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Exhibit 99.17
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CORPORATE PROPERTY ASSOCIATES 5
(A California Limited Partnership)
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of
CORPORATE PROPERTY ASSOCIATES 5, a California limited partnership (the
"Partnership"), which amends and restates the Amended Agreement of Limited
Partnership dated as of June 1, 1983, as amended as of _________, 1997, is made
and entered into as of the ____ day of _______, 1997 by and between ▇▇▇▇▇
DIVERSIFIED LLC, a Delaware limited liability company as general partner and as
limited partner, ▇▇▇▇▇ MANAGEMENT LLC, as Corporate Special Partner, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, as Individual Special Partner, and ▇▇▇▇▇ CORPORATE PROPERTY, INC.,
as limited partner, those Persons set forth on Schedule A hereto, as limited
partners, and all persons and entities admitted as Limited Partners as provided
herein.
ARTICLE I
FORMATION OF PARTNERSHIP
The parties hereby continue the Partnership under the provisions of
the California Revised Limited Partnership Act (the "Act") and the rights and
liabilities of the Partners shall be as provided in such law and as herein
expressly provided. In the event that it shall be necessary for the Partnership
to exist in or qualify to do business under the laws of any state or states
other than or in addition to the State of California, the parties hereby agree
that the Partnership shall take such action as may be necessary to exist or
qualify to do business in any state in which such existence or qualification
shall be required, provided that in any such event the Partnership shall at all
times continue to be a limited partnership formed under and governed by the
provisions of the Act.
ARTICLE II
NAME
The business of the Partnership shall be conducted under the name
"Corporate Property Associates 5" or under the name "Corporate Property
Associates 5 -A California Limited Partnership" in any state or other
jurisdiction which requires that the term "limited partnership" be a part of the
Partnership's name or under such other name as the General Partner shall
hereafter designate in writing to the other Partners.
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ARTICLE III
DEFINITIONS
"Acquisition Expenses" means the expenses of the Partnership related
to the selection and acquisition of properties by the Partnership, whether or
not such properties are acquired, including but not limited to legal fees and
expenses, travel and communications expenses, costs of appraisals,
non-refundable option payments on property not acquired, accounting fees and
expenses, costs of title reports and title insurance, transfer and recording
taxes and miscellaneous expenses. Acquisition Expenses shall not include
Acquisition Fees.
"Acquisition Fees" means the total of all fees and commissions paid
by any party in connection with the purchase or development of property by the
Partnership, except a development fee paid to a person not an Affiliate of the
Partnership in connection with the actual development of a project after the
Partnership's acquisition of the land. Included in the computation of such fees
or commissions shall be any real estate commission, selection fee, development
fee, nonrecurring management fee, or any fee of a similar nature, however
designated but not any loan fee ("points"). Acquisition Fees shall not include
Acquisition Expenses.
"Affiliate" means, with respect to any party hereto, (i) any person
directly or indirectly controlling, controlled by or under common control with
such party, (ii) any person owning or controlling 10% or more of the outstanding
voting securities of such party. (iii) any officer, director or partner of such
party or of any person specified in (i) or (ii) above and (iv) any company in
which any officer, director or partner of any person specified in (iii) above is
an officer, director or partner; provided, however, that for purposes of this
definition the term "Affiliate" shall not be deemed to include any person
providing legal, underwriting or financial or investment advisory services to
the Partnership, the General Partner, or any Affiliate of any of them from time
to time.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership as hereafter amended from time to time.
"Appraisal Date" means December 31, 2001.
"Capital Account" means, in respect of any Partner, the account
maintained for such Partner in accordance with Article XII.
"Cash From Financings" means the net cash proceeds realized by the
Partnership from the financing of Partnership property or the refinancing of any
Partnership indebtedness.
"Cash From Sales" means the net cash proceeds realized by the
Partnership from the sale, exchange or other disposition
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of any of its assets. Cash From Sales shall not include net cash proceeds
realized from the financing of Partnership property or the refinancing of any
Partnership indebtedness.
"Code" means the Internal Revenue Code of 1986.
"Consolidation and Offering Expenses" means all expenses incurred in
connection with the formation and qualification of the Subsidiary Partnership,
the Merger and in offering the Shares to the former limited partners of the
Partnership in exchange for their Partnership Interests under applicable Federal
and state law, and any other expenses actually incurred and directly related to
the offering of the Shares, including such expenses as: (i) the preparing,
printing, filing and delivering of the Registration Statement and the Prospectus
(including any amendments thereof or supplements thereto), (ii) the preparing
and printing of this Agreement, other solicitation material and related
documents and the filing and/or recording of such certificates or other
documents necessary to comply with the laws of the State of California for the
formation of a limited partnership, the merger of a limited partnership into
another limited partnership and for the continued good standing of a limited
partnership, (iii) the qualification or registration of the limited liability
company interests under state securities or "Blue Sky" laws, (iv) any escrow
arrangements, including any compensation to an escrow agent, (v) the filing fees
payable to the United States Securities and Exchange Commission and to the
National Association of Securities Dealers, Inc. and any costs payable to the
New York Stock Exchange for the listing of the Listed Shares, (vi) the fees of
the Partnership's counsel, (vii) all advertising expenses incurred in connection
therewith, including the cost of all sales literature and the costs related to
investor and broker/dealer sales and information meetings and marketing
incentive programs and (viii) selling commissions and wholesaling expenses
incurred in connection with the sale of the Shares.
"Contribution" means any money, property or services rendered, or a
promissory note or other binding obligations to contribute money or property, or
to render services as permitted by Section 15651 of the Act, which a Partner
contributes to the Partnership as capital in that Partner's capacity as Partner
pursuant to this Partnership Agreement or any other agreement among the
Partners, including any agreement as to value.
"Corporate Special Partner" means ▇▇▇▇▇ Management LLC, a Delaware
limited liability company.
"CPA Partnership" means Corporate Property Associates, a California
limited partnership, Corporate Property Associates 2, a California limited
partnership, Corporate Property Associates 3, a California limited partnership,
Corporate Property Associates 4, a California limited partnership, Corporate
Property Associates 6, a California limited partnership, Corporate Property
Associates 7, a California
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limited partnership, Corporate Property Associates 8, L.P., a Delaware limited
partnership, Corporate Property Associates 9, L.P., a Delaware limited
partnership, the Partnership and any other real estate limited partnerships
sponsored by W.P. ▇▇▇▇▇ & Co., Inc. or its Affiliates with investment objectives
substantially similar to the Partnership's. "Distributable Cash From Operations"
means cash receipts from the ordinary day-to-day operations of the Partnership
(including all interest on Partnership investments and mortgages held by the
Partnership) without deduction for the management fee authorized by Paragraph
G(3) of Article X payable to an Affiliate of the General Partner or for
depreciation and amortization of intangibles such as organization, underwriting
and debt placement costs but after deducting all other expenses, debt
amortization and provisions for reserves established by the General Partner
which it deems to be reasonably required for the proper operation of the
business of the Partnership. "Distributable Cash from Operations" shall not
include cash proceeds realized from the sale, exchange or other disposition of
assets of the Partnership or from financing of Partnership property or the
refinancing of any Partnership indebtedness.
"Distribution" means any transfer of money or property by the
Partnership to a Partner without consideration.
"Fiscal Quarter" means the three-month period ending on the last day
of the third. sixth. ninth and twelfth calendar months of each Fiscal Year of
the Partnership.
"Fiscal Year' means the Fiscal Year specified in Article XIII.
"Front-End Fees" means all fees and expenses paid by any party for
any services rendered in connection with the organizational or acquisition phase
of the Partnership, including Consolidation and Offering Expenses, Acquisition
Fees, Acquisition Expenses and any other similar fees, however designated.
"General Partner" means any person or entity in his, her or its
capacity as general partner of the Partnership and whose name and address are
set forth in Article V, or any successor thereto appointed or elected hereunder.
"Individual Special Partner" means ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Investment in Properties" means the amount of gross proceeds of the
Offering actually paid or allocated to the purchase, development, construction
or improvement of properties acquired by the Partnership, including the purchase
of properties, working capital reserves (except that working capital reserves in
excess of 5% of the gross proceeds of the Offering shall not be included) and
other cash payments such as interest, closing costs, financing fees, taxes and
other similar items, but excluding Front-End Fees.
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"Limited Partner" means any person or entity in his, her or its
capacity as a limited partner of the Partnership and whose name and address are
set forth on the books and records of the Partnership.
"Mandatory Distribution Event" means (a) the sale or disposition of
a Partnership property to a third party unaffiliated with the Partnership or the
General Partner, not including the pledge, mortgage or encumbrance of a
property, or of any interest therein, in connection with the financing,
refinancing or other leveraging of such property or otherwise or any assignment
of any leases or rents related to such property, or (b) the mandatory
distribution to holders of Partnership Interests following the Appraisal Date.
"Merger" means the merger of the Subsidiary Partnership into the
Partnership.
"Merger Agreement" means the Agreement of Merger pursuant to which
the Subsidiary Partnership is merged with and into the Partnership.
"Minimum Gain" shall mean and refer to, at any time, the excess, if
any, of the outstanding principal balance of all nonrecourse debt of the
Partnership that is secured by an interest in Partnership assets, over the
adjusted basis of such assets to the Partnership for Federal income tax
purposes. For purposes of the preceding sentence, the term "nonrecourse debt"
shall mean a liability of the Partnership with respect to which no Partner has
any personal liability.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
"Net Lease" means a lease in which the tenant undertakes to pay all
or substantially all the cash expenses, excluding debt service, related to the
leased property.
"Offering" means the offering of the Shares made pursuant to the
Prospectus.
"Partner" means the General Partner, the Corporate Special Partner,
the Individual Special Partner and any Limited Partner where no distinction is
required by the context in which the term is used.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were
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treated as a nonrecourse Liability, determined in accordance with Treasury
Regulations Section 1.704-2(i)(4).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Debt for the Partnership taxable year shall be determined in
accordance with the rules of Treasury Regulations Section 1.704-2(i)(2).
