AGREEMENT OF LIMITED PARTNERSHIP AMREIT MONTHLY INCOME & GROWTH FUND IV, L.P. A Delaware Limited Partnership
AMREIT
MONTHLY INCOME & GROWTH FUND IV, L.P.
A
Delaware Limited Partnership
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2
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1.1
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Name
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2
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1.2
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Purpose
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2
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1.3
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Place
of Business and Agent
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2
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1.4
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Term
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2
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2
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4
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3.1
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Initial
Limited Partner
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4
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3.2
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No
Management by Limited Partners
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4
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3.3
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Access
to Records
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4
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3.4
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Liability
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4
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| 3.5 | No Withdrawal or Dissolution |
4
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3.6
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Consent
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4
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3.7
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Power
of Attorney
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4
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5
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4.1
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Initial
Capital Contributions
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5
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4.2
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Limited
Partner Capital Contributions
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5
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4.3
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No
Interest on Capital Contributions
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5
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4.4
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Liability
Limited to Capital
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5
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4.5
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Issuance
of Additional Units
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5
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6
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5.1
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General
Partner
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6
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5.2
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General
Authority and Powers of General Partner
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6
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5.3
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Limitations
on Authority and Powers of General Partner
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6
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5.4
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Loans
to the Partnership
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6
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5.5
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Liability
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7
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5.6
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Outside
Activities of the General Partner
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8
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5.7
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Indemnification
and Liability of General Partner
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8
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5.8
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Partnership
Expenses
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8
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5.9
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Compensation
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8
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5.10
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Liquidation
of the Partnership and Redemption of the General Partner
Investment
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8
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5.11
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Joint
Ventures
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8
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5.12
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Merger,
Exchange and Conversion
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9
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10
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6.1
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Share
of Distributions
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10
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6.2
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Source
of Funds
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10
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6.3
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Liquidation
or Dissolution
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10
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6.4
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Amount
and Time of Distributions
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10
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11
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7.1
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Capital
Account
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11
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7.2
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Deficit
Capital Account Balances
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11
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7.3
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Allocations
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11
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7.4
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Taxable
Gain on Exchange
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11
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7.5
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Depreciation
Recapture
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11
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7.6
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Allocation
between Assignor and Assignee
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11
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7.7
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Express
Consent to Allocations
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11
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7.8
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Adjustments
to Gain and Loss
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12
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7.9
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Tax
Allocations: Code Section 704(c)
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12
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7.10
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General
Provisions Relating to Distributions, Net Profit and Net Loss
Allocations
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12
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7.11
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Adjustments
to Allocations
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12
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7.12
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Fractions
Rule
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12
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13
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8.1
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No
Termination by Admission or Incapacity of Limited Partners
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13
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8.2
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Termination
of the Partnership
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13
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8.3
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Continuation
of Partnership upon Certain Events
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13
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8.4
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Dissolution
and Liquidation
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13
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14
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9.1
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Voluntary
Withdrawal or Assignment by the General Partner
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14
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9.2
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Involuntary
Withdrawal and Transfer of a General Partner’s Interest
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14
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9.3
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Transfer
by Limited Partners
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14
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9.4
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Put
Right
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14
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15
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10.1
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Books
and Records
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15
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10.2
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Accounting
Method; Audits and Reports
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15
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10.3
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Bank
Accounts
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15
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16
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11.1
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Tax
Elections
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16
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11.2
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Tax
Audit Expenses
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16
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17
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12.1
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General
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17
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12.2
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Action
Without a Meeting
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17
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12.3
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Amendments
on Admission or Withdrawal of Partners and Clarification
Amendments
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17
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18
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13.1
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Notices
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18
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13.2
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Further
Assurances
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18
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13.3
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Representations
of the Partners
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18
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13.4
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Survival
of Representations and Agreements
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18
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13.5
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Agreement
in Counterparts
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18
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13.6
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Captions
and Context
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18
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13.7
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Construction
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18
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13.8
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Governing
Law, Successors
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18
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13.9
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Binding
Effect
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18
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13.10
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Validity
of Agreement
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18
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13.11
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Creditors
Not Benefited
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18
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AMREIT
MONTHLY INCOME & GROWTH FUND IV, L.P.
A
Delaware Limited Partnership
AGREEMENT
OF LIMITED PARTNERSHIP
____________________________________
AMREIT
MONTHLY INCOME & GROWTH FUND IV, L.P., a Delaware limited partnership, (the
“Partnership”) is hereby formed as a limited partnership under the laws of the
state of Delaware pursuant to this Agreement of Limited Partnership entered into
by and between AmREIT Monthly Income & Growth IV Corporation, a Delaware
corporation, as the General Partner (the “General Partner”) and AmREIT, the
Initial Limited Partner. The Certificate of Limited Partnership of
the Partnership shall be promptly recorded with the Secretary of State for the
State of Delaware as required by the Delaware Revised Uniform Limited
Partnership Act.
1.1. Name. The
name of the Partnership is “AMREIT MONTHLY INCOME & GROWTH FUND IV,
L.P.”
1.2. Purpose. The
purpose of the Partnership shall be to acquire, develop, own, operate, improve,
lease, sell, manage and hold for investment real property and to make and/or
invest in loans for the acquisition, development or construction of real
property, either alone or in association with others, and to conduct any other
activity in connection therewith permitted by law, any of which will be
permitted regardless of whether any Partner or Affiliate has a direct or
indirect interest in the activity.
1.3. Place of Business and
Agent. The principal place of business and office of the
Partnership shall be at c/o AmREIT, 0 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000 or such other location as may hereafter be determined by the General
Partner on prior notice to the Limited Partners. The name and address
of the registered agent for service of process on the Partnership in the State
of Delaware shall be Capitol Services, Inc., 000 Xxxxx Xxxxxx Xxxxxxx, Xxxxxx xx
Xxxx, Xxxxx, Xxxxxxxx 00000.
1.4. Term. The
term of the Partnership commenced as of the date of filing of the original
Certificate and shall continue until December 31, 2026, or until sooner
dissolved or terminated as provided in this Agreement.
As used
herein the following terms shall have the following meanings:
“Act”
shall mean the Delaware Revised Uniform Limited Partnership Act, as
amended.
“Adjusted
Capital Account” shall mean the Capital Account maintained for each Partner
which is determined as of the end of each Partnership Fiscal Year, or other
appropriate occasion, (i) increased by any amounts which such Partner is
obligated to restore pursuant to any provision of this Agreement or Regulations
Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1)
and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
“Adjusted
Capital Account Deficit” shall mean, with respect to a Partner, the deficit
balance, if any, in that Partner’s Adjusted Capital Account.
“Affiliate”
shall mean, when used with reference to a specified Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
another Person, (ii) any Person owning or controlling ten percent or more of the
outstanding voting securities of such other Person, (iii) any officer, director,
member, manager or partner of such Person or any Person specified in (i) or (ii)
above, and (iv) any company in which any officer or director of such Person is
an officer, director, member, manager or partner; provided, however, that for
purposes of this definition the term “Affiliate” will not be deemed to include
any Person providing legal, accounting or other professional services to the
Partnership or General Partner.
“Agreement”
shall mean this Agreement of Limited Partnership and any amendments
hereto.
“Annual
Return” shall mean with respect to each Partner, an annual, cumulative,
non-compounded return on such Partners’ aggregate Unreturned Deemed Capital
Contribution calculated like interest using the average monthly balance of such
Partners’ aggregate Unreturned Deemed Capital Contribution over the time period
in question.
“Applicable
Percentage” shall mean with respect to a particular year the annual distribution
percentage determined by the General Partner, targeted to begin at 7.5% per
annum.
“Capital
Account” shall have the meaning assigned to such term in Section 7.1
hereof.
“Capital
Account Balance” shall mean with respect to a Partner, the balance in that
Partner’s Capital Account.
“Capital
Account Deficit” shall mean with respect to a Partner, the deficit balance, if
any, in that Partner’s Capital Account.
“Capital
Contribution” shall mean, with respect to any Partner, the amount which such
Partner contributes to the capital of the Partnership in accordance with the
provisions of this Agreement, including without limitation any initial Capital
Contribution and any additional Capital Contributions made by the Partner to the
Partnership
“Certificate”
shall mean the Certificate of Limited Partnership of the Partnership to be filed
with the Secretary of State for the State of Delaware.
“Code”
shall mean the Internal Revenue Code of 1986, as amended.
“Consent”
shall mean the consent of a Person to do the act or thing for which the consent
is solicited, or the act of granting such consent, as the context may
require. The Consent of the Limited Partners will be deemed to have
been obtained if Limited Partners identified in the Partnership’s records
affirmatively vote the number of outstanding Units required for such action in
favor of such action.
“Deemed Capital Contribution”
shall mean the product of $25,000 per Unit (regardless of the purchase price
paid for a Unit) multiplied by the number of Units owned by a
Partner.
“Event of
Bankruptcy” shall mean with respect to any Person: (i) the entry of an “order
for relief,” as defined in Title 11 of the United States Code (“Bankruptcy
Code”), in either a voluntary case when instituted by such Person or in an
involuntary case when instituted against such Person if such Person may be a
debtor under the chapter of the Bankruptcy Code under which such case is
commenced and which case shall not be dismissed or closed within ninety (90)
days of such commencement; or a comparable action against or by such
Person under any other Federal, state or foreign law related to bankruptcy or
insolvency; or (ii) the filing by such Person of a petition or answer
or consent seeking debtor relief under any other applicable federal, state or
foreign law; or (iii) the entry of an order or decree appointing, or
consent by such Person to the appointment of, a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of such Person or of all or a
substantial part of the property of such Person or ordering the winding up or
liquidation of the affairs of such Person; or (iv) the making by such
Person of any assignment for the benefit of creditors or the admission by such
Person of his or its inability to pay his or its debts generally as they come
due, or the taking of any corporate or other action by such Person in
furtherance of any such action; provided, in any event that the debtor’s
Partnership Interest in the Partnership must be subject to the bankruptcy or
liquidation proceedings and not exempt from creditors.
“Event of
Dissolution” shall mean the liquidation, dissolution, removal, or the occurrence
of an Event of Bankruptcy with respect to a Partner or any
successor.
“General
Partner” shall mean the Person or Persons designated as General Partner in the
introductory paragraph hereof and any successor Person named as a General
Partner according to the terms of this Agreement.
“General
Partner Investment” shall have the meaning assigned to such term in Section
4.2(a) hereof.
“GP
Excess Distributions” shall have the meaning assigned to such term in Section
6.1(b)(4) hereof.
“Initial
Limited Partner” shall mean AmREIT, whose address is set forth above in Section
1.3.
“Invested
Capital” means the gross purchase price for his or her Unit(s) originally paid
by a Limited Partner multiplied by the number of Units owned by a Limited
Partner.
“Joint
Ventures” shall have the meaning assigned to such term in Section 5.11
hereof.
“Limited
Partners” shall mean the Persons identified as Limited Partners on the signature
pages to this Agreement and/or each Person admitted to the Partnership as a
Limited Partner upon executing a Subscription Agreement and contributing capital
to the Partnership in exchange for Units, and such successor or additional
Persons admitted to the Partnership as Limited Partners according to the terms
of this Agreement.
“Limited
Partner List” shall have the meaning assigned to such term in Section 3.3(a)
hereof.
“LP
Excess Distributions” shall mean cumulative distributions received by Limited
Partners pursuant to Sections 6.1(a), 6.1(b)(1), and 6.1(b)(3) in excess of such
Limited Partner’s Invested Capital.
“LP
Target Distribution Amount” shall mean an amount computed for the Limited
Partners, as of any determination date, equal to the amount of cash, which if
distributed to the Limited Partners, would be sufficient such that no additional
amounts would be required to be distributed to the Limited Partners pursuant to
Sections 6.1(b)(1) and 6.1(b)(3).
“Majority
in Interest” shall mean a majority of the Units held by all Limited
Partners.
“Net
Cash” shall mean cash funds derived from all sources by the Partnership
(including, but not limited to, cash from operations, cash released from
reserves, interest, other investment income, and net proceeds generated from the
disposition of properties), but excluding (i) funds used to pay or to provide
for the payment of all operating expenses of the Partnership and each
Partnership property and debt service, if any, capital improvements and
replacements, without deduction for depreciation or amortization and (ii) cash
reserves (a) required by any loan agreements or similar arrangements to which
the Partnership is subject, (b) necessary to satisfy contingencies reasonably
anticipated for, or associated with, the Partnership’s business, or (c)
considered necessary or desirable by the General Partner, in its sole discretion
(including for the purchase of additional assets).
