EXHIBIT A
LIMITED PARTNERSHIP AGREEMENT
REALTY PARKING PROPERTIES L.P.
TABLE OF CONTENTS
Page
Preliminary Statement .......................................................................................... A-3
Article I - Defined Terms .................................................................................... A-3
Article II - Name; Purpose; Term and Certificate ................................................... A-9
Section 2.1 Name; Formation .............................................................................. A-9
Section 2.2 Place of Registered Office .................................................................. A-9
Section 2.3 Purpose .......................................................................................... A-9
Section 2.4 Term .............................................................................................. A-9
Section 2.5 Recording of Certificate ..................................................................... A-9
Article III - Partners; Capital .............................................................................. A-10
Section 3.1 General Partners; Assignor Limited Partner; Subordinated
Limited Partners ........................................................................................... A-10
Section 3.2 Investors ........................................................................................ A-10
Section 3.3 Partnership Capital .......................................................................... A-10
Section 3.4 Liability of Partners and Investors ..................................................... A-11
Article IV - Allocations, Distributions and Applicable Rules ................................... A-12
Section 4.1 Allocation of Profit or Loss from a Sale ............................................. A-12
Section 4.2 Distribution of Net Proceeds of Sale or Financing ............................... A-12
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and
Loss from Operations .................................................................................... A-13
Section 4.4 Liquidation or Dissolution ............................................................... A-13
Section 4.5 General and Special Rules ............................................................... ▇- ▇▇
Article V - Rights, Powers and Duties of Partners ................................................. A-16
Section 5.1 Management and Control of the Partnership; Tax Matters Partner ............. A-16
Section 5.2 Authority of General Partners .......................................................... A-16
Section 5.3 Authority of Investors ..................................................................... A-19
Section 5.4 Restrictions on Authority ................................................................. A-19
Section 5.5 Authority of Partners and Affiliated Persons to Deal with Partnership ............. A-21
Section 5.6 Duties and Obligations of the General Partner ................................... A-22
Section 5.7 Compensation of General Partner ..................................................... A-23
Section 5.8 Other Businesses of Partner .............................................................. A-23
Section 5.9 Liability of General Partner and Affiliates to Limited Partner or Investors . ..... A-23
Section 5.10 Indemnification ............................................................................. A-23
Article VI - Transferability of a General Partner's Interest ..................................... A-24
Section 6.1 Removal, Voluntary Retirement or Withdrawal of a General Partner;
Transfer of Interests ...................................................................................... A-24
Section 6.2 Election and Admission of Successor or Additional General Partners ....... A-24
Section 6.3 Events of Withdrawal of a General Partner ........................................ A-24
Section 6.4 Liability of a Withdrawn General Partner .......................................... A-25
Section 6.5 Valuation of Partnership Interest of General Partner ........................... A-25
Article VII - Assignment of Assignee Units to Investors; Transferability of Limited
Partner Interests and Units ..............................................................................A-26
Section 7.1 Assignments of the Assignee Units to Investors .................................. A-26
Section 7.2 Transferability of Units .................................................................... A-27
Section 7.3 Death, Bankruptcy or Adjudication of Incompetence of an Investor or a
Limited Partner ........................................................................................... ▇-▇▇
▇-▇
▇▇▇▇▇▇▇ 7.4 Effective Date ............................................................................ A-28
Section 7.5 Substitute Limited Partners .......................................................... A-28
Section 7.6 Retirement or Withdrawal of a Limited Partner ............................. A-28
Article VIII - Dissolution, Liquidation and Termination of the Fund ................... A-29
Section 8.1 Events Causing Dissolution ......................................................... A-29
Section 8.2 Liquidation ................................................................................ A-29
Section 8.3 Capital Contribution Upon Dissolution ......................................... A-30
Article IX - Certain Payments to the General Partners and Affiliates ................... A-30
Section 9.1 Reimbursement of Certain Costs and Expenses of the General Partner and
Its Affiliates ............................................................................................ A-30
Section 9.2 Fees and Other Payments ............................................................ A-31
Article X - Books and Records; Bank Accounts; Reports ................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Books and Records .................................................................... A-31
Section 10.2 Bank Accounts ......................................................................... A-32
Section 10.3 Reports .................................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇ Tax Elections ................................................................ A-33
Article XI - Meetings of Investors ................................................................... A-34
Section 11.1 Calling Meetings ......................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇; Procedure ..................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Right to Vote ........................................................................... A-34
Section 11.4 Proxies; Rules .......................................................................... A-34
Article XII - General Provisions ..................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇ of General Partner as Attorney-in-Fact ......................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇ of Partition ................................................................... A-35
Section 12.3 Notification .............................................................................. A-35
Section 12.4 Word Meanings ........................................................................ A-35
Section 12.5 Binding Provisions ................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Applicable Law ........................................................................ ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ............................................................................ A-35
Section 12.8 Separability of Provisions .......................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇ Titles ........................................................................ A-36
Section 12.10 Entire Agreement ...................................................................... A-36
Section 12.11 Amendments .......................................................................... A-36
Signatures ..................................................................................................... A-37
Schedule A .................................................................................................... A-38
REALTY PARKING PROPERTIES L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of
October 4,1988, is by and among Realty Parking Company,
Inc., a Maryland corporation, as the General Partner,
Parking Properties Holding Co., Inc., a Maryland
corporation, as the Assignor Limited Partner, and Realty
Associates 1988 Limited Partnership, a Maryland limited
partnership, as the Subordinated Limited Partner.
Preliminary Statement
The General Partner, the Subordinated Limited Partner
and the Assignor Limited Partner desire to form Realty
Parking Properties L.P. (the "Partnership"), pursuant to
the Delaware Revised Uniform Limited Partnership Act, for
the purpose of acquiring parking lot properties located in
the United States.
NOW, THEREFORE, in consideration of the mutual
promises made herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINED TERMS
The defined terms used in this Agreement shall,
unless the context otherwise expressly requires, have the
meanings specified in this Article I.
"Accountants" means such firm of independent
certified public accountants as shall be engaged from time
to time by the General Partner on behalf of the
Partnership.
"Acquisition Expenses" means expenses, 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, title insurance, and
miscellaneous expenses related to selection and
acquisition of Properties, whether or not acquired.
"Acquisition Fees" means the total of all fees and
commissions paid by any party on behalf of the Partnership
in connection with the selection, purchase or development
of, or investment in, any Property by the Partnership,
including, without limitation, the Property Acquisition
Fee payable to the General Partner, any real estate
commission, selection fee, non-recurring management fee,
development fee, or any fee of a similar nature, however
designated.
"Act"means the Delaware Revised Uniform Limited
Partnership Act (6 DEL.C. ss.17-101 et. seq.)
as amended or modified from time to time.
"Additional General Partner" means any Person who is
admitted as an Additional General Partner of the
Partnership, under the provisions of Article VI, after the
date of this Agreement.
"Adjusted Capital Balance" of a Partner or an Investor
means the Capital Contribution of the Partner or the
Assignor Limited Partner made on behalf of an Investor,
less any Net Proceeds of Sale or Financing actually
distributed to the Partner or Investor (other than that
portion, if any, which is payment of an unpaid Preferred
Return), as provided in Article IV herein, at the time of
reference thereto.
"Affiliate" means (i) any Person directly or
indirectly controlling, controlled by or under common
control with another Person, (ii) any Person owning or
controlling 10% or more of the outstanding voting
securities of such other Person, (iii) any officer,
director or partner of such Person, and (iv) if such other
Person is an officer, director or partner, any company for
which such Person acts in any such capacity.
"Agreement" means this Agreement of Limited
Partnership as originally executed and as amended from
time to time, as the context requires. Words such as
"herein", "hereinafter, " "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement,
refer to this Agreement as a whole unless the context
otherwise requires.
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"Assigned Limited Partnership Interest" means a
Partnership Interest which is credited to the
Assignor Limited Partner on the books and records
of the Partnership in respect of a purchase of one
Unit by an Investor. Each Assigned Limited
Partnership Interest represents a contribution to
the capital of the Partnership equal to $25,
regardless of any reduction in Selling Commissions.
"Assignee Units" means the ownership interests
of an Investor in the Partnership at any particular
time, including the right of such Investor to any
and all benefits to which an Investor may be
entitled as provided in this Agreement. The
ownership interests of the Investors in the
Partnership are sometimes referred to herein as
"Units".
"Assignor Limited Partner" means Parking
Properties Holding Co., Inc. which will (i) own any
Assigned Limited Partnership Interests issued
pursuant to Sections 3.2 and 7.1 hereof, and (ii)
transfer and assign to those Persons who acquire
Units all of its rights and interest in Assigned
Limited Partnership Interests in accordance with
Sections 3.2 and 7.1 hereof.
"Capital Account" means (i) the separate
account maintained and adjusted on the books and
records of the Partnership for each Partner and
(ii) the separate subaccount of the Capital Account
of the Assignor Limited Partner maintained and
adjusted for each Investor. Each Partner's and
Inves- tor's Capital Account is credited with his
Capital Contributions and his distributive share of
Profit (or item thereof). Each Partner's or
Investor's Capital Account is debited with the cash
and the fair market value of any property
distributed to him (net of liabilities assumed by
such Partner or Investor and liabilities to which
such distributed property is subject), and his
distributive share of Loss (and deduction (or item
thereof)). Each Partner's and Investor's Capital
Account shall also be adjusted pursuant to Section
4.5 hereof and as required by the Income Tax
Regulations promulgated under Section 704 of the
Code. Any questions concerning a Partner's or
Investor's Capital Account shall be resolved by the
General Partner in its reasonably exercised
discretion, applying principles consistent with
this Agreement and the regulations promulgated
under Section 704 of the Code in order to assure
that all allocations herein will have substantial
economic effect or will otherwise be respected for
income tax purposes. For purposes of this
Agreement, a Partner or Investor who has more than
one Partnership Interest or Unit, as the case may
be, shall have a single Capital Account that
reflects all of his Partnership Interests and
Units, regardless of the class of Interests owned
(e.g., general or limited) and regardless of the
time or manner in which the Partnership Interests
and Units were acquired.
"Capital Contribution" means the total amount
of cash and the fair market value of any other
assets contributed to the Partnership by a Partner
(net of liabilities assumed by the Partnership and
liabilities to which any such contributed assets
are subject) and, with respect to an Investor, the
Capital Contribution of the Assignor Limited
Partner made on behalf of such Investor (without
regard to any reduction of Selling Commissions).
Any reference in this Agreement to the Capital
Contribution of a then-Partner or Investor shall
include a Capital Contribution previously made by
any prior Partner or Investor with respect to the
Interest or Unit of such then-Partner or then-
Investor, except to the extent that all or a
portion of the Interest or Unit of any prior
Partner or Investor shall have been terminated and
the portion so terminated not transferred to a
successor Partner or Investor.
"Certificate" means the Certificate of Limited
Partnership establishing the Partnership, as filed
with the office of the Secretary of State of the
State of Delaware on or about the date of this
Agreement, as it may be amended from time to time
in accordance with the terms of this Agreement and
the Act.
"Code" means the Internal Revenue Code of 1986,
as amended (or any corresponding provision of
succeeding law).
"Controlling Person"of the General Partner or
Affiliate thereof means any person who (a) performs
functions for the General Partner or Affiliate
similar to those of (i) a Chairman or member of the
Board of Directors, (ii) executive management, such
as a President, or a Vice-President, Secretary or
Treasurer, or (iii) senior management; or (b) holds
a 5% or more equity interest in the
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General Partner or Affiliate, or has the power to direct or
cause the direction of the General Partner, or Affiliate,
whether through the ownership of voting securities, by
contract or otherwise.
"Deferred Net Cash Flow Amount" means the cumulative
excess of the amounts of Net Cash Flow that the General
Partner would have received if Net Cash Flow had been
distributed 95% to the Investors and 5% to the General
Partner over the amounts of Net Cash Flow actually received
by the General Partner pursuant to Section 4.3A hereof.
"Due Diligence Expense Reimbursement Fee" means the
fee equal to 2% of the Gross Proceeds of the Offering
allowed to the Selling Agent, which may be re-allowed to
Soliciting Dealers, for advisory services, due diligence
activities and the reimbursement of expenses.
"Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, estate,
business trust, cooperative, association or other legal
form of organization.
"Escrow Agent" means Mercantile-Safe Deposit & Trust
Company, or such other escrow agent chosen by the General
Partner to hold funds from Persons who have subscribed to
become Investors pending the assignment of Assignee Units
to them.
"Financing" means all indebtedness encumbering the
Properties or incurred by the Partnership, the principal
amount of which is scheduled to be paid over a period of
not less than 48 months, and not more than 50% of the
principal amount of which is scheduled to be paid during
the first 24 months.
"Front-End Fees" means fees and expenses paid by any
Person for any services rendered during the organization or
acquisition phase of the Partnership, including the
Offering and Organizational Expense Fee, the Due Diligence
Expense Reimbursement Fee, the Selling Commissions, the
Acquisition Expenses, the Acquisition Fees and any other
similar fees.
"General Partner" means Realty Parking Company, Inc. and any other Person
designated as a General Partner in the Schedule and any Person who becomes a
Successor or Additional General Partner as provided herein, in each such
Person's capacity as a General Partner of the Partnership. "Gross Proceeds of
the Offering" means the aggregate
of the proceeds from the sale of Units in the Offering,
which amount is equal to the total of all Capital
Contributions of the Investors.
"Increased Maximum Offering Amount" means the total
amount of $60,000,000 in Gross Proceeds of the Offering.
"Interest" or "Partnership Interest" means the entire
ownership interest (which may be segmented into and/or
expressed as a percentage of various rights and/or
liabilities) of a Partner in the Partnership at any
particular time, including the right of such Partner to any
and all benefits to which a Partner may be entitled as
provided in the Agreement and in the Act, together with the
obligations of such Partner to comply with all the terms
and provisions of this Agreement and of the Act.
"Interim Investments" means the short-term investments
made with the Net Proceeds of the Offering until such Net
Proceeds of the Offering are disbursed for acquisition of
Properties.
"Investor" means (i) any Person who holds an Assignee
Unit and is reflected as an Investor on the books and
records of the Partnership, and (ii) any Investor who has
been admitted to the Partnership as a Substitute Limited
Partner pursuant to Section 7.5 hereof.
"Investment in Properties" means the amount of Capital
Contributions actually paid or allocated to the purchase
and development of the Properties (including the purchase
of properties, working capital reserves allocable thereto
(except that working capital reserves in excess of 5% shall
not be included), and other cash payments such as interest
and taxes but excluding Front-End Fees).
"Investment Advisory Agreement" means the agreement
referred to in the Prospectus by and between the
Partnership and Allright Auto Parks, Inc.
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"Leases" means those certain agreements to
be entered into by the Partnership and the
Parking Lot Operator pursuant to which the
Parking Lot Operator shall lease, operate or
manage each of the Properties.