"Partnership" means Corporate Property Associates 5, a California
limited partnership.
"Partnership Interest" means the interest of each Partner in the
profits, losses, distributions, capital and assets of the Partnership.
"Partnership Minimum Gain" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership taxable year shall be determined in accordance with the rules of the
Treasury Regulations.
"Prospectus" means the final prospectus of the General Partner
pursuant to which the Partnership will offer up to 23,654,898 Shares as the same
may at any time and from time to time be amended or supplemented after the
effective date of the Registration Statement.
"Proxy" means a written authorization signed by a Partner or the
Partner's attorney-in-fact giving another person the power to vote with respect
to the Partnership Interest of that Partner.
"Signed," for the purpose of this paragraph, means the placing of
the Partner's name on the proxy (whether by manual signature, typewriting,
telegraphic transmission or otherwise) by the Partner or the Partner's
attorney-in-fact.
"Special Partners" means the Corporate Special Partner and the
Individual Special Partner.
"Registration Statement" means the General Partner's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission in the
form in which it becomes effective, as the same may at any time and from time to
time thereafter be amended or supplemented.
"Shares" means Shares of the General Partner.
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"Subsidiary Partnership" means Fifth Subsidiary, L.P., a California
limited partnership, which is a subsidiary of the General Partner.
ARTICLE IV
PURPOSE
The business and purpose of the Partnership is to invest in and own
real property or interests therein (including leasehold estates) or
appurtenances thereto as well as personal or mixed property connected therewith
which is income-producing or capable of improvement to become income-producing
within a reasonable time after acquisition. The Partnership may enter into
ventures, partnerships and other business arrangements with respect to real
property as deemed prudent by the General Partner in order to achieve successful
operations for the Partnership. Operations of the Partnership may be conducted
wherever, in the opinion of the General Partner and not in violation of the
general restrictions described in Paragraph H of Article X the factors involved
appear to be favorable for the Partnership and the Partners.
ARTICLE V
NAMES AND ADDRESSES OF PARTNERS
The General Partner of the Partnership shall be ▇▇▇▇▇ Diversified
LLC, a Delaware limited liability company having an office at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
The names and addresses of the Limited Partners of the Partnership
shall be as set forth on the books and records of the Partnership and shall be
kept at the principal place of business of the Partnership and a copy of which
shall be kept at the Partnership's California office.
ARTICLE VI
PRINCIPAL PLACE OF BUSINESS; CALIFORNIA OFFICE
The principal place of business of the Partnership shall be ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Partnership shall also maintain
an office in California at Transamerica Pyramid, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The General Partner may from time to time change
the principal place of business of the Partnership or its California office and,
in either such event, the General Partner shall notify the Partners in writing
within ten days after the effective date of such change; provided, however, that
no such change shall be effected unless the General Partner determines
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that such change is in the best interests of the Partnership after giving
consideration to any material adverse state or local income, estate or
inheritance tax consequences to the Partners, or any adverse effect on the
limited liability of the Limited Partners, as a result of such change. The
General Partner may establish additional places of business of the Partnership
when and where required by the business of the Partnership. The Partnership
shall at all times maintain in California an agent for service of process upon
the Partnership.
ARTICLE VII
CAPITAL CONTRIBUTIONS
The Partnership is authorized to issue and sell up to $160,000 of
limited partner interests.
No interest shall be paid on any contribution to the capital of the
Partnership.
Loans by a Partner to the Partnership shall not be considered
contributions to the capital of the Partnership. Any Partner, including any
additional or substituted Partner, who shall acquire a Partnership Interest or
whose Partnership Interest is increased by means of a transfer to him of all or
a part of the Partnership Interest of another Partner, shall succeed to the
Capital Account, or portion thereof, in respect of the Partnership Interest
received.
ARTICLE VIII
PROFITS AND LOSSES
A. Determination of Profits and Losses. The profits and losses of
the Partnership shall be determined for each Fiscal Year of the Partnership in
accordance with generally accepted accounting principles and procedures applied
in a consistent manner and for federal income tax purposes, by additionally
making such adjustments as are necessary to include other items of income,
expense, deduction and allowance as are permitted and required under the Code
and the regulations promulgated thereunder. Except as otherwise provided herein,
whenever a proportionate part of the Partnership profit or loss is credited or
charged to a Partner's Capital Account every item of income, gain, loss or
deduction entering into the computation of such profit or loss shall be
considered either credited or charged, as the case may be, to such Partner's
Capital Account and every item of credit or tax preference related to such
profit or loss and applicable to the period during which such profit or loss was
realized shall be allocated to such Partner in the same proportion. Every
recapture of deduction or credit shall be allocated among the Partners in the
same proportion as the items
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of deduction or credit subject to recapture was allocated among the Partners.
Any increase or decrease in the amount of any item of income, gain, loss or
deduction attributable to an adjustment to the basis of Partnership assets made
pursuant to a valid election under sections 734, 743 and 754 of the Code, and
pursuant to corresponding provisions of applicable state and local income tax
laws shall be charged or credited, as the case may be, and any increase or
decrease in the amount of any item of credit or tax preference attributable to
any such adjustment shall be allocated, to the Partners entitled thereto under
such laws. Profits and losses allocated, to a particular class of Partnership
Interests shall be allocated among the holders of record of such class of
Partnership Interests at the end of each Fiscal Year (or such shorter period as
may be provided herein) of the Partnership in proportion to their respective
Partnership Interests; provided however, that any such profits and losses
attributable to a limited partner interest assigned during such Fiscal Year of
the Partnership shall be allocated among the holders of such limited partner
interests during such Fiscal Year in proportion to the number of months (for
purposes of such allocation ownership of limited partner interests for each
month will be determined on the fifteenth day of each month) that each such
holder was recognized as the owner of such limited partner interest during such
Fiscal Year, without regard to the results of Partnership operations during the
period in which each such holder was recognized as the owner thereof and without
regard to the date, amount or recipient of any distributions which may have been
made with respect to such limited partner interest.
B. Allocation of Profits and Losses.
1. Except as provided in subparagraph 4 of this paragraph B, the
profits and losses of the Partnership (other than gains or losses from the sale,
exchange or other disposition of Partnership assets) shall be allocated to the
Partners as follows and in the following order to priority:
a. An amount of net income equal to the excess, if any, of the
aggregate negative balance of the Capital Accounts of the Partners over the
Minimum Gain (determined as of the end of such year or fraction thereof), shall
first be allocated among the Partners whose Capital Accounts are negative as a
result of nonrecourse debt in proportion to the negative amounts attributable to
such nonrecourse debt.
b. Any remaining balance of net income shall be allocated 1%
to the General Partner, 5% to the Corporate Special Partner, 1% to the
Individual Special Partner and 93% to the Limited Partners.
c. Net losses of the Partnership shall be allocated 1% to the
General Partner, 5% to the Corporate Special Partner, 1% to the Individual
Special Partner and 93% to the Limited Partners.
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2. Except as provided in subparagraph 4 of this Paragraph B, net
losses arising from sales, exchanges or other dispositions of Partnership assets
shall be allocated 1% to the General Partner, 1% to the Individual Special
Partner and 98% to the Limited Partners. For purposes of this subparagraph 2,
Capital Accounts shall be determined after applying the allocations provided in
subparagraphs 1 and 5 of this Paragraph B, and after applying subparagraphs 6
and 7 of this Paragraph B.
3. Net gains arising from sales, exchanges or other dispositions of
Partnership assets shall be allocated to the Partners as follows and in the
following order to priority:
a. An amount of such gains equal to the excess, if any, of the
aggregate negative balance of the Capital Account of the General Partner over
the Minimum Gain;
b. If each Partner's Capital Account is negative and the gains
are less than the aggregate negative amounts in the Capital Accounts, in the
ratio that the Capital Accounts bear to each other;
c. If each Partner's Capital Account is negative and the gains
are greater than the aggregate negative amounts in the Capital Accounts (i)
first in an amount to bring each Partner's Capital Account to zero, and (ii)
then to the Partners in the percentage by which Cash From Sales and Cash From
Financings is then being distributed pursuant to the provisions of Paragraph E
of Article IX hereof;
d. If certain Partner's Capital Accounts are positive and
other Partner's Capital Accounts are negative (i) first in an amount to bring
the Capital Account of each Partner whose Capital Accounts which are negative to
zero (or if gains are less than the aggregate negative amounts of the Capital
Accounts which are negative, to such Partners in the ratio that such negative
Capital Accounts bear to each other), and (ii) then to the Partners in the
percentage by which Cash From Sales and Cash From Financings is then being
distributed pursuant to the provisions of Paragraph E of Article IX hereof;
e. If each Partner's Capital Account is positive, in the
percentages by which Cash From Sales and Cash From Financings is then being
distributed pursuant to the provisions of Paragraph E of Article IX hereof;
For purposes of this subparagraph 3, Capital Accounts shall be
determined after applying the allocations provided in subparagraphs 1 and 2 of
this Paragraph B and after applying subparagraphs 6 and 7 of Paragraph B.
4. No loss or deduction or item thereof under subparagraph 1 or 2 of
this Paragraph B shall be allocated to the General Partner if, or to the extent,
such allocation would
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create or increase a deficit in the General Partner's Capital Account, unless:
a. Such allocation of loss or deduction is attributable to
nonrecourse debt of the Partnership; and
b. Such allocation does not cause the deficit capital account
of the General Partner to exceed the amount of Minimum Gain attributable to such
nonrecourse debt, determined as of the last day of the taxable year to which
such allocation is attributable.
