon receipt of such a written request, stating the
purpose of the proposed meeting, the General Partner shall provide each Partner,
within 10 days of such request, written notice (either by personal service or
certified mail or by express or other overnight delivery service) of a meeting
and the purpose of such meeting. Such meeting shall be held not less than 10
days nor more than 60 days after the receipt of such request. Included with the
notice shall be a detailed statement of the action proposed, including a
verbatim statement of the wording of any resolution proposed for adoption by the
Limited Partners and of any proposed amendment to the Partnership Agreement. The
Partnership will provide for Proxies or written consents which specify a choice
between approval or disapproval of each matter to be acted upon at the meeting.
Holders of a majority of the Limited Partner Interests entitled to vote,
represented in person or by Proxy, shall constitute a quorum at a meeting of the
Limited Partners. To the extent not consistent with this Paragraph C, all
meetings shall be governed by the provisions of Section 15637 of the Act. The
General Partner may establish a record date for any meeting, subject to the
limitations of Section 15637(j) of the Act.
ARTICLE XVII
TERM
The Partnership shall terminate on December 31, 2004, unless sooner
dissolved pursuant to the provisions of Article XVIII hereof as otherwise
provided by law.
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ARTICLE XVIII
DISSOLUTION
A. Events Requiring Dissolution. The Partnership shall be dissolved upon
the happening of any of the following events:
1. The retirement, removal, adjudication of bankruptcy under Chapter 7 of
the Bankruptcy Code (or any similar law or provision enacted in lieu thereof),
of the General Partner, the dissolution or other cessation to exist as a legal
entity of the General Partner, unless the Limited Partners agree in writing to
continue the business of the Partnership and to admit one or more General
Partners.
2. The Partnership is adjudicated bankrupt under Chapter 7 of the Federal
Bankruptcy Code (or any similar law or provision enacted in lieu thereof).
3. The vote of Limited Partners holding more than fifty percent (50%) of
the then outstanding Limited Partner Interests held by all Limited Partners,
with the same proportionate vote as provided in paragraph (d) of Article XI.
4. The disposition of all interests in the real property and other assets
of the Partnership.
5. December 31, 2004.
B. Distributions on Dissolution. Upon the dissolution of the Partnership
the General Partner who has not wrongfully dissolved the Partnership shall wind
up the affairs of the Partnership. If there is no such General Partner, the
Limited Partners shall wind up the affairs of the Partnership. The Partners
winding up the affairs of the Partnership shall take full account of the
Partnership assets and liabilities and all assets shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom shall be applied and distributed in the following order: (1)
to creditors (including Partners who are creditors to the extent permitted by
law), in the order of priority as provided by law, (2) to the Partners in
accordance with their respective Capital Accounts and (3) to the Partners in
accordance with the provisions of Paragraph E of Article IX hereof.
Notwithstanding anything to the contrary, in the event the Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g),
liquidating distributions shall be made pursuant to the previous sentence by the
end of the taxable year in which the Partnership is liquidated, or, if later,
within 90 days after the date of such liquidation. Distributions pursuant to the
preceding sentence may be made to a trust for the purposes of an orderly
liquidation of the Partnership by the trust in accordance with the Act.
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C. Contributions by the General Partner. In the event that, upon the
liquidation of the Partnership, the General Partner shall have a negative
balance in the General Partner's Capital Account then the General Partner shall
contribute to the capital of the Partnership an amount equal to such negative
balance in the General Partner's Capital Account.
ARTICLE XIX
POWER OF ATTORNEY
Concurrently with the written acceptance and adoption of the provisions of
this Agreement, each Limited Partner and Special Partner shall execute and
deliver to the General Partner a Power of Attorney in a form acceptable to the
General Partner in which the General Partner is constituted and appointed as the
attorney-in-fact for such Limited Partner or Special Partner with power and
authority to act in his name and on his behalf in the execution, acknowledgment
and filing of documents, which will include but not be limited to a Certificate
of Limited Partnership, as well as amendments thereto, under the laws of the
State of California and under the laws of any other state in which the General
Partner deems it advisable to file such a certificate; 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 Partner deems it advisable
to file; and any documents which may be required to effect the continuation of
the Partnership, the admission of an additional or substituted Limited Partner
or Special Partner or the dissolution and termination of the Partnership,
provided such continuation, admission or dissolution and termination are in
accordance with the terms of this Agreement.