“Net
Profits” and “Net Losses” shall mean the profits or losses, as the case may be,
of the Partnership for federal income tax purposes for each Partnership Fiscal
Year determined in accordance with the Code, the Regulations and the accounting
method followed by the Partnership for such purposes.
“Nonrecourse
Deduction” has the meaning assigned to it in Regulations
Section 1.704-2(c).
“Notification”
or “Notice” shall mean a writing containing the information required by this
Agreement to be communicated to any Person in the manner provided in
Section 13.1 hereof; provided, however, that any communication containing
such information sent or delivered to such Person and actually received by such
Person constitutes Notification for all purposes under this
Agreement.
“Offering”
means that certain offering by the Partnership of an initial 2,000 Units (at an
offering price of $25,000 per Unit) pursuant to the Private Offering Memorandum,
which may be increased in the discretion of the General Partner by an additional
2,000 units.
“Operating
Period” means the period ending on the seventh anniversary of the date of the
Private Offering Memorandum, unless extended pursuant to Section
5.3(a)(6).
“Partner”
shall mean either the General Partner or a Limited Partner and “Partners” shall
mean the General Partner and the Limited Partners, collectively.
“Partner
Nonrecourse Debt” has the meaning assigned to it in Regulations
Section 1.704-2(b)(4).
“Partner
Nonrecourse Debt Minimum Gain” has the meaning assigned to it in Regulations
Section 1.704-2(i)(2) and (3).
“Partner
Nonrecourse Deductions” has the meaning assigned to it in Regulations
Section 1.704-2(i)(2).
“Partnership”
shall mean the limited partnership formed pursuant to the execution of this
Agreement and the filing of the Certificate.
“Partnership
Fiscal Year” shall mean the calendar year, unless otherwise determined by the
Partnership’s tax advisors and approved by the General Partner upon notice to
the Limited Partners.
“Partnership
Interest,” “Interest” or “Interest of a Partner” shall mean the particular
Partner’s interest in the Partnership including, without limitation, the
Partner’s Units and interest in the Partnership’s Net Profits, Net Losses,
income, gains, losses, deductions and distributions.
“Partnership
Minimum Gain” shall have the meaning set forth in 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 Fiscal Year
shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).
“Person”
shall mean an individual, trust, estate, partnership, joint venture, company,
corporation or other entity.
“Private
Offering Memorandum” means that certain Private Offering Memorandum dated
November 15, 2006, as supplemented and amended from time to time during the
Offering, pursuant to which the Partnership shall engage in the
Offering.
“Project”
shall mean any real property, including any interest therein, which is developed
and/or owned by the Partnership.
“Put
Partner” shall have the meaning assigned to such term in Section 9.4
hereof.
“Regulations”
shall mean the Treasury Regulations promulgated under the Code.
“Representative”
shall mean the executor, administrator, guardian, trustee, or other personal
representative of a Partner.
“Requested
Redemption Date” shall have the meaning assigned to such term in Section 9.4
hereof.
“Retirement
Trusts” shall have the meaning assigned to such term in Section 4.2(d)
hereof.
“Subscription
Agreements” shall mean the subscription agreements executed by the Limited
Partners for Units.
“Substitute
Limited Partner” shall mean a Limited Partner admitted to the Partnership
pursuant to Section 9.3.
“Unit”
shall mean an interest in the Partnership as a Limited Partner, which is
acquired either by means of a Capital Contribution to the Partnership or by
transfer. A qualified person may acquire more than one Unit and/or a
fraction of a Unit upon approval of the General Partner.
“Unreturned
Deemed Capital Contribution” means each Partner’s Deemed Capital Contribution
less cumulative distributions to date made to the Partner pursuant to Section
6.1(b)(1) or which otherwise constitute a return of capital. For
purposes of determining “Unreturned Deemed Capital Contribution” the Limited
Partners’ Unreturned Deemed Capital Contribution shall be zero at such time as
there has been a return of all of the Limited Partners’ Invested
Capital.
“Unreturned
Invested Capital” means each Partner’s Invested Capital less cumulative
distributions to date made to the Partner pursuant to Section 6.1(b)(1) or which
otherwise constitute a return of capital.
3.1. Initial Limited
Partner. Upon the admission of additional Limited Partners,
the Limited Partner interest of the Initial Limited Partner shall be repurchased
in full, and it is recognized and acknowledged that the capital of $200
contributed by the Initial Limited Partner will be returned at that
time.
3.2. No Management by Limited
Partners. Limited Partners as such shall take no part in, or
at any time interfere in any manner with, the management, conduct, or control of
the Partnership’s business and operations and shall have no right or authority
to act or bind the Partnership in any manner whatsoever. Except as
expressly provided for in this Agreement, the Limited Partners do not have the
right to vote on or consent to any matter, nor is their vote or consent required
for any action by the Partnership or the General Partner.
3.3. Access to
Records. Each Limited Partner holding not less than 5% of the
outstanding Units shall, at reasonable business hours, have access to the
records of the Partnership subject to Article X and at its expense may
inspect any of them; provided that the Limited Partner holding not less than 5%
of the outstanding Units exercising such right (including, without limitation,
any right to access or receive the Limited Partner List) shall not unreasonably
interfere with or disrupt Partnership business. With respect to
access of the list of Limited Partners, the Partnership shall prepare and make
available the Limited Partner List upon request as follows:
(a) An
alphabetical list of the names, addresses and business telephone numbers of the
Limited Partners along with the number of Units held by each of them (the
“Limited Partner List”) shall be maintained as a part of the books and records
of the Partnership and shall be available for inspection by Limited Partners
holding not less than 5% of the outstanding Units at the home office of the
Partnership upon the request of such Limited Partners holding not less than 5%
of the outstanding Units;
(b) The
Limited Partner List shall be updated at least quarterly to reflect changes in
the information contained therein; and
(c) The
General Partner may, in its sole discretion, grant access to the records of the
Partnership and the Limited Partner List to a Limited Partner holding less than
5% of the outstanding Units upon written request by such Limited Partner stating
the reasons for such request.
3.4. Liability. The
Limited Partners shall be liable with respect to the Partnership only to the
extent of the amount of the contributions to capital made by such Limited
Partners as provided in Section 4.2. The Units shall be
nonassessable.
3.5. No Withdrawal or
Dissolution. No Limited Partner shall at any time withdraw
from the Partnership except as provided in this Agreement. No Limited
Partner shall have the right to have the Partnership dissolved or to have his
contribution to the capital of the Partnership returned except as provided in
this Agreement. The death, incompetency, disability, dissolution,
termination, or bankruptcy of a Limited Partner shall not dissolve or terminate
the Partnership.
3.6. Consent. To
the fullest extent permitted by law, each of the Limited Partners hereby
consents to the exercise by the General Partner of all the rights and powers
conferred on the General Partner by this Agreement and the Act.
3.7. Power of
Attorney. Each of the Limited Partners, by the execution of
this Agreement, does hereby irrevocably constitute and appoint the General
Partner, with full power of substitution, as his or its true and lawful
attorney-in-fact and agent, with full power and authority in the Limited
Partner’s name, place and stead, to execute, acknowledge, swear to, deliver,
file and record in the appropriate public offices (i) all certificates and other
instruments (including counterparts of this Agreement and amendments hereto)
that the General Partner deems appropriate to form, qualify or continue the
Partnership as a limited partnership, or a partnership in which the Limited
Partners have limited liability, in all jurisdictions in which the Partnership
may conduct business or own properties, (ii) all instruments that the General
Partner deems appropriate to reflect any amendment, change or modification of
this Agreement in accordance with the terms hereof (including, without
limitation, one or more amendments to this Agreement to reflect any assignments
or issuances of Interests in the Partnership), (iii) all conveyances and other
instruments that the General Partner deems appropriate to reflect the
dissolution and termination of the Partnership pursuant to the terms of this
Agreement and (iv) instruments relating to the admission of any Partner pursuant
to Article IX. The power of attorney granted herein is hereby
declared irrevocable and, being a power coupled with an interest, shall survive
the death, incompetency, disability, bankruptcy, dissolution or other
termination of any Partner and shall extend to such Partner’s heirs, successors
and assigns. Each Partner hereby agrees to be bound by any
representations, covenants, or agreements made by the General Partner acting in
good faith pursuant to such power of attorney, and each Partner hereby waives
any and all defenses that may be available to contest, negate or disaffirm any
action of the General Partner taken in good faith under such power of
attorney. Each Partner hereby agrees to execute and deliver to the
General Partner, within fifteen (15) days after receipt of the General Partner’s
written request therefor, such other and further statements of interest and
holding, designations, powers of attorney and other instruments as the General
Partner deems necessary to effectuate this Agreement and the purposes of this
Partnership. If a Limited Partner assigns his interest in the
Partnership, as provided in Article IX, the foregoing power of attorney shall
survive the delivery of the instruments effecting such assignment for the
purpose of enabling the General Partner to sign, swear to, execute and
acknowledge and file any and all amendments to this Agreement or the Certificate
and other instruments and documents necessary to effectuate the substitution of
the assignee as a Limited Partner.
4.1. Initial Capital
Contributions.
(a) General Partner’s Capital
Contribution. The General Partner shall contribute $1,000 to
the capital of the Partnership for its Interest in the Partnership as a General
Partner.
(b) Initial Limited Partner’s
Capital Contribution. The Initial Limited Partner shall
contribute $200 to the capital of the Partnership for its Interest in the
Partnership as Limited Partner.
4.2. Limited Partner Capital
Contributions.
(a) Capital
Contributions. Prior to or contemporaneously with the Initial
Closing Date (as defined in the Private Offering Memorandum), the General
Partner shall purchase 36 Units in exchange for cash in the amount of $800,000
(the “General Partner Investment”), which purchase shall not be deemed a part of
the Offering. There shall be available for subscription in the
Offering by prospective Limited Partners an aggregate initial amount of up to
2,000 Units, each Unit requiring such initial Capital Contribution as provided
in the Private Offering Memorandum (the foregoing shall not be deemed to limit
the General Partner’s ability to issue fractional Units). Following
the sale of the initial 2,000 Units, the General Partner shall have the right,
in its sole discretion, to cause the Partnership to issue and sell up to an
additional 2,000 Units subject to the same terms and conditions. Each
Limited Partner investing pursuant to the Offering shall make a Capital
Contribution by submitting to the registered broker-dealer designated by the
General Partner the executed Subscription Agreement, as well as any other
documents required by the Private Offering Memorandum, together with a check
payable to the applicable account established by the Partnership in the amount
of $25,000 for each Unit to which the Subscription Agreement relates (or the pro
rata amount of the Unit purchase price for fractional Units) less any discounts
authorized in the Private Offering Memorandum. The Initial Limited
Partner (prior to its redemption pursuant to Section 3.1), all subscribers for
Units whose subscriptions are accepted by the General Partner and the General
Partner (with respect to any Units purchased or otherwise held by the General
Partner) are collectively referred to as the “Limited Partners.”
(b) Requirements for Limited
Partner Status. A Limited Partner shall be admitted to the
Partnership not later than the first day of the month following his purchase of
Units, provided that his Capital Contribution has been received by the 20th day
of the preceding month.
(c) Additional Capital
Contributions. The Limited Partners shall not be obligated to
make any additional Capital Contributions to the capital of the
Partnership.
(d) Admission of Retirement
Trusts as Limited Partners. The General Partner shall
establish a fixed maximum percentage of Units permitted to be held by an
“employee benefit plan,” as described in Section 3(3) of ERISA, or an
“individual retirement account,” as described in Section 408 of the Code (each,
a “Retirement Trust”) or other tax exempt entities and prohibit transfers of
Units pursuant to Sections 9.3(a)(2) and/or 9.3(b) in connection therewith, in
order to permit the Units to fall within the insignificant investment exclusion
from the definition of plan assets contained in Section 2510.3-101(f) of Title
29 of the Code of Federal Regulations.
4.3. No Interest on Capital
Contributions. No interest shall be paid by the Partnership to
any Partner on any Capital Contribution.
4.4. Liability Limited to
Capital. The liability of Limited Partners shall be limited to
the amount of Capital Contributions which Limited Partners actually make or are
required to make in accordance with the provisions of Section 4.2 of this
Agreement. Limited Partners shall not have any further personal
liability to contribute money to the Partnership with respect to the liabilities
or obligations of the Partnership, nor shall the Limited Partners be personally
liable for any obligations of the Partnership. However, if any
distribution or distributions constituting a return of capital shall have been
made to a Limited Partner, then such Limited Partner may, to the extent provided
by the Act, be obligated to repay all or part of any such
distributions. Any repayment of distributions shall be made to the
Partnership within 30 days after the General Partner shall have delivered to
such Limited Partner written Notice asserting such repayment, together with a
statement of the amount chargeable to such Limited Partner to be repaid and an
explanation of the reasons for such repayment.