5. To the extent that any amount paid to a Limited Partner or its
Affiliates pursuant to the provisions of Paragraphs G(2), (4),(5),(6), or (7) of
Article X hereof, or as Front-End Fees, is treated as a distributive share of
Partnership income to the Limited Partner for Federal income tax purposes, the
Limited Partner affected shall be allocated gross income of the Partnership at a
time and in an amount equal to the amount of such payment, and the Capital
Account of the Limited Partner so affected shall be adjusted to reflect such
allocation and payment. If the Partnership's gross income for a Fiscal Year is
less than the amount of such payment, the Limited Partner so affected shall be
allocated gross income in each succeeding Fiscal Year until the total amount so
allocated equals the total amount of such payment.
6. For purposes of subparagraphs 1(a), 2 and 3 of this Paragraph B,
distributions to the Partners pursuant to Paragraphs A and E of Article IX
hereof shall be treated as having been made and charged to the Capital Accounts
of the Partners prior to the allocations of income, gains and losses provided
therein.
7. Solely for purposes of this Paragraph B, the Capital Accounts of
each Partner shall be reduced by such Partner's share of any Partnership
expenditure which would be treated as it were an expenditure described under
Section 705(a)(2)(B) of the Code, and shall be reduced or increased by any other
amount required by the then applicable regulations under Section 704 of the
Code.
8. Notwithstanding anything to the contrary in this Article VIII, if
any Partner receives an adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Partner
shall be specially allocated a pro rata portion of each item of Partnership
income, including gross income, and gain in an amount and manner sufficient to
eliminate, as quickly as possible, any deficit balance in such Partner's Capital
Account created by such adjustment, allocation or distribution in excess of the
sum of (i) the amount such Partner is obligated to restore pursuant to any
provision of this Agreement and (ii) the amount such Limited Partner is deemed
to be obligated to restore pursuant to the penultimate sentence of Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) (as amended in 1986). This subparagraph
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Paragraph B is intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
9. Except as otherwise provided in Section 1.704-2(f) of the
Treasury Regulations, if there is a net decrease in Partnership Minimum Gain for
any Partnership fiscal year, each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary subsequent years)
in an amount equal to such Partner's share of the net decrease in Partnership
Minimum Gain to the extent required by Treasury Regulations Section 1.704-2(f).
The items to be so allocated shall be determined in accordance with Section
1.704-2(f) and (i) of the Treasury Regulations. This subparagraph is intended to
comply with the minimum gain chargeback requirement in said section of the
Treasury Regulations and shall be interpreted consistently therewith.
Allocations pursuant to this subparagraph shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant hereto.
10. Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year, each Partner
who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of the
Treasury Regulations, shall be specially allocated items of Partnership income
and gain for such year (and, if necessary, subsequent years) in an amount equal
to that Partner's share of the net decrease in the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt to the extent and in the manner
required by Section 1.704-2(i) of the Treasury Regulations. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i) of the
Treasury Regulations. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and (j)(2) of the Treasury Regulations.
This subparagraph is intended to comply with the minimum gain chargeback
requirement with respect to Partner Nonrecourse Debt contained in said section
of the Treasury Regulations and shall be interpreted consistently therewith.
Allocations pursuant to this subparagraph shall be made in proportion to the
respective amounts to be allocated to each Partner pursuant hereto.
11. To the extent any Partner has an Adjusted Capital Account
Deficit at the end of any Partnership Fiscal Year, each such Partner shall be
specially allocated items of Partnership income (including gross income) and
gain in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Paragraph 8(B)(11) shall be made if and only to the
extent that such Partners would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Section have been tentatively made as
if this Paragraph 8(B)(11) were not in the Agreement.
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12. Partner Nonrecourse Deductions for any fiscal year or other
applicable period with respect to a Partner Nonrecourse Debt shall be specially
allocated to the Partners that bear the economic risk of loss for such Partner
Nonrecourse Debt (as determined under Sections 1.704-2(b)(4) and 1.704-2(i)(1)
of the Treasury Regulations).
C. Power of the Partner to Vary Allocations of Profits and Losses.
It is the intent of the Partners that each Partner's distributive share of
income, gains, losses, deductions and credits shall be determined and allocated
in accordance with this Article VII to the fullest extent permitted by Section
704(b) of the Code. If the Partnership is advised that the allocations provided
in this Article VIII are unlikely to be respected for Federal income tax
purposes, the General Partner has been granted power in Paragraph B(2) of
Article XVI of this Agreement to amend the allocation provisions of this
Agreement, on advice of accountants and legal counsel, to the minimum extent
necessary to effect the plan of allocations and distributions provided in this
Agreement.
D. Allocations of Profits and Losses Among Limited Partners. Except
as otherwise provided in this Article VIII, profits and losses shall be
allocated among the Limited Partners in the same manner as distributions are
allocated in Paragraph D of Article IX hereof.
E. Consent of Partners to Allocation of Profits and Losses. The
methods hereinabove set forth by which profits and losses of the Partnership are
determined and allocated are hereby consented to by each Partner as a condition
to becoming a Partner.
ARTICLE IX
DISTRIBUTIONS
A. Distributable Cash From Operations. The General Partner shall
distribute as soon after the close of each Fiscal Quarter as is reasonably
feasible all of the Distributable Cash From Operations for such Fiscal Quarter
in the following manner: 1% to the General Partner, 5% to the Corporate Special
Partner, 1% to the Individual Special Partner and 93% to the Limited Partners.
B. Cash From Sales. The General Partner shall distribute, as soon
after the close of each Fiscal Quarter as is reasonably feasible, all Cash From
Sales realized by the Partnership during such Fiscal Quarter in accordance with
the provisions of Paragraph E of this Article IX.
C. Cash From Financings. The General Partner shall distribute, as
soon after the close of each Fiscal Quarter as is reasonably feasible, all of
the Cash From Financings realized by
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the Partnership during such Fiscal Quarter in accordance with the provisions of
Paragraph E of this Article IX.
D. Allocation of Distributions Among Limited Partners. Distributions
of cash to the Limited Partners shall be apportioned among the holders of record
of limited partner interests in the ratio in which the number of limited partner
interests held of record by each of them bears to the number of limited partner
interests held of record by all the Limited Partners as of the first day of the
Fiscal Quarter with respect to which such distribution is made
E. Distributions of Cash From Sales and Cash From Financings. The
General Partner shall distribute Cash From Sales and Cash From Financings in the
following manner: 1% to the General Partner, 1% to the Individual Special
Partner and 98% to the Limited Partners, until such time as $430,844 has been
distributed to the Individual Special Partner pursuant to this Paragraph E of
Article IX. Thereafter, Cash From Sales and Cash From Financings shall be
distributred 1% to the General Partner and 99% to the Limited Partners.
F. Return of Capital Contributions. To the extent that, at the end
of any Fiscal Quarter, the total cash distributions to the Limited Partners made
pursuant to this Article IX exceed the profits of the Partnership for such
Fiscal Quarter, such excess shall be charged to each Limited Partners' Capital
Account and shall be regarded as a rightful return of capital contributions.
G. Consent of Partners to Allocation of Distributions. The methods
hereinabove set forth by which Cash From Operations, Cash From Sales and Cash
From Financings are allocated and distributed are hereby consented to by each
Partner as a condition to becoming a Partner.
ARTICLE X
MANAGEMENT AND OPERATION OF BUSINESS
A. Management of Business. The Partnership shall be managed by the
General Partner and the conduct of the Partnership's business shall be
controlled and conducted by the General Partner in accordance with this
Agreement.
B. Authority of General Partner. In addition to and not in
limitation of any rights and powers conferred by law or other provisions of this
Agreement, the General Partner shall have and may exercise on behalf of the
Partnership all powers and rights necessary, proper, convenient or advisable to
effectuate and carry out the purposes, business and objectives of the
Partnership. Such powers shall include, without limitation, the following
powers:
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1. To acquire, hold and dispose of any real property, (or any
interests therein, including leasehold estates) and appurtenances thereto
as well as personal or mixed property connected therewith, including the
purchase, lease, development, improvement, maintenance, exchange, trade or
sale of such property at such price, rental or amount, for cash,
securities or other property and upon such terms, as the General Partner
deem to be in the best interests of the Partnership;
2. Subject to the provisions of Paragraph H(10) of this Article X to
borrow money and, if security is required therefor, to mortgage or subject
to any other security device any portion of the assets of the Partnership,
to obtain replacements of any mortgage or other security device, and to
prepay, in whole or in part, refinance, increase, modify, consolidate or
extend any mortgage or other security device;
3. To invest the Partnership's funds in United States Government
securities, certificates of deposit or other time or demand deposits of
United States commercial banks, savings banks, savings and loan
associations or similar institutions which have a net worth of at least
$100,000,000 or in which such certificates or deposits are fully insured
by any Federal or state government agency, Eurodollar deposits in branches
of United States banks, which banks have a net worth of at least
$100,000,000, bank repurchase agreements covering securities of the United
States Government or governmental agencies, bankers' acceptances, public
no-load money market funds or other similar short-term highly liquid
investments; to invest any working capital or other reserves retained by
the General Partner for the operation of the Partnership in like manner;
and to deposit, withdraw, invest, pay, retain and distribute the
Partnership's funds in any manner consistent with the provisions of this
Agreement.