"Limited Partner" means any Person who is
designated as a Limited Partner on the books and
records of the Partnership at the time of
reference thereto, in each such Person's capacity
as a Limited Partner of the Partnership.
"Limited Partnership Interest" means the
ownership interest of the Assignor Limited
Partner and all other Limited Partners in the
Partnership.
"Limited Partnership Interest Percentage" in
respect of any Investor means the percentage
obtained by converting to a percentage the
fraction having the number of Assignee Units
owned by such Investor as its numerator and
having the number of Assignee Units owned by all
Investors at the time of reference thereto as its
denominator.
"Majority Vote of the Investors" shall mean
the affirmative vote of Investors owning more
than 50% of the outstanding Units or the consent
of Investors owning more than 50% of the
outstanding Units, as the case may be.
"Maximum Offering Amount" means the total
amount of $25,000,000 in Gross Proceeds of the
Offering.
"Minimum Gain" means with respect to each
non-recourse liability of the Partnership and
subject to certain adjustments pursuant to Income
Tax Reg. ss.1.704-1 (b)(4)(iv)(c), the amount of
gain (of whatever character), if any, that would
be realized by the Partnership, if the
Partnership disposed of (in a taxable
transaction) any of the assets subject to such
liability in full satisfaction of the liability.
For this purpose, only the portion of the assets'
adjusted basis allocated to non-recourse
liabilities of the Partnership shall be taken
into account.
"Minimum Offering Amount" means the amount
of $2,000,000 in Gross Proceeds of the Offering.
"Net Cash Flow" means, with respect to any
fiscal period, the excess, if any, of (i) all
cash funds derived from the operations of the
Partnership during such period, including the
yield from the Interim Investments and excess
cash reserves deemed distributable by the General
Partner pursuant to Section 3.3E hereof, over
(ii) all cash disbursed in the operations of the
Partnership during such period, including cash
used to pay, or establish reasonable reserves
for, operating expenses, fees, commissions, debt
service and loan repayments, improvements,
repairs, replacements, contingencies and
anticipated obligations, except to the extent any
such payment is made out of reserves set aside
for such purpose. Net Cash Flow shall not include
amounts distributed or to be distributed under
Section 4.2 hereof.
"Net Proceeds from a Financing" means the
gross proceeds to the Partnership of any
Financing, less any amounts deemed necessary by
the General Partner to be allocated to the
establishment of reserves, the payment of any
debts and liabilities of the Partnership to
creditors, and the payment of any reasonable
expenses or costs associated with the Financing,
including but not limited to, fees, points, or
commissions paid to any unaffiliated Persons.
"Net Proceeds from a Sale" means the gross
proceeds to the Partnership of any Sale, less any
amounts deemed necessary by the General Partner
to be allocated to the establishment of reserves,
the payment of any debts and liabilities of the
Partnership to creditors, and the payment of any
reasonable expenses or costs associated with the
Sale, including but not limited to, fees or real
estate brokerage commissions paid to any
unaffiliated Persons and, subject to Sections
5.2.A(viii) and 9.2.A(vi), fees or real estate
brokerage commissions paid to the General Partner
or Affiliates.
"Net Proceeds of the Offering" means the
Gross Proceeds of the Offering less the Selling
Commissions, the Due Diligence Expense
Reimbursement Fee, and the Offering and
Organizational Expense Fee.
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"Net Proceeds from a Sale or Financing" means the Net
Proceeds from a Sale or Net Proceeds from a Financing, as
the case may be.
"Notification" means a writing, containing the
information required by this Agreement to be communicated
to any Person, sent or delivered to such Person in
accordance with the provisions of Section 12.3 of this
Agreement.
"Offering"means the offering and sale of Units for a
minimum of $2,000,000 and a maximum of $60,000,000, as
more fully described in the Prospectus.
"Offering and Organizational Expense Fee" means the
non-accountable fee paid to the General Partner equal to
4.5% of the Gross Proceeds of the Offering, payable at
such times as the Investors are recognized as such on the
books of the Partnership, for services rendered and costs
incurred in connection with the organization of the
Partnership and the offering of Units.
"Parking Lot Operator" means (i) Allright Auto Parks,
Inc. or an Affiliate, or (ii) such other person selected
by the Partnership to operate the Properties.
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed in
accordance with this Agreement by the parties hereto, as
said limited partnership may from time to time be
constituted.
"Partnership Property" means all or any portion of the
assets owned or to be owned by the Partnership, including
the Properties and all incidental personal property.
"Person" means any individual or Entity.
"Preferred Return" means the cumulative,
non-compounded annual return equal to 12% of the Adjusted
Capital Balance of each Investor commencing on the earlier
of (i) the final closing for the sale of Units or (ii)
December 31, 1988, less any Net Cash Flow distributed to
each Investor pursuant to Section 4.3 and any Net Proceeds
from a Sale or Financing distributed to each Investor in
respect of the Preferred Return pursuant to Section
4.2A(i).
"Profit" or "Loss" means, for each fiscal year or
other period, an amount equal to the Partner- ship's
taxable income or loss for such year or period, with the
following adjustments: (i) any income of the Partnership
that is exempt from federal income tax shall be added to
such taxable income or loss; (ii) any expenditures of the
Partnership described in Section 705(a)(2)(B) of the Code,
or treated as Section 705(a)(2)(B) of the Code
expenditures pursuant to Income Tax Reg.
ss.1.704-1(b)(2)(iv)(i), shall be subtracted from such
taxable income or loss; and (iii) Pursuant to Income Tax
Reg. ss.1.704- l(b)(iv)(g)(3), an amount equal to the
depreciation, amortization, or other cost recovery
deduction allowable with respect to an asset for such year
or other period for federal income tax purposes shall be
taken into account, except that if the fair market value
on the date that the asset is contributed to the
Partnership (or if the basis of such asset for book
purposes is adjusted under the Income Tax Regulations,
such adjusted book basis) differs from its adjusted basis
for federal income tax purposes at the beginning of such
year or other period, the depreciation, amortization and
other cost recovery deductions taken into account shall be
equal to an amount which bears the same ratio to such
beginning fair market value (or adjusted book basis) as
the federal income tax depreciation, amortization, or
other cost recovery deduction for such year or other
period bears to such beginning adjusted tax basis. Except
as otherwise provided herein, each item of income, gain,
loss, deduction, preference or recapture entering into the
computation of Profit or Loss hereunder shall be allocated
to each Partner in the same proportion as Profit and Loss
are allocated.
"Profit or Loss from Operations" means Profit or Loss
of the Partnership from any source other than a Sale.
"Properties" means the parking lot properties acquired
by the Partnership, including, without limitation, surface
commercial parking lots, parking garages, suburban parking
properties, parking properties requiring the prior
demolition of obsolete structures, or offsite airport
parking lots.
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"Property Acquisition Fee" means the fee paid
to the General Partner or its Affiliates for
identifying, evaluating and selecting the
Properties, as described in the Prospectus.
"Prospectus" means the Partnership's Prospectus
contained in the Registration Statement filed on
Form S-11 with the Securities and Exchange
Commission for the registration of the Units under
the Securities Act of 1933, in the final form in
which it is filed with the Securities and Exchange
Commission and as thereafter supplemented pursuant
to Rule 424 under the Securities Act of 1933. Any
reference herein to "date of the Prospectus" shall
be deemed to refer to the date of the Prospectus in
the form filed pursuant to Rule 424(b) of the
Securities Act of 1933.
"Sale" means any transaction entered into by
the Partnership resulting in the receipt of cash or
other consideration (other than the receipt of
Capital Contributions) not in the ordinary course of
its business, including, without limitation, sales
or exchanges or other dispositions of Properties and
real or personal property of the Partnership,
condemnations, recoveries of damage awards and
insurance proceeds (other than business or rental
interruption insurance proceeds), but excepting any
Financing.
"Schedule" means Schedule A annexed hereto as
amended from time to time and as so amended at the
time of reference thereto.
"Selling Agent" means Alex. ▇▇▇▇▇ Realty
Securities, Inc., an Affiliate of the General
Partner, which will offer the Units on a best
efforts basis pursuant to the Selling Agent
Agreement.
"Selling Agent Agreement" means that certain agreement to be entered into
by the Partnership, Alex. ▇▇▇▇▇ Realty Securities. Inc., and the General
Partner, pursuant to which Alex. ▇▇▇▇▇ Realty Securities, Inc. will offer and
sell the Units on a best efforts basis. "Selling Commissions" means the maximum
total
(or any portion thereof) of 7% of the Gross Proceeds
of the Offering paid to the Selling Agent or
Soliciting Dealers for their efforts in offering the
Units. The 7% maximum Selling Commissions will be
reduced for volume purchases and purchases by
certain Affiliates as specified in the Prospectus.
"Sponsor" means any Person directly or
indirectly instrumental in organizing, wholly or in
part, the Partnership or who will manage or
participate in the management of the Partnership,
and any Affiliate of such Person, but does not
include (a) any Person whose only relationship with
the Partnership or the General Partner is that of an
independent property manager if such person's only
compensation from the Partnership is in the form of
fees for the performance of property management
services, or (b) wholly-independent third parties
such as attorneys, accountants and broker-dealers
whose only compensation from the Partnership is for
professional services rendered in connection with
the Offering or the operations of the Partnership.
"Subordinated Limited Partner" means Realty
Associates 1988 Limited Partnership and such other
Persons who are designated as Subordinated Limited
Partners on the books and records of the
Partnership.
"Substitute Limited Partner" means any Investor
who has elected to convert from an Investor to a
Limited Partner pursuant to Section 7.5 of this
Agreement.
"Successor General Partner" means any Person
who is admitted as a Successor General Partner to
the Partnership under the provisions of Article VI
after the date of this Agreement.
"Tax Matters Partner" means the General Partner
designated in Section 5.1C as the tax matters
partner, as defined in Section 6231(a)(7) of the
Code.
"Termination Date of the Offering" means the
date upon which the Offering will terminate, which,
if not sooner terminated by the General Partner,
will be one (1) year from the date of the
Prospectus.
"Unit" means (i) an Assignee Unit representing
the assignment by the Assignor Limited Partner of
one Assigned Limited Partnership Interest, and (ii)
the Partnership Interest attributable to one Unit of
any Investor who has become a Substitute Limited
Partner pursuant to Section 7.5 hereof.
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"U.S. Person" means a Person who is (i) an individual
who is either a United States citizen or a resident of the
United States for federal income tax purposes, (ii) a
corporation, partnership, or other legal entity created or
organized in or under the laws of the United States or any
political subdivision thereof, (iii) a corporation that is
not created or organized in or under the laws of the
United States or any political subdivision thereof but
which has made an election under Section 897(i) of the
Code to be treated as a domestic corporation for certain
purposes of federal income taxation, or (iv) an estate or
trust whose income from sources without the United States
is includable in its gross income for federal income tax
purposes regardless of its connection with a trade or
business carried on in the United States.
"Working Capital Reserves" means, initially, the
portion of the Net Proceeds of the Offering set aside as
working capital reserves pursuant to Section 3.3E, as
increased or decreased from time to time at the discretion
of the General Partner.
ARTICLE II
NAME; PURPOSE; TERM AND CERTIFICATE
Section 2.1 Name; Formation
The Partners hereby form the limited partnership to
be known as "Realty Parking Properties L.P.," and such
name shall be used at all times in connection with the
Partnership's business and affairs; provided, however,
that the Partnership may use trade names in its business
operations. The Partnership shall be governed by the Act.
Section 2.2 Place of Registered Office
The address of the registered office in the State of
Delaware of the Partnership is Corporation Trust Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; the name
of the registered agent for service of process on the
Partnership in the State of Delaware at that address is
The Corporation Trust Company. The Partnership's principal
place of business is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other place(s) as the
General Partner may hereafter determine. Notification of
any change in the location of the principal office shall
be given to the Partners and Investors on or before the
date of any such change.
Section 2.3 Purpose
The purpose of the Partnership is to acquire, own,
develop, maintain, finance, encumber, operate as a
business, lease, sell, dispose of and otherwise deal with
the Properties, and to do all things necessary, convenient
or incidental to the achievement of the foregoing.
Section 2.4 Term
The Partnership shall continue until December 31,
2038, unless the Partnership is sooner dissolved in
accordance with the provisions of this Agreement.
Section 2.5 Recording of Certificate
The General Partner shall take all necessary action
to maintain the Partnership in good standing as a limited
partnership under the Act, including, without limitation,
the filing of the Certificate and such amendments and
further certificates as may be necessary under the Act and
necessary to qualify the Partnership to do business in
such states as the Partnership owns property. The General
Partner shall not be required to send a copy of the
Partnership's filed Certificate to each Partner and
Investor.
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ARTICLE III
PARTNERS; CAPITAL
Section 3.1 General Partner; Assignor Limited
Partner; Subordinated Limited Partner
The name, address and Capital Contribution of
the General Partner, the Assignor Limited
Partner and the Subordinated Limited Partner are
set forth on the Schedule. Upon the dissolution and
termination of the Partnership (i) the General
Partner, on or before the later of the last day of
the fiscal year in which the dissolution of the
Partnership occurs or ninety (90) days after the
date of dissolution of the Partnership, shall make
a Capital Contribution to the Partnership in an
amount equal to the lesser of (A) the deficit
balance, if any, in its Capital Account or (B) the
excess of 2.02% of the Capital Contributions of the
Investors and Limited Partners (excluding capital
contributions of the Assignor Limited Partner on
behalf of Investors) over the Capital Contributions
previously contributed by the General Partner, and
(ii) the Subordinated Limited Partner, on or before
the later of the last day of the fiscal year in
which the dissolution of the Partnership occurs or
ninety (90) days after the date of dissolution of
the Partnership, shall make a Capital Contribution
to the Partnership in an amount equal to the lesser
of (x) the deficit balance in its Capital Account
or (y) the amount which it agrees to contribute to
the capital of the Partnership pursuant to an
amendment hereto.
Section 3.2 Investors
A. The General Partner is authorized to accept
orders for Units pursuant to the Offering. All
orders for Units shall be held in trust and
deposited in an escrow account with the Escrow
Agent. Orders for Units shall be accepted or
rejected by the General Partner within thirty (30)
days after their receipt by the Escrow Agent.
B. Upon the receipt by the Escrow Agent of
orders for an amount equal to the Minimum Offering
Amount, the Escrow Agent shall release the funds in
the escrow account to the Assignor Limited Partner
which shall immediately transmit such funds to the
Partnership. Subsequent orders for Units that are
accepted by the General Partner shall be released
from the escrow account and transmitted to the
Partnership or returned to subscribers in
accordance with the Prospectus. Upon release of an
Investor's funds from the escrow account to the
Partnership, an Assigned Limited Partnership
Interest shall be credited to the Assignor Limited
Partner on the books and records of the Partnership
in respect of such Unit and the Assignor Limited
Partner shall assign all of its rights with respect
to such Assigned Limited Partnership Interest to
the Investor to the extent permitted by, and in
accordance with, the Agreement and applicable law.