4.5. Issuances of Additional
Units. The General Partner is hereby authorized to cause the
Partnership to issue additional Units for any Partnership purpose, at any time
or from time to time, to Partners (including the General Partner) or to other
Persons for such consideration and on such terms and conditions as shall be
established by the General Partner in its sole discretion and absolute
discretion, all without the approval of the Limited Partners. Any
additional Units issued thereby may be issued in one or more classes, or in one
or more series of any of such classes, with designations, preferences and
relative participating, option or other special rights, powers and duties,
including rights, powers and duties senior to Units previously issued to the
Limited Partners, all as shall be determined by the General Partner in its sole
discretion and without the approval of any Limited Partner, subject to Delaware
law, including without limitation, (A) the allocation or items of Partnership
income, gain, loss, deduction and credit to each such class or series of Units;
(B) the right of each such class or series of Units to share in Partnership
distributions; and (C) the rights of each such class or series of Units upon
dissolution and liquidation of the Partnership; provided, however, that no
additional Units will be issued to the General Partner unless: (1) the
additional Units are issued in exchange for property or other assets owned by
the General Partner with a fair market value, as determined by the General
Partner, in good faith, equal to the value to the Units; or (2) the additional
Units are issued to all Partners in proportion to their respective percentage
ownership of the Units.
5.1. General
Partner. The General Partner is AmREIT Monthly Income &
Growth IV Corporation, a Delaware corporation, whose address is 0 Xxxxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000.
5.2. General Authority and Powers
of General Partner. Subject to the terms and conditions of
this Agreement, the General Partner shall have complete authority over and
exclusive control and management of the business and affairs of the Partnership
and shall devote such time to the Partnership as may be reasonably required for
the achievement of its purposes, in addition to all other responsibilities of
the General Partner. Without limiting the foregoing, the General
Partner is empowered to spend Partnership funds on non-refundable options, fees
to third parties or Affiliates to investigate, study and evaluate possible land
acquisition and development opportunities and other similar expenditures which
may be written off in full if the Partnership is unable to acquire and develop a
property, to contract for the purchase or development of commercial real estate
assets and to dispose and liquidate the assets. In connection with
such management, the General Partner may, subject to this Article V, employ on
behalf of the Partnership any other Persons to perform services for the
Partnership, including Persons employed by, affiliated with, or related to any
Partner.
5.3. Limitations on Authority and
Powers of General Partner.
(a) Notwithstanding
any other provision of this Agreement to the contrary, the General Partner shall
not, without the prior vote or written Consent of a Majority in Interest of the
Limited Partners, do any of the following:
1. amend
this Agreement except:
A. to admit
a Substitute Limited Partner or additional Limited Partners pursuant to Section
4.2 and 9.3;
B. to
reflect the withdrawal of a Limited Partner;
C. to make a
clarification to the Agreement or in connection with the performance of
ministerial acts; provided that, such amendment does not change the intent of
the Agreement or materially impair a Limited Partner’s Interest or rights in the
Partnership;
D. to change
the name or location of the principal place of business, registered agent or
registered office of the Partnership, provided that notice of such change is
provided in writing to the Limited Partners;
E. to
reflect the disposition of any Limited Partner’s Interest; or
F. as
otherwise expressly permitted in this Agreement, including without limitation,
Section 12.1;
2. confess a
judgment against the Partnership in an amount exceeding $100,000;
3. possess
any property or assign the rights of the Partnership in specific property,
including a Project, for other than a Partnership purpose;
4. except as
provided in Sections 9.1 or 9.2, resign as the General Partner, transfer
its General Partner Interest or admit a Person as a substitute General
Partner;
5. incur
indebtedness on behalf of the Partnership in an amount greater than 75% of the
Partnership’s cash and cash equivalents plus the aggregate market value of the
Projects, which market values shall be determined by the General Partner based
on a capitalization rate approval applied to the net operating income of the
Projects;
6. extend
the Operating Period from seven years after the date of the Private Offering
Memorandum to nine years after the date of the Private Offering
Memorandum;
7. invest
more than 15% of the gross proceeds from the Offering in properties outside of
the U.S.;
8. invest
more than 20% of the gross proceeds from the Offering in investments in
mortgages; or
9. invest in
the securities of other issuers, except for permitted temporary investments
pending utilization of Partnership funds for investments in real property and
except for investments in Joint Ventures and investments in mortgages pursuant
to Section 5.3(a)(8) above.
(b) Notwithstanding
any other provision in this Agreement to the contrary, the General Partner shall
not, without the express vote or prior written Consent of each Limited Partner
adversely affected by such action, do any of the following:
1. perform
any act in contravention of this Agreement which would make it impossible to
carry on the business of the Partnership;
2. perform
any act which would subject the Limited Partners to liability as general
partners in any jurisdiction; or
3. amend
this Agreement to (i) convert the interest of a Limited Partner into that of a
general partner; (ii) adversely affect the limited liability of a Limited
Partner; or (iii) alter the interests of the Partners in distributions, except
to the extent that distributions are altered solely as a result of the issuance
of Units pursuant to Article IV.
(c) Notwithstanding
any other provision of this Agreement to the contrary, the General Partner shall
not vote its limited partner interest in matters which affect the General
Partner or the economic interest of the General Partner.
5.4. Loans to the
Partnership. In the event that additional funds are required
by the Partnership for any valid purpose relating to the business of the
Partnership, or for any of its obligations, expenses, or costs, including
operating deficits, the Partnership may borrow such funds as are needed from any
Person (including, without limitation, a Partner) on terms and conditions
agreeable between the Partnership and the lender; provided that if such loan is
from a General Partner or an Affiliate thereof, the simple rate of interest
shall not exceed the then prevailing regional prime interest rate at the Bank of
America (or its successor) plus one percent, but in no event to exceed the
interest rate that would be charged to the General Partner by said
bank. No financing charges, fees, penalties or similar provisions
will be included in any General Partner loan to the Partnership unless the
General Partner must itself borrow such funds, in which event any financing
charges, fees or penalties to the Partnership shall be no greater than those
imposed on the General Partner by the lending institution.
5.5. Liability. The
General Partner, its Affiliates, employees and agents shall not be liable,
responsible or accountable in damages or otherwise to any Partner for any act or
omission performed or omitted by the General Partner or its duly authorized
Affiliates, employees or agents in good faith on behalf of the Partnership and
in a manner reasonably believed to be within the scope of the authority granted
by this Agreement and in the best interests of the Partnership, except for gross
negligence or intentional misconduct.
5.6. Outside Activities of the
General Partner. The General Partner, during the term of this
Partnership, may engage in and possess an interest for its own account 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, investment in and development of real
estate; and neither the Partnership nor any Partner, by virtue of
this Agreement shall have any right in and to said independent ventures or any
income or profits derived therefrom. With respect to activities
permitted by the preceding sentence, the General Partner may engage in such
ownership, businesses and activities in direct competition with the Partnership
without having or incurring any obligation to offer any such interest in such
properties, business or activities to the Partnership or the Limited Partners,
and no other provision of this Agreement shall be deemed to prohibit the General
Partner from conducting such businesses and activities. The General
Partner shall not be required under this Agreement to devote its financial
capabilities or means, personnel and other resources exclusively for the benefit
or exclusively on behalf of the Partnership or on activities in which the
Partnership is participating or will participate, but rather shall only be
required to devote so much of such resources as may be necessary to promote in
good faith the business of the Partnership and to exercise its responsibilities
in a fiduciary manner. Neither the General Partner nor any Affiliate
of the General Partner shall have any obligation to allow the Partnership or the
Limited Partners to invest in any property of the General Partner or any
Affiliate of the General Partner.
5.7. Indemnification and
Liability of General Partner.
(a) The
Partnership shall indemnify each of the General Partner and its Affiliates
against any claim or liability incurred or imposed upon such General Partner or
such Affiliates relative to the Partnership, provided that such General Partner
or Affiliate has determined, in good faith, that the course of conduct which
caused the loss or liability was in the best interests of the Partnership, and
such General Partner or Affiliate was not guilty of gross negligence or willful
or wanton misconduct. Neither the General Partner nor any of its
Affiliates shall be liable to the Partnership or any Partner by reason of any
act or omission of such General Partner or Affiliate, provided that the General
Partner has determined, in good faith, that the course of conduct which caused
the loss or liability was in the best interests of the Partnership, and such
General Partner or Affiliate was not guilty of gross negligence or willful or
wanton misconduct. Solely for the purposes of this Section 5.7 but
for all such purposes, the term “Affiliate” shall mean only an Affiliate that
has performed an act on behalf of the Partnership or the General Partner and for
which the General Partner would have been entitled to indemnification had such
act been performed by the General Partner.
(b) Notwithstanding
anything to the contrary contained in Section 5.7(a) above, neither the General
Partner nor any of its Affiliates shall be indemnified from any liability, loss
or damage incurred by them arising due to an alleged violation of federal or
state securities laws unless (i) there have been a successfully adjudication on
the merits of each count involving alleged securities law violations as to the
particular indemnified party, (ii) such claims have been dismissed with
prejudice on the merits by a court of competent jurisdiction as to the
particular indemnified party, or (iii) a court of competent jurisdiction
approves a settlement of the claims against the particular indemnified party and
finds that indemnification of the settlement and related costs should be
made. Prior to seeking a court approval for indemnification, the
General Partner shall undertake to cause the party seeking indemnification to
apprise the court of the position of the Securities and Exchange Commission with
respect to indemnification for securities violations.
(c) The
Partnership shall not incur the cost of the portion of any insurance which
insures any party against any liability as to which such party is prohibited
from being indemnified as set forth above.
(d) Any
indemnification pursuant to this Section, or otherwise, shall be recoverable
only from the assets of the Partnership and not from any of the Limited
Partners.
(e) Notwithstanding
anything to the contrary contained elsewhere in this Agreement, neither the
General Partner nor any of its Affiliates shall be liable, responsible or
accountable in damages or otherwise to any other Partner, the Partnership, its
receiver or trustee for, and such Person shall be indemnified hereunder with
respect to, any claims to the extent relating to any of the events or outcomes
set forth in the Private Offering Memorandum as possible results, outcomes or
risks associated with the business of the Partnership or the investment in
Units.
5.8. Partnership
Expenses. All of the Partnership’s expenses will be paid by
the Partnership. Reimbursements to the General Partner or any
Affiliate shall not exceed such Person’s actual cost for the service, goods or
materials used for or by the Partnership. Notwithstanding the
foregoing, the Partnership will reimburse the General Partner or its Affiliates
for organization and offering expenses in connection with the Offering,
including legal and accounting fees, printing costs, filing fees and
distribution costs, not to exceed 1.0% of the gross proceeds of the
Offering.
5.9. Compensation. Compensatory
arrangements between the Partnership and the General Partner and its Affiliates
shall be subject to the following:
(a) Asset Management
Fees. The General Partner or its Affiliates may provide asset
management services in exchange for fees equal to 1% of the net equity under
management.
(b) Acquisition
Fees. The General Partner, its Affiliates or unrelated third
parties may provide acquisition services for Projects acquired by the
Partnership in exchange for acquisition fees not to exceed, for any single
acquisition, 3% of the contract purchase price up to $20,000,000, and 2% of the
contract purchase price in excess of $20,000,000. The Partnership
will not pay acquisition fees for a Project with respect to which the
Partnership has paid a development or redevelopment fee.
(c) Development and
Redevelopment Fees. The General Partner, its Affiliates or
unrelated third parties may provide development and redevelopment services for
Projects developed and redeveloped by the Partnership in exchange for
development and redevelopment fees not to exceed 6% of the total costs up to
$10,000,000, 5% of the total costs between $10,000,000 and $20,000,000 and 4% of
the total costs in excess of $20,000,000. The Partnership will not
pay a development or redevelopment fee for a Project where the Partnership has
paid an acquisition fee.
(d) Property Leasing
Fees. The General Partner, its Affiliates or unrelated third
parties may provide leasing services in connection with Projects in exchange for
fees not to exceed 4% of base rent on a lease renewal and not to exceed 6% of
base rent on an initial lease; provided, however, that on leases of over 10,000
square feet, leasing fees may be paid on the basis of square footage, not to
exceed $6.00 per square foot.
(e) Property Management
Fees. The General Partner, its Affiliates or unrelated third parties may
provide property management services in connection with the Projects in exchange
for fees not to exceed 4% of gross revenue on multi-tenant or multi-pad
properties.