The Power of Attorney so granted by each Limited Partner and Special
Limited Partner to the General Partner is a Special Power of Attorney coupled
with an interest, is irrevocable and shall survive the death or legal incapacity
of the Limited Partner or Special Partner; may be exercised by the General
Partner for each Limited Partner or Special Partner by a facsimile signature of
one of its officers or by listing all the Limited Partners and Special Partners
executing any instrument with a single signature of one of its officers acting
as attorney-in-fact for all of them; and shall survive the delivery of any
assignment by a Limited Partner or Special Partner of the whole or any portion
of his interest in the Partnership; except that where the assignee thereof has
been approved by the General Partner for admission to the Partnership as a
substituted Limited Partner or Special Partner, the Power of Attorney shall
survive the delivery of such assignment for the sole purpose of enabling the
General Partner to execute, acknowledge and file any instrument necessary to
effect such substitution.
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The Power of Attorney so granted by each Limited Partner to the General
Partner shall not authorize the General Partner to act on behalf of Limited
Partners in any situation in which this Agreement requires the consent of
Limited Partners.
ARTICLE XX
LIMITATIONS ON LIABILITY; LITIGATION
Except as provided in his Subscription Agreement, no Limited Partner or
Special Partner shall be liable (i) as a General Partner unless, in addition to
the exercise of his rights and powers as a Limited Partner or Special Partner,
he takes part in the management or control of the Partnership's business or is
named as a General Partner in the Certificate of Limited Partnership or any
amendment thereto or (ii) to the Partnership or to a General Partner unless a
liability of the Partnership or of the General Partner, as the case may be, is
founded upon the unauthorized activity of such Limited Partner or Special
Partner in attempting to take part in the control of the Partnership's business
or misstatements contained in such Partner's Subscription Agreement delivered in
connection with his purchase of limited partner interests.
The General Partner is hereby authorized to prosecute, defend, settle or
compromise actions or claims at law or in equity at the Partnership's expense as
may be necessary or proper to enforce or protect the Partnership's interests.
The General Partner shall satisfy any judgment, decree or decision of any court,
board or authority having jurisdiction or any settlement of any suit or claim
prior to judgment or final decision thereon first, out of any insurance proceeds
available therefor, next out of the Partnership's assets and income and finally
out of the assets and income of the General Partner.
ARTICLE XXI
MISCELLANEOUS
All notices under this Agreement shall be in writing and shall, except as
otherwise expressly provided herein, be given to the Partner entitled thereto by
personal service or by certified or registered mail or express mail or other
overnight delivery service, return receipt requested, to the address set forth
in this Agreement for such Partner or at such other address as he may specify in
writing.
Article titles or captions contained in this Agreement are inserted only
as a matter of convenience and for reference and
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in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision hereof.
Whenever the singular number is used in this Agreement and when required
by the context, the same shall include the plural, and the masculine gender
shall include the feminine and neuter genders and the word "persons" shall
include individuals, corporations, firms, partnerships, trusts or other forms of
associations.
This Agreement may be executed in several counterparts, and all so
executed shall constitute one agreement, binding on all of the parties hereto,
notwithstanding that all the parties are not signatory to the original or the
same counterpart.
Subject to the provisions of Article XV, the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of heirs, executors,
administrators, successors and assigns of the respective Partners.
Whenever the vote of the Limited Partners is referred to in this
Agreement, the General Partner may vote on behalf of such Limited Partners who
have by written proxy authorized the General Partner so to do.
This Agreement and all amendments hereof shall be governed by the laws of
the State of California.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their respective
hands as of the day and year first above written.
GENERAL PARTNER:
▇▇▇▇▇ DIVERSIFIED LLC
By:___________________________________
CORPORATE SPECIAL PARTNER:
▇▇▇▇▇ MANAGEMENT LLC
By:____________________________________
INDIVIDUAL SPECIAL PARTNER:
_______________________________________
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
SIXTH ▇▇▇▇▇ CORPORATE PROPERTY, INC.
By:___________________________________
▇▇▇▇▇ DIVERSIFIED LLC
By:___________________________________
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All Limited Partners now and hereafter admitted as
limited partners of the Partnership pursuant to
powers of attorney and authorizations now and
hereafter executed in favor of and granted and
delivered to the General Partner
By: ▇▇▇▇▇ DIVERSIFIED LLC,
General Partner
By:___________________________________________
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