The Assignor Limited Partner hereby agrees to
exercise any and all rights with respect to such
Assigned Limited Partnership Interest as directed
by the Investor.
C. Any interest earned on moneys paid by
Investors during the period such moneys are held in
escrow by the Escrow Agent shall be paid to the
Partnership following the release of orders and
shall be distributed in accordance with Section
4.5A hereof. Persons whose orders for Units are
rejected by the General Partner shall be returned
their moneys (and interest earned thereon) within
ten (10) days after such rejection.
D. No order for Units sold as part of the
Offering shall be accepted after the Termination
Date of the Offering. If the General Partner does
not accept orders totalling an amount equal to the
Minimum Offering Amount on or before the
Termination Date of the Offering, the Escrow Agent
shall promptly return all moneys deposited by
subscribers together with any interest earned on
such moneys.
E. For purposes of this Agreement, an Investor
who acquires Units in the Offering shall be
recognized as an Investor with respect to such
Units on the date that such Investor's funds are
released from the escrow account to the
Partnership.
Section 3.3 Partnership Capital
A. Each Partner's and Investor's Capital
Contribution shall be paid in cash on or prior to
the date of such Partner's admission to the
Partnership or the date of the recognition of the
Investor on the books and records of the
Partnership.
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B. Except to the extent of any interest income earned
on an Investor's Capital Contribution while it is held in
escrow, and later distributed to such Investor pursuant to
Section 4.5A, no Partner or Investor shall be paid interest
on any Capital Contribution.
C. Except as otherwise provided in this Agreement, no
Partner or Investor shall have the right to withdraw, or
receive any return of, his Capital Contribution prior to
December 31, 2038.
D. Under circumstances requiring a return of any
Capital Contribution, no Partner shall have the
right to demand or receive property other than cash.
E. The Partnership shall initially set aside Working
Capital Reserves for contingencies related to ownership of
the Properties in an amount equal to at least 3% of the
Gross Proceeds of the Offering. If in any fiscal quarter,
the General Partner determines that the Working Capital
Reserves of the Partnership are in excess of the amount
deemed sufficient in connection with the ownership of the
Properties and that such Working Capital Reserves may be
reduced, the amount of such reduction may be distributed to
the Partners and Investors as a portion of the
Partnership's Net Cash Flow. Upon the Sale or disposition
of a Property, any Working Capital Reserves maintained for
such Property may be distributed, in the General Partner's
discretion, to Partners and Investors or applied as Working
Capital Reserves for other Properties.
Section 3.4 Liability of Partners and Investors
A. Except as provided in Section 17-607 of the Act, or
in Section 3.1 with respect to the Subordinated Limited
Partner, the Limited Partners and Investors shall be liable
only to pay their Capital Contributions and no Limited
Partner or Investor will be personally liable for the
debts, liabilities, contracts, or other obligations of the
Partnership.
B. Except as set forth in 3.4A, no Limited Partner or
Investor shall be required to lend any funds to the
Partnership or, after his Capital Contribution has been
fully paid, to make any further capital contribution to the
Partnership, nor shall any Limited Partner or Investor be
liable for or have any obligation to restore any negative
balance in his Capital Account.
C. Subject to the provisions of Sections 3.1 and 5.9 of
this Agreement, the General Partner shall not have any
personal liability for the repayment of the Capital
Contribution or the Preferred Return of any Limited Partner
or Investor or be required to repay to the Partnership all
or any portion of any negative balance of the Capital
Accounts of the Limited Partners or the Investors.
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ARTICLE IV
ALLOCATIONS, DISTRIBUTIONS AND APPLICABLE RULES
Section 4.1 Allocation of Profit or Loss from a Sale
A. Profit from any Sale (and Profit from any deemed
Sale pursuant to Section 4.5) shall be allocated
in the following order of priority:
(i) First, if one or more Investors or
Partner has a negative balance in his Capital
Account, to such Partners and Investors, in
proportion to their negative Capital Accounts,
until all such Capital Accounts have zero
balances.
(ii) Second, to each of the Investors
until the Capital Account of each Investor is
equal to the sum of his Adjusted Capital
Balance plus his unpaid Preferred Return, if
any.
(iii) Third, to the General Partner until
the Capital Account of the General Partner is
equal to the sum of its Adjusted Capital
Balance and the Deferred Net Cash Flow Amount.
(iv) Fourth, to the Subordinated Limited
Partner, an amount of Profit equal to the
amount of Net Proceeds from such Sale to which
the Subordinated Limited Partner is entitled to
receive pursuant to Section 4.2A (iii) or would
have been entitled to receive if the Sale
Proceeds were distributed pursuant to Section
4.2A rather than Section 4.2B.
(v) Fifth, any remaining Profit shall be
allocated 98% to the Investors and 2% to the General
Partner.
B. Loss from any Sale (and Loss from any deemed
Sale pursuant to Section 4.5) shall be allocated
98% to the Investors and 2% to the General Partner.
C. All Profit or Loss allocated pursuant to
Section 4.1 hereof with respect to any Unit which
is transferred during a taxable year of the
Partnership shall be allocated to the Persons
recognized (in accordance with Section 7.4 hereof)
as Investors as of the first business day of the
month that includes the date on which the Sale
occurs; provided, however, that all such Profit or
Loss which is attributable to an installment or
other deferred Sale shall be allocated to the
Persons recognized (in accordance with Section 7.4
hereof) as Investors as of the first business day
of the month that includes the date on which the
deferred Net Proceeds from such Sale are received
by the Partnership, and the allocable cash basis
items with respect thereto shall be allocated as
required under Section 706(d) of the Code and the
Income Tax Regulations thereunder.
Section 4.2 Distribution of Net Proceeds of Sale
or Financing
A. Upon a Financing and upon a Sale that does
not constitute a Sale of all or substantially all
of the Properties, Net Proceeds from the Financing
or Sale shall be distributed, credited and applied
in the following order of priority:
(i) First, to the Investors until each
Investor has received an amount equal to his
unpaid Preferred Return, if any, and then his
Adjusted Capital Balance.
(ii) Second, to the General Partner, an
amount equal to the sum of its Adjusted Capital
Balance and the deferred Net Cash Flow Amount.
(iii) Third, except as provided in Section
4.2D below, any remaining Net Proceeds of Sale
or Financing shall be distributed 90% to the
Investors, 9% to Realty Associates 1988 Limited
Partnership, and 1% to the General Partner.
B. Upon the Sale of all or substantially all of
the Properties, Net Proceeds from the Sale shall be
allocated to the Partners and Investors, in
proportion to their positive Capital Accounts,
after the allocation of Profit and Loss pursuant to
Sections 4.1A and 4.1B, until all such Capital
Accounts have been reduced to zero.
C. All Net Proceeds of Sale or Financing
distributable with respect to any Unit which is trans-
ferred during a taxable year of the Partnership shall
be distributed to the Persons recognized (in
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accordance with Section 7.4 hereof) as Investors as of the
first business day of the month that includes the date on
which the Sale or Financing occurs; provided, however,
that all Net Proceeds from a Sale received by the
Partnership as a result of an installment or other
deferred Sale shall be distributed to the Persons
recognized (in accordance with Section 7.4 hereof) as
Investors as of the first business day of the month that
includes the date on which the deferred Net Proceeds from
a Sale are received by the Partnership.
D. Notwithstanding any other provision of this
Article IV, the Subordinated Limited Partner shall not be
entitled to receive any Net Proceeds from a Sale except
(i) to the extent that it has been or will be allocated
Profit from such Sale in an amount equal to the Net
Proceeds from such Sale which will be allocated to it
pursuant to Section 4.1A, and (ii) if the amount of Net
Proceeds from such Sale which it would be otherwise
entitled to receive exceeds the amount of Profit from such
Sale to be allocated to it pursuant to Section 4.1A, then,
in addition to the amount to which the Subordinated
Limited Partner is entitled to receive under subparagraph
(i), an amount equal to the excess of the amount that the
Subordinated Limited Partner has agreed to contribute
pursuant to Section 3.1 over the amount of Profit from
such Sale which is allocated to it (reduced by prior
distributions pursuant to this subparagraph (ii)).
Section 4.3 Distribution of Net Cash Flow and Allocation
of Profit and Loss from Operations
A. Net Cash Flow shall be distributed 98% to the
Investors and 2% to the General Partner. The General
Partner will endeavor to distribute Net Cash Flow on a
quarterly basis, within approximately sixty (60) days
after the close of each calendar quarter.
B. Profit and Loss from Operations for each fiscal
year shall be allocated 98% to the Investors
and 2% to the General Partner.
C. For each fiscal year, all Profit and Loss
allocated pursuant to Section 4.3B to the Investors shall
be allocated among the Persons that are recognized as
Investors during such year by determining the Profit and
Loss attributable to each month during such year and by
allocating the amount of such Profit and Loss among
Persons who are recognized as Investors on the books of
the Partnership on the first business day of such month.
The Profit or Loss attributable to each month of the
fiscal year shall be determined by dividing the Profit or
Loss for such year by the number of days in such year, and
then multiplying such per diem amount by the number of
days in each month.
D. All Net Cash Flow distributable to the Investors
attributable to each month of a fiscal quarter, if any,
pursuant to Section 4.3A, shall be distributed among the
Persons recognized as Investors on the books of the
Partnership on the first business day of such month during
the fiscal quarter. The Net Cash Flow attributable to each
month of the fiscal quarter shall be determined by
dividing the amount of Net Cash Flow for such quarter by
the number of days in the quarter, and then multiplying
such per diem amount by the number of days in each month.
E. Notwithstanding Sections 4.3C and 4.3D, the
Partnership shall adopt the "interim closing of the books"
method of allocating Profit and Loss, in accordance with a
"semi-monthly convention," among persons who become
Investors pursuant to a closing of the sale of the Units
on or before the Termination Date. Accordingly, if there
is more than one closing of the sale of the Units,
Investors who are recognized on the books of the
Partnership (i) prior to the sixteenth day of a calendar
month, shall be treated as an Investor on the books of the
Partnership on the first business day of the month of
recognition, and (ii) on or after the sixteenth day of a
calendar month shall be treated as an Investor on the
books of the Partnership on the sixteenth day of the month
of recognition.
Section 4.4 Liquidation or Dissolution
A. If the Partnership is liquidated or dissolved, the
net proceeds from such liquidation, as provided in Article
VIII, shall be distributed first to creditors, including
Partners who are creditors, to the extent otherwise
permitted by law (whether by payment or by establishment
of reserves), other than liabilities for distributions to
Partners and Investors, and any remaining net proceeds
shall be
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distributed in proportion to the Capital Accounts
of the Partners and Investors, determined after the
allocations in Sections 4.1A and 4.1B.
B. All distributions under this Section 4.4
shall be made by the end of the taxable year of
liquidation of the Partnership or, within ninety
(90) days of the date of liquidation, whichever is
later.
Section 4.5 General and Special Rules
A. Except as otherwise provided herein, the
timing and amount of all distributions shall be
determined by the General Partner. Notwithstanding
any other provision of this Agreement, the General
Partner shall have authority to make the following
distributions to certain of the Investors: First,
if the Partnership has realized a savings on
Selling Commissions payable by the Partnership with
respect to the purchase of Units (as more fully set
forth in the Prospectus), the General Partner shall
make a distribution to such Investor equal to the
amount of such savings realized by the Partnership.
Second, if any interest is earned on an Investor's
Capital Contribution while it is held in escrow
pending recognition as an Investor under Article
VII, such interest shall be paid by the Partnership
to such Investor and Profit attributable to such
interest shall be allocated in the same manner.
B. Subject to all of the special rules of this
Section 4.5, if any property or assets of the
Partnership are distributed to the Partners in
kind, such property or assets first shall be valued
on the basis of the fair market value thereof to
determine the Profit or Loss that would have
resulted if such property or assets had been sold,
and then such Profit or Loss shall be allocated as
provided in Section 4.1A and Section 4.1B, and
shall be properly credited or charged to the
Capital Accounts in accordance with Income Tax Reg.
ss.1.704-1(b)(2)(iv)(e) or any successor provision
thereto. Any Partner entitled to any interest in
such property or assets shall receive such interest
as a tenant-in-common with all other Partners so
entitled. The fair market value of such property or
assets shall be determined by an independent
appraiser who shall be selected by the General
Partner. This Section 4.5B governs income tax
consequences only and shall not be read or
construed as authorizing the distribution in kind
of property or assets of the Partnership.
C. Notwithstanding Sections 4.1 and 4.3 hereof,
if an allocation of Loss (or item thereof) to an
Investor or Partner, other than the General
Partner, would cause or increase a deficit balance
in his or its Capital Account in excess of his
proportionate share of Minimum Gain (such excess
being referred to hereafter as the "Excess Deficit
Balance"), plus, in the case of the Subordinated
Limited Partner, any amount which it agrees to
contribute to the capital of the Partnership
pursuant to Section 3.1, then the allocation shall
not be made to such Investor or Partner. Instead,
such Loss (or item thereof) shall be allocated
first to the Partners and Investors having positive
Capital Accounts, in proportion to such positive
Capital Accounts, until all such positive Capital
Accounts have been reduced to zero, and any
additional Loss (or item thereof) shall be
allocated to the General Partner. For purposes of
making the determination set forth above, each
Investor's and each Partner's Capital Account
balance shall be reduced by reasonably expected
allocations or adjustments of loss (or item
thereof) including Loss from a Sale under Income
Tax Regulation ss.ss.1.704-1(b)(2)(ii)(d)(4) and
(5), and by reasonably expected distributions to
the extent not offset by reasonably expected
Capital Account increases ("Account Reduction
Items"). For purposes of calculating reasonably
expected Capital Account increases, the value of
the Partnership's assets shall be presumed to be
equal to their adjusted basis for federal income
tax purposes.
D. Notwithstanding Sections 4.1 and 4.3 hereof,
in accordance with Income Tax Regulation
ss.ss.1.704-1(b)(2)(ii)(d) and
1.704-1(b)(4)(iv)(e), (i) if, in any fiscal year of
the Partnership, an Account Reduction Item
unexpectedly causes or increases an Investor's or
Partner's Excess Deficit Balance, or (ii) if there
is a net decrease in Minimum Gain during a taxable
year, then all Investors or Partners with an Excess
Deficit Balance at the end of such year shall be
specially allocated Profit and, to the extent
necessary, gross income (as defined in Section 61
of the Code) to the extent of such Excess Deficit
Balances, in proportion to the Excess Deficit
Balance of each Investor or Partner. Any remaining
Profit or Loss, after adjustment has been made for
allocation of income or gain pursuant to this
Section 4.5D, shall be allocated in accordance with
Sections 4.1 and 4.3 hereof. The General Partner
shall be authorized to interpret and apply this
Section 4.5D so as to satisfy the requirements
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of Income Tax Regulation ss.ss.1.704-1(b)(2)(11)(d) and
1.704-1(b)(4)(iv)(e) and any successor provisions.
