AGREEMENT OF LIMITED PARTNERSHIP
OF
REALTY PARKING PROPERTIES II L.P.
BY AND AMONG
REALTY PARKING COMPANY II, INC.
(GENERAL PARTNER)
REALTY ASSOCIATES LIMITED PARTNERSHIP
(SUBORDINATED LIMITED PARTNER)
AND
PARKING PROPERTIES HOLDING CO., INC.
(ASSIGNOR LIMITED PARTNER)
AGREEMENT OF LIMITED PARTNERSHIP
REALTY PARKING PROPERTIES II L.P.
TABLE OF CONTENTS
Page
Preliminary Statement ............................................................................ A-1
Article I - Defined Terms .................................................................. A-1
Article II - Name; Purpose; Term and Certificate ............................... A-8
Section 2.1 Name; Formation ........................................................... A-8
Section 2.2 Place of Registered Office .............................................. A-8
Section 2.3 Purpose ........................................................................... A-8
Section 2.4 Term ........... A-9
Section 2.5 Recording of Certificate ................................................ A-9
Article III - Partners; Capital .............................................................. A-9
Section 3.1 General Partner; Assignor Limited Partner; Subordinated Limited Partner
Section 3.2 Investors ................................................ ........................... A-9
Section 3.3 Partnership Capital ........................................................ A-10
Section 3.4 Liability of Partners and Investors ............................... A-10
Article IV - Allocations, Distributions and Applicable Rules ..................... A-10
Section 4.1 Allocation of Profit or Loss from a Sale ...................................... A-10
Section 4.2 Distribution of Net Proceeds of Sale or Financing .................................. A-11
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss from
Operations ....................................................................... A-12
Section 4.4 Liquidation or Dissolution ............................................ A-12
Section 4.5 General and Special Rules ............................................ A-12
Article V - Rights, Powers and Duties of the General Partner ....................................... A-15
Section 5.1 Management and Control of the Partnership; Tax Matters Partner
Section 5.2 Authority of General Partner ........................................ A-15
Section 5.3 Authority of Investors ................................................... A-20
Section 5.4 Restrictions on Authority .............................................. A-20
Section 5.5 Authority of Partners and Affiliated Persons to Deal with Partnership A-22
Section 5.6 Duties and Obligations of the General Partner ................ A-23
Section 5.7 Compensation of General Partner ................................ A-24
Section 5.8 Other Businesses of Partners ......................................... A-24
Section 5.9 Liability of General Partner and Affiliates to Limited Partners or Investors
Section 5.10 Indemnification ........................................................... A-24
Article VI - Transferability of the General Partner's Interest ............... A-25
Section 6.1 Removal, Voluntary Retirement or Withdrawal of the General Partner;
Transfer of Interests ...................................................... A-25
Section 6.2 Election and Admission of Successor or Additional General Partners
Section 6.3 Events of Withdrawal of a General Partner ..................................... A-25
Section 6.4 Liability of a Withdrawn General Partner .................................... A-26
Section 6.5 Valuation of Partnership Interest of General Partner .............................. A-26
Article VII - Assignment of Assignee Units to Investors; Transferability of Limited
Partner Interests and Units .......................................... A-27
Section 7.1 Assignment of Assignee Units to Investors .................. A-27
Section 7.2 Transferability of Units ................................................. A-28
Section 7.3 Death, Bankruptcy or Adjudication of Incompetence of an Investor or a
Limited Partner ............................................................. A-29
Section 7.4 Effective Date ................................................................ A-29
Section 7.5 Substitute Limited Partners .......................................... A-29
Section 7.6 Retirement or Withdrawal of an Investor ..................... A-29
ii
Article VII - Dissolution, Liquidation and Termination of the Fund ................................... A-30
Section 8.1 Events Causing Dissolution ............................................................ A-30
Section 8.2 Liquidation ......................... ........................................................ A-31
Section 8.3 Capital Contribution Upon Dissolution ..... ...................................... A-31
Article IX - Certain Payments to the General Partner and Affiliates ................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇.▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ of Certain Costs and Expenses of the General Partner and
its Affiliates ................................................................................... A-31
Section 9.2 Fees and Other Payments ............................................................... A-32
Article X - Books and Records; Bank Accounts; Reports ......... ............................ A-32
Section 10.1 Books and Records ...................................................................... A-32
Section 10.2 Bank Accounts ............................................................................ A-33
Section 10.3 Reports ....................................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇ Tax Elections ................................................................... A-35
Article XI - Meetings of Investors ..................................................................... A-35
Section 11.1 Calling Meetings ............................................................................ ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇; Procedure ........................................................................ ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Right to Vote .............................................................................. A-36
Section 11.4 Proxies; Rules ............................................................................. A-36
Article XII - General Provisions ....................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇ of General Partner as Attorney-in-Fact ....................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇ of Partition A-36
............................................................