(f) Real Estate Brokerage
Commissions. The General Partner, its Affiliates or unrelated
third parties may provide real estate brokerage services in connection with
Projects in exchange for commissions not to exceed 4% of the sales price on
individually brokered transactions and not to exceed 6% of the sales price on
co-brokered transactions. The General Partner and its affiliates will
not be paid real estate brokerage commissions on the sale of a property if such
property has not generated an annual return of at least 8.5% per annum on the
equity contributed to such property.
(g) Financing. The
General Partner or an Affiliate may, but is not obligated to, provide Project or
investment financing to the Partnership at rates not in excess of then
prevailing market rates available from unrelated institutional
lenders.
(h) Reimbursements. The
General Partner and/or its Affiliates shall be reimbursed by the Partnership for
their actual costs in performing acquisition, development, management and
administrative functions for the Partnership.
(i) Other. The
General Partner and/or its Affiliates may receive additional compensation for
any additional services performed on behalf of the Partnership so long as such
services are provided on terms and conditions no less favorable to the
Partnership than can be obtained from independent third parties for comparable
services in the same location. Such services may include, but are not
limited to, leasing coordination fees, construction management fees, including
in connection with renovation and remodeling, and tax appeal fees.
5.10. Liquidation of the
Partnership and Redemption of the General Partner
Investment. The General Partner shall in good faith actively
(i) cause all real property owned by the Partnership and not in the development
or redevelopment stage to be marketed for sale on or before the last day of the
Operating Period and (ii) cause all properties which are in the development or
redevelopment stage at the end of the Operating Period to be marketed for sale
upon completion. If the General Partner has not taken all
commercially reasonable efforts to diligently pursue the marketing for sale of
the Partnership’s properties when required by the foregoing, the Partnership
shall redeem the General Partner Investment for $1.00 without any action on the
part of the General Partner.
5.11. Joint
Ventures. Subject to the provisions below, the General Partner
may choose to acquire properties in joint ventures or other co-ownership
arrangements with third party developers and real estate investors, including
the General Partner, its Affiliates and entities owned or managed by Affiliates,
with the purpose of acquiring and/or improving properties (“Joint
Ventures”). The General Partner and/or its Affiliates may provide
services to the Joint Venture, including, but not limited to, acquisition,
development, management, leasing and/or real estate disposition
services.
(a) Notwithstanding
the foregoing, the Partnership shall not enter into a Joint Venture
unless:
1. The
Partnership has the right either to approve significant decisions of the Joint
Venture or to control operations of the Joint Venture, subject to the right of
the Joint Venture partner to approve sales or refinancing;
2. The total
compensation paid by the Partnership and the Joint Venture to the General
Partner and its Affiliates in connection with a Joint Venture would be
permissible under this Agreement if the Partnership owned 100% of the Joint
Venture;
3. There is
no duplication of Joint Venture costs and expenses and the costs and expenses of
the Partnership relating to the Joint Venture business, including organization
and syndication expenses, acquisition and development costs; and
4. Any
purchase, sale or financing transactions between the Joint Venture partner and
the General Partner or its Affiliates are on terms which are commercially
reasonable and comparable to those relating to transactions between unrelated
parties.
(b) If the
Partnership enters into a Joint Venture with the General Partner, an Affiliate
or an entity owned or managed by an Affiliate, the General Partner or the
managing member, largest shareholder, general partner or other controlling or
majority owner of the Affiliate or such other entity (a “Controlling Person”)
may contribute capital to the Joint Venture on the same terms and conditions as
the Partnership. Allocable profits in a Joint Venture shall be
calculated based on the sum of net sale proceeds from the sale of a property
(after repayment of debt) plus reserves less capital contributions of each joint
venturer plus actual origination and carrying costs of the additional financing
incurred in connection with such property. Distributions will be pro
rata to the joint venturers based on their aggregate capital
contributions.
(c) The
General Partner or an Affiliate may form another partnership or other entity
with essentially the same investment objectives as the Partnership and such
entity may acquire properties through joint venture or other
arrangements. Such other entities may have as investors Controlling
Persons (as defined above) or other former and current investors in programs
sponsored by Affiliates. The terms and conditions upon which persons
become investors in such other entities may differ from those of the
Partnership. The Partnership will not acquire properties jointly with
other entities unless the ownership is in the form of a partnership, limited
liability company, joint venture or other co-ownership arrangement.
5.12. Merger, Exchange and
Conversion.
(a) The
Partnership may (1) adopt a plan of merger and may merger with one or more
domestic or foreign limited partnerships or other entities, resulting in there
being one or more surviving entities, (2) adopt a plan of exchange by which a
domestic or foreign limited partnership or other entity is to acquire all of the
outstanding Partnership interests of the Partnership in exchange for cash,
securities or other property of the acquitting domestic or foreign limited
partnership or other entity or (3) adopt a plan of consideration and convert to
a foreign limited partnership or other entity. Any such plan of
merger, plan of exchange or plan of conversion shall in all events comply with
the applicable requirements of the Act and this Agreement.
(b) Any such
merger shall be conditioned upon the merger being permitted by the laws under
which each other entity that is a party to the merger is incorporated or
organized or by the constituent documents of such other entity that are not
inconsistent with such laws. Any such plan of exchange shall be
conditioned upon the issuance of shares or other interests of the acquiring
foreign limited partnership or other entity being permitted by the laws under
which such foreign limited partnership or other entity is incorporated or
organized or is not inconsistent with such laws. Any such conversion
shall be conditioned upon such conversion being permitted by, or not
inconsistent with, the laws of the jurisdiction in which the converted entity is
to be incorporated, formed or organized, and the incorporation, formation or
organization of the converted entity is effected in compliance with such
laws.
(c) The
Partnership may adopt a plan of merger, plan of exchange or plan of conversion
if the General Partner acts upon and the Limited Partners (if required by
Section 5.12(d) below) approve the plan of merger, plan of exchange or plan of
conversion in the manner prescribed in Section 5.12(d) below.
(d) Except as
provided by Section 5.12(e) and 5.12(f), in order for a plan of merger, plan of
exchange or plan of conversion to be approved:
1. the
General Partner shall adopt a resolution recommending that the plan of merger,
plan of exchange or plan of conversion, as the case may be, be approved by the
Limited Partners, unless the General Partner determines that for any reason it
should not make that recommendation, in which case the General Partner shall
adopt a resolution directing that the plan of merger, plan of exchange or plan
of conversion, as the case may be, be submitted to the Limited Partners for
approval without recommendation and, in connection with the submission,
communicate the basis for its determination that the plan of merger, plan of
exchange or plan of conversion be submitted to the Limited Partners without any
recommendation;
2. the
General Partner shall then submit the plan of merger, plan of exchange or plan
of conversion for approval by the Limited Partners; and
3. the
Limited Partners entitled to vote on the plan of merger, plan of exchange or
plan of conversion must approve the plan by a Majority Vote (unless the General
Partner requires a greater vote).
The
General Partner may condition its submission to the Limited Partners of a plan
of merger, plan of exchange or plan of conversion, and the effectiveness of such
plan, on any basis, including without limitation, that a specified percentage in
excess of a Majority Vote be required for the approval of the plan of merger,
plan of exchange or plan of conversion. Unless the General Partner
requires a greater vote, a Majority Vote shall be required for approval of a
plan of merger, plan of exchange or plan of conversion.
The
General Partner shall notify each Limited Partner, whether or not entitled to
vote, of the meeting of the Limited Partners at which the plan of merger, plan
of exchange or plan of conversion is to be submitted for approval in accordance
with Section 5.12(d) and applicable law. The notice shall be given at
least ten (10) days before the meeting and shall state that the purpose, or one
of the purposes, of the meeting is to consider the plan of merger, plan of
exchange or plan of conversion and shall contain or be accompanied by a copy or
summary of the plan of merger, plan of exchange or plan of
conversion. Any such approval may be by written consent of the
Limited Partners as would be required to approve the plan of merger, plan of
exchange or plan of conversion at any meeting where all of the Limited Partners
are present.
(e) Unless
applicable law otherwise requires (in which case the approval of the Limited
Partners shall continue to be required and the provisions of Section 5.12(d)
shall continue to apply), (1) approval by the Limited Partners of a plan of
exchange shall not be required, and the provisions of Section 5.12(d) do not
apply, if the Partnership is the acquiring entity in the plan of exchange and
(2) approval by the Limited Partners on a plan of merger, plan of exchange or
plan of conversion shall not be required and the provisions of Section 5.12(d)
do not apply if either:
1. (A) A
limited partnership is the sole surviving or resulting entity;
(B) the
partnership agreement of the surviving or resulting limited partnership will not
differ from this Agreement before the merger or conversion in any manner other
than as to the application of applicable law or other insignificant conforming
differences;
(C) Limited
Partners who held interests in the Partnership immediately before the effective
date of the merger or conversion will hold the same interests in the same
proportions, immediately after the effective date of the merger or conversion;
and
(D) the
General Partner adopts a resolution approving the plan of merger or plan of
conversion; or
2.
The
transaction involves the conversion to corporate, trust or association form of
only the Partnership and, as a consequence of the transaction, there will be no
significant adverse change in any of the following rights or terms, as compared
to such rights and terms in effect for the Partnership prior to such
transaction:
A. voting
rights of holders of the class of securities to be held by Limited
Partners;
B. the term
of existence of the surviving or resulting entity;
C. compensation
to the sponsor of the surviving or resulting entity; or
D. the
investment objectives of the surviving or resulting entity.
(f) After a
plan of merger, plan of exchange or plan of conversion is approved, and at any
time before the merger, exchange or conversion has become effective, the plan of
merger, plan of exchange or plan of conversion may be abandoned (subject to any
contractual rights by any of the entities that are a party thereto), without
action by the Limited Partners, in accordance with the procedures set forth in
the plan of merger, plan of exchange or plan of conversion or, if no such
procedures are set forth in such plan, in the manner determined by the General
Partner.
6.1. Share of
Distributions.
(a) Partnership
distributions of Net Cash during the Operating Period are targeted to be made to
the Partners as follows: Distributions of Net Cash shall be made 1%
to the General Partner and 99% to the Limited Partners. Distributions
shall be paid monthly to each Partner in a an amount determined by the General
Partner, in its sole discretion, to the extent Net Cash is available, in a
target amount equal to the Applicable Percentage per annum uncompounded on such
Partner’s Unreturned Deemed Capital Contribution.
(b) Partnership
distributions of Net Cash after the Operating Period shall be made to the
Partners as follows:
1. First,
distributions will be made 100% to the Limited Partners (in proportion to their
Unreturned Invested Capital) until such time as the Limited Partners have
received cumulative distributions equal to 100% of their Unreturned Invested
Capital;
2. Second,
distributions will be made 100% to the General Partner until such time as the
General Partner has received cumulative distributions equal to 100% of its
Capital Contributions;
3. Third,
distributions will be made 1% to the General Partner and 99% to the Limited
Partners (in proportion to the number of Units held by each Limited Partner as
compared to the aggregate Units held by all Limited Partners) until such time as
the Limited Partners have received cumulative distributions from all sources
(including monthly cash distributions made during the Operating Period) equal to
an 8.5% Annual Return;
4. Fourth,
distributions will be made 100% to the General Partner until such time as the
General Partner has received cumulative distributions (other than with respect
to its Units) from all sources (including monthly cash distributions made during
the Operating Period) in excess of cumulative distributions to date which
constitute a return of capital contributed pursuant to Section 4.1 (“GP Excess
Distributions”) equal to 40% of all LP Excess Distributions made to Limited
Partners pursuant to the provisions of this Section 6.1; and
5. Thereafter,
distributions will be made 60% to the Limited Partners (in proportion to the
number of Units held by each Limited Partner as compared to the aggregate Units
held by all Limited Partners) and 40% to the General Partner.
6.2. Source of
Funds. In making distributions pursuant to Sections 6.1(a) and
(b) above, no distinction shall be made by reason of the source of such
funds.
6.3. Liquidation or
Dissolution.
(a) In the
event the Partnership is liquidated or dissolved, the assets of the Partnership
shall be distributed to the Partners in accordance with Section 8.4(d), but only
after the payment of Partnership debts and the establishment of reasonable
reserves for anticipated contingencies, if any.
(b) No
Partner with a negative balance in such Partner’s Capital Account Balance, at
any time, including following the distribution of liquidation proceeds, shall be
required to restore such balance to the Partnership except as may be required
under the Act.
(c) Any
Limited Partner who has a separate written obligation approved by the General
Partner to make additional Capital Contributions to the Partnership which has
not been paid at the date of liquidation shall pay such amount to the
Partnership within ninety (90) days of the liquidation of the Partnership, or
such obligation may be offset against any distributions to be made to such
Limited Partner.