4. To bring and defend actions at law or in equity.
5. To employ persons in the operation and management of the
Partnership's business, including but not limited to supervisory managing
agents, building management agents. real property developers and real
estate brokers;
6. To place record title to, or the right to use, Partnership assets
in the name or names of a non-operating nominee or nominees, including an
Affiliate of the General Partner, for any purpose convenient or beneficial
to the Partnership;
7. To perform all acts and file all documents, including tax returns
and registration statements, necessary to comply with federal, state and
local laws, rules and
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regulations applicable to the Partnership or the conduct of the
Partnership's business;
8. To enter into and carry out contracts and agreements and any or
all documents and instruments and to do and perform all such other things
as may be in furtherance of Partnership purposes or necessary or
appropriate to the conduct of Partnership activities;
9. To execute, acknowledge, deliver, seal, file, record and vote any
and all instruments which may be deemed necessary or convenient to effect
the foregoing; and
10. To designate ▇▇▇▇▇ Diversified LLC, the General Partner, as the
"Tax Matters Partner" in accordance with Section 6231(a)(7) of the Code
and, as such, the General Partner shall have all powers necessary to so
perform including, without limitation, the power to retain attorneys and
accountants of its choice and the right to settle any audits without the
consent of the Limited Partners, except as otherwise required by the Code.
the designation provided for herein is expressly consented to by each
Partner as an express condition to becoming a Partner; and
C. Restrictions on Authority of General Partner. In addition to
other acts expressly prohibited or restricted by this Agreement or by law, the
General Partner shall have no authority to act on behalf of the Partnership with
respect to, and are expressly prohibited from undertaking, the following:
1. Doing any act in contravention of this Agreement;
2. Except as provided in this Agreement and except in connection
with the liquidation and winding up of the business of the Partnership upon its
termination and dissolution, doing any act which would make it impossible to
carry on the ordinary business of the Partnership;
3. Confessing a judgment against the Partnership in connection with
any threatened or pending legal action,
4. Possessing Partnership property or assigning the rights of the
Partnership in specific Partnership property for other than a Partnership
purpose;
5. Admitting a person as a Limited Partner except as provided in
this Agreement;
6. Except as provided in this Agreement and except in connection
with the liquidation and winding up of business of the Partnership upon its
termination and dissolution or a Mandatory Distribution Event, selling
substantially all the assets of the Partnership at a single sale or in multiple
sales in the same 12-month period without the prior written consent of Limited
Partners holding more than fifty percent (50%) of the then
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outstanding Limited Partner Interests, with the same proportionate vote as
provided in paragraph (d) of Article XI;
7. Pledging or encumbering substantially all the properties of the
Partnership at one time or from time to time in a series of related
transactions, unless the lien of such pledge or encumbrance arises in connection
with the acquisition or improvement of properties or the initial financing of
properties acquired free and clear of encumbrances or the refinancing of
previous obligations and such lien is limited to the properties so acquired,
improved, financed or refinanced;
8. Obtaining any loan or any mortgage loan on any residential
property made or guaranteed by any Federal, state or local government or
municipality or any agency of any federal, state or local government or
municipality;
9. Performing any act (other than an act required by this Agreement
or any act taken in good faith in reliance upon counsel's opinion) which would,
at the time such act occurred, subject any Limited Partner to liability as a
general partner in any jurisdiction;
10. Prepaying any interest on any Partnership indebtedness; provided
that the payment of any amount commonly referred to as "points" shall not be
deemed a prepayment of interest; or
11. Assessing any Partner for an additional capital contribution.
D. Fiduciary Obligations of General Partner. The General Partner
shall act at all times as a fiduciary with respect to the Partnership, the
Limited Partners and the Partnership property and assets.
E. Obligations of General Partner. The General Partner shall:
1. Devote such of their time to the business of the Partnership as
they shall, in its discretion, exercised in good faith, determine to be
necessary to conduct the business of the Partnership for the benefit of the
Partnership and the Limited Partners;
2. File and publish all certificates, statements or other
instruments required by law for formation, qualification and operation of the
Partnership and for the conduct of its business in all appropriate
jurisdictions;
3. Use its best efforts to cause the Partnership and the Partners to
be protected by adequate public liability, property damage and other insurance;
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4. Employ attorneys to represent the Partnership, which attorneys
may also serve as counsel to the General Partner and any of its Affiliates; and
5. Use its best efforts to maintain the status of the Partnership as
a "partnership" for federal income tax purposes.
F. Limitation on Liability of General Partner Indemnification.
1. The General Partner shall have no liability, responsibility or
accountability in damages or otherwise to any other Partner or the Partnership
for, and the Partnership agrees to indemnify, pay, protect and hold harmless the
General Partner (on the demand of and to the satisfaction of the General
Partner) from and against, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including without limitation all
costs and expenses of defense, appeal and settlement of any and all suits,
actions or proceedings instituted against the General Partner or the Partnership
and all costs of investigation in connection therewith) which may be imposed on,
incurred by or asserted against the General Partner or the Partnership in any
way relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Partnership or on the part of the General
Partner as a General Partner of the Partnership; provided, that the General
Partner shall be liable, responsible and accountable, and the Partnership shall
not be liable to the General Partner, for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, proceedings,
costs, expenses and disbursements resulting from the General Partner's own
fraud, bad faith, negligence, misconduct or other breach of fiduciary duty to
the Partnership or any Partner. If any action, suit or proceeding shall be
pending or threatened against the Partnership or the General Partner relating to
or arising, or alleged to relate to or arise, out of any such action or inaction
the General Partner shall have the right to employ, at the expense of the
Partnership, separate counsel of the General Partner's choice in such action,
suit or proceeding. The satisfaction of the obligations of the Partnership under
this Section 1 shall be from and limited to the assets of the Partnership and no
Partner shall have any personal liability on account thereof. The General
Partner shall have the right to ▇▇▇▇ the Partnership for, or otherwise request
the Partnership to pay, at any time and from time to time after the General
Partner has become obligated to make payment therefor, any and all amounts for
which the General Partner believes in good faith that the General Partner is
entitled to indemnification for under this Section.
2. The Partnership shall pay any and all such bills and honor any
and all such requests for payment within 60 days after such ▇▇▇▇ or request is
received by the General Partner. In the event that a final determination is made
that the
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Partnership is not so obligated in respect of any amount paid by it to the
General Partner, the General Partner will refund such amount within 180 days of
such determination.
3. The Partnership shall indemnify to the extent of the Partnership
assets each Limited Partner against any claims of liability asserted against a
Limited Partner solely because he is a Limited Partner in the Partnership.
4. Notwithstanding the foregoing, neither the General Partner nor
any officer, director, employee, agent, subsidiary or assignee of the General
Partner or of the Partnership shall be indemnified from any liability, loss or
damage incurred by them in connection with (i) any claim or settlement involving
allegations that the Securities Act of 1933 was violated by the General Partner
or by any such other person or entity unless: (a) the General Partner or other
persons or entities seeking indemnification are successful in defending such
action; and (b) such indemnification is specifically approved by a court of law
which shall be advised as to the current position of the Securities and Exchange
Commission and the California Commissioner of Corporations regarding
indemnification for violations of securities laws; or (ii) any liability imposed
by law, including liability for fraud, bad faith or negligence.
G. Specific Transactions Authorized. The General Partner is hereby
authorized to enter into, on behalf of the Partnership, the following specific
transactions:
1. The Partnership may purchase property from any Affiliate of the
General Partner provided (i) the property was acquired by such Affiliate for the
purpose of facilitating its purchase by the Partnership, facilitating the
borrowing of money or the obtaining of financing for the Partnership or any
other purpose related to the business of the Partnership, (ii) the property is
purchased by the Partnership for a price no greater than the acquisition and
out-of-pocket carrying cost of the property to such Affiliate, (iii) there is no
adverse difference in the interest rates of the loans secured by the property at
the time acquired by such Affiliate and at the time purchased by the Partnership
nor any other benefit arising out of such transaction to the General Partner and
(iv) no compensation is paid by the Partnership or by any non-affiliated person
to any Affiliate of the General Partner in connection with the purchase of the
property by the Partnership.
2. The Partnership may contract (i) with Affiliates of the General
Partner to serve as real estate brokers and mortgage placement brokers in
connection with the investment of the Partnership assets and (ii) with
Affiliates of the General Partner to serve as real estate brokers in connection
with the sale of property by the Partnership. The amount of real estate
commissions payable to Affiliates of the General Partner upon a sale of property
by the Partnership where such Affiliates have provided a substantial amount of
services in the sales effort may
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not exceed the lesser of (i) 3% of the sales contract price of the property or
(ii) 50% of the reasonable, customary and competitive rate for similar services
in light of the size, type and location of the property and the total real
estate commissions payable to such Affiliates and to other persons may not
exceed the lesser of (a) 6% of the contract price for the sale of the property
or (b) the reasonable, customary and competitive rate for similar services in
light of the size, type and location of the property. No Affiliate of the
General Partner may receive payment of a real estate commission with respect to
the sale of any property by the Partnership unless total consideration received
by the Partnership upon such sale exceeds the amounts actually paid by the
Partnership for the purchase, development, construction or improvement, of the
property and any fees and commissions paid by the Partnership in connection
therewith.
3. Affiliates of the General Partner may receive insurance premiums
and brokerage commissions with respect to insurance on property owned by the
Partnership only when the cost of such insurance is paid by tenants who net
lease such properties from the Partnership. No such Net Lease shall provide that
the lessee is required to purchase insurance through an Affiliate of the General
Partner.
4. At any time, the Partnership may borrow money on a short-term
basis from an Affiliate of the General Partner in connection therewith pay
interest to such Affiliate at a rate equal to the lesser of (i) one percent
above the prime interest rate at the Bank of New York or (ii) the rate that
would be charged to the Partnership by unrelated lending institutions on
comparable loans for the same purpose in the locality of the property. Such
borrowings shall be non-recourse to the Partnership, unless the General Partner
shall otherwise consent in writing.