E. Any special allocations of Profit, Loss or gross
income under Section 4.5D shall be taken into account in
computing subsequent allocations of Profit or Loss, so that
to the extent possible, the aggregate amounts of Profit or
Loss allocated to each Partner or Investor will be equal to
the aggregate amounts that would have been allocated to
them in the absence of the unexpected Account Reduction
Items.
F. In the event that any Investor fails to furnish to
the General Partner evidence, in form and substance
satisfactory to the General Partner, establishing that the
General Partner has no obligation under Section 1445 of the
Code with respect to such Investor to withhold and pay over
an amount to the Internal Revenue Service, the General
Partner may, in its sole discretion, withhold with respect
to such Investor the amount it would be required to
withhold pursuant to Section 1445 of the Code if such
Investor were not a U.S. Person, and any amount so withheld
shall be treated as a distribution under Sections 4.2 or
4.3 of this Agreement, as the case may be, and shall reduce
the amount otherwise distributable to such Investor
thereunder. Alternatively, the General Partner may at its
option loan the Investor an amount equal to the tax to be
withheld (at an interest rate equal to the Escrow Agent's
announced "prime rate" plus two percentage points), such
loan to be repaid by retaining such Investor's
distributions. In addition, the General Partner is
authorized to withhold from any distribution made to an
Investor the amount of tax paid or to be paid by the
Partnership under Section 1446 of the Code with respect to
such Investor.
G. Notwithstanding anything to the contrary that may be
expressed or implied in this Agreement, if at any time the
allocation provisions of this Article IV do not result in
the allocation to the General Partner of at least 1% of the
Profit or Loss being allocated, the General Partner shall
be allocated 1% thereof.
H. It is the intent of the General Partner that each
Investor's and Partner's distributive share of Profit and
Loss shall be determined and allocated in accordance with
this Article IV to the fullest extent permitted by Sections
704(b) and 706 of the Code. Therefore, if the Partnership
is advised by the Accountants or the Partnership's legal
counsel, that the allocations provided in Article IV of
this Agreement are unlikely to be respected for federal
income tax purposes, the General Partner has been granted
the power in Section 12.1l.B hereof to amend the allocation
provisions of this Agreement, on advice of the Accountants
or the Partnership's legal counsel, to the minimum extent
necessary to conform to Sections 704(b) and 706 of the Code
the plan of allocations and distributions of Profit and
Loss, Net Cash Flow and Net Proceeds of Sale or Financing
provided in this Agreement.
I. Notwithstanding any other provision of this
Agreement, the General Partner may, after giving ninety
(90) days' prior Notification to the Investors, (i) adopt
any other method for determining, in the event of transfers
of Units, the Investors entitled to distributions of Net
Cash Flow or Net Proceeds from a Sale or Financing that the
General Partner, subject to the review and approval of the
Accountants, determines is reasonable, and (ii) allocate
Profit or Loss among the Investors during the taxable year
in any other manner that the General Partner, determines
satisfies the requirements of Section 706 of the Code, but
only to the extent such allocation of Profit and Loss
incorporates the minimum changes required to comply with
such section and is supported by an opinion of counsel to
the Partnership.
J. Allocations and distributions to Investors as a
class shall be made to each Investor entitled to such
allocation or distribution based upon the ratio of the
number of Units owned by each such Investor to the number
of Units owned by all Investors entitled to such allocation
or distribution.
K. In accordance with Section 704(c) of the Code and
the Income Tax Regulations thereunder, income, gain, loss,
and deduction (including depreciation) with respect to any
property contributed to the capital of the Partnership
shall be allocated among the Investors and Partners so as
to take account of any variation between the adjusted basis
of such property to the Partnership for federal income tax
purposes and its fair market value on the date of
contribution. In the event the value at
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which Partnership assets are carried on its balance
sheet maintained under the terms of this Agreement
are adjusted pursuant to Income Tax Reg.
ss.1.704-1(b)(2)(iv)(f), subsequent allocations of
income, gain, loss and deduction with respect to
such assets shall take account of any variation
between the adjusted basis of such asset for
federal income tax purposes and the value carried
on such balance sheet in the same manner as under
Section 704(c) of the Code and the Income Tax
Regulations thereunder. Any elections or other
decisions relating to such allocations shall be
made by the General Partner in any manner that
reasonably reflects the purpose and intention of
this Agreement. Allocations pursuant to this
Section are solely for purposes of federal, state
and local taxes and shall not affect, or in any way
be taken into account in computing, any Investor's
or Partner's Capital Account or share of Profit,
Loss, Net Cash Flow, Net Proceeds from a Sale, Net
Proceeds from a Financing, or other distributions
pursuant to any provision of this Agreement.
ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 5.1 Management and Control of the
Partnership; Tax Matters Partner
A. Subject to the Majority Vote of the
Investors when required by this Agreement, the
General Partner shall have the exclusive right to
manage and control the business of the Partnership.
B. No Limited Partner or Investor (except one
who may also be a General Partner, and then only in
his capacity as General Partner) shall have the
right to participate in the control of the business
of the Partnership, or have any authority or right
to act for or bind the Partnership.
C. The General Partner is hereby designated to
serve as the Partnership's Tax Matters Partner and
shall have all of the powers and responsibilities
of such position as provided in Sections 6221 et
seq. of the Code. All third party costs and
expenses incurred by the General Partner in
performing its duties as Tax Matters Partner shall
be borne by the Partnership, as shall all expenses
incurred by the Partnership and/or the Tax Matters
Partner in connection with any tax audit or
tax-related administrative or judicial proceeding.
Each Partner and Investor shall be responsible for
all costs incurred by such Partner or Investor with
respect to any tax audit or tax related
administrative or judicial proceeding in connection
with such Partner's or Investor's tax returns and
all costs incurred by any such Partner or Investor
who participates in any tax audit or tax-related
administrative or judicial proceeding of or against
the Partnership or any Partner. Each Partner and
Investor hereby (i) expressly authorizes the Tax
Matters Partner to enter into any settlement with
the Internal Revenue Service with respect to any
tax matter, tax item, tax issue, tax audit, or
judicial proceeding, which settlement shall be
binding on all Partners and Investors; (ii) waives
the right to participate in any administrative or
judicial proceeding in which the tax treatment of
any Partnership item is to be determined; and (iii)
agrees to execute such consents, waivers or other
documents as the Tax Matters Partner may determine
are necessary to accomplish the provisions of this
Section 5.1C. The Tax Matters Partner shall have no
liability to any Partner or Investor or the
Partnership, and shall be indemnified by the
Partnership to the full extent provided by law, for
any act or omission performed or omitted by it
within the scope of the authority conferred on it
by this Agreement, except for acts of negligence or
for damages arising from any misrepresentation or
breach of any other agreement with the Partnership.
The liability and indemnification of the Tax
Matters Partner shall be determined in the same
manner as is provided in Sections 5.9 and 5.10
hereof.
Section 5.2 Authority of General Partner
A. Except to the extent otherwise provided
herein, including, without limitation, Sections
5.3A, 5.4 and 5.5, the General Partner for, and in
the name of, and on behalf of, the Partnership is
hereby authorized:
(i) to enter into any kind of activity and
to perform and carry out contracts of any kind
necessary to, or in connection with, or
incidental to the accomplishment of the
purposes of the Partnership, so long as said
activities and contracts may be lawfully
carried on or performed by a limited
partnership under applicable laws and
regulations;
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(ii) to engage Persons, including the Sponsors
as provided in Article IX, to provide services or
goods to the Partnership, upon such terms as the
General Partner deems fair and reasonable and in
the best interest of the Partnership, provided,
however, that, as to services or goods provided by
a Sponsor (except for those services specifically
authorized under the NASAA Guidelines to be
performed by a Sponsor), (a) the compensation for
such services or goods must be the lesser of the
cost of such services or goods to the Sponsor or
ninety percent (90%) of the competitive price that
would be charged by non-affiliated persons or
entities rendering similar types and quality of
services in the same or comparable geographic
locations; (b) the compensation and other terms of
such contracts shall be fully disclosed to the
Investors in the reports of the Partnership; (c)
the Sponsor must have been previously engaged in
the business of providing such services or goods,
independent of the Partnership and as an ongoing
business; (d) all such transactions shall be
embodied in a written contract that describes the
services or goods to be provided and the
compensation to be paid, which contract may only be
modified by the Majority Vote of the Investors, and
,which contract shall permit termination without
penalty on sixty (60) days notice; and (e) except
for those services to be provided under agreements
referred to in this Agreement or the Prospectus,
any services provided by a Sponsor will be provided
only under extraordinary circumstances where
services are not available elsewhere;
(iii) to acquire by lease or purchase, improve,
develop, own, construct, finance, maintain,
mortgage, lease or exchange incident to a tax-free
swap any real estate and any personal property
necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership,
including without limitation, any Property;
(iv) to grant options with respect to, sell,
convey, or assign any Property or any other real
estate or personal property necessary, convenient
or incidental to the accomplishment of the purposes
of the Partnership;
(v) to execute any and all agreements,
contracts, documents, certifications and
instruments necessary or convenient in connection
with the acquisition, development, construction,
management, maintenance and operation of any
Property, including without limitation, the
Investment Advisory Agreement and the Leases;
(vi) to borrow money and issue evidences of
indebtedness in furtherance of any or all of the
purposes of the Partnership, and to secure the same
by deed of trust, mortgage, security interest,
pledge or other lien or encumbrance on any Property
or any other assets of the Partnership and to
borrow money on the general credit of the
Partnership for use in the business of the
Partnership and to take any action and enter into
any agreement necessary or advisable in connection
with such borrowing;
(vii) to repay in whole or in part, negotiate,
refinance, recast, increase, renew, modify or
extend any secured, or other indebtedness affecting
any Partnership Property and in connection
therewith to execute any extensions, renewals or
modifications of any evidences of indebtedness
secured by deeds of trust, mortgages, security
interests, pledges or other encumbrances covering
any Partnership Property or assets, provided,
however, that it is the Partnership's objective to
acquire the Properties on an all-cash basis and the
General Partner does not anticipate that it will be
necessary to borrow money to acquire the Properties
or to maintain the Partnership's investment in the
Properties;
(viii) to engage a real estate agent (including
a Sponsor) to sell any Partnership Property or
assets or portions thereof upon such terms and
conditions as are deemed fair and reasonable by the
General Partner and to be in the best interest of
the Partnership, and to pay reasonable compensation
for such services; provided, however, that any real
estate commission paid shall not exceed the lesser
of the competitive real estate commission for like
properties located in the same geographic area or
six percent (6%) of the contract price for the Sale
of any Partnership Property or assets, and, in
addition, if a Sponsor provides substantial
services in such regard, to pay the Sponsor up to
one-half of such real estate commission, provided,
however, that the payment of such real estate
commission to the Sponsor shall be subordinated to
the payment to
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Investors of their Adjusted Capital Balance plus
the unpaid portion, if any, of their Preferred
Return;
(ix) to recognize transferees of Units as
Investors and to admit substitute Limited
Partners in accordance with the terms described
in the Prospectus and Article VII of this
Agreement;
(x) to invest Working Capital Reserves and,
pending the investment of the Partnership's
assets in the Properties, to invest the
Partnership's assets (excluding Working Capital
Reserves), in interest-bearing accounts and
short-term investments, including obligations of
federal, state and local governments and their
agencies, regulated investment companies,
commercial paper and certificates of deposit of
federally-insured commercial banks, savings banks
or savings and loan associations; provided,
however, that such investments are short-term,
highly-liquid and provide appropriate safety of
principal;
(xi) to purchase and cancel or otherwise
retire or dispose of the Partnership Interests or
Units of any Partner or Investor according to the
provisions of this Agreement;
(xii) to execute and deliver all documents
necessary or appropriate (a) for the sale of
Units, including the Prospectus and filings under
the Securities Act of 1933 and any other federal
and state laws relating to the sale of securities
and (b) to file state and local tax returns at
the Partnership level on behalf of the Investors
and Partners;
(xiii) to require Investors to become
Limited Partners (in which case the General
Partner shall have the power to amend this
Agreement without the Majority Vote of the
Investors) and to take such other action with
respect to the manner in which Units are being or
may be transferred or traded as may be necessary
or appropriate to preserve the tax status of the
Partnership as a partnership for federal income
tax purposes and the tax treatment of the
Investors as Partners (but such action shall be
taken only to the minimum extent required by an
opinion of Counsel and only with the Majority
Vote of Investors if the changes would adversely
affect the Investors);
(xiv) to take such steps (including
amendment of this Agreement) as the General
Partner determines are advisable or necessary and
will not result in any material adverse effect on
the economic position of a majority in interest
of the Investors with respect to the Partnership
in order to preserve the tax status of the
Partnership as a partnership for federal income
tax purposes and the tax treatment of the
Investors as Partners, including, without
limitation, removing the Units from public
trading markets and imposing restrictions on
transfers of Units or Interests (provided such
restrictions on transfers do not cause the
Partnership's assets to be deemed "plan assets"
within the meaning of ERISA) (but such action
shall be taken only to the minimum extent
required by an opinion of Counsel and only with
the Majority Vote of Investors if the changes
would adversely affect the Investors);
(xv) to establish and maintain the Working
Capital Reserves described in Section 3.3E;
(xvi) to pay or reimburse any reasonable
out-of-pocket expenses incurred by any
Affiliate of
the General Partner in connection with any report
pursuant to Section 10.3, provided that no fee
shall be paid to any Affiliate in connection with
any such report;
(xvii) upon the Majority Vote of the
Investors to the matters set forth in Sections
5.4A(xv), 5.4A(xvi) or 5.4A(xvii), to take any
actions which they deem appropriate to the extent
authorized by the Investors to facilitate the
purposes described in such sections, including,
without limitation, amendments to this Agreement
to change the dates upon which transfers of Units
will be recognized, and the General Partner shall
give prior written notice to the Investors of any
such amendment; and
(xviii) to take such steps as the General
Partner determines are advisable or necessary and
will not result in any material adverse effect on
the economic position of a majority in interest
of the Investors with respect to the Partnership
to restructure the Partnership and its activities
to obtain a prohibited transaction exemption from
the Department of Labor or to comply with any
exemption in final plan asset regulations adopted
by the Department of Labor, including, but not
limited to, establishing a fixed percentage of
Units permitted to be held by qualified plans or
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other tax-exempt investors or discontinuing sales to
such entities after a given date, in the event that
either the assets of the Partnership constitute
"plan assets" for purposes of ERISA or the
transactions contemplated hereunder constitute
prohibited transactions under ERISA or the Code. B.
Any person dealing with the Partnership or the
General Partner may rely upon a certificate
signed by the General Partner, as to:
(i) the identity of any General Partner or any
Limited Partner;
(ii) the existence or non-existence of any fact
or facts that constitute conditions precedent to
acts by the General Partner or in any other manner
are germane to the affairs of the Partnership;
(iii) the Persons who are authorized to execute
and deliver any instrument or document of
the Partnership; or
(iv) any act or failure to act by the
Partnership or as to any other matter whatsoever
involving the Partnership or any Partner.