Section 12.3 Notification .......................................................................................A-36
Section 12.4 Word Meanings ........................................................................... A-37
Section 12.5 Binding Provisions ...................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Applicable Law ............................. ............................................. ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ............................................................................... A-37
Section 12.8 Separability of Provisions ............................................................. ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇ Titles .................................. ......................................... A-37
Section 12.10 Entire Agreement ....................................................................... A-37
Section 12.11 Amendments ............................................................................. A-37
Signatures ......................................................................................................... A-39
Schedule A ....................................................................................................... A-40
iii
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REALTY PARKING PROPERTIES II L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of March
6, 1991, is by and among Realty Parking Company II, Inc., a
Maryland corporation, as General Partner, Parking Properties
Holding Co., Inc., a Maryland corporation, as the Assignor
Limited Partner, and Realty Associates 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 II L.P. (the "Partnership"), pursuant to
the Delaware Revised Uniform Limited Partnership Act, for
the purpose of acquiring land and facilities, or interests
in land and facilities, to be used for parking operations
and incidental ancillary uses, with an emphasis on surface
commercial parking lots believed by the Partnership to have
significant future potential for eventual sale as
development sites. The Partnership also may acquire or build
parking garages, suburban parking properties, offsite
airport parking lots, sites requiring the demolition of
obsolete structures prior to use as parking facilities and
vacant sites on which parking facilities may be constructed
or anything else deemed appropriate by the General Partner.
Some of the land or facilities may be acquired primarily due
to the income potential from use as a parking facility.
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 any expenses related to
selection and acquisition of Properties, whether or not
acquired, including, but not limited to, legal fees and
expenses, travel and communications expenses, costs of
appraisals, non-refundable option payments on property not
acquired, accounting fees and expenses, title examination
expenses, title insurance premiums and related charges,
environmental studies, surveys, real estate transfer fees
and taxes and other miscellaneous expenses.
"Acquisition Fees" means the total of all fees and
commissions paid by any party on behalf of the Partnership
in connection with the purchase, development or construction
of any Property by the Partnership, including, without
limitation, the Acquisition Fee payable to the General
Partner, the Acquisition Fee payable to the Consultant, any
real estate commission, selection fee, development fee,
construction fee, non-recurring management fee or loan fee,
or any fee of a similar nature, however designated.
"Act" means the Delaware Revised Uniform Limited
Partnership Act (6 DEL. C. ss.(0) 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.
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"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.
"Asset Based Fee" means the fee, which is payable to the
General Partner each year for advising the Partnership and
managing its investments, equal to (i) 0.75% of the
Partnership's Base Amount for such year and (ii) 0.5% of the
Capital Contributions temporarily held while awaiting
Investments in Properties. The Asset Based Fee will be accrued
without interest when funds are not available for its payment.
Any accrued Asset Based Fee will be paid from the next available
Net Cash Flow or Net Proceeds from a Sale or Financing of
Properties and not from Working Capital Reserves. In the event
of the termination of the General Partner as general partner of
the Partnership, the General Partner will be paid that Asset
Based Fee to which it is entitled through the date of such
termination.
"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
Sales 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.
"Base Amount" means that portion of Capital Contributions
originally committed to Investment in Properties without regard
to leverage and including Working Capital Reserves of up to 3%
of the Capital Contributions (the "Permitted Working Capital
Reserves"). The Base Amount shall be recomputed annually by
subtracting from the then fair market value of the Partnership's
Properties as determined by independent appraisals plus the
Permitted Working Capital Reserves, an amount equal to the
outstanding debt secured by the Partnership's Properties.
"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.,
A-2
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 in respect of an Interest or
Unit (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 Sales 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).
"Competitive Real Estate Commission" means that real
estate or brokerage commission paid for the purchase or sale
of a Property which is reasonable, customary and competitive
in light of the size, type and location of the Property.
"Consultant" means (i) Central Parking System, Inc., or
(ii) such other person selected by the Partnership to advise
the Partnership regarding acquisitions, operations and
dispositions.
"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 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.
"Disposition Advisory Fee" means the fee, payable on the
Sale of any Property, equal to 1.5% of the contract price for
the sale of such Property payable to the General Partner, the
Sponsor or their Affiliates if any such Entity provides a
substantial amount of services in the effort to sell such
Property and subject to the limitations set forth in Section
5.2(a)(viii).