5. All of the Partnership's expenses shall be billed directly to and
paid by the Partnership. The Partnership shall reimburse the General Partner or
its Affiliates for: (a) the actual cost to the General Partner or its Affiliates
of goods and materials used for and by the Partnership and obtained from
unaffiliated parties and (b) the costs incurred by the General Partner or its
Affiliates in performing administrative services necessary to the prudent
operation of the Partnership; provided, however, that the amounts charged to the
Partnership for services performed pursuant to this clause (c) shall not exceed
the lesser of (1) the actual cost of such services, or (2) the amount which the
Partnership would be required to pay to independent parties for comparable
services in the same geographic location. No reimbursement shall be made to the
General Partner or its Affiliates for: (x) services for which the General
Partner or its Affiliates are entitled to compensation by way of a separate fee,
or (y) any of the salaries, fringe benefits, travel expenses, and other
administrative items incurred by or allocated to any controlling person (as
defined herein) of the General Partner or
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its Affiliates; provided, however, that the Partnership may reimburse the
General Partner or its Affiliates for any travel expenses incurred by any
controlling person of the General Partner or its Affiliates where such travel
expenses are for the evaluation by such controlling person of a property owned
or being considered for acquisition by the Partnership or for visits to
executives of tenants to discuss current financial results. The Partnership's
annual report to the Limited Partners shall contain a breakdown of the costs
reimbursed to the General Partner or its Affiliates. Within the scope of the
annual audit of the General Partner's (or such Affiliates) financial statement,
the independent certified public accountant shall verify the allocation of such
costs to the Partnership. The method of review shall at minimum provide (1) a
review of time records of individual employees, the costs of whose services were
reimbursed; and (2) a review of the specific nature of the work performed by
each such employee. The methods of review shall be in accordance with generally
accepted auditing standards and shall accordingly include such tests of the
accounting records and such other auditing procedures which the General
Partner's (or such Affiliate's) independent certified public accountants
consider appropriate in the circumstance. The additional costs of such review
shall be itemized by such accountants on a partnership by partnership basis and
may be reimbursed to the General Partner (or such Affiliate) in accordance with
this Paragraph G(9) only to the extent that such reimbursement, when added to
the cost for administrative services rendered, does not exceed the competitive
rate for such services as determined in this Paragraph G(9).
As used herein, the term "controlling person" shall mean any person,
whatever his title, who performs executive or senior management functions for
the General Partner or Affiliate similar to those of executive or senior
management officers, directors or partners, or those holding 5% or more equity
interest in the General Partner or Affiliate or a person having the power to
direct or cause the direction of the management level employees and policies of
the General Partner or Affiliate, whether through the ownership of voting
securities, by contract, or otherwise. For the purposes of this Paragraph G(5),
not every person who carries a title such as vice president or senior vice
president, corporate secretary or treasurer, shall be considered a controlling
person, unless such person performs the functions or has the powers described
above, and even in the absence of a specific title, an executive in a truly
senior management position shall be considered a controlling person.
H. General Restrictions.
1. The Partnership shall obtain a written evaluation report signed
by an independent appraiser prior to the purchase of any real property by the
Partnership and shall not purchase any such real property if the purchase price
and all Acquisition Fees paid by the Partnership in connection with the
acquisition exceed the appraised value set forth in such report. All such
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appraisals whether or not the real property which is the subject of such
appraisal is purchased by the Partnership, shall be at the Partnership's expense
or at the expense of the seller, shall be retained for five years and shall be
available for inspection and duplication by the Limited Partners.
2. The Partnership may not sell any property in a transaction in
which an Affiliate of the General Partner acts as a real estate broker unless
the provisions of Paragraph G(2) of this Article X are complied with.
3. The Partnership shall not own any land where the buildings and
improvements thereon are owned by an Affiliate of a General Partner.
4. The Partnership may not acquire property in exchange for
interests in the Partnership.
5. The Partnership shall not give an Affiliate of a General Partner
the exclusive right to sell property for the Partnership.
6. The Partnership shall not pay, directly or indirectly, any
Acquisition Fee to an Affiliate of a General Partner in connection with the
purchase of property acquired with proceeds obtained from Cash From Sales or
Cash From Financings.
7. The aggregate borrowings of the Partnership shall not exceed
66-2/3,% of the purchase price of all properties purchased by the Partnership on
a combined basis. The foregoing restriction may be waived or lessened by the
General Partner without the approval of the Limited Partners, but only with the
prior written consent of the Commissioner of Corporations of the Sate of
California or pursuant to a change in the published Rules of the Commissioner.
In no event, however, shall the aggregate borrowings of the Partnership exceed
the sum of 85% of the purchase price of all properties which have not been
refinanced and 85% of the aggregate fair market value of all refinanced
properties.
8. Except as set forth in Paragraph G(5) of this Article X, all
expenses of the Partnership shall be billed directly to and paid by the
Partnership.
9. The Partnership funds shall not be commingled with the funds of
any other natural person. partnership, corporation, association or other legal
entity.
10. The Partnership shall not finance the purchase of real property
by use of a wrap around note and mortgage "all-inclusive" note and deed of
trust) unless (a) neither the General Partner nor any Affiliate of the General
Partner receives interest on the amount of the underlying encumbrance in excess
of that payable to the lender on such underlying encumbrance, (b)
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the Partnership receives credit on its obligation under the all-inclusive note
for payments made directly on the underlying encumbrance and (c) all payments on
the underlying encumbrance shall be made by the Partnership or, in the
alternative, payments by the Partnership on the wrap around note are made to a
third party collecting agent which in turn disburses such payment, first to the
holder of such underlying encumbrance, and thereafter to the holder of the wrap
around note.
11. The Partnership shall not create or assume any indebtedness for
borrowed money unless the documents pursuant to which such indebtedness is
created or assumed provide, and the General Partner shall cause any and all such
documents assumed or entered into by or on behalf of the Partnership to provide,
that the parties thereto other than the Partnership (including any Affiliates of
the General Partner) shall look only to the assets of the Partnership for
satisfaction of the liabilities and obligations of the Partnership under such
documents (including without limitation those arising from representations,
warranties, covenants and agreements made in or in connection with such
documents) and that such other parties shall have no recourse to the Partners or
the separate assets of the Partners for the satisfaction of such liabilities and
obligations. The Partnership shall not incur any indebtedness including
indebtedness under a shared appreciation or similar mortgage wherein the lender
will have or acquire, at any time as a result of making the loan, any direct or
indirect interest in the profit, capital or property of the Partnership other
than as a creditor.
12. The Partnership shall not enter into any contracts with the
General Partner or with any Affiliates of the General Partner to construct or
develop Partnership properties or to render any services in connection with such
construction or development.
13. The Partnership shall not acquire any property which is under
construction unless completion of the improvements on the property is guaranteed
at the contracted price by (a) an adequate completion bond; (b) a letter of
credit issued by a bank organized and doing business under the laws of the
United States or any State or of the District of Columbia which is subject to
supervision by Federal, State or District of Columbia authority and which has a
combined capital and surplus of not less than $5,000,000; or (c) a completion
guarantee by a third person, provided that such person has a net worth of at
least $10,000,000 and had in the most recent fiscal year or twelve-month period
prior to the giving of such guarantee net income of at least $2,000,000.
14. Unimproved or non-income producing property shall not be
acquired except in amounts and upon terms which can be financed by the net
proceeds derived from the sale of limited partner interests. No more than 10% of
the net proceeds derived from Distributable Cash from Operations.
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15. No portion of the net proceeds derived from the sale of limited
partner interests may be invested in junior mortgages or deeds of trust;
provided, however, that the acquisition or granting of a junior mortgage or deed
of trust in connection with the sale, purchase, financing or refinancing of real
property of the Partnership shall not be deemed to be investing in junior
mortgages or deeds of trust.
16. Any agreement entered into between the Partnership and the
General Partner or its Affiliates must be terminable by the Partnership, without
penalty, upon 60 days' notice.
I. Compensation of General Partner. The General Partner shall not,
in its capacity as General Partner, receive any salary, fees, profits or
distributions from the Partnership except profits, distributions, fees and
allocations to which they may be entitled under Articles VIII and IX.
J. Other Business of Partners. Except as otherwise specifically
provided herein, any of the Partners and any shareholder, officer, director,
employee or other person holding a legal or beneficial interest in an entity
which is a Partner may engage in or possess an interest in other business
ventures of every nature and description, independently or with others,
including, but not limited to, the ownership, financing, leasing, operation,
management, syndication, brokerage and development of real property and neither
the Partnership nor the Partners shall have any right by virtue of this
Agreement in and to such independent ventures or to the income or profits
derived therefrom.
ARTICLE XI
STATUS OF LIMITED PARTNERS
The Limited Partners and Special Partners shall not participate in
the management or control of the Partnership's business nor shall they transact
any business for the Partnership nor shall they have the power to sign for or
bind the Partnership, said powers being vested solely and exclusively in the
General Partner. The Limited Partners and Special Partners shall not be bound
by, or be personally liable for, the expenses, liabilities or obligations of the
Partnership, except to the extent of their Capital Accounts. The Partnership
Interest owned by a Limited Partner or a Special Partner shall be fully paid and
nonassessable.
In addition to those described elsewhere in the Partnership
Agreement, the Limited Partners and Special Partners shall have the following
rights, powers, privileges, duties and liabilities:
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(a) The Limited Partners and Special Partners shall have the
right to have full and true information of all things affecting the Partnership
and shall be entitled to such reports as are set forth in Article XII hereof.
(b) The Limited Partners and Special Partners shall receive
from the Partnership the share of the distributions provided for in this
Agreement in the manner and at the times provided for in this Agreement.
(c) A Limited Partner or a Special Partner shall have the
right to demand the return of his Capital Account only on the dissolution and
winding up of the Partnership in accordance with Article XVIII hereof. No
Limited Partner shall have priority over any other Limited Partner either as to
the return of capital or as to profits, losses or distributions. No Limited
Partner or Special Partner shall have right to bring an action for partition
against the Partnership.
(d) Limited Partners holding more than fifty percent (50%) of
the outstanding Limited Partner Interests may (1) remove the General Partner and
(2) in the event that a vacancy shall occur in the office of General Partner,
subject to the provisions B(5) of Article XV, elect a successor General Partner
upon retirement, removal, death, adjudication of incompetence to manage his
person or estate, adjudication of bankruptcy under Chapter 7 of the Bankruptcy
Code (or any similar law or provision enacted in lieu thereof), dissolution or
other cessation to exist as a legal entity of the General Partner.
(e) Each Limited Partner and Special Partner shall have the
right to a complete list of names and addresses and interests of all Limited
Partners as set forth in the records of the Partnership, upon written request to
the Partnership, provided such request is for a purpose reasonably related to
such Partner's interest in the Partnership. A reasonable charge for copy work
may be charged by the Partnership.