6.4. Amount and Time of
Distributions. Distributions pursuant to this Article VI
will be made at such times and in such amounts as the General Partner may, in
its sole discretion, determine. The General Partner shall endeavor to
distribute each Partnership Fiscal Year to each Limited Partner an amount at
least equal to the Applicable Percentage per annum uncompounded on such Limited
Partner’s Unreturned Deemed Capital Contribution. The Partnership may
be restricted from making distributions under the Act or the terms of notes,
mortgages or other debt obligations which it may obtain from lenders in
connection with Partnership loans. Distributions may also be
restricted or suspended whenever the General Partner, in its sole discretion,
determines that such action is in the best interests of the
Partnership. All distributions are subject to the payment of
Partnership expenses, including maintenance of reasonable operating reserves.
Notwithstanding anything herein to the contrary, in each Partnership Fiscal
Year, the General Partner may, in its sole discretion, distribute to the
Partners such amounts as the General Partner, in its sole discretion, determines
are necessary to enable the Partners to pay the Federal income taxes on their
distributive shares of the Partnership’s taxable income (including separately
stated items). The General Partner shall not incur any liability as a
result of its determination to distribute Net Cash, even though such
distribution may result in the Partnership’s retaining insufficient funds for
the operation of its business, provided its determination was made in good faith
and not as a result of its gross negligence or willful misconduct.
7.1. Capital
Account. A separate capital account shall be maintained for
each Partner (a “Capital Account”). Each Partner’s Capital Account
shall be increased by (1) the amount of money contributed by it to the
Partnership, (2) the fair market value of any property contributed by it to the
Partnership (net of any liabilities securing such contributed property that the
Partnership is considered to assume or take subject to under Section 752 of the
Code), and (3) allocations to it of income or gain (or items thereof), including
income and gain exempt from tax, and income and gain described in Regulations
Section 1.704-1(b)(2)(iv)(g), but excluding income and gain described in
Regulations Section 1.704-1(b)(4)(i); and shall be decreased by (4)
the amount of money distributed to it by the Partnership, (5) the fair market
value of property distributed to it by the Partnership (net of liabilities
securing such distributed property that such Partner is considered to assume or
take subject to under Section 752 of the Code), (6) allocations to it of
expenditures of the Partnership of the type described in Code Section
705(a)(2)(B), and (7) allocations of deduction and loss, including items of loss
and deduction described in Regulations Section 1.704-1(b)(2)(iv)(g), but
excluding items described in (6) above and loss or deduction described in
Regulations Sections 1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). For
purposes of this Agreement, a Partner who has more than one interest in the
Partnership shall have a single Capital Account that reflects all such
interests, regardless of the class of interests owned by such Partner, and
regardless of the time or manner in which such interests were
acquired. All items of income exempt from federal income tax, and
expenditures not deductible in computing federal income tax shall be allocated
among the Partners in accordance with their allocable share of income, gain,
deduction or losses (as the case may be). If the book values of
Partnership assets are adjusted, the Capital Accounts of all Partners shall be
adjusted simultaneously to reflect the aggregate net adjustment as if the
Partnership recognized gain or loss equal to the amount of such aggregate net
adjustment. Subject to Section 8.4, if any assets of the Partnership
are to be distributed in kind, such assets shall be distributed on the basis of
their fair market value as determined by independent appraisal after the
Partners’ Capital Accounts have been adjusted to reflect the manner in which any
unrealized gain and loss with respect to such assets (that have not been
reflected in their Capital Accounts previously) would be allocated among the
Partners if there were a taxable disposition of the property for its fair market
value. It is the intent of the Partnership that the Capital Accounts
of all Partners be determined and maintained in accordance with the principles
of Regulations Section 1.704-1 at all times throughout the full term of the
Partnership, and this Section 7.1 shall be so interpreted and
applied.
7.2. Deficit Capital Account
Balances. Upon liquidation of the Partnership or the
liquidation of a Partner’s interest in the Partnership, no Partner with a
deficit balance in its Capital Account shall have the obligation to restore such
deficit balance by making an additional contribution to the capital of the
Partnership, except as may be required under the Act.
7.3. Allocations.
(a) Allocations of Net Profit
and Net Loss. After giving effect to the special allocations
set forth in Sections 7.3(b), (c), (d), (e), (f), (g), (h), and (j), Net Profit
and Net Loss for any taxable year or other applicable period shall be allocated
as set forth below.
(i) Net
Profit shall be allocated:
(A) First,
99% to the Limited Partners (in proportion to the number of Units held by each
Limited Partner as compared to the aggregate Units held by all Limited Partners)
and 1% to the General Partner, to the extent of the LP Target Distribution
Amount;
(B) Second,
100% to the General Partner until its Capital Account balance equals 40% of the
Partners’ aggregate Capital Account balance, taking into account any proposed
distributions and allocations for the current taxable year or other applicable
period; and
(C) Thereafter,
60% to the Limited Partners (in proportion to the number of Units held by each
Limited Partner as compared to the aggregate Units held by all Limited
Partners), and 40% to the General Partner.
(ii) Net
Loss shall be allocated:
(A) First,
60% to the Limited Partners (in proportion to the number of Units held by each
Limited Partner as compared to the aggregate Units held by all Limited Partners)
and 40% to the General Partner, until the cumulative amount of Net Loss
allocated pursuant to this Section 7.3(a)(ii)(A) for the current taxable year or
other applicable period and all previous taxable years or other applicable
periods is equal to the cumulative amount of Net Profit allocated to each of the
Partners pursuant to Section 7.3(a)(i)(C) for all previous taxable years or
other applicable periods;
(B) Second,
to the General Partner, until the aggregate amount of Net Loss allocated
pursuant to this Section 7.3(a)(ii)(B) for the current taxable year or other
applicable period and all previous taxable years or other applicable periods is
equal to the cumulative amount of Net Profit allocated to the General Partner
pursuant to Section 7.3(a)(i)(B) for all previous taxable years or other
applicable periods;
(C) Thereafter,
99% to the Limited Partners (in proportion to the number of Units held by each
Limited Partner as compared to the aggregate Units held by all Limited Partners)
and 1% to the General Partner.
(iii) Notwithstanding
anything to the contrary in Section 7.3(a), no Partner shall be allocated any
Net Loss for any taxable year or other applicable period to the extent that such
allocation would result in such Partners having an Adjusted Capital Account
Deficit as of the end of such taxable year or other applicable period and the
other Partners having a positive Capital Account balance at the end of such
taxable year or other applicable period. Any Net Loss not allocated
to a Partner pursuant to the preceding sentence shall be allocated to the other
Partners until their Capital Account balance has been reduced to zero, provided that,
notwithstanding anything to the contrary in Section 7.3(a), any Net Profit for
any subsequent taxable year or other applicable period that would have been
allocated to a Partner to which Net Loss would have been allocated but for the
effect of the first sentence of this Section 7.3(a)(iii) shall be allocated to
the other Partners to the extent of the aggregate amount of Net Loss allocated
to such other Partners pursuant to the first sentence of this Section
7.3(a)(iii).
(b) Partnership Minimum Gain
Chargeback. Notwithstanding any other provision of this
Section 7.3, if there is a net decrease in Partnership Minimum Gain during any
taxable year or other period for which allocations are made, prior to any other
allocation under this Agreement, each Partner will be specially allocated items
of Partnership income and gain for that period (and, if necessary, subsequent
periods) in proportion to, and to the extent of, an amount equal to such
Partner’s share of the net decrease in Partnership Minimum Gain during such year
determined in accordance with Regulations
Section 1.704-2(g)(2). The items to be allocated will be
determined in accordance with Regulations
Section 1.704-2(g). This Section 7.3(b) is intended to comply
with the partnership minimum gain chargeback requirements of the Regulations,
will be interpreted consistently with the Regulations and will be subject to all
exceptions provided therein.
(c) Partner Nonrecourse Debt
Minimum Gain Chargeback. Notwithstanding any other provision
of this Section 7.3 (other than Section 7.3(b) which shall be applied first), if
there is a net decrease in Partner Nonrecourse Debt Minimum Gain with respect to
a Partner Nonrecourse Debt during any taxable year or other period for which
allocations are made, any Partner with a share of such Partner Nonrecourse Debt
Minimum Gain (determined under Regulations Section 1.704-2(i)(5)) as of the
beginning of the year will be specially allocated items of Partnership income
and gain for that period (and, if necessary, subsequent periods) in an amount
equal to such Partner’s share of the net decrease in the Partner Nonrecourse
Debt Minimum Gain during such year determined in accordance with Regulations
Section 1.704-2(g)(2). The items to be so allocated will be
determined in accordance with Regulations
Section 1.704-2(g). This Section 7.3(c) is intended to comply
with the partner nonrecourse debt minimum gain chargeback requirements of the
Regulations, will be interpreted consistently with the Regulations and will be
subject to all exceptions provided therein.
(d) Qualified Income
Offset. A Partner who unexpectedly receives any adjustment,
allocation or distribution described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially allocated
items of Partnership income and gain in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of the Partner as quickly as possible.
(e) Nonrecourse
Deductions. Nonrecourse Deductions for any taxable year or
other period for which allocations are made will be allocated 1% to the General
Partner and 99% to the Limited Partners, pro rata among them in proportion to
the number of Units held by each Limited Partner as compared to the aggregate
Units held by all Limited Partners.
(f) Partner Nonrecourse
Deductions. Notwithstanding anything to the contrary in this
Agreement, any Partner Nonrecourse Deductions for any taxable year or other
period for which allocations are made will be allocated to the Partner who bears
the economic risk of loss with respect to the Partner Nonrecourse Debt to which
the Partner Nonrecourse Deductions are attributable in accordance with
Regulations Section 1.704-2(i).
(g) Code Section 754
Adjustments. To the extent an adjustment to the adjusted tax
basis of any Partnership asset under Code Sections 734(b) or 743(b) is
required to be taken into account in determining Capital Accounts under
Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the adjustment to
the Capital Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the
basis), and the gain or loss will be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are required
to be adjusted under Regulations Section 1.704-1(b)(2)(iv)(m).
(h) Interest in
Partnership. Notwithstanding any other provision of this
Agreement except Section 7.12, no allocation of Net Profit, Net Loss or item of
income, gain, loss or deduction will be made to a Partner if the allocation
would not have “economic effect” under Regulations
Section 1.704-1(b)(2)(ii) or otherwise would not be in accordance with the
Partner’s interest in the Partnership within the meaning of Regulations
Section 1.704-1(b)(3) or 1.704-1(b)(4)(iv). The General Partner
will have the authority to reallocate any item in accordance with this Section
7.3(h). Notwithstanding the authority granted to make such
allocations as may be appropriate to accomplish the purposes of this Section
7.3(h), no allocation under this Section 7.3(h) will affect or otherwise alter
the amount of any distribution to which a Partner would otherwise be entitled
pursuant to any provision of this Agreement.
(i) [Intentionally
Left Blank]
(j) Curative Allocations.
The allocations set forth in subsection (b), (c), (d), (e), (f) and (g) (the
“Regulatory Allocations”) are intended to comply with certain requirements of
Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory
Allocations may effect results that would not be consistent with the manner in
which the Partners intend to divide Partnership
distributions. Accordingly, the General Partner is authorized to
divide other allocations of Net Profits, Net Losses, and other items among the
Partners so as to prevent the Regulatory Allocations from distorting the manner
in which Partnership distributions would be divided among the Partners under
Section 8.4. In general, the reallocation will be accomplished by
specially allocating other Net Profits, Net Losses and items of income, gain,
loss and deduction, to the extent they exist, among the Partners so that the net
amount of the Regulatory Allocations and the special allocations to each Partner
is zero. The General Partner will have discretion to accomplish this
result in any reasonable manner that is consistent with Code Section 704
and the related Regulations.
7.4. Taxable Gain on
Exchange. Any taxable gain incurred by the Partnership as a
result of receiving taxable “boot” in an otherwise tax-deferred exchange of a
Partnership property shall be allocated to the Partners receiving said funds and
other consideration as said allocation is provided in Code Section 704(a) and
704(b), but only to the extent that the total gain so allocated does not exceed
the amount of gain that would be allocated to the Partner had the property been
sold outright for all cash by the Partnership for the net amount credited to the
Partnership in the exchange. Any such excess shall be allocated to
the remaining Partners in the same ratio that total gain would have been
allocated had the property been sold outright for all cash by the Partnership
for the net amount credited to the Partnership in the exchange.
7.5. Depreciation
Recapture. To the extent possible, if taxable gain to be
allocated includes income resulting from the sale or disposition of Partnership
property which is treated as ordinary income (or un-recaptured Code Section 1250
gain) for income tax purposes, such gain so treated as ordinary income (or
un-recaptured Code Section 1250 gain) shall be allocated to and reported by each
Partner in proportion to allocations received by that Partner of the items that
gave rise to such ordinary income (or Code Section 1250 gain) recapture, and the
Partnership shall keep records of such allocations.