"Due Diligence Expense Reimbursement Fee" means the file
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 Organization
A-3
Expense Fee, the Due Diligence Expense Reimbursement Fee, the
Sales Commissions, the Acquisition Expenses, the Acquisition
Fees and any other similar fees.
"General Partner" means Realty Parking Company II, 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.
"General Partner Acquisition Fee" means the
non-accountable fee paid to the General Partner equal to 2% of
the Gross Proceeds of the Offering, payable at each closing for
Unitholders as Gross Proceeds of the Offering are raised, for
services rendered in connection with the development of the
technical and managerial infrastructure required in order to
evaluate and acquire Properties and for identifying,
evaluating, negotiating and providing other miscellaneous
services in regard to the acquisition of the Properties.
"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 $100,000,000 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 highly-liquid, short-term
investments, including bank certificates of deposit,
publicly-available money-market funds having assets in excess
of $50,000,000 (including money-market funds managed by the
General Partner or its Affiliates), short-term government
obligations, bankers' acceptances, high grade commercial paper,
GNMA or FNMA mortgage pass-through certificates or discount
notes and similar investments as determined by the General
Partner in its sole discretion, made with the Net Proceeds of
the Offering until such Net Proceeds of the Offering are
disbursed for acquisition of Properties or retained as Working
Capital Reserves; provided, however, that such investments do
not consist of deposits of funds with affiliated financial
institutions or money market mutual funds unless such deposits
(i) do not exceed five percent (5%) of all deposits held by
such entity and do not require the payment of any fees by the
Partnership, (ii) are not part of "compensating balance"
arrangements for the benefit of other than the Partnership and
(iii) earn interest or dividends at a rate competitive with
those available from similar independent depositories.
"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 3% shall not be
included), and other cash payments such as interest and taxes,
but excluding Front-End Fees).
"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 and 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.
A-4
"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
$2,500,000 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
Working Capital 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 amount 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, the
disposition fee equal to 1.5% of the contract price for the
sale of the Properties payable to the Consultant upon the
sale of a Property 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 Sales Commissions, the
Due Diligence Expense Reimbursement Fee, the Offering and
Organization Expense Fee, and the General Partner
Acquisition Fee.
"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 $2,500,000, a maximum of $25,000,000, and an
increased maximum of $100,000,000, as more fully described
in the Prospectus.
A-5
"Offering and Organization Expense Fee" means the
non-accountable fee paid to the General Partner equal to 3% 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 in connection with the
structuring and organization of the Partnership, and the
supervision and review of all documents prepared in connection
therewith. A portion of the Offering and Organization Expense
Fee (not to exceed 1% of the Gross Proceeds of the Offering)
may be paid to the Selling Agent and re-allowed to other
broker-dealers, including Affiliates of the Selling Agent. The
General Partner will be responsible for all Organizational and
Offering Expenses in connection with the Offering, including
accounting, legal and escrow and depositary fees, printing
costs, registration and filing fees, including "Blue Sky" fees,
and advertising, marketing and promotion costs.
"Organization and Offering Expenses" means those expenses
incurred in connection with and in preparing the Partnership
for registration and subsequently offering and distributing it
to the public, including sales commissions paid to
broker-dealers in connection with the distribution of the
Partnership and all advertising expenses.
"Parking Consulting Agreement" means the agreement
referred to in the Prospectus by and
between the Partnership and Central Parking System, Inc.,
"Parking Lot Operator" means (i) Central Parking System,
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 as of the first day of the calendar
quarter immediately following the calendar quarter in which
such Investor was admitted to the Partnership, except as set
forth in Section 7.2.E in regard to transferred or assigned
Units, 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.
A-6
"Properties" means the land and facilities, or interests
in land and facilities, acquired by the Partnership to be
used for parking operations and incidental ancillary uses,
including, without limitation, surface commercial parking
lots, parking garages, suburban parking properties, offsite
airport parking lots, sites requiring the demolition of
obsolete structures prior to use as parking facilities,
vacant sites on which parking facilities may be constructed
and anything else deemed appropriate by the General Partner.
"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.
"Sales Commissions" means the maximum total (or any
portion thereof) of 6% of the Gross Proceeds of the Offering
paid to the Selling Agent or Soliciting Dealers for their
efforts in offering the Units. The 6% maximum Sales
Commissions will be reduced for volume purchases and
purchases by the Consultant and its Affiliates and Alex.
▇▇▇▇▇ Realty, Inc. and its Affiliates