ARTICLE XII
BOOKS OF ACCOUNT AND REPORTS
Proper books of account shall be kept by the General Partner wherein
shall be entered all transactions, matters and things relating to the
Partnership's business as are usually entered into books of account kept by
persons engaged in a business of a like character. The books of account shall be
kept at the principal place of business of the Partnership and each Partner (or
any duly constituted designee of a Partner) shall at all times during reasonable
business hours have free access to and the right to inspect and copy the same.
There shall be established for each Partner on the books of the
Partnership a Capital Account which shall show the
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amount of each capital contribution made by such Partner (or his, her or its
predecessor in the case of an assignment of a Partnership Interest),. adjusted
to reflect such Partner's proportion of profits and losses (determined according
to Paragraph B of Article VIII) and of withdrawals and distributions and other
items to the extent properly creditable to or chargeable against such Capital
Account.
Within 75 days after the end of each Fiscal Year, the General
Partner shall deliver to each Limited Partner adequate information to enable
each Limited Partner to complete and file his Federal tax return.
Copies of each such report shall be distributed to each Limited
Partner within 60 days after the end of any such quarter. If deemed appropriate
by the General Partner such notice may be prepared and distributed to Limited
Partners more frequently than quarterly. The General Partner shall send such
other reports and information, if any, to the Limited Partners as the General
Partner may deem necessary or appropriate, including but not limited to reports
containing the name and address of each person who has had an unconditional
written offer to purchase Partnership property rejected by the Partnership (such
report shall also contain the price and terms offered). Copies of each report
distributed to the Limited Partners shall, to the extent required by applicable
law, be filed concurrently with relevant state "Blue Sky" authorities
ARTICLE XIII
FISCAL YEAR
The Fiscal Year of the Partnership shall begin on the first day of
January and end on the thirty-first day of December in each year.
ARTICLE XIV
PARTNERSHIP FUNDS
The funds of the Partnership shall be deposited in such account or
accounts as shall be designated by the General Partner and all withdrawals
against such accounts shall be made only by one of the General Partner or by its
properly delegated agents.
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ARTICLE XV
TRANSFER OF PARTNERSHIP INTEREST
A. In General. A Limited Partner or Special Partner may not sell,
assign, transfer or otherwise dispose of, or pledge, hypothecate or in any
manner encumber, his interest in the Partnership or any part thereof except as
permitted in this Article, and any act in violation of this Paragraph A shall
not be binding upon or recognized by the Partnership regardless of whether the
General Partner shall have knowledge thereof.
B. General Partner.
1. The Limited Partners, at the direction or with the approval of
holders of Listed Shares and Series 5 Partnership Shares holding more than fifty
percent (50%) of the then outstanding Limited Partner Interests, pursuant to
Paragraph (d) of Article XI and with the same proportionate vote as provided
therein, may remove a General Partner from the Partnership. Written notice of
the removal of the General Partner shall be served upon the General Partner
either by certified or by registered mail, return receipt requested. or by
personal service. Said notice shall set forth the day upon which the removal is
to become effective. Upon receipt of notice, the General Partner shall cause an
accounting to be prepared covering the transactions of the Partnership since the
end of the previous Fiscal Year, and it shall not thereafter sell or dispose of
or allow the sale or disposition of any Partnership asset unless such sale or
disposition was the subject of a contract entered into by and binding upon the
Partnership prior to the date upon which the notice was received by the General
Partner.
2. Until the dissolution of the Partnership otherwise occurs, the
General Partner shall not voluntarily take any steps to dissolve itself nor
shall the General Partner voluntarily retire; provided, however, that nothing in
this Partnership Agreement shall be deemed to prevent the merger or
reorganization of ▇▇▇▇▇ Diversified LLC into or with any other entity organized
under the laws of the United States or any state thereof or the transfer of all
the limited liability company interests of ▇▇▇▇▇ Diversified LLC and the
assumption of the rights and duties of the General Partner by, in the case of a
merger, reorganization or consolidation, the surviving entity by operation of
law.
3. Upon the removal, adjudication of bankruptcy or insolvency,
dissolution or other cessation to exist as a legal entity of the General
Partner, the General Partner's Partnership Interest and interest in
Distributable Cash From Operations and its subordinated interest in Cash From
Sales and Cash From Financings shall be purchased by the Partnership for a
purchase price equal to the fair market value thereof determined pursuant to the
provisions of Section 4 of this Paragraph B. The purchase price of such interest
shall be paid by the Partnership to the General Partner by the promissory note
of the Partnership,
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payable to the General Partner or its order, having a face amount equal to such
purchase price, containing provisions as would be usual and customary in a
commercial promissory note, bearing interest at a rate per annum equal to one
percent above the prime interest rate at The Bank of New York, payable annually,
with principal and all unpaid accrued interest subject to mandatory prepayment
from all Cash From Sales and Cash From Financings, and the remaining unpaid
principal balance and unpaid accrued interest on such promissory note due and
payable five years from the date of the General Partner's retirement, expulsion,
adjudication of bankruptcy or insolvency, dissolution or other cessation to
exist as a legal entity.
4. The fair market value of the General Partner's interest purchased
by the Partnership pursuant to Section 3 of this Paragraph B shall be determined
by agreement between the General Partner and the Partnership (which agreement
shall require the approval of the Limited Partners holding more than fifty
percent (50%) of the outstanding Limited Partner Interests, with the same
proportionate vote as provided in paragraph (d) of Article XI). If the General
Partner and the Partnership cannot agree upon the fair market value of such
Partnership Interest within 30 days after the occurrence of the event upon which
such interest of the General Partner is to be purchased by the Partnership, the
fair market value thereof shall be determined in the manner provided by the laws
of the State of California for the determination of controversies by
arbitration, the General Partner to choose one arbitrator, the Partnership to
choose one arbitrator and the two arbitrators so chosen to choose a third
arbitrator. The decision of a majority of said arbitrators as to the fair market
value of such Partnership interest shall be final and binding and may be
enforced by legal proceedings. The General Partner and the Partnership shall
each compensate the arbitrator appointed by it and the compensation of the third
arbitrator shall be borne equally by such parties.
C. Limited Partners and Special Partners.
1. The General Partner may, pursuant to this Article XV, (a) admit
as a substituted Limited Partner or Special Partner any successor in interest to
a Limited Partner or Special Partner either deceased or under legal disability,
and (b) admit as substituted Limited Partners or Special Partners assignees of
Limited Partners or Special Partners.
2. A substituted Limited Partner or Special Partner is a person
admitted to all the rights of a Limited Partner or Special Partner. An assignee
is a person to whom a Limited Partner has assigned his interest in the
Partnership but who has not become a substituted Limited Partner or Special
Partner. An assignee shall have no right to require any information or account
of the Partnership's transactions or to inspect the Partnership's books but
shall only be entitled to receive the share of the profits, or the return of the
capital contribution,
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to which his assignor would otherwise be entitled as set forth in Section 5 of
this Paragraph C.
3. No assignee of the whole or any portion of a Limited Partner's or
Special Partner's interest in the Partnership shall have the right to become a
substituted Limited Partner or Special Partner in place of his assignor unless
all of the following conditions are satisfied:
(a) The written consent of the General Partner to such
substitution shall be obtained, the granting or denial of which shall be within
the absolute discretion of the General Partner;
(b) The duly executed written instrument of assignment setting
forth the intention of the assignor that the assignee become a substituted
Limited Partner or Special Partner in his place shall have been filed with the
Partnership;
(c) The interests in the Partnership being acquired by the
assignee shall consist of at least five (5) percent of the limited partner or
special partner interest and, if the assignor shall retain any Limited partner
or special partner interest, such retention shall consist of at least five (5)
percent of the limited partner or special partner interest;
(d) The assignor and assignee shall execute and acknowledge
such other instruments as the General Partner may deem necessary or desirable to
effect such assignment and admission, including the written acceptance and
adoption by the assignee of the provisions of this Agreement and his execution,
acknowledgment and delivery to the General Partner of a Power of Attorney, the
form and content of which are more fully described in Article XIX hereof; and
(e) The assignee shall pay a transfer fee not to exceed $50.00
per transaction to the Partnership.
4. Any person admitted to the Partnership as a Partner shall be
subject to all of the provisions; of this Agreement as if originally a party to
it.
5. Subject to the provisions of Section 11 of this Paragraph C.
compliance with the suitability standards imposed by the Partnership, applicable
"Blue Sky" laws and the applicable rules of any other governmental authority, a
Limited Partner or Special Partner shall have the right to assign the whole or
any portion (not less than five (5) percent of the limited partner or special
partner interest and, if he shall retain any limited partner or special partner
interest, subject to his retaining not less than five (5) percent of the limited
partner or special partner interest) of his Partnership Interest by a written
assignment the terms of which are not in contravention of any of the provisions
of this Agreement, which assignment has been executed by the assignor and
received by the Partnership and
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recorded on the books thereof. Any assignment in contravention of any of the
provisions of this Section 5 shall be of no force and effect and shall not be
binding upon or recognized by the Partnership.
(a) Except as provided in Subsection (c) below, Paragraph A of
Article VIII hereof and Paragraph D or Article IX hereof, an assignee of a
Partner's Partnership Interest shall be entitled to receive distributions of
cash or other property from the Partnership attributable to the interest
acquired by reason of such assignment from and after the effective date of the
assignment of such interest to him. The "effective date" of an assignment of an
interest in the Partnership as used in this Subsection shall be the last day of
the month in which the written instrument of assignment, in form and substance
satisfactory to the General Partner, is received by the General Partner.
(b) The net profits and net losses attributable to an interest
in the Partnership assigned during any year shall be divided among and allocated
in accordance with the provisions of Paragraph A of Article VIII hereof.
(c) Anything herein to the contrary notwithstanding. both the
Partnership and the General Partner shall be entitled to treat the assignor of
such interest as the absolute owner thereof in all respects, and shall incur no
liability for distributions of cash or other property made in good faith to him,
until such time as the written assignment has been received by, and recorded in
books of, the Partnership.