Section 5.3 Authority of Investors
A. By the Majority Vote of the Investors, the
Investors, without the consent of the General Partner,
may:
(i) amend this Agreement; provided that such
amendment (a) shall not in any manner allow the
Investors to take part in the control of the
Partnership's business in a manner which would
subject them to liability as general partners under
the Act or any other applicable law, and (b) shall
not, without the consent of the General Partner
affected, alter the rights, powers, or duties of the
General Partner or its interest in Profit and Loss,
Net Cash Flow, Net Proceeds of Sale or Financing, or
alter any of the provisions of Section 8.2 hereof;
(ii) dissolve or terminate the Partnership
prior to the expiration of its term; (iii)
remove the General Partner and, pursuant to
Section 6.2, elect a new General Partner,
or
(iv) approve or disapprove of the Sale of all
or substantially all of the Partnership Property.
B. Any action taken pursuant to Section 5.3A hereof
shall be void ab initio, if prior to or within
fifteen (15) days after such vote either (i) the
Partnership shall have received an opinion of counsel,
which counsel is approved by the Majority Vote of the
Investors, that such action may not be effected without
subjecting the Investors to liability as general partners
under the Act or under the laws of such other
jurisdiction in which the Partnership owns properties or
is doing business, or (ii) a court of competent
jurisdiction shall have entered a final judgment to the
foregoing effect. For purposes of this paragraph, counsel
will be deemed approved by the Majority Vote of the
Investors if proposed by the General Partner and
affirmatively approved in writing within forty-five (45)
days; provided, that if the holders of 10% or more of the
outstanding Units proposed counsel for this purpose, such
proposed counsel, and not counsel proposed by the General
Partner shall be submitted for such approval by the
Investors. The existence of such an opinion of counsel or
court judgment with respect to a particular contemplated
Partnership action shall not affect the rights of the
Investors to vote on other future actions or the
existence of such rights. If the opinion of counsel or
court judgment referred to above has not been obtained
the vote shall proceed as scheduled and it shall not be
delayed or postponed for any reason except as otherwise
permitted by the Act. Section 5.4 Restrictions on
Authority
A. The General Partner and its Affiliates shall have
no authority to perform any act in violation of any
applicable laws or regulations thereunder, nor shall the
General Partner as such have any authority:
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(i) to purchase or acquire property other
than as described in the Prospectus or to
invest more than 25% of the Gross Proceeds of
the Offering in unimproved, non-income
producing property;
(ii) except as permitted in this
Agreement, to do any act required to be approved by the
Investors under the Act;
(iii) to reinvest any Net Cash Flow or Net
Proceeds of Sale or Financing, except in
short-term securities pursuant to Section
10.2B;
(iv) except with respect to the Interim
Investments, to invest in or underwrite
securities of any type or kind for any purpose,
or make investments other than in the
Properties and the operations related and
incidental thereto;
(v) to do any act in contravention of this
Agreement;
(vi) to do any act that would make it
impossible to carry on the ordinary business
of the Partnership;
(vii) to confess a judgment against the
Partnership;
(viii) to offer Interests or Units in
exchange for property;
(ix) to possess any property, or assign
the Partnership's rights in same, for other
than the exclusive use of the Partnership;
(x) to operate in such a manner as to be
classified as an "investment company" under the
meaning of the Investment Company Act of 1940;
(xi) to purchase or lease any property
from or sell or lease property to the General
Partner, its Affiliates or any program or
partnership in which the General Partner or its
Affiliates have any interest (provided however
that the General Partner or an Affiliate may
temporarily hold title to a Property to
facilitate an acquisition by the Partnership so
long as no profit is received by the General
Partner or Affiliate);
(xii) to admit a Person as a General
Partner, except as provided in this
Agreement; (xiii) to admit a Person as an
Investor or Limited Partner, except as
provided in this
Agreement;
(xiv) to create or suffer to exist a total
indebtedness incurred by the Partnership in
excess of 60% of the fair market value of all
of the assets of the Partnership, as
determined, by an independent appraisal;
provided, however, that the General Partner
shall have the authority to incur indebtedness
with respect to any single Property up to but
not in excess of 75% of the then fair market
value of such Property, as determined by an
independent appraiser; provided, further, that
the foregoing term "indebtedness" shall include
the principal of any loan together with any
interest that may be deferred pursuant to the
terms of the loan agreement which exceeds 5%
per annum of the principal balance of such
indebtedness excluding contingent
participations in income or appreciation in the
value of the property);
(xv) without the Majority Vote of the
Investors, to cause or facilitate the merger or
consolidation of the Partnership with other
partnerships, including, but not limited to,
mergers or consolidations in which the
Investors receive in exchange for their Units
interests in the surviving entity, with the
objective of listing the interests of the
surviving entity on a national or regional
securities exchange or NASDAQ;
(xvi) subject to Section 7.2.A, without
the Majority Vote of the Investors, to list the
Units on a securities exchange or enable the
Units to be traded in the over-the-counter
market, or otherwise facilitate the
establishment of a market for the trading of
Units, or (except as set forth in Section
5.2A(xiv)) to withdraw the Units from such
listing; or
(xvii) without the Majority Vote of the
Investors, to restructure the Partnership as a
real estate investment trust ("REIT") for
federal income tax purposes; or
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(xviii) to obtain mortgage financing which is
not fully amortized over not more than 30 years or
which requires balloon payments due sooner than
seven years from the date the Partnership acquires
the Property securing such financing; provided,
however, that the foregoing do not apply to
financing representing 25% or less of the purchase
price of the Properties acquired or to interim
financing. B. The General Partner shall not take any
action which, for federal tax purposes, shall cause
the
Partnership to terminate or to be treated as an
association taxable as a corporation.
Section 5.5 Authority of Partners and Affiliated Persons
to Deal with Partnership
A. The General Partner may, for, in the name of,
and on behalf of, the Partnership, acquire
property from, borrow money from, enter into agreements,
contracts or the like (in addition to those set forth
herein) with, or reimburse for reasonable out-of-pocket
expenses incurred in connection with the preparation of
reports by, any Sponsor in an independent capacity, as
distinguished from such capacity (if any) as a Sponsor,
as if such Sponsor were an independent contractor;
provided, however, that any such agreement shall be
subject to the conditions set forth in Section 5.2A(ii)
herein.
B. Neither the General Partner nor any Affiliate
thereof shall have the authority:
(i) to cause the Partnership to invest in any
program, partnership or other venture;
(ii) to receive any compensation, fee or
expense not otherwise permitted to be paid to it
under the terms of this Agreement or the Prospectus;
(iii) to cause the Partnership to acquire a
Property without first having obtained an appraisal
with respect to the value of the Property, rendered
by a competent, independent appraiser, in which the
appraised value equals or exceeds the purchase price
to be paid by the Partnership;
(iv) to commingle the Partnership's funds with
those of any other Person, or to invest any of the
Net Proceeds of the Offering in junior mortgages,
junior deeds of trust or other similar obligations,
except that funds of the Partnership may be
temporarily retained by agents of the Partnership
pursuant to contracts for the rendering of services
to the Partnership by such agents or held in
accounts established and maintained for the purpose
of making the Interim Investments and/or
computerized disbursements;
(v) to cause the Partnership to lend money or
other assets to the General Partner or any
Affiliate thereof,
(vi) to grant to the General Partner or any
Affiliate thereof an exclusive listing for the Sale of
any assets of the Partnership;
(vii) to receive any rebate or give-up, or to
participate in any reciprocal business arrangement
with the General Partner or an Affiliate thereof,
(viii) to cause the Partnership to acquire a
Property that is under construction without
completion bonds, fixed price guarantees or other
satisfactory arrangements;
(ix) to cause the Partnership to pay directly
or indirectly, a commission or fee (except as
provided under Section 5.2.A.(viii)) to a Sponsor in
connection with the reinvestment or distribution of
the proceeds of the resale, exchange or refinancing
of the Properties; or
(x) to cause the Partnership to engage a
Sponsor to construct or develop the Properties or
render any services in connection with the
construction or development of the Properties.
C. If a loan is made to the Partnership by the
General Partner, the General Partner may not receive
interest or similar charges or fees in excess of the
amount which would be charged by unrelated lending
institutions on comparable loans for the same purpose,
in the same locality of the property if the loan is made
in connection with a particular property. No prepayment
charge or penalty shall be required by the General
Partner on a loan to the Partnership secured by either a
first or a junior or all-inclusive trust deed, mortgage
or encumbrance on the property, except to the extent
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that such prepayment charge or penalty is
attributable to the underlying encumbrance.
Notwithstanding the foregoing, the General Partner
shall not provide Financing to the Partnership.
Section 5.6 Duties and Obligations of the General Partner
A. The General Partner shall take all action
that may be necessary or appropriate (i) for the
continuation of the Partnership's existence as a
limited partnership under the Act (and under the
laws of each other jurisdiction in which such
existence is necessary to protect the limited
liability of the Investors and the Limited Partners
or to enable the Partnership to conduct the business
in which it is engaged), and (ii) for the
acquisition, maintenance, preservation and operation
of the Properties in accordance with the Prospectus,
the provisions of this Agreement and applicable laws
and regulations. The General Partner shall devote to
the Partnership such time as may be necessary for
the proper performance of its duties hereunder, but
neither the General Partner nor any of its
Affiliates shall be expected to devote its full time
to the performance of such duties. The General
Partner or its Affiliates may act as general or
managing partners for other partnerships engaged in
businesses similar to that conducted by the
Partnership. Nothing herein shall limit the General
Partner or its Affiliates from engaging in any such
business activities, or any other activities which
may be competitive with the Partnership.
B. The General Partner shall at all times
conduct its affairs, the affairs of all its
Affiliates and the affairs of the Partnership in
such a manner that no Limited Partner or Investor
(except a Limited Partner or Investor who is also a
General Partner) will have any personal liability
for Partnership debts except as otherwise set forth
herein and in the Prospectus.
C. The General Partner shall prepare or cause
to be prepared, and shall file, on or before the due
date (or any extension thereof), any federal, state
or local tax returns required to be filed by the
Partnership. The General Partner shall cause the
Partnership to pay any taxes payable by the
Partnership to the extent same are not payable by
any other party.
D. The General Partner shall obtain and keep in
force, or cause to be obtained and kept in force
during the term hereof, fire and extended coverage,
workmen's compensation, and public liability
insurance in favor of the Partnership with such
insurers and in such amounts as the General Partner
deems advisable, but in amounts not less (and with
deductible amounts not greater) than those
customarily maintained with respect to parking lots
or garages comparable to the Properties.
E. The General Partner shall be under a
fiduciary duty to conduct the affairs of the
Partnership in the best interests of the
Partnership, including the safekeeping and use of
all Partnership funds and assets, whether or not in
the General Partner's possession or control, and the
use thereof for the benefit of the Partnership. The
General Partner shall not enter into any contract or
agreement relieving it of its common law fiduciary
duty. The General Partner shall at all times act in
good faith and exercise due diligence in all
activities relating to the conduct of the business
of the Partnership. The General Partner shall treat
the Investors as a group and shall not favor the
interests of any particular Investor.
F. The General Partner shall cause the
Partnership to commit a percentage of the Gross
Proceeds of the Offering to Investment in Properties
which is equal to the greater of. (i) 80% of the
Gross Proceeds of the Offering reduced by.1625% for
each 1% of financing of the Partnership; or (ii) 67%
of the Gross Proceeds of the Offering. The proceeds
of the Offering will be invested in Properties
within two years of the date of the Prospectus.
I. Except for payment of the Selling
Commissions and the re-allowance of the Due
Diligence Expense Reimbursement Fee, the General
Partner shall not directly or indirectly pay or
award any commission or other compensation to any
Person engaged by a potential Investor for
investment advice as an inducement to such advisor
to advise the purchase of Units.
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Section 5.7 Compensation of General Partner
Except as expressly provided in Articles IV and IX
herein, the General Partner shall receive no fees,
salaries, profits, distributions, reimbursement or other
compensation for serving as General Partner.
Section 5.8 Other Businesses of Partners
Neither the Partnership nor any Partner or Investor
shall have any rights or obligations, by virtue of this
Agreement, in or to any independent ventures of any
nature or description, or the income or profits derived
therefrom, in which a Partner or Investor may engage,
including, without limitation, the ownership, operation,
management, syndication and development of other real
estate projects.
Section 5.9 Liability of General Partner and Affiliates
to Limited Partners or Investors The General Partner
and its Affiliates performing certain services on
behalf of the Partnership
shall not be liable, responsible, or accountable, in
liabilities, damages or otherwise, to any Investor,
Limited Partner or the Partnership for any loss,
judgment, liability, expense or amount paid in
settlement of any claims sustained which arise out of
any act or omission performed or omitted by them within
the scope of the authority conferred on them by this
Agreement, provided that the General Partner determines,
in good faith, that such act or omission was in the best
interests of the Partnership, except for acts of
negligence or misconduct or for damages arising from any
misrepresentation or breach of an agreement with the
Partnership. The Partnership shall not incur the cost of
that portion of any liability insurance which insures
the General Partner or its Affiliates performing certain
services on behalf of the Partnership against any
liability as to which the General Partner or its
Affiliate may not be indemnified under Section 5.10
herein. In the event the General Partner is held liable
to Investors and the General Partner's assets are
insufficient to satisfy such liability, the Subordinated
Limited Partner agrees to permit Investors to recover
from it to the extent of the Subordinated Limited
Partner's interest in the Partnership.
Section 5.10 Indemnification
A. The General Partner and its Affiliates performing
certain services on behalf of the Partnership shall be
indemnified to the full extent provided by law for any
loss, judgment, liability, expense or amount paid in
settlement of any claims sustained by them which arise
out of any act or omission performed or omitted by any
or all of them within the scope of the authority
conferred on them by this Agreement, if the General
Partner determines, in good faith, that such act or
omission was in the best interests of the Partnership
and that such act or omission did not constitute
negligence or misconduct or breach of any other
agreement with the Partnership, provided that any
indemnity under this Section shall be provided out of
and to the extent of Partnership assets only, and no
Investor or Limited Partner shall have any personal
liability on account thereof.
B. Notwithstanding Section 5.10A, the General
Partner and its Affiliates performing certain services
on behalf of the Partnership and any Person acting as a
Broker-Dealer shall not be indemnified by the
Partnership for any liability, loss or damage incurred
by any or all of them in connection with (i) any claim
or settlement arising under federal or state securities
laws unless (a) there has been a successful adjudication
on the merits of each count involving such securities
laws violations as to the particular indemnities and the
court approves indemnification of the litigation costs,
(b) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to
the particular indemnities and the court approves
indemnification of the litigation costs, or(c) a court
of competent jurisdiction approves a settlement of the
claims and finds that indemnification of the settlement
and related costs should be made, after being advised as
to the current position of the Securities and Exchange
Commission, the Massachusetts Securities Division, the
California Commissioner of Corporations, the
Pennsylvania Securities Commission, the Tennessee
Securities Commission, the Missouri Securities Division
(and such other state securities administrators as shall
be required by such court), regarding indemnification
for violations of securities law; or (ii) any liability
imposed by law, including liability for negligence or
misconduct.