7.6. Allocation between Assignor
and Assignee. The initial Capital Account Balance for a
transferee of Units pursuant to this Agreement shall be that of the transferor
on the date the transfer is effective hereunder. The portion of the
income, gain, losses, credits and deductions of the Partnership for any
Partnership Fiscal Year during which a Partner transfers its interest in the
Partnership pursuant to this Agreement is allocable to the transferor and the
transferee on the basis of the number of days during the relevant fiscal year
that each is the owner thereof, using a reasonable daily proration
method.
7.7. Express Consent to
Allocations. The allocations which are to be made pursuant to
this Agreement, including allocations of distributions, are expressly consented
to by each Partner and each Partner hereby agrees to file its tax returns
consistent therewith.
7.8. Adjustments to Gain and
Loss. For purposes of computing gain or loss on the
disposition of Partnership property, or for purposes of determining the cost
recovery, depreciation or amortization deduction with respect to any asset, the
Partnership shall use such property’s book value, as determined in accordance
with Regulations Section 1.704-1(b). Consequently, such property’s
book value shall be equal to its adjusted basis for federal income tax purposes,
except as follows:
(a) The
initial book value of the property shall be the fair market value net of
encumbrances on such property.
(b) The book
values of all Partnership properties may be adjusted to equal their respective
gross fair market values, as determined by the General Partner, as of the
following times: (i) the acquisition of an additional interest in the
Partnership by any new or existing Partner in exchange for more than a capital
contribution of $1,000; (ii) the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property other than
money; (iii) the termination of the Partnership for federal income
tax purposes pursuant to Code Section 708(b)(1)(B); and (iv) the
liquidation of any Partner’s Interest or portion thereof (other than a de
minimis amount) in the Partnership.
(c) If the
book value of property has been determined pursuant to subsection 7.8(a) or
7.8(b), such book value shall thereafter be adjusted by depreciation or
amortization, if any, taken into account with respect to such property for
purposes of computing income, gain or loss.
7.9. Tax
Allocations: Code Section 704(c). In accordance
with Code Section 704(c) and the Regulations, income, gain, loss and deductions
with respect to any property contributed to the capital of the Partnership
shall, solely for tax purposes, be allocated among the Partners so as to take
into account any variation between the adjusted basis of such property to the
Partnership for federal income tax purposes and its initial book value (computed
in accordance with Section 7.8).
If the
book value of any Partnership property is adjusted pursuant to Section 7.8,
subsequent allocations of income, gain, loss and deductions with respect to such
asset shall take into account any variation between the adjusted basis of such
property for federal income tax purposes and its book value in the same manner
as under Code Section 704(c) and the Regulations.
Any
elections or other decisions relating to such allocations shall be made by the
General Partner in any manner that reasonably reflects the purpose and intention
of this Agreement. Allocations pursuant to this Section 7.9 are
solely for purposes of federal, state and local taxes and shall not affect, or
in any way be taken into account in computing, any Partner’s Capital Account
Balance.
7.10. General Provisions Relating
to Distributions, Net Profit and Net Loss Allocations.
(a) For each
taxable year of the Partnership, all Net Profit and Net Loss of the Partnership
shall be allocated at and as of the end of the taxable year. The
General Partner shall distribute to each Partner a report of the allocations of
Net Profit and Net Loss within ninety (90) days after the end of such taxable
year (or later if due to a delay beyond the control of the General
Partner).
(b) Net
Profit and Net Loss shall be allocated, and all distributions shall be
distributed, as the case may be, to the Persons shown on the records of the
Partnership to have been Partners as of the last day of the taxable year for
which the allocation or distribution is to be made or if such distribution is to
be made in connection with the dissolution of the Partnership, as of the date
such distribution is made pursuant to Section 8.4(d). Notwithstanding
the foregoing, if a Partner transfers all or any portion of his or her
Partnership Interest to any Person who, during such taxable year, is admitted as
a Substitute Limited Partner, the Net Profit and Net Loss shall be allocated
between the transferor and the transferee on the basis of the number of days of
the taxable year in which each was a Partner or assignee of record, as the case
may be.
(c) The
methods set forth hereinabove by which Net Profit, Net Loss, and the
distributions are allocated, apportioned and paid are hereby expressly consented
to by each Partner as an express material condition to becoming a
Partner.
7.11. Adjustments to
Allocations. Anything herein to the contrary notwithstanding,
except and subject to Section 7.12, in the event the General Partner in its sole
discretion, based on advice from the Partnership’s tax advisor, determines that
for any Partnership tax year or other applicable period an allocation of Net
Profit, Net Loss, gain, loss, deduction or credit is likely not to be in
compliance with the Code or Regulations promulgated thereunder, the General
Partner may, without limiting the authority of the General Partner otherwise
under this Article VII, amend this Agreement, and each Limited Partner hereby
consents to any such amendment, to reallocate such item so as to comply with the
Code or Regulations in such manner as it determines, in its sole judgment, to
least change the original allocation.
7.12. Fractions
Rule. The Partners intend that the foregoing allocation
provisions of this Article VII shall be made in such a manner as to have
“substantial economic effect” pursuant to Regulations Section 1.704-1(b), and
enable each Limited Partner which is a qualified organization under Section 514
of the Code (“Qualified Organization”) to meet the requirements of Section
514(c)(9)(E) of the Code. To the extent such foregoing allocation
provisions do not have “substantial economic effect,” or cause a Limited Partner
which is a Qualified Organization to be unable to meet the requirements of
Section 514(c)(9)(E) of the Code, such provisions shall be amended by the
General Partner if and to the extent necessary to produce such result; provided,
however, that no such adjustment that has a material adverse effect upon any
Partner shall be made without the General Partner having received from counsel
an opinion that such adjustments are necessary for a Limited Partner which is a
Qualified Organization to comply with the requirements of Section 514(c)(9)(E)
of the Code. This Section 7.12 shall control notwithstanding any
other provision of this Agreement or the reallocation or adjustment of taxable
income, taxable loss or items thereof by the Internal Revenue Service or any
other taxing authority.
8.1. No Termination by Admission
or Incapacity of Limited Partners. Neither the admission to
the Partnership of any additional Limited Partner, nor the transfer of an
Interest, nor any Event of Dissolution with respect to any of the Limited
Partners will affect the Partnership’s existence in any manner
whatsoever. If an Event of Dissolution shall occur with respect to a
Limited Partner, his Representative shall have the same rights for the purpose
of settling his estate or business and shall be subject to the same limitations,
conditions, and liabilities as applied to the Limited Partner; provided,
however, that upon the death, dissolution or incapacity of a Limited Partner,
the successor-in-interest to such Limited Partner shall have the right to become
a Substitute Limited Partner as provided in Section 9.3 of this
Agreement.
8.2. Termination of the
Partnership. The Partnership shall be dissolved upon the
happening of any of the following events, whichever shall first
occur:
(a) an Event
of Dissolution with respect to any General Partner, unless the Partnership is
continued in accordance with the provisions of Section 8.3 of this
Agreement;
(b) the sale,
exchange, condemnation or other disposition of all the interests in real estate
(including, without limitation, purchase money security interests and interest
in joint ventures or other entities owning interests in real estate) unless the
General Partner has determined to reinvest the proceeds consistent with the
provisions of this Agreement; or
(c) upon the
expiration of the term provided for in Section 1.4 of this
Agreement.
8.3. Continuation of Partnership
upon Certain Events.
(a) Upon the
occurrence of any event or events provided in Section 8.2(a) of this Agreement
with respect to less than all the General Partner(s) (if there is then more than
one General Partner), the remaining General Partner(s) shall immediately send
Notice of such event to the Limited Partners, and such remaining General
Partner(s) may then elect, within 30 days after the occurrence of such event, to
continue the business of the Partnership in accordance with the terms of this
Agreement; provided, however, that counsel to the Partnership determines that
such continuation would not result in the Partnership being classified for
federal income tax purposes as an association taxable as a corporation and not
as a partnership. If the remaining General Partner does not so elect,
the Limited Partners may Consent, within sixty (60) days after receipt of Notice
of such event, to reconstitute the Partnership and continue its business in
accordance with the terms of this Agreement and with the new General Partner or
the remaining General Partner selected by the Limited Partners.
(b) Upon the
occurrence of any event or events provided in Section 8.2(a) of this Agreement
with respect to a sole General Partner, the Limited Partners shall have the
right to continue the business of the Partnership in accordance with the terms
of this Agreement upon the selection, by a Majority in Interest of the Limited
Partners within ninety (90) days of such occurrence, of a substitute General
Partner and upon such substitute General Partner executing this Agreement and an
amendment to the Certificate and agreeing to be bound by all of the terms and
provisions hereof; provided, however, that counsel to the Partnership determines
that such continuation would not result in the Partnership being classified for
federal income tax purposes as an association taxable as a corporation and not
as a partnership.
8.4. Dissolution and
Liquidation.
(a) Upon the
termination of the Partnership, and absent any continuation of the Partnership
pursuant to Section 8.3, the Partnership’s affairs shall be wound up and the
Partnership shall be dissolved as soon as practicable thereafter by the General
Partner or its designee, or, if there is no General Partner then remaining, by
such other person designated by a Majority in Interest of the Limited Partners
(the “Liquidator”). In winding up the affairs of the Partnership, the
Liquidator shall proceed to liquidate the assets of the Partnership in such
manner as it shall determine, allowing a reasonable time thereafter to minimize
losses attendant upon a liquidation.
(b) Upon the
liquidation of the Partnership’s assets, the proceeds, if any, from such
liquidation shall be applied and distributed first to the payment of the
expenses or other charges incurred in connection with such
liquidation; second, to the payment of all debts and liabilities of
the Partnership including, without limitation, compensation owing to the General
Partner or an Affiliate pursuant to Section 5.9; third, to the
establishment of such reserves which the Liquidator shall deem reasonably
necessary to provide for contingent and unforeseen liabilities or obligations of
the Partnership; and fourth, to the Partners in the manner and order
provided in subsection (d) below.
(c) The
General Partner shall not be personally liable for the repayment of the Capital
Contributions made by the Limited Partners or any portion
thereof. Any repayment will be made solely from the assets of the
Partnership available for such repayment. The General Partner shall
not be liable to the Partnership on account of a Capital Account Deficit of any
Partner; provided, however, that the General Partner shall not be relieved of
any obligation to pay liabilities to third parties incurred in its capacity as
General Partner.
(d) Distributions
in connection with the dissolution of the Partnership shall be made in
accordance with the Partners’ respective positive Capital Accounts after they
have been adjusted to reflect the allocations of Net Profits, Net Losses,
income, gain, losses and deductions as set forth in Section 7.3. In
the event that all or any part of the Partnership’s property is itself
distributed to the Partners on dissolution and termination of the Partnership
without a sale of such property having occurred, an independent appraisal of the
fair market value of each such asset as of a date reasonably close to the date
of the Partnership’s liquidation shall be obtained by the Liquidator at the
expense of the Partnership. Any unrealized appreciation or
depreciation with respect to such assets shall be allocated among the Partners
in accordance with Section 7.3, assuming the assets were sold for their
appraised value. Distribution of any such asset in kind to a Partner
shall be considered a distribution of an amount equal to the asset’s appraised
fair market value.
(e) Final Capital Account
Balances. The parties intend that the allocation provisions of
Section 7.3 shall produce final Capital Account balances of the Partners that
will permit liquidating distributions under Section 8.4(d) to be made in a
manner identical to the order of priorities set forth in Section
6.1(b). To the extent that the allocation provisions of Section 7.3
would fail to produce such final Capital Account balances, (a) such provisions
shall be amended by the General Partner if and to the extent necessary to
produce such result, and (b) profits and losses of the Partnership for prior
open years (or items of gross income, gain, loss and deduction of the
Partnership for such years) shall be reallocated by the General Partner among
the Partners to the extent it is not possible to achieve such result with
allocations of items of income (including gross income and gain), deduction and
loss for the current year and future years. This Section 8.4(e) shall
control notwithstanding any other provision of this Agreement, other than
Section 7.12 and the reallocation or adjustment of taxable income, taxable loss
or items thereof by the Internal Revenue Service or any other taxing
authority.