6. The General Partner may elect to treat an assignee who has not
become a substituted Limited Partner or Special Partner as a substituted Limited
Partner or Special Partner in the place of his assignor should they deem, in its
absolute discretion, that such treatment is in the best interests of the
Partnership for any of its purposes or for any of the purposes of this
Agreement.
7. No consent of any of the Limited Partners or Special Partners is
required to effect the substitution of a Limited Partner or Special Partner,
except that a Limited Partner or Special Partner who assigns his interest in the
Partnership must evidence his intention that his assignee be admitted as a
substituted Limited Partner or Special Partner in his place and must execute
such instruments as the General Partner may in its absolute discretion determine
to be necessary or desirable in connection therewith.
8. Upon the admission of a Limited Partner or Special Partner
(whether as a result of his purchase of partner interests from the Partnership
or his admission as a substituted Limited Partner or Special Partner), the
General Partner shall make an appropriate amendment to the list of the Partner's
names,
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addresses, Contributions and Capital Accounts referred to in Article XII hereof.
9. Upon the death or legal incompetency of an individual Limited
Partner or Special Partner. his personal representative shall have all of the
rights of a Limited Partner or Special Partner for the purpose of settling or
managing his estate, and such power as the decedent or incompetent possessed to
constitute a successor as an assignee of its interest in the Partnership and to
join with such assignee in making application to substitute such assignee as a
Limited Partner or Special Partner. However, such personal representative shall
not have the right to become a substituted Limited Partner or Special Partner in
the place of his predecessor in interest unless the conditions of Section 2 of
this Paragraph C (other than the requirement that the assignor execute and
acknowledge instruments) are first satisfied.
10. Upon the adjudication of bankruptcy or insolvency, dissolution
or other cessation to exist as a legal entity of a Limited Partner or Special
Partner not an individual, the authorized representative of such entity shall
have all of the rights of a Limited Partner or a Special Partner for the purpose
of effecting the orderly winding up and disposition of the business of such
entity and such power as such entity possessed to constitute a successor as an
assignee of its interest in the Partnership and to join with such assignee in
making application to substitute such assignee as a Limited Partner or Special
Partner. However, such authorized representative shall not have the right to
become a substituted Limited Partner or Special Partner in the place of his
predecessor in interest unless the conditions of Section 2 of this Paragraph C
(other than the requirement that the assignor execute and acknowledge
instruments) are first satisfied.
11. (a) No assignment or transfer of an interest in the Partnership
may be made which would result in Limited Partners or Special Partners and
assignees of Limited Partners or Special Partners owning, directly or
indirectly, individually or in the aggregate, more than twenty percent (20%) of
the equity interests of a General Partner or any Affiliate of a General Partner
as defined in Section 1504(a)) of the Code. If any such assignment or transfer
would otherwise be made by bequest, inheritance or operation of law, the
transferee shall not become a Partner and the interest in the Partnership
transferred shall be automatically redeemed by the Partnership immediately prior
to such transfer in the same manner as provided in Subsection (b)(4) of this
Section 11.
(b) Anything to the contrary contained herein notwithstanding:
(1) Except in the case of the Merger, in any twelve (12)
consecutive month period no assignment or transfer of a limited partner interest
may be made if as a result thereof the
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aggregate total of limited partner
interests assigned and/or transferred in such period would exceed forty percent
(40%) of the outstanding limited partner interests. This limitation is
hereinafter referred to as the "forty percent (40%) limitation".
(2) A Limited Partner may assign or transfer his
Partnership Interest to: (i) his spouse (unless legally separated), child or
ancestor, or (ii) a corporation, partnership, trust or other entity, fifty-one
percent (51%) of the equity interest of which is owned by such Limited Partner
and/or any of the persons specified in clause (i) so related to such Limited
Partner, provided, however, that such transfers are subject to the forty percent
(40%) limitation.
(3) Subsection (b)(1) of this Section 11 shall not apply
to a transfer by gift, bequest or inheritance or a transfer to the Partnership
and, for purposes of the forty percent (40%) limitation, any such transfer shall
not be treated as such.
(4) If, after the forty percent (40%) limitation is
reached in any consecutive twelve (12) month period, a transfer of a Partnership
Interest would otherwise take place by operation of law (but not including any
transfer referred to in Subsection (b)(3) of this Section 11), then the
transferee shall not become a Limited Partner and such Partnership Interest
shall be automatically redeemed by the Partnership immediately prior to such
transfer for a price equal to the fair market value of said interest on such
date of transfer. The price shall be paid within ninety (90) days after the date
of the transfer and redemption. If the Partnership and the transferor do not
agree upon the fair market value of the Partnership Interest, the purchase price
shall be determined by arbitration. The purchase price shall be paid in cash
within ten (10) days after such determination.
(c) No transfer or assignment of any partner interest shall be
made if it would result in the Partnership's being treated as an association
taxable as a corporation for tax purposes. The General Partner, in its sole
discretion, may, on behalf of the Partnership, impose any restrictions or
transfers or assignments of limited partner interests it may deem appropriated
to give effect to the preceding sentence. The General Partner shall incur no
liability to any Limited Partner, prospective investor or assignee for any
action or inaction in connection with the foregoing, provided that the General
Partner acted in good faith and such course of conduct did not constitute
negligence or misconduct of the General Partner.
12. The General Partner, in its absolute discretion, may cause the
Partnership to make, refrain from making, or once having made, to revoke, the
election referred to in Section 754 of the Code, and any similar election
provided by state or local law, or any similar provision enacted in lieu
thereof.
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13. Until the dissolution of the Partnership, the General Partner
shall not take any voluntary steps to dissolve itself nor shall the General
Partner voluntarily withdraw or resign.
ARTICLE XVI
MEETINGS AND AMENDMENT OF LIMITED PARTNERSHIP
CERTIFICATE AND AGREEMENT
A. Amendment of Limited Partnership Certificate The General Partner
shall amend and record the Certificate of Limited Partnership of the Partnership
without additional consent of Limited Partners when, pursuant to the terms of
this Partnership Agreement:
1. There is a change in the name of the Partnership;
2. The General Partner withdraws, is removed, is adjudicated
bankrupt under Chapter 7 of the Bankruptcy Code (or any similar law or provision
enacted in lieu thereof), is adjudicated incompetent to manage his person or
estate or dies, or a person is admitted as the General Partner;
3. There is a false or erroneous statement in the Certificate;
4. A time is fixed for dissolution of the Partnership or the return
of contributions and such time has not been specified in the Certificate;
5. The Partners desire to make a change in any other statement in
the Certificate in order that it shall accurately represent the agreement among
them;
6. There is a change in the character of the business of the
Partnership;
7. There is a change in the address of the Partnership's principal
place of business or its California office;
8. There is a change in the time as stated in the Certificate for
the dissolution of the Partnership or for the return of a contribution; and
There is a change in the address of the California agent for service
of process designated in the Certificate of Limited Partnership (unless such
agent is a corporation) or a new agent for service of process is appointed.
B. Amendments to the Agreement.
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1. Amendments to this Partnership Agreement may be proposed by the
General Partner or by Limited Partners holding ten percent (10%) or more of the
then outstanding Limited Partner Interests, with the same proportionate vote as
provided in paragraph (d) of Article XI. Following such proposal, the General
Partner shall submit to the Partners a verbatim statement of any proposed
amendment and an opinion of counsel, who may be counsel to the Partnership, as
to the legality of such amendment and the effect of such amendment on the
liability of Limited Partners for the debts of the Partnership. The General
Partner shall include in any such submission the General Partner's
recommendations as to the proposed amendment. The amendment shall become
effective only upon the written consent or affirmative vote of holders holding
more than fifty percent (50%) of the then outstanding Limited Partner Interests,
with the same proportionate vote as provided in paragraph (d) of Article XI.
2. Any provision to the contrary herein notwithstanding, the General
Partner may, without the consent of the Limited Partners, make the following
amendments to this Agreement:
a. Any amendments to Article VIII and/or Article IX of this
Agreement if the Partnership is advised by its accountants or legal counsel at
any time that the allocations provided in those Articles are not likely to be
respected for Federal income tax purposes, either because of the promulgation of
Treasury Regulations under Section 704 of the Code or other developments in the
law. The General Partner is empowered to amend such provisions to the minimum
extent necessary in accordance with the advice of the accountants and counsel to
effect the allocations provided in this Agreement . New allocations made by the
General Partner in reliance upon the advice of the accountants or counsel
described above shall be deemed to be made pursuant to the fiduciary obligation
of the General Partner to the Partnership and the Limited Partners, and no such
new allocation shall give rise to any claim or cause of action by any Limited
Partner, provided that the General Partner acted in good faith; and
b. In the event that the State of California amends the
California Revised Limited Partnership Act in any manner and, as a result of
such amendment, counsel to the Partnership is unable to give the Partnership an
opinion to the effect that the Partnership will be treated as a partnership for
Federal income tax purposes and not as an association taxable as a corporation,
then the General Partner may decide in its sole discretion to reconstitute the
Partnership under the laws of another state.
3. Any provision to the contrary contained herein notwithstanding,
the General Partner may, without the consent of the Limited Partners, amend this
Agreement (a) to add to the representations, duties or obligations of a General
Partner or to surrender any right or power granted to a General Partner herein,
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for the benefit of the Limited Partners, (b) to cure any ambiguity, to correct
or supplement any provision herein which may be inconsistent with any other
provision herein or to make any other provision with respect to matters or
questions arising under this Agreement which will not be inconsistent with the
provisions of this Agreement, (c) to delete any provision from this Agreement or
to add any provision to this Agreement required to be so deleted or added by the
Staff of the Securities and Exchange Commission or by a State "Blue Sky"
Commissioner or similar such official, which addition or deletion is deemed by
such Commission or official to be for the benefit or protection of the Limited
Partners, and (d) to change administrative or other provisions of this Agreement
in a manner which, in the opinion of the General Partner, will permit the most
profitable and/or efficient operation of the Partnership; provided, however,
that no amendment shall be adopted pursuant to this Section 3 unless the
adoption thereof (i) is for the benefit of, or not adverse to, the interests of
the Limited Partners, (ii) is consistent with Article IV and Paragraph A of
Article X hereof, (iii) does not affect the distribution of Distributable Cash
From Operations, Cash From Sales and Cash From Financings or the allocation of
profits and losses among the Limited Partners or between the Limited Partners
and the General Partner and (iv) does not affect the limited liability of the
Limited Partners or the status of the Partnership as a partnership for Federal
income tax purposes.