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ARTICLE VI
TRANSFERABILITY OF THE GENERAL PARTNER'S INTEREST
Section 6.1 Removal, Voluntary Retirement or
Withdrawal of the General Partner; Transfer of
Interests
A. The General Partner may be removed in the
manner specified in Section 5.3A herein.
B. The General Partner may not voluntarily
withdraw or retire from its position as a General
Partner of the Partnership unless another General
Partner (including any Additional or Successor
General Partner admitted pursuant to Section 6.2)
remains, and unless (i) counsel for the Partnership
is of the opinion that such voluntary retirement or
withdrawal from the Partnership will not cause the
Partnership: (a) to be dissolved under the Act; (b)
to be classified other than as a partnership for
federal income tax purposes; or (c) to terminate for
federal income tax purposes; and (ii) the approval of
the remaining General Partners, if any, and the
Majority Vote of the Investors to such voluntary
retirement or withdrawal is obtained.
C. If the General Partner voluntarily retires or
withdraws from the Partnership in violation of this
Section 6.1, it shall be and remain liable to the
Partnership and the Partners for damages resulting
from the General Partner's breach of this Agreement,
and, without limitation of remedies, the Partnership
may offset such damages against the amounts otherwise
distributable to the General Partner.
D. The General Partner shall not have the right
to sell, exchange, or otherwise dispose of all or any
portion of its Interest unless the proposed assignee
or transferee of all or a portion of the Interest of
the General Partner is admitted as a Successor or
Additional General Partner to the Partnership
pursuant to the provisions of Section 6.2 prior to
any such sale, exchange or other disposition.
E. The voluntary retirement or withdrawal of the
General Partner shall become effective only upon (i)
receipt by the Partnership of the opinions of counsel
referred to in Section 6.1(B)(i); (ii) receipt by the
Partnership of the approval and consent referred to
in Section 6.1B(ii); and (iii) the amendment of the
Partnership's Certificate to reflect such withdrawal
or retirement and its filing for recordation.
Section 6.2 Election and Admission of Successor or Additional General
Partners A. The General Partner may at any time designate additional persons to
be Successor or Addi- tional General Partners, provided that the conditions of
Section 6.2B are satisfied. B. Except as otherwise expressly provided herein, no
Person shall be admitted as a Successor or
Additional General Partner unless (i) counsel for the
Partnership is of the opinion that the admission of
such Successor or Additional General Partner will not
cause the Partnership to be classified other than as
a partnership for federal income tax purposes or
cause the Partnership to terminate for federal income
tax purposes; (ii) the consent of the then remaining
General Partners, if any, is obtained; and (iii) the
Majority Vote of the Investors to such admission has
been obtained.
C. The admission of such Successor or Additional
General Partner shall become effective upon (i)
receipt by the Partnership of the opinion referred to
in Section 6.2B(i); (ii) receipt by the Partnership
of the consents referred to in Section 6.2B(ii) and
(iii), if applicable; and (iii) the amendment of the
Certificate to reflect the admission of the Successor
or Additional General Partner and its filing for
recordation.
Section 6.3 Events of Withdrawal of a General Partner
A. In addition to a voluntary withdrawal of the
General Partner pursuant to Section 6.lE, the General
Partner shall be deemed to withdraw (i) if the
General Partner assigns all of its Interest in the
Partnership, (ii) if the General Partner is removed
pursuant to Section 5.3A; and (iii) the filing of a
certificate of dissolution, or its equivalent, for
the General Partner or the revocation of its charter.
To the maximum extent permitted by the Act, no other
act or event shall be deemed an event of withdrawal
of the General Partner or serve to convert a General
Partner to a Limited Partner.
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B. In the event of the withdrawal of the General
Partner and if a Successor or Additional General Partner
has been admitted to the Partnership in accordance with
Section 6.2, the remaining General Partner or General
Partners, including such Successor or Additional General
Partner may elect to continue the Partnership, and if such
election is made, shall promptly give Notification of such
event and shall make and file such amendments to the
Certificate as are required by the Act to reflect the fact
that the withdrawn General Partner has ceased to be a
General Partner of the Partnership.
C. In the event of the withdrawal of the General
Partner and no Successor or Additional General Partner has
been admitted to the Partnership, or such Successor or
Additional General Partner does not elect to continue the
Partnership, the withdrawn General Partner, or its
successors, representatives, heirs or assigns shall
promptly give Notification of such withdrawal to all
remaining Partners and Investors. In such event, the
Partnership shall be dissolved unless, within ninety (90)
days after the withdrawal of the General Partner, the
Investors, by the Majority Vote of the Investors (or such
higher percentage vote as may be required by the Act),
agree in writing to continue the business of the
Partnership and to the appointment, effective as of the
date of withdrawal of the sole General Partner, of one or
more Additional General Partners. If the Investors elect
to reconstitute the Partnership and agree to admit an
Additional General Partner, the relationship of the
Investors and of substitute General Partner in the
Partnership shall be governed by this Agreement.
Section 6.4 Liability of a Withdrawn General Partner
A. Any General Partner who withdraws from the
Partnership shall be, and remain, liable for all
obligations and liabilities incurred by it as General
Partner prior to the time such withdrawal becomes
effective. In addition, a General Partner who voluntarily
withdraws in violation of this Agreement shall be subject
to the liability described in Section 6.1C.
B. Upon the withdrawal of a General Partner, such
General Partner shall immediately cease to be a General
Partner, and, unless a Successor General Partner has
acquired the Interest of the withdrawing General Partner
pursuant to Section 6.5, the withdrawn General Partner's
Interest shall be converted to a limited partner Interest
of a new class. Such conversion shall not affect any
rights or liabilities of the withdrawn General Partner,
except that such General Partner shall no longer
participate in the management of the Partnership. For
purposes of this Section 6.4.B and Section 6.5, the
Interest of the withdrawing General Partner shall include
the interest in the Partnership as a Subordinated Limited
Partner (if any) owned by an Affiliate of such withdrawing
General Partner.
C. The personal representatives, heirs, successors or
assigns of any General Partner who withdraws from the
Partnership shall be, and remain, liable for all
obligations and liabilities incurred by the General
Partner prior to, or in connection with, its withdrawal.
Section 6.5 Valuation of Partnership Interest of General Partner
Upon the voluntary or involuntary withdrawal of a
General Partner, the Partnership or a Successor General
Partner may purchase the Partnership Interest of the
withdrawn General Partner at any time subsequent to
withdrawal. The price of the withdrawn General Partner's
Interest shall be determined by two (2) independent
appraisers, one selected by the withdrawn General Partner
and one selected by the remaining General Partner, or if
none is remaining, by the Investors. If the two appraisers
are unable to agree on the value of the General Partner's
Interest, they shall jointly appoint a third independent
appraiser whose determination shall be final and binding.
The Partnership shall then pay the withdrawn General
Partner the price of its Interest as a General Partner as
so determined. The expense of the appraisals shall be
borne equally by the terminated General Partner and the
Partnership. If the withdrawal is involuntary, payment
shall be made by delivery of a promissory note bearing
interest payable semiannually at a floating rate of
interest equal to the lowest rate permitted under the Code
to avoid the imputation of interest income to the
withdrawn General Partner, payable in five equal annual
installments, the first installment to be paid as soon as
practicable after the appraisal, and prepayable at any
time. If the withdrawal is voluntary, payment shall be
made by delivery of a promissory note bearing no interest,
with principal payable only from distributions which the
withdrawn General Partner would have received under this
Agreement had the
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General Partner not withdrawn. Immediately upon
receiving the note, the withdrawn General Partner
shall cease to be a Partner of the Partnership for all
purposes, except that the withdrawn General Partner
shall continue to be subject to Section 6.4 hereunder.
All amounts received pursuant to this Section 6.5
shall constitute complete and full discharge for all
amounts owing to the withdrawn General Partner on
account of its Interest in the Partnership. Any
disputes regarding valuation or payment pursuant to
this Section which are not resolved in a binding
manner by the provisions of this Section shall be
resolved by arbitration in accordance with the then
current rules of the American Arbitration Association.
The expense of arbitration shall be borne equally by
the terminated General Partner and the Partnership.
ARTICLE VII
ASSIGNMENT OF ASSIGNEE UNITS TO INVESTORS;
TRANSFERABILITY OF LIMITED PARTNER INTERESTS AND UNITS
Section 7.1 Assignment of the Assignee Units to Investors
A. Pursuant to Sections 3.2 and ▇.▇▇ hereof, the
Assignor Limited Partner shall assign to each Investor
Assignee Units equal to the number of Units purchased
by each Investor in the Offering.
B. Except as provided in Section 7.1.A above, the
Assignor Limited Partner may not transfer a Limited
Partnership Interest without the prior written consent
of the General Partner. The Assignor Limited Partner
shall have no right to vote or consent with respect to
Units owned by the Assignor Limited Partner for its
own account and such Units shall not be considered
outstanding Units for purposes of determining whether
the Majority Vote of the Investors or the Consent of
the Investors has occurred. The Assignor Limited
Partner, by the execution of this Agreement,
acknowledges and agrees that the Assignor Limited
Partner's management will have fiduciary
responsibility for the safekeeping and use of all
funds and assets of the Investors, whether or not in
the Assignor Limited Partner's management's possession
or control, and that the management of the Assignor
Limited Partner will not employ, or permit another to
employ such funds or assets in any manner except for
the exclusive benefit of the Investor. The Assignor
Limited Partner agrees not to contract away the
fiduciary duty owed to the Investors by the Assignor
Limited Partner's management under the common law of
agency.
C. Except as set forth in Section 7.1G, the
Assignor Limited Partner, by the execution of this
Agreement, irrevocably transfers and assigns to the
Investors all of the Assignor Limited Partner's rights
and interest in and to the Assigned Limited
Partnership Interests, as of the time that payment for
such Assigned Limited Partnership Interests is
received by the Partnership and such Assigned Limited
Partnership Interests are credited to the Assignor
Limited Partner on the books and records of the
Partnership. The rights and interest so transferred
and assigned shall include, without limitation, the
following:
(i) all rights to receive distributions of uninvested Capital Contributions
pursuant to Sec- tions 3.2 and 3.3;
(ii) all rights to receive cash distributions pursuant to ArticleIV;
(iii) all rights in respect to allocations of
Profit and Loss pursuant to Article IV;
(iv) all other rights in respect of
determinations of allocations and distributions pursuant to Article IV,
(v) all
rights to consent to the admission of Successor or Additional General Partners
pursuant to Sections 6.1 and 6.2;
(vi) all rights to receive any proceeds of
liquidation of the Partnership pursuant to Section 8.2;
(vii) all rights to
inspect books and records and to receive reports pursuant to Article X;
(viii)all voting rights, rights to attend or call meetings and other such
rights; and
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(ix) all rights which the Limited Partners have, or may have in the future,
under the Act.
D. The General Partner, by the execution of this Agreement,
irrevocably consents to and
acknowledges that (i) the foregoing transfer and
assignment pursuant to Section 7.1 by the Assignor Limited
Partner to the Investors of the Assignor Limited Partner's
rights and interest in the Assigned Limited Partnership
Interests is effective, and (ii) the Investors are
intended to be and shall be third party beneficiaries of
all rights and privileges of the Assignor Limited Partner
in respect of the Assigned Limited Partnership Interests.
The General Partner covenants and agrees that, in
accordance with the foregoing transfer and assignment, all
the Assignor Limited Partner's rights and privileges in
respect of Assigned Limited Partnership Interests may be
exercised by the Investors including, without limitation,
those cited in Section 7.1.
E. In accordance with the transfer and assignment
described in Section 7.1, Investors shall have the same
rights that the Limited Partners have under this Agreement
and under the Act.
F. Notwithstanding the assignment of the Assigned
Limited Partnership Interests referred to in this Section
7.1, the Assignor Limited Partner shall retain legal title
to and be and remain a Limited Partner of the Partnership.
Section 7.2 Transferability of Units
A. Units are generally transferable, provided,
however, that a transfer of Units shall be prohibited
if one of the following restrictions applies:
(i) No sale or exchange of any Units shall be
made if the Units sought to be sold or exchanged,
when added to the total of all other Units sold or
exchanged within a period of twelve (12) consecutive
months prior thereto, would, in the opinion of
counsel for the Partnership, result in the
Partnership being considered to have terminated
within the meaning of Section 708(b)(1)(A) of the
Code. The General Partner shall give Notification to
all Investors in the event that sales or exchanges
should be suspended for this reason. All deferred
sales or exchanges shall be made (in chronological
order to the extent practicable) as of the first day
of the fiscal year beginning after the end of any
such 12-month period, subject to the provisions of
this Article VII.
(ii) No transfer or assignment of any Unit shall
be made if a counsel for the Partnership is of the
opinion that the particular transfer or assignment
would be in violation of any federal or state
securities laws (including any investment suitability
standards) applicable to the Partnership or would
cause the Partnership to be classified other than as
a partnership for federal income tax purposes.
(iii) No transfer or assignment of any Unit shall
be made if in the opinion of Counsel to the
Partnership such transfer would cause the Partnership
to be treated as a "publicly traded partnership"
under Sections 7704 and 469(k) of the Code. Each
Investor agrees not to transfer, and agrees that the
Partnership shall not recognize for any purpose any
transfer on or through a listing on a securities
exchange, over-the-counter market or secondary market
or any transfer to or from a dealer in securities or
partnership interests or other market maker, or any
transfer arranged thrugh or facilitated by means of
an interdealer quotation system, information system
or other facility that may create the equivalent of a
secondary market in partnership interests, unless
counsel to the Partnership is of the opinion that
such transfers will not result in the partnership
becoming taxable as a corporation or a publicly
traded partnership.
(iv) No transfer or assignment of Units shall be
made after which any transferor or transferee would
hold (a) a number of Units not evenly divisible by
four, or (b) less than 200 Units, except for
Individual Retirement Accounts, or (c) less than 80
Units in the case of Individual Retirement Accounts,
provided, however, that any such transferor or
transferee may hold zero Units.
(v) No transfer or assignment of any Unit shall
be made if it would result in the assets of the
Partnership being treated as "plan assets" or the
transactions contemplated hereunder to be prohibited
transactions under ERISA or the Code.
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(vi) No transfer or assignment of a Unit shall be made to a foreign person
under the Code or a minor or incompetent (unless such transfer or assignment
shall be made to a legal guardian on such person's behalf).
B. In order to record a trade on its books and
records, the Partnership may require such evidence
of transfer or assignment and authority of the
transferor or assignor (including signature
guarantees), evidence of the transferee's suitability
under state securities laws, and the written
acceptance and adoption by the transferee of the
provisions of this Agreement, as the General Partner
may determine. The General Partner may charge a
transfer fee sufficient to cover an reasonable
expenses connected with such transfer (with no profit
to any party in the transaction).