9.1. Voluntary Withdrawal or
Assignment by the General Partner. The General Partner shall
not resign, retire or withdraw as a general partner from the Partnership, or at
any time assign, transfer, or otherwise dispose of all or any part of its
Partnership Interest, unless: (i) any remaining General Partner and a
Majority in Interest of the Limited Partners shall have
Consented; (ii) such General Partner shall have provided an
additional or successor General Partner satisfactory to a Majority in Interest
of the Limited Partners; and (iii) the Partnership shall have
received advice of its counsel to the effect that such resignation, withdrawal,
assignment or transfer would not subject the Partnership to federal income
taxation as an association taxable as a corporation and not as a partnership,
and would not cause a termination of the Partnership for federal income tax
purposes.
9.2. Involuntary Withdrawal and
Transfer of a General Partner’s Interest.
(a) The
General Partner may be removed, with or without cause, by an affirmative vote or
written consent of the Limited Partners owning at least a majority of the Units
then outstanding (not counting any Units then owned by the General Partner or
its Affiliates). Limited Partners owning at least a majority of the
Units then outstanding (not counting any Units then owned by the General Partner
or its Affiliates) shall provide Notice to the General Partner of such removal
which such Notice shall include (1) the Limited Partners voting for removal
and the Limited Partners voting against removal, (2) the reason for such
removal and (3) whether or not such removal was
for cause. For the purposes of the foregoing, “cause”
shall mean (i) the bankruptcy of the General Partner pursuant to an Event of
Bankruptcy, (ii) the incapacity of the General Partner, (iii) the commission by
the General Partner of an intentional material breach of this Agreement, or (iv)
conduct of the General Partner constituting gross negligence or willful or
wanton misconduct harmful to the Partnership.
(b) In the
event that the Limited Partners vote to remove the General Partner, the General
Partner shall have an additional thirty (30) business days from the date of the
notice of removal from the Limited Partners in which to cure or otherwise
resolve the matter(s) resulting in the notice to remove to the reasonable
satisfaction of the Limited Partners holding a majority of the Units then
outstanding (not counting any Units then owned by the General
Partner). The Limited Partners shall not unreasonably withhold
approval of the cure accomplished by the General Partner. In the
event that the General Partner is removed, it hereby agrees to convert its
General Partner’s Capital Contribution into that of a Limited Partner having no
voting rights but whose Interest is unchanged in all other
respects. The removed General Partner shall be removed from and
indemnified against Partnership liabilities, including without limitation
liabilities the General Partner has guaranteed. Further, if removed
other than for cause, the General Partner’s Interest must be purchased by the
Partnership and/or any successor General Partner for fair market value, which
will be determined by the median of three independent appraisals of the General
Partner Interest.
(c) In the
event of the dissolution and liquidation or removal of the General Partner and
the Partnership being continued in accordance with Section 8.3, the successor of
the said General Partner shall not be entitled to any distributions due the
former General Partner under this Agreement. The Limited Partners
hereby agree to such a transfer and specifically authorize that the power of
attorney provided for in their Subscription Agreements with the Partnership be
utilized, if need be, on their behalf to effectuate fully the legal conversion
or transfer, as the case may be, of the dissolved or removed General Partner’s
Interest hereunder.
9.3. Transfer by Limited
Partners.
(a) Subject
to Section 9.4 hereof, no Limited Partner may at any time sell, transfer, or
assign all or any portion of its Interest in the Partnership,
unless:
1. such
Limited Partner and the purchaser, transferee or assignee execute, acknowledge
and deliver to the General Partner such instruments of transfer and assignment
with respect to such transaction as may be reasonably requested by the General
Partner to assure the payment of any unpaid amounts due from the Limited Partner
hereunder;
2. such
Limited Partner obtains the prior written Consent of the General Partner, the
granting of which shall be within the sole discretion of the General Partner and
will not be given unless (i) the General Partner determines, in its sole
discretion, that the Partnership (A) would be able to satisfy any of the
secondary market safe harbors contained in Regulations Section 1.7704-1 (or any
other applicable safe harbor from publicly traded partnership status which may
be adopted by the Internal Revenue Service) for the Partnership’s taxable year
in which such transfer otherwise would be effective and (B) would not be
treated as an association taxable as a corporation as a result of such transfer
or assignment, or (ii) the Partnership has received an opinion of counsel
satisfactory to the General Partner or a favorable Internal Revenue Service
ruling that any such transfer will not result in the Partnership’s being
classified as a publicly traded partnership for federal income tax purposes (the
General Partner may waive the requirement of the legal opinion in its sole
discretion); and
3. such
Limited Partner pays the Partnership the actual costs reasonably incurred by it
in effecting the transfer or assignment, which shall not be less than $150 per
transaction.
In
connection with Section 9.3(a)(2), the Limited Partners agree to provide all
information with respect to a proposed transfer that the General Partner deems
necessary or desirable in order to make such determination, including but not
limited to, information as to whether the transfer occurred on a secondary
market (or the substantial equivalent thereof).
(b) Notwithstanding
anything contained in this Agreement to the contrary, no purchaser, transferee
or assignee of an Interest in the Partnership shall have any right to become a
Substitute Limited Partner unless the General Partner consents in writing to
such substitution. Further, notwithstanding anything contained in
this Agreement to the contrary, no sale, transfer, assignment or substitution by
a Limited Partner shall be effective as against the Partnership (and any such
purported sale, transfer, assignment or substitution shall be void ab initio) if
it (i) would result in the Partnership being treated as an association
taxable as a corporation (and any such purported sale, transfer, assignment or
substitution shall be void ab initio) or would otherwise cause the Partnership
to fail to satisfy any of the applicable safe harbors from publicly traded
partnership status contained in Regulations Section 1.7704-1 (or any other
applicable safe harbor from publicly traded partnership status which may be
adopted by the Internal Revenue Service which may be adopted by the Internal
Revenue Service), (ii) would violate any applicable federal or state
securities, real estate syndication or comparable laws or (iii) would cause
the Units to fail to fall within the insignificant investment exclusion from the
definition of plan assets contained in Section 2510.3-101(f) of
Title 29 of the Code of Federal Regulations.
(c) No sale,
transfer, assignment or substitution by a Limited Partner, which has otherwise
been consented to by the General Partner, shall be effective as against the
Partnership until the purchaser, transferee, assignee or Substitute Limited
Partner, and all the Partners perform all such acts which the General Partner
deems necessary or appropriate to constitute such purchaser, transferee or
assignee as a Substitute Limited Partner and to preserve the limited liability
status of the Limited Partners in the Partnership after the completion of such
sale, transfer, assignment or substitution under the laws of each jurisdiction
in which the Partnership is doing business. The Limited Partners
agree upon request of the General Partner to execute such certificates or other
documents and perform such other acts as may be reasonably requested by the
General Partner in this regard.
(d) Any sale,
transfer or assignment of an Interest in the Partnership or substitution of a
Limited Partner made in compliance with this Section 9.3 shall be effective as
of the day of the month in which the execution of such instruments,
certificates, or other documents and the performance of such other acts by the
Partner is completed as provided in subsections (a) and (c) of this Section 9.3,
or in which any required written Consent thereto is given by the General Partner
pursuant to subsections (a) and (b) of this Section 9.3, whichever is
later.
(e) The Net
Profits and Net Losses attributable to an assigned Interest in the Partnership
shall be allocated among the assignor and assignee of such Interest as of the
effective date of the assignment thereof, in accordance with Section 7.6
hereof.
(f) Upon the
death, dissolution or incapacity of a Limited Partner, the successor-in-interest
to the Limited Partner shall have the right to become a Substitute Limited
Partner upon written notice to the Partnership within ninety (90) days after the
appointment of such Limited Partner’s Representative, but not later than one
hundred eighty (180) days after the death or certified incapacity of the Limited
Partner, and upon such successor executing this Agreement or an amendment
hereto, the certificate and such other documents as the General Partner may
request. If such right is not exercised, the Representative of the
deceased or incapacitated Limited Partner shall have only the rights to
distributions and allocations as the Limited Partner would have
had.
(g) Notwithstanding
anything contained in this Agreement to the contrary, the General Partner may
require, as a condition to any transfer or assignment, a prior written notice of
assignment of Units in form and substance satisfactory to legal counsel, signed
by both the transferor and transferee, and a determination by counsel in form
and substance satisfactory to the Partnership that (i) registration will not be
required under the Securities Act of 1933, as amended; (ii) such
assignment or transfer will not violate any applicable federal or state
securities, real estate syndication or comparable laws; (iii) such
assignment or transfer will not cause a termination of the Partnership for
federal income tax purposes; (iv) such assignment or transfer will
not be effectuated through an “established securities market” or a “secondary
market (or the substantial equivalent thereof)” within the meaning of Section
7704(b) of the Code; (v) such assignment or transfer will not
result in the Partnership being treated as a publicly traded partnership within
the meaning of Section 7704 of the Code; and (vi) such assignment or
transfer will not violate any loan documents or other agreements to which the
Partnership is a party or by which the Partnership is bound.
9.4. Put
Right. At any time after November 15, 2009 and prior to
November 15, 2013, any Partner who has held Units for at least three years (the
“Put Partner”) shall have the right to request that the Partnership redeem all
of such Units. Such request shall be made in writing, state a
requested date for the redemption (the “Requested Redemption Date”) and be
delivered to the General Partner at least 60 calendar days in advance of the
Requested Redemption Date. The General Partner shall determine
whether the Partnership has sufficient funds to grant the request, which
determination shall be made prior to the Requested Redemption Date in the sole
discretion of the General Partner. If the General Partner determines
that sufficient funds are available, the request shall be granted, and the
Partnership shall transfer and deliver to the Put Partner no sooner than the
Requested Redemption Date, but no later than 60 calendar days thereafter, 92% of
the Unreturned Invested Capital of the Put Partner with respect to the redeemed
Units determined as of the Requested Redemption Date; provided that the sum of
the percentage interests in Partnership capital or profits transferred during
the taxable year of the Partnership does not exceed 9% of the total interests in
partnership capital or profits as determined in the sole discretion of the
General Partner. Notwithstanding the foregoing, at no time during any
12-month period may the number of Units redeemed by the Partnership exceed 2% of
the number of Units outstanding at the beginning of such 12-month period unless
such redemption is otherwise deemed to be a disregarded transfer for purposes of
determining whether the Partnership is a publicly traded partnership pursuant to
Regulations Section 1.7704-1 as determined in the sole discretion of the
General Partner. If the General Partner determines that sufficient
funds are not available, or if the requested redemption would cause the number
of Units redeemed by the Partnership to exceed 2% of the number of Units
outstanding at the beginning of such 12-month period, the Partnership shall
either (i) decline to perform the requested redemption or (ii) perform the
requested redemption solely to the extent such redemption does not violate the
provisions of Section 9.3 or this Section 9.4, to be decided in the sole
discretion of the General Partner.
Each Put
Partner covenants and agrees with the Partnership and the General Partner that
all Units delivered in connection with the exercise of the put right under this
Section 9.4 shall be delivered to the Partnership or the General Partner,
respectively, free and clear of all liens, encumbrances, liabilities, claims or
charges of any kind and, notwithstanding anything contained herein to the
contrary, neither the Partnership nor the General Partner shall be under any
obligation to acquire any Put Partner’s Units, (1) to the extent that any such
Units are subject to any liens, encumbrances, liabilities, claims or charges of
any kind or (2) in the event that any such Put Partner shall fail to give the
General Partner adequate assurances that such Units are not subject to any such
liens, encumbrances, liabilities, claims or charges of any kind or shall fail to
agree to fully indemnify the General Partner from any such liens, encumbrances,
liabilities, claims or charges of any kind as well as any costs and expenses
relating to the Put Partner’s Units or the exercise of the put
right. Each Put Partner further agrees that, in the event any state
or local transfer tax is payable as a result of the transfer of its Units to the
Partnership or General Partner, respectively, each such Put Partner shall assume
and pay such transfer tax.
10.1. Books and
Records.
(a) The
Partnership shall keep and maintain the following records in its principal
office or make them available in that office within five business days after the
date of receipt of a written request under subsection (d) below:
1. a current
list that states:
A. the name
and mailing address of each partner, separately identifying in alphabetical
order the General Partner and the Limited Partners;
B. the last
known street address of the business or residence of the General Partner;
and
C. the
percentage or other interest in the Partnership owned by each
Partner;
2. copies of
the Partnership’s federal, state, and local information or income tax returns
for each of the Partnership’s six most recent tax years;
3. copies of
the Agreement and the Certificate, and all amendments thereof;
4. unless
contained in this Agreement, a written statement of:
A. the
amount of the cash contribution and a description and statement of the agreed
value of any other contribution made by each Partner, and the amount of the cash
contribution and a description and statement of the agreed value of any other
contribution that the Partner has agreed to make in the future as an additional
contribution;
B. events
requiring the Partnership to be dissolved and its affairs wound up;
C. the date
on which each Partner in the Partnership became a
Partner; and
D. books and
records of account of the Limited Partners.
(b) The
Partnership shall maintain its records in written form or in another form
capable of conversion into written form within a reasonable time.
(c) The
Partnership shall keep in its registered office in Delaware, and make available
to Partners on reasonable request, the street address of its principal United
States office in which the records required by this section are maintained or
will be available.
(d) A Partner
or an assignee of a Partnership Interest, on written request stating the
purpose, may examine and copy, in person or by the Partner’s or assignee’s
representative, at any reasonable time, for any proper purpose, and at the
Partner’s expense, records required to be kept under this section and other
information regarding the business, affairs, and financial condition of the
Partnership as is just and reasonable for the person to examine and
copy.
(e) On the
written request by any Partner or an assignee of a Partnership Interest made to
the person and address designated in this Agreement or, if there is no
designation, to the General Partner at the Partnership’s principal United States
office, the Partnership shall provide to the requesting Partner or assignee
without charge, true copies of:
1. this
Agreement and all amendments or restatements;
2. the
Certificate, and all amendments or restatements; and
3. any of
the tax returns described in Subdivision (2) of Subsection (a)
above.
10.2. Accounting Method; Audits
and Reports.
(a) The
Partnership shall adopt the accrual method of accounting unless the General
Partner determines, in the interest of the Partnership, that a different method
should be adopted.
(b) At all
times during the existence of the Partnership, the General Partner shall keep or
cause to be kept full and true books of account in which shall be entered fully
and accurately each transaction of the Partnership. Unless otherwise
required by applicable law, the General Partner shall deliver to the Limited
Partners within one hundred twenty (120) days after the end of each Partnership
Fiscal Year unaudited annual financial statements of the
Partnership. Such financial statements may be prepared by the General
Partner or its Affiliates. Such financial statements will be audited
for a Partnership Fiscal Year by an independent certified accountant if the
affirmative vote or written consent of the Limited Partners owning at least 30%
of the then outstanding Units (not counting any Units then owned by the General
Partner) is obtained at least 90 days prior to the end of such Partnership
Fiscal Year. If such financial statements are audited by an
independent certified public accountant, the Partnership will bear 100% of the
cost of such services. In addition, the General Partner shall deliver
within ninety (90) days after the end of each Partnership Fiscal Year so-called
“Information Returns” showing the actual Profits or losses and the allocation
thereof to each Partner for the Partnership’s preceding Partnership Fiscal
Year.
(c) The
General Partner shall deliver to the Limited Partners periodically, but not less
than annually, operating reports and financial or other pertinent information as
is determined appropriate by the General Partner.
10.3. Bank
Accounts. The General Partner shall maintain on behalf of the
Partnership a bank account or accounts with such depositories as it shall
determine, in which all monies received by or on behalf of the Partnership shall
be deposited. All withdrawals from such accounts shall be made upon
the signature of such person or persons as the General Partner may from time to
time designate.
11.1. Tax
Elections. All elections required or permitted to be made by
the Partnership under the Code shall be made by the General Partner in the
manner as will, in its opinion, be most advantageous to the
Partners. No Partner shall take or refuse to take any action which
would cause the Partnership to lose the benefits of any tax election made or to
be made. The General Partner shall designate the “Tax Matters
Partner” and the “Notice Partner” for the Partnership within the meaning of the
Code. For all purposes with respect to the Code, the General Partner
appoints itself the “Tax Matters Partner” and the “Notice Partner,” as
applicable, to serve in such capacity until its resignation or replacement is
appointed.
11.2. Tax Audit
Expenses. In the event the Partnership is audited by the
Internal Revenue Service, the Partnership shall pay all of the costs incurred in
defending the Partnership’s tax position, including the cost of third party
professionals engaged to assist in preparing for and representing the
Partnership in such an audit. In the event the Partnership does not
have funds available to pay such costs, the General Partner may
advance such sums or may loan sufficient funds to the Partnership to cover such
costs, in accordance with Section 5.4 herein. The General Partner
shall be solely responsible for determining when and to what extent to
compromise, defend, or otherwise pursue the Partnership’s position with respect
to the treatment of any item of Partnership income, expense, deduction, or
allocation with respect to such an audit.
12.1. General.
(a) The
General Partner may, at any time, amend this Agreement in a way that does not
adversely impact the rights of the Limited Partners; provided, however, that the
General Partner shall provide written notice to the Limited Partners of such
amendment no later than fifteen (15) days after the effective date of such
amendment.
(b) The
General Partner may, at any time, propose an amendment to this Agreement that
adversely impacts the rights of the Limited Partners by providing notice thereof
to all Partners in writing, together with a statement of the purpose(s) of the
amendment and such other matters as the General Partner deems material to the
consideration of such amendment. An amendment to this Agreement
proposed by the General Partner and adversely impacting the rights of the
Limited Partners shall require the Consent of a Majority in Interest of the
Limited Partners and such approval may be obtained at either a special meeting
of Partners called for the purposes of considering such amendment or pursuant to
the terms of Section 12.2. A special meeting called for the
consideration of an amendment to this Agreement proposed by the General Partner
shall be called by the General Partner by providing written notice to all
Partners not less than ten (10) not more than sixty (60) days before the
meeting. Included in the notice shall be a description of the
proposed amendment.
(c) At any
time, Limited Partners holding not less than 25% of the issued and outstanding
Units may propose an amendment to this Agreement, or a meeting of Limited
Partners to consider any other proposal for which the Limited Partners may vote
hereunder, including the sale of all or substantially all of the assets of the
Partnership. Upon the request in writing to the General Partner of
any person entitled to call a meeting, the General Partner shall promptly call a
special meeting of all Partners to consider the proposal by providing written
notice of the meeting to all Partners not less than ten (10) nor more than sixty
(60) days before the meeting. Included in the notice shall be a
description of the action proposed. The notice shall provide that
Limited Partners may vote in person or by proxy. Any amendment to the
Agreement properly proposed by Limited Partners shall require the Consent of a
Majority in Interest of the Limited Partners; provided, however, that no such
amendment affecting the rights or obligations of the General Partner shall be
approved without the approval of the General Partner.
12.2. Action Without a
Meeting. As an alternative to voting at meetings of the
Partnership pursuant to this and other Articles of this Agreement, the Limited
Partners may Consent to and approve by written action any matter that the
Limited Partners may Consent to and approve by vote at a meeting. In
order to Consent to and approve the matter, the same percentage of Limited
Partners, by interest, must sign the written action as is required by vote at a
meeting; provided, however, that written notice of the action so taken is given
to all Partners at least fifteen (15) days after such required Consent is
obtained.
12.3. Amendments on Admission or
Withdrawal of Partners and Clarification Amendments.
(a) Notwithstanding
the provisions of Section 12.1 hereof, this Agreement may be amended without the
Consent of the Limited Partners to reflect the addition, removal or substitution
of a Limited Partner. Any amendment to this Agreement pursuant to
this Section 12.3(a) shall be signed by the General Partner, and by the Persons
to be added or substituted, or their attorneys-in-fact, and, if Limited Partners
are to be removed or substituted, by the removed or assigning Limited Partners
or their attorneys-in-fact.
(b) Notwithstanding
the provisions of Section 12.1 hereof, this Agreement and the Certificate may be
amended without the Consent of the Limited Partners to reflect the designation
of an additional or successor General Partner. Any amendment to this
Agreement pursuant to this Section 12.3(b) shall be signed by the remaining
General Partner(s), and by such additional or successor General
Partner.
(c) Notwithstanding
the provisions of Section 12.1 hereof, this Agreement and the Certificate may be
amended without the Consent of the Limited Partners to reflect the withdrawal or
removal of a General Partner. Any amendment to this Agreement
pursuant to this Section 12.3(c) shall be signed by the withdrawing or removed
General Partners and the remaining or successor General Partner.
(d) Notwithstanding
the provisions of Section 12.1 hereof, this Agreement may be amended by the
General Partner without the Consent of the Limited Partners to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provisions herein, or to make any other provisions
with respect to matters or questions arising under this Agreement which will not
be inconsistent with the provisions of this Agreement. Any amendment
to this Agreement pursuant to this Section 12.3(d) shall be signed by the
General Partner.
(e) Notwithstanding
the provisions of Section 12.1 hereof, this Agreement may be amended by the
General Partner without the Consent of the Limited Partners to add to the
representations, duties or obligations of the General Partner or surrender any
right or power granted to the General Partner herein, for the benefit of the
Limited Partners. Any amendment to this Agreement pursuant to this
Section 12.3(e) shall be signed by the General Partner.
13.1. Notices. All
Notices, demands, or other communications hereunder shall be in writing and
shall be deemed to have been given when the same are (a) deposited in the United
States mail and sent by certified or registered mail, postage prepaid, return
receipt requested, or (b) delivered, in each case to the parties at the
addresses set forth below or at such other addresses as such parties may
designate by written notice to the Partnership:
(a) if to the
Partnership or the General Partner, at the principal office of the
Partnership; and
(b) if to the
Limited Partners, at the addresses set forth in their respective Subscription
Agreements or any written notice of change of address received by the General
Partner.
13.2. Further
Assurances. The Partners will execute and deliver such further
instruments and do such further acts or forbear from such action and things as
may be required to carry out the intent and purpose of this
Agreement.
13.3. Representations of the
Partners. Each Partner represents and warrants to the
Partnership and every other Partner that (a) he is fully aware of, and is
capable of bearing, the risks relating to an investment in the Partnership, (b)
he understands his Interest in the Partnership has not been registered under the
Securities Act of 1933, as amended, or the securities law of any jurisdiction in
reliance upon exemptions contained in those laws, and (c) he has acquired his
Interest in the Partnership for his own account, with the intention of holding
the Interest for investment and without any intention of participating directly
or indirectly in any redistribution or resale of any portion of the Interest in
violation of the Securities Act of 1933, as amended, or any applicable
law.
13.4. Survival of Representations
and Agreements. All representations and agreements herein
shall survive until the dissolution and final liquidation of the Partnership,
except to the extent that a representation or agreement expressly provides
otherwise.
13.5. Agreement in
Counterparts. This Agreement may be executed in counterparts
and all so executed shall constitute one agreement binding on all parties hereto
notwithstanding that all the parties hereto are not signatories to the original
or to the same counterpart.
13.6. Captions and
Context. Captions contained in this Agreement are inserted
only as a matter of convenience and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any provisions
hereof. The use of a masculine pronoun shall be deemed
interchangeable with a feminine or neuter pronoun as the content would
require; likewise singular nouns shall be interchangeable with plural
as the content requires.
13.7. Construction. The
title of the Articles and Sections in this Agreement have been inserted as a
matter of convenience of reference only and do not affect the meaning or
construction of any of the provisions in this Agreement.
13.8. Governing Law;
Successors. This Agreement and the rights and obligations of
the Partners shall be governed by and construed in accordance with the internal
laws of the State of Delaware. Except as otherwise expressly provided
in this Agreement, all provisions of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by or against, the heirs, successors,
legal representatives and assigns of the parties hereto.
13.9. Binding
Effect. Subject to Section 13.11, this Agreement will inure to
the benefit of and will be binding upon the Partners, their legal
representatives, transferees, heirs, administrators, successors and
assigns.
13.10. Validity of
Agreement. The invalidity of any portion of this Agreement
shall not affect the validity of the remainder hereof. Should any
portion of this Agreement be declared invalid and unenforceable, then such
provisions shall automatically be struck from this Agreement and replaced with a
provision as close in meaning to the original provision as possible while
remaining valid and enforceable.
13.11. Creditors Not
Benefited. Nothing in this Agreement (including specifically
Sections 4.4, 5.4, 6.3 and 11.2) is intended to benefit any creditor of (i) the
Partnership or (ii) a Partner. No creditor of the Partnership or a
Partner will be entitled to require the General Partner to solicit or accept any
loan or additional capital contribution for the Partnership or to enforce any
right which the Partnership or any Partner may have against a Partner, whether
arising under this Agreement or otherwise.
[Signatures
on next page]
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
to be effective as of the 15th day of November, 2006.
| General Partner: | ||
| AmREIT Monthly Income & Growth IV Corporation | ||
|
By:
|
/s/ Xxxx X. Xxxxx | |
|
Name:
|
Xxxx X. Xxxxx | |
|
Title:
|
Vice President, Chief Financial Officer, Secretary and Treasurer | |
| Initial Limited Partner: | ||
| AmREIT | ||
|
By:
|
/s/ X. Xxxx Xxxxxx | |
|
Name:
|
X. Xxxx Xxxxxx | |
|
Title:
|
Chairman, Chief Executive Officer and President | |
~19~