4. Upon amendment of this Agreement, the Certificate of Limited
Partnership shall also be amended if necessary to reflect such change.
5. Any amendment to the Partnership Agreement which modifies the
compensation or distributions to which a General Partner is entitled or which
affects the duties of a General Partner must be consented to by the General
Partner before becoming effective.
6. In the event there is a change in the Federal income tax laws or
regulations which result in the Partnership being taxed as an association
taxable as a corporation, the General Partner may cause the Partnership to
conduct its business so as to be treated as a real estate investment trust for
Federal income tax purposes.
C. Meetings of the Partnership. Meetings of the Partnership may be
called by the General Partner and shall be called by them upon the written
request of Limited Partners holding more than ten percent (10%) or more of the
outstanding Limited Partner Interests, with the same proportionate vote as
provided in paragraph (d) of Article XI. Upon receipt of such a written request,
stating the purpose of the proposed meeting, the General Partner shall provide
each Partner, within 10 days of such request, written notice (either by personal
service or certified mail or by express or other overnight delivery service) of
a meeting and the purpose of such meeting. Such meeting shall
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be held not less than 10 days nor more than 60 days after the receipt of such
request. Included with the notice shall be a detailed statement of the action
proposed, including a verbatim statement of the wording of any resolution
proposed for adoption by the Limited Partners and of any proposed amendment to
the Partnership Agreement. The Partnership will provide for Proxies or written
consents which specify a choice between approval or disapproval of each matter
to be acted upon at the meeting. Holders of a majority of the Limited Partner
Interests entitled to vote, shall constitute a quorum at a meeting of the
Limited Partners. To the extent not consistent with this Paragraph C, all
meetings shall be governed by the provisions of Section 15637 of the Act. The
General Partner may establish a record date for any meeting, subject to the
limitations of Section 15637(j) of the Act.
ARTICLE XVII
TERM
The Partnership shall terminate on December 31, 2005, unless sooner dissolved
pursuant to the provisions of Article XVIII hereof as otherwise provided by law.
ARTICLE XVIII
DISSOLUTION
A. Events Requiring Dissolution. The Partnership shall be dissolved
upon the happening of any of the following events:
1. The retirement, removal, adjudication of bankruptcy under Chapter
7 of the Bankruptcy Code (or any similar law or provision enacted in lieu
thereof), of the General Partner, the dissolution or other cessation to exist as
a legal entity of the General Partner, unless the Limited Partners agree in
writing to continue the business of the Partnership and to admit one or more
General Partners.
2. The Partnership is adjudicated bankrupt under Chapter 7 of the
Federal Bankruptcy Code (or any similar law or provision enacted in lieu
thereof).
3. The vote of Limited Partners holding more than fifty percent
(50%) of the then outstanding Limited Partner Interests held by all Limited
Partners, with the same proportionate vote as provided in paragraph (d) of
Article XI.
4. The disposition of all interests in the real, personal and mixed
property and other assets of the Partnership.
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5. December 31, 2005.
B. Distributions on Dissolution. Upon the dissolution of the
Partnership the General Partner who has not wrongfully dissolved the Partnership
shall wind up the affairs of the Partnership. If there is no such General
Partner, the Limited Partners shall wind up the affairs of the Partnership. The
Partners winding up the affairs of the Partnership shall take full account of
the Partnership assets and liabilities and all assets shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom shall be applied and distributed in the following order: (1)
to creditors (including Partners who are creditors to the extent permitted by
law), in the order of priority as provided by law, (2) to the Partners in
accordance with their respective Capital Accounts, determined after the
application of Articles VIII and IX hereof and (3) to the Partners in accordance
with the provisions of Paragraph E of Article IX hereof. Notwithstanding
anything to the contrary, in the event the Partnership is "liquidated" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), liquidating
distributions shall be made pursuant to the previous sentence by the end of the
taxable year in which the Partnership is liquidated, or, if later, within 90
days after the date of such liquidation. Distributions pursuant to the preceding
sentence may be made to a trust for the purposes of an orderly liquidation of
the Partnership by the trust in accordance with the Act.
C. Contributions by the General Partner. In the event that, upon the
liquidation of the Partnership, a General Partner shall have a negative balance
in the General Partner's Capital Account then the General Partner shall
contribute to the capital of the Partnership an amount equal to such negative
balance in the General Partner's Capital Account.
ARTICLE XIX
POWER OF ATTORNEY
Concurrently with the written acceptance and adoption of the
provisions of this Agreement, each Limited Partner and Special Partner shall
execute and deliver to the General Partner a Power of Attorney in form
acceptable to the General Partner in which the General Partner is constituted
and appointed as the attorney-in-fact for such Limited Partner or Special
Partner with power and authority to act in his name and on his behalf in the
execution, acknowledgment and filing of documents, which will include but not be
limited to a Certificate of Limited Partnership, as well as amendments thereto,
under the laws of the State of California and under the laws of any other state
in which the General Partner deems it
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advisable to file such a certificate; any other instrument which may be required
to be filed by the Partnership under the laws of any state or by any
governmental agency, or which the General Partner deems it advisable to file;
and any documents which may be required to effect the continuation of the
Partnership, the admission of an additional or substituted Limited Partner or
the dissolution and termination of the Partnership, provided such continuation,
admission or dissolution and termination are in accordance with the terms of
this Agreement.
The Power of Attorney so granted by each Limited Partner and Special
Partner to the General Partner is a Special Power of Attorney coupled with an
interest, is irrevocable and shall survive the death or legal incapacity of the
Limited Partner or Special Partner; may be exercised by the General Partner for
each Limited Partner or Special Partner by a facsimile signature of one of its
officers or by listing all the Limited Partners and Special Partners executing
any instrument with a single signature of one of its officers acting as
attorney-in-fact for all of them; and shall survive the delivery of any
assignment by a Limited Partner or Special Partner of the whole or any portion
of his interest in the Partnership; except that where the assignee thereof has
been approved by the General Partner for admission to the Partnership as a
substituted Limited Partner or Special Partner, the Power of Attorney shall
survive the delivery of such assignment for the sole purpose of enabling the
General Partner to execute, acknowledge and file any instrument necessary to
effect such substitution.
The Power of Attorney so granted by each Limited Partner to the
General Partner shall not authorize the General Partner to act on behalf of
Limited Partners in any situation in which this Agreement requires the consent
of Limited Partners.
ARTICLE XX
LIMITATIONS ON LIABILITY; LITIGATION
Except as provided in his Subscription Agreement, no Limited Partner
shall be liable (i) as a General Partner unless, in addition to the exercise of
his rights and powers as a Limited Partner, he takes part in the management or
control of the Partnership's business or (ii) to the Partnership or to a General
Partner unless a liability of the Partnership or of the General Partner, as the
case may be, is founded upon the unauthorized activity of such Limited Partner
in attempting to take part in the control of the Partnership's business or
misstatements contained in such Limited Partner's Subscription Agreement
delivered in connection with his purchase of limited partner interests.
The General Partner is hereby authorized to prosecute, defend,
settle or compromise actions or claims at law or in equity at the Partnership's
expense as may be necessary or proper to enforce or protect the Partnership's
interests. The General Partner shall satisfy any judgment, decree or decision of
any court, board or authority having jurisdiction or any settlement
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of any suit or claim prior to judgment or final decision thereon first, out of
any insurance proceeds available therefor, next out of the Partnership's assets
and income and finally out of the assets and income of the General Partner.
ARTICLE XXI
MISCELLANEOUS
All notices under this Agreement shall be in writing and shall,
except as otherwise expressly provided herein, be given to the Partner entitled
thereto by personal service or by certified or registered mail, return receipt
requested, to the address set forth in this Agreement for such Partner or at
such other address as he may specify in writing.
Article titles or captions contained in this Agreement are inserted
only as a matter of convenience and for reference and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provision
hereof.
Whenever the singular number is used in this Agreement and when
required by the context, the same shall include the plural, and the masculine
gender shall include the feminine and neuter genders and the word "persons"
shall include individuals, corporations, firms, partnerships, trusts or other
forms of associations.
This Agreement may be executed in several counterparts, and all so
executed shall constitute one agreement, binding on all of the parties hereto,
notwithstanding that all the parties are not signatory to the original or the
same counterpart.
Subject to the provisions of Article XV, the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the respective Partners.
Whenever the vote of the Limited Partners is referred to in this
Agreement, the General Partner may vote on behalf of such Limited Partners who
have by written proxy authorized the General Partner so to do.
This Agreement and amendments hereof shall be governed by the laws
of the State of California.
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IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands as of the day and year first above written.
GENERAL PARTNER:
▇▇▇▇▇ DIVERSIFIED LLC
By:
--------------------------------
CORPORATE SPECIAL PARTNER:
▇▇▇▇▇ MANAGEMENT LLC
By:
--------------------------------
INDIVIDUAL SPECIAL PARTNER
-----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
LIMITED PARTNERS:
▇▇▇▇▇ CORPORATE PROPERTY, INC.
By:
--------------------------------
▇▇▇▇▇ DIVERSIFIED LLC
By:
--------------------------------
All Limited Partners now and
hereafter admitted as limited
partners of the Partnership
pursuant to powers of attorney and
authorizations now and hereafter
executed in favor of and granted
and delivered to the General
Partner
By: ▇▇▇▇▇ DIVERSIFIED LLC,
General Partner
By:
--------------------------------
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