C. In no event shall an Investor be permitted to
transfer a fraction of a Unit.
Section 7.3 Death, Bankruptcy or Adjudication of
Incompetence of an Investor or a Limited Partner
Upon the death of an Investor or a Limited
Partner, his executor, administrator, or trustee,
or, if
he is adjudicated incompetent or insane, his
committee, guardian, or conservator, or, if he becomes
bankrupt, the trustee or receiver of his estate, shall
have all the rights of an Investor or a Limited
Partner for the purpose of settling or managing his
estate and shall have whatever power the deceased or
incompetent Investor or Limited Partner possessed to
assign all or any part of his Units or Interest. The
death, dissolution, adjudication of incompetence, or
bankruptcy of an Investor or a Limited Partner shall
not dissolve the Partnership.
Section 7.4 Effective Date
The Partnership shall recognize the transferee of
Units as an Investor on the Partnership's books and
records on the first business day of the next calendar
month after the month in which the Partnership
receives all necessary documentation and consents
required to effect the transfer of Units.
Section 7.5 Substitute Limited Partners
Any Investor may elect to become a Substitute
Limited Partner upon (i) signing a counterpart of this
Agreement and any other instrument or instruments
deemed necessary by the General Partner, including a
Power of Attorney in favor of the General Partner as
described in Section 12.1.A hereof, and (ii) paying a
fee equal to the actual costs and expenses incurred by
the General Partner for legal and administrative costs
and recording fees. Investors who elect to become
Substitute Limited Partners will receive one Limited
Partnership Interest for each Unit they convert and
will not be able to re-exchange their Limited
Partnership Interests for Units. The Capital Account
of the former Investor attributable to transferred
Units shall be credited to the Capital Account of the
Substitute Limited Partner. The Partnership's
Certificate will be amended no less often than
quarterly, if required by applicable law, to reflect
the substitution of Limited Partners.
Section 7.6 Retirement or Withdrawal of an Investor
A. No Investor shall have the right to
voluntarily retire or withdraw from the Partnership
unless the General Partner shall have consented to
such voluntary retirement or withdrawal by an
Investor. Upon the retirement or withdrawal of an
Investor: (i) the Interest of such retiring or
withdrawing Investor shall thereafter belong to the
Partnership; (ii) such retiring or withdrawing
Investor shall not be entitled to receive
distributions with respect to any periods after the
time of such retirement of withdrawal; and (iii) such
retiring or withdrawing Investor shall not be entitled
to receive any amount for the fair value of his Units
as of the date of his retirement or withdrawal, other
than as agreed to by the General Partner and the
withdrawing Investor. The General Partner shall not
consent to the voluntary retirement or withdrawal of
an Investor if the General Partner receives an opinion
of counsel to the Partnership that such retirement or
withdrawal would cause the Partnership to be
classified other than as a partnership for federal
income tax purposes, or cause the Partnership to
terminate for federal income tax purposes.
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B. At any time after the Termination Date of the
Offering, the Partnership may, in its sole discretion,
in response to the request of an Investor, repurchase
any or all of the Units of such Investor upon mutually
agreeable terms, provided that such repurchase does not
materially impair the capital or operation of the
Partnership. The determination to repurchase Units will
be made in the sole discretion of the General Partner.
The determination of the value of the repurchased Units
will be based upon, among other factors, the current
fair market value of the Properties and the assets of
the Partnership, less all Partnership debts and
obligations. The Partnership will not repurchase Units
prior to the Termination Date of the Offering and is not
obligated to repurchase Units at any time. Units
acquired by the General Partner and its Affiliates or by
the Assignor Limited Partner will not be eligible for
repurchase by the Partnership. Units purchased by the
Partnership during any month shall be deemed cancelled
effective as of the first day of the month following the
effective date of such purchase.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE FUND
Section 8.1 Events Causing Dissolution
A. The Partnership shall dissolve and its affairs
shall be wound up upon the first to occur of the
following events:
(i) the expiration of its term;
(ii) the withdrawal of the General Partner,
unless the Partnership is continued pursuant to
Sections 6.3B or 6.3C;
(iii) the Sale of all of the Properties
(excepting (a) a disposition thereof which, in the
opinion of counsel to the Partnership, qualifies,
in whole or in part, under Section 1031 or Section
1033 of the Code or (b) a Sale in which the
purchase price is paid in one or more installments,
in which case the Partnership shall dissolve upon
receipt of the final payment thereunder);
(iv) the election by the General Partner, with
the Majority Vote of the Investors, to dissolve
the Partnership;
(v) by the Majority Vote of the Investors
pursuant to Section 5.3A to dissolve the Partner-
ship; or
(vi) the happening of any other event causing
the dissolution of the Partnership under
applicable law.
B. Dissolution of the Partnership shall be
effective on the day on which the event occurs giving
rise to the dissolution. A certificate of cancellation
shall be filed under the Act upon the dissolution and
the commencement of winding up of the Partnership;
provided, however, that the Partnership shall not
terminate until the assets of the Partnership has been
distributed as provided in Section 8.2. Notwithstanding
the dissolution of the Partnership, prior to the
termination of the Partnership, the business of the
Partnership and the affairs of the Partners, as such,
shall continue to be governed by this Agreement.
Section 8.2 Liquidation
A. As soon as practical after the dissolution of
the Partnership, the General Partner, or if there is no
General Partner, any Limited Partner or the liquidating
trustee under the Act, as the case may be, shall give
Notification to all the Limited Partner and Investors of
such fact and shall prepare a plan as to whether and in
what manner the assets of the Partnership shall be
liquidated. By the Majority Vote of the Investors, the
assets of the Partnership, subject to its liabilities
(and the establishment of reserves, if necessary, for
such liabilities), may be transferred to a successor
Entity, upon such terms and conditions as are then
agreed upon.
B. Unless the Investors agree to transfer the
assets of the Partnership, subject to its liabilities,
to a successor Entity pursuant to Section 8.2A, upon
dissolution of the Partnership, the General Partner,
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any Limited Partner or the liquidating trustee under
the Act, as the case may be, shall liquidate the
assets of the Partnership, and apply and distribute
the proceeds thereof in accordance with Section 4.4.
C. Notwithstanding the provisions of Section
8.2B, in the event the General Partner or any
liquidating agent under the Act, as the case may be,
shall determine that an immediate sale of all or a
portion of the assets of the Partnership would cause
undue loss to the Partners and Investors, the General
Partner or liquidating agent under the Act, as the
case may be, in order to avoid such loss, may, after
having given Notification to all the Investors and
Limited Partners, either defer liquidation of, and
withhold from distribution for a reasonable time, any
assets of the Partnership, or distribute the assets in
kind to a liquidating trust to be held for the benefit
of the Investors and Partners.
Section 8.3 Capital Contribution Upon Dissolution
Subject to the provisions of Section 5.9 of this
Agreement, each Investor and Partner shall look solely
to the assets of the Partnership for all distributions
with respect to the Partnership and his Capital
Contribution and shall have no recourse (upon
dissolution or otherwise) against any Partner or
Investor; provided, however, that upon the dissolution
and termination of the Partnership, the General
Partner will make the Capital Contributions referred
to in Section 3.1. All amounts so contributed by the
General Partner shall be distributed first to the
Partnership's creditors entitled thereto, and the
balance to the Investors and Partners in proportion to
the positive balances in their Capital Accounts at the
time of dissolution and termination of the
Partnership.
ARTICLE IX
CERTAIN PAYMENTS TO THE GENERAL PARTNER AND AFFILIATES
Section 9.1 Reimbursement of Certain Costs and
Expenses of the General Partner and its
Affiliates A. Subject to the provisions of
Article V hereof, the Partnership shall be
permitted to reimburse
the General Partner for the actual cost to the General
Partner or any of its Affiliates of the Partner-
ship's operating expenses. In determining the actual
cost to the General Partner or an Affiliate of the
General Partner of goods and materials and
administrative services, actual cost means the actual
cost to the General Partner or an Affiliate of the
General Partner of goods and materials used for or by
the Partnership and obtained from entities not
affiliated with the General Partner, and actual cost
of administrative services means the pro rata cost of
personnel as if such persons were employees of the
Partnership. The cost for administrative services to
be reimbursed to the General Partner or an Affiliate
shall be at the lower of the General Partner's or
Affiliate's actual cost or ninety percent (90%) of the
amount the Partnership would be required to pay to
independent parties for comparable administrative
services in the same geographic location. The General
Partner shall use its best efforts to cause all of the
Partnership's expenses to be billed directly to and
paid by the Partnership to the extent practicable.
B. Subject to the foregoing, the Partnership
shall pay all expenses (which expenses shall be billed
directly to the Partnership) of the Partnership which
may include but are not limited to: (a) an costs of
personnel (excluding rent or depreciation, utilities,
capital equipment, and other administrative items)
employed full- or part-time by the Partnership and
involved in the business of the Partnership and
allocated pro rata to their administrative services
performed on behalf of the Partnership, including
Persons who may also be officers or employees of the
General Partner or its Affiliates (other than
Controlling Persons); (b) all costs of borrowed money,
taxes and assessments on Properties and other taxes
applicable to the Partnership; (c) legal, audit,
accounting, brokerage and other fees; (d) printing,
engraving and other expenses and taxes incurred in
connection with the issuance, distribution, transfer,
registration and recording of documents evidencing
ownership of an Interest or Unit or in connection with
the business of the Partnership; (e) fees and expenses
paid to independent contractors, mortgage bankers,
brokers and servicers, leasing agents, consultants,
on-site property managers and other property
management personnel (other than Controlling Persons
and other officers of the General Partner or its
Affiliates), real estate brokers, insurance brokers
and other
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agents; (f) expenses in connection with the disposition,
replacement, alteration, repair, remodeling,
refurbishment, leasing, refinancing and operating of the
Properties (including the costs and expenses of
foreclosures, insurance premiums, real estate brokerage
and leasing commissions and of maintenance of such
Properties); (g) expenses of organizing, revising,
amending, converting, modifying or terminating the
Partnership; and (h) the cost of preparation and
dissemination of the informational material and
documentation relating to potential sale, or other
disposition of Properties or in connection with any
meetings or votes if the Investors.
C. Notwithstanding any other provision of this Agreement, no reimbursement
shall be permitted for services for which the General Partner is entitled to
compensation by way of a separate fee.
Section 9.2 Fees and Other Payments
A. The Partnership shall cause the following payments and fees to be paid
to the General Partner and its Affiliates:
(i) to the Selling Agent, the Selling Commissions and the Due Diligence
Expense Reimburse- ment Fee.
(ii) to the General Partner or its Affiliates, the Offering and
Organizational Expense Fee.
(iii) to the General Partner or its Affiliates, the Acquisition Expenses
previously paid by the General Partner or its Affiliates. (iv) to the General
Partner or its Affiliates, the Property Acquisition Fee.
(v) to the General Partner, an annual property management fee equal to 1%
of the gross revenues of the Properties.
(vi) to the General Partner, real estate
brokerage commissions, payable upon the Sale of any
Property, provided that the General Partner actually
renders real estate brokerage services in connection
with such Sale. Any commissions paid to the General
Partner will be limited to one-half of the
competitive real estate commission for like
properties located in the same geographic area not
to exceed 1% of the contract price for the Sale of
the Property, and will be subordinated to the
payment to Investors of their Adjusted Capital
Balance plus the unpaid portion, if any, of their
Preferred Return. B. The total of the fees owed to
the General Partner and its Affiliates and described
in. (i), (ii),
(iii) and (iv) above shall in no event exceed 16.5% of
the Gross Proceeds of the Offering.
ARTICLE X
BOOKS AND RECORDS; BANK ACCOUNTS; REPORTS
Section 10.1 Books and Records
A. The books and records of the Partnership shall be
maintained by the General Partner at the Partnership's
principal place of business. In all cases, said books and
records shall be available for examination and copying by
any Limited Partner, Investor or his duly authorized
representatives, for any purpose related to the Limited
Partner's or Investor's interest as a Limited Partner or
Investor, at the expense of such Limited Partner or
Investor, at any and all reasonable times. The
Partnership shall keep at its principal place of
business, without limitation, the following records: true
and full information regarding the status of the business
and financial condition of the Partnership; promptly
after becoming available, a copy of the Partnership's
federal, state and local income tax returns for each
year; a current list of the names and last known
business, residence or mailing addresses of and the
numbers of Units held by each Partner and Investor; a
copy of this Agreement and the Certificate and all
amendments thereto; and other information regarding the
affairs of the Partnership as is just and reasonable. The
current list of the names and last known business,
residence or mailing addresses of each Partner and
Investor shall be mailed to any Investor upon payment of
a reasonable charge for copy work.
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B. The Partnership shall keep its books and records in accordance with the
accounting methods determined by the General Partner. The Partnership's taxable
year shall be a calendar year.
Section 10.2 Bank Accounts
A. The General Partner shall have fiduciary
responsibility for the safekeeping and use of all
funds and assets of the Partnership, whether or not in
their immediate possession or control. The General
Partner shall not employ, or permit any other Person
to employ, such funds in any manner except for the
benefit of the Partnership.
B. The bank accounts of the Partnership shall be
maintained in such banking institutions as the General
Partner shall determine, and withdrawals shall be made
only in the regular course of Partnership business on
the signature of the General Partner or such other
signature or signatures as the General Partner may
determine. All deposits and other funds may be
deposited in interest bearing or non-interest bearing
accounts guaranteed by federal authorities, invested
in short-term United States Government or municipal
obligations, or deposited with a banking institution
selected by the General Partner.
Section 10.3 Reports
A. No later than seventy-five (75) days after the
end of each calendar year, the General Partner will
furnish each Person who was an Investor or Limited
Partner at any time during the fiscal year with all
tax information relating to the Partnership's
performance for the preceding calendar year that is
required to be set forth in the Investor's and Limited
Partner's federal and state income tax return.
B. Within sixty (60) days after the end of each
of the first three fiscal quarters of each fiscal year
of the Partnership, the General Partner will furnish
to each Person who was an Investor or Limited Partner
at any time during the fiscal quarter then ended, a
report setting forth information with respect to the
progress of the Partnership's business, which report
shall include:
(i) an unaudited balance sheet of the
Partnership; (ii) an unaudited statement of
income for the quarter; (iii) an unaudited
cash flow statement for the quarter; (iv) an
unaudited statement setting forth
the services rendered to, and fees received from,
the Partnership by any Sponsor; and
(v) other pertinent information concerning
the Partnership and its activities during the
quarter.
The various reports required pursuant to this
Section 10.3.B may be sent earlier than or separately
from any of the other reports required pursuant to
this Section 10.3.B, and the information required to
be contained in any of the reports required pursuant
to this Section 10.3.B may be contained in more than
one report.
C. Within one hundred twenty (120) days after the
end of each fiscal year, the General Partner shall
furnish an annual report to each Person who was a
Limited Partner or an Investor as of the last business
day of the fiscal year then ended. Such annual report
will include:
(i) a balance sheet as of the end of the
Partnership's fiscal year, statements of income,
Partners' equity and cash flow, which shall be
prepared in accordance with generally accepted
accounting principles and accompanied by (a) an
auditor's report containing an opinion of an
independent certified public accountant and (b) a
reconciliation to information furnished to
Investors for income tax purposes;
(ii) the breakdown of any Partnership costs
reimbursed to a Sponsor and a statement setting
forth in detail the services rendered to, and
fees received from, the Partnership by any
Sponsor as verified by a review of the time
records of, and the specific nature of the work
performed by, individual employees, the cost of
whose services were reimbursed (and within the
scope of the
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annual audit by the Accountants shall be the obligation to verify the
allocations of the costs reimbursed to the General Partner or Affiliate
thereof);
(iii) a cash flow statement; and
(iv) a report of the activities of the
Partnership during the fiscal year.
The annual report shall also set forth distributions
to the Investors for the period covered thereby and shall
separately identify distributions from (a) Net Cash Flow
during the period, (b) Net Cash Flow during a prior period
which had been held as reserves, (c) Net Proceeds of Sale
or Financing, and (d) Working Capital Reserves.
D. Within forty-five (45) days after the end of each
fiscal quarter in which a Sale or Financing occurs, the
General Partner shall send to each Person who was an
Investor as of the close of business on the first business
day of the month that includes the date of occurrence of
the Sale or Financing, a report as to the nature of the
Sale or Financing and as to the Profit or Loss arising from
the Sale or Financing.
E. The General Partner shall prepare and timely file
with appropriate federal and state regulatory authorities
all reports required to be filed with such entities under
then-applicable laws, rules and regulations. Such reports
shall be prepared on the accounting or reporting basis
required by such regulatory authorities. Upon request,
copies of such reports will be furnished to any Investor or
Limited Partner for any purpose reasonably related to the
Investor's or Limited Partner's interest as an Investor or
a Limited Partner. In the event that any regulatory
authority promulgates rules or amendments thereto that
would permit a reduction in any of the reporting
requirements to which the Partnership is subject under this
Agreement at the time of the execution hereof, the
Partnership may cease to prepare and file any such reports
in accordance with such rules or amendments.
F. The General Partner shall maintain, (I) for a
period of at least six (6) years, a record of the
information obtained to indicate that an Investor has met
the suitability standards set forth in the Prospectus; and
(ii) for a period of at least five (5) years, records of
the appraisals made of the Properties, which appraisal
records shall be available for inspection and copying by
any Investor or Limited Partner for any purpose reasonably
related to the Investor's or Limited Partner's interest as
an Investor or a Limited Partner.
Section 10.4 Federal Tax Elections
The Partnership, in the sole discretion of the General
Partner, may make elections for federal tax purposes as
follows:
(I) In case of a transfer of a Unit, the
Partnership, in the sole discretion of the General
Partner, may timely elect pursuant to Section 754 of
the Code (or corresponding provisions of future law)
and pursuant to similar provisions of applicable state
or local income tax laws, to adjust the basis of the
assets of the Partnership.
(ii) The General Partner may elect accelerated
depreciation methods under the Code, or may elect
straight-line depreciation over a period as long as
forty (40) years if, in its sole discretion, the
determination of the percentage of tax-exempt
Investors becomes too cumbersome.
(iii) All other elections required or permitted
to be made by the Partnership under the Code shall be
made by the General Partner in such manner as will, in
its sole opinion, be most advantageous to a Majority
of the Investors. The Partnership shall, to the extent
permitted by applicable law and regulations, elect to
treat as an expense for federal income tax purposes
all amounts incurred by it for real estate taxes,
interest and other charges which may, in accordance
with applicable law and regulations, be considered as
expenses.
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ARTICLE XI
MEETINGS OF INVESTORS
Section 11.1 Calling Meetings
Meetings of the Investors for any purpose may
be called by the General Partner and shall be
called by the General Partner upon receipt of a
request in writing signed by Investors having in
the aggregate more than 10% of the outstanding
Units. Upon receipt of a written request stating
the purpose(s) of the meeting, the General Partner
shall provide all Investors within 10 days after
receipt of such request with notice as described in
Section 11.2. The meeting shall be held at a time
and place convenient to the Investors.
Section 11.2 Notice, Procedure
If a meeting is called at the request of the
Investors, the General Partner shall provide all
Investors with notice of such meeting given either
personally or by certified mail, which notice shall
state the purpose thereof, such meeting to be held
on a date not less than fifteen (15) nor more than
sixty (60) days after the receipt by the General
Partner of the request for the meeting. Notice of
any other meeting shall be given either personally
or by certified mail, not less than fifteen (15)
days nor more than sixty (60) days before the date
of the meeting, to each Investor at his record
mailing address. The notice shall be in writing,
and shall state the place, date, hour, and purpose
of the meeting, and shall indicate that it is being
issued at or by the direction of the Partners or
Investors calling the meeting. If a meeting is
adjourned to another time or place, and if any
announcement of the adjournment of time or place is
made at the meeting, it shall not be necessary to
give notice of the adjourned meeting. The presence
in person or by proxy of the holders of more than
50% of the outstanding Units shall constitute a
quorum at all meetings of the Investors; provided,
however, that if there is no quorum present,
holders of a majority in interest of the Investors
present or represented may adjourn the meeting from
time to time without further notice until a quorum
is obtained. No notice of the time, place or
purpose of any meeting of Investors need be given
to any Investor who attends in person or is present
by proxy (except when an Investor attends a meeting
for the express purpose of objecting at the
beginning of the meeting to the transaction of any
business on the ground that the meeting is not
lawfully called or convened), or to any Investor
entitled to notice who, in a writing executed and
filed with the records of the meeting, either
before or after the time of the meeting, waives the
notice requirement.
Section 11.3 Right to Vote
For the purpose of determining the Investors
entitled to vote at any meeting of the Partnership,
the General Partner or the Investors requesting the
meeting may fix a date, in advance, as the record
date for the determination of Investors entitled to
vote. This date shall be not more than fifty (50)
days nor less than ten (10) days before any
meeting.
Section 11.4 Proxies; Rules
Each Investor may authorize any person or
persons to act for him by proxy in all matters in
which an Investor is entitled to participate,
whether by waiving notice of any meeting, or voting
or participating at a meeting. Every proxy must be
signed by the Investor or his attorney-in-fact. No
proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be
recoverable at the pleasure of the Investor
executing it. At each meeting of Investors, the
General Partner shall appoint officers and adopt
rules as they deem appropriate for the conduct of
the meeting.
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ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Appointment of General Partner as Attorney-in-Fact
A. Each Limited Partner and Investor hereunder hereby
irrevocably appoints and empowers the General Partner his
attorney-in-fact to consent to or ratify any act listed in
Subsections 5.4A(i) through (xviii) and Section 6.3C of this
Agreement after the Majority Vote of the Investors thereto
has been obtained, and to execute, acknowledge, swear to and
deliver all agreements and instruments and file all
documents requisite to carrying out the intentions and
purposes contemplated in this Agreement, including, without
limitation, the execution and delivery of this Agreement and
all amendments hereto, the filing of all business
certificates and necessary certificates of limited
partnership and amendments thereto from time to time in
accordance with all applicable laws and any certificates of
cancellation.
B. The appointment by all Limited Partners and
Investors of the General Partner as attorney-in-fact shall
be deemed to be a power coupled with an interest, shall not
be affected by the subsequent disability or incapacity of
the principal and shall survive the assignment by any
Limited Partners or Investors of the whole or any part of
his Interests or Units in the Partnership.
C. The power of attorney granted by this Section 12.1
shall be governed by the laws of the State of Delaware.
Section 12.2 Waiver of Partition
Each Partner and Investor, on behalf of himself, his
successors, representatives, heirs and assigns hereby waives
any right of partition or any right to take any other action
which otherwise might be available to him for the purpose of
severing his relationship with the Partnership or his
interest in the assets held by the Partnership from the
interest of the other Partners or Investors.
Section 12.3 Notification
Any Notification, in order to be effective, shall be
sent by registered or certified mail, postage prepaid, if to
a Partner or Investor, to the address of the Partner or
Investor set forth in the books and records of the
Partnership, and if to the Partnership, to the principal
place of business of the Partnership set forth in Section
2.2 (unless Notification of a change of the principal office
is given), the date of registry thereof or the date of the
certification thereof being deemed the date of receipt of
Notification; provided, however, that any written
communication sent to a Partner or Investor or to the
Partnership and actually received by such Person shall
constitute Notification for all purposes of this Agreement.
Section 12.4 Word Meanings
In this Agreement, the singular shall include the
plural and the masculine gender shall include the feminine
and neuter and vice versa, unless the context otherwise
requires.
Section 12.5 Binding Provisions
The covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, the heirs,
personal representatives, successors and assigns of the
respective parties hereto.
Section 12.6 Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without
regard to principles of conflict of laws.
Section 12.7 Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original as against any party whose signature appears
thereon, and all of which shall together
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constitute one and the same instrument. This
Agreement shall become binding upon the date
hereof. Each Additional or Successor General
Partner shall become a signatory hereof by signing
such number of counterparts of this Agreement and
such other instrument or instruments, and in such
manner as the General Partner shall determine, and
by so signing, shall be deemed to have adopted and
to have agreed to be bound by all the provisions
of this Agreement.
Section 12.8 Separability of Provisions
Each provision of this Agreement shall be
considered separable, and if for any reason any
provision or provisions hereof are determined to
be invalid or contrary to any existing or future
law, such invalidly shall not impair the operation
of or affect those portions of this Agreement
which are valid.
Section 12.9 Paragraph Titles
Paragraph titles are for descriptive purposes
only and shall not control or alter the meaning of
this Agreement as set forth in the text.
Section 12.10 Entire Agreement
This Agreement and the exhibits and documents
referred to herein constitute the entire
understanding and agreement among the parties
hereto with respect to the subject matter hereof,
and supersede all prior and contemporaneous
agreements and understanding, inducements or
conditions, express or implied, oral or written,
except as herein contained. This Agreement may not
be modified or amended other than by an agreement
in writing.
Section 12.11 Amendments
A. In addition to the amendments otherwise authorized
herein, amendments may be made to this Agreement
from time to time by the General Partner with the
Majority Vote of the Investors; provided, however,
that without the consent of the Partners or
Investors to be adversely affected by the
amendment, except as provided in Section 12.11B,
this Agreement may not be amended so as to (i)
convert an Investor's interest into a General
Partner's interest; (ii) modify the limited
liability of an Investor; (iii) alter the interest
of a Partner or Investor in Net Cash Flow, Profit
or Loss, or Net Proceeds of Sale or Financing;
(iv) increase the amount of the Capital
Contributions required to be paid by the
Investors; or (v) extend the Termination Date.
B. In addition to the amendments otherwise
authorized herein, amendments may be made to this
Agreement from time to time by the General
Partner, without the consent of any of the
Investors, (i) to add to the duties or obligations
of the General Partner or surrender any right or
power granted to the General Partner herein, for
the benefit of the Investors; (ii) 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 provisions
with respect to matters or questions arising under
this Agreement which will not be inconsistent with
the provisions of this Agreement; (iii) to delete
or add any provision of this Agreement required to
be deleted or added by the Staff of the Securities
and Exchange Commission or other federal agency or
by a state securities commissioner or similar
official and deemed by the commission, agency,
commissioner, or official to be for the benefit or
protection of the Investors; (iv) to take any
actions necessary to cause the assets of the
Partnership to come within the exclusion from the
definition of "plan assets" contained in Section
2550.40lb-1 of Title 29 of the Code of Federal
Regulations; and (v) to give effect to any action
permitted pursuant to Section 5.2; provided,
however, that no amendment shall be adopted
pursuant to this Section 12.2.B unless its
adoption (1) is not adverse to the interests of
the Investors; (2) is consistent with Section 5.2;
(3) does not affect the distribution of Net Cash
Flow or Net Proceeds of Sale or Financing or the
allocation of Profit or Loss among the Investors
as a class and the General Partner, except as
provided below; and (4) does not affect the
limited liability of the Investors or the status
of the Partnership as a partnership for federal
income tax purposes. In addition to the amendments
otherwise authorized herein, amendments may be
made to this Agreement to amend provisions of
Article IV of this Agreement relating to the
allocations of Profit or Loss and to distributions
of Net Cash Flow or Net Proceeds of Sale or
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Financing among the Partners and Investors if the
Partnership is advised at any time by the Partner- ship's
Accountants and counsel that the allocations provided in
Article IV of this Agreement are unlikely to be respected
for federal income tax purposes. The General Partner is
empowered to amend the distribution and allocation
provisions of Article IV pursuant to Section 12.11B to the
minimum extent necessary in accordance with the advice of
the Partnership's Accountants and counsel to effect the
plan of distribution of Net Cash Flow and Net Proceeds of
Sale or Financing, and, consistent therewith, the
allocations of Profit and Loss provided in this Agreement.
New allocations made by the General Partner in reliance
upon the advice of the Partnership's Accountants and
counsel shall be deemed to be made pursuant to the
fiduciary obligation of the General Partner to the
Partnership and the Investors. This Section 12.11 shall be
subject to the provisions of Section 5.9 of this Agreement.
C. If this Agreement is amended as a result of adding
or substituting a Limited Partner or increasing the
investment of a Limited Partner, the amendment shall be
signed by the General Partner and by the Person to be
substituted or added, or the Limited Partner increasing his
investment in the Partnership, and, if a Limited Partner is
to be substituted, by the assigning Limited Partner. If
this Agreement is amended to reflect the designation of an
Additional General Partner, the amendment shall be signed
by the other General Partner or General Partners and by the
Additional General Partner. If this Agreement is amended to
reflect the withdrawal of a General Partner when the
business of the Partnership is being continued, the
amendment shall be signed by the withdrawing General
Partner and by the remaining or successor General Partner
or General Partners.
D. In making any amendments, there shall be prepared
and filed for recordation by the General Partner all
documents and certificates required to be prepared and
filed under the Act and under the laws of the other
jurisdictions under the laws of which the Partnership is
then formed or qualified.
IN WITNESS WHEREOF, parties hereto have executed this
Agreement as of the date first above written.
GENERALPARTNER
ATTEST: REALTY PARKING COMPANY, INC.
By: (SEAL)
Name: Name:
Title: Title:
SUBORDINATED LIMITED PARTNER
WITNESS: REALTY ASSOCIATES 1988 LIMITED
PARTNERSHIP
By: RESIDUAL INVESTMENT ASSOCIATES,
A MARYLAND LIMITED
PARTNERSHIP, General Partner
By: A.B. RESIDUAL, INC., General Partner
By: (SEAL)
Name:
Title:
ASSIGNOR LIMITED PARTNER
ATTEST: PARKING PROPERTIES HOLDING
CO., INC.
By:
Name: Name:
Title: Title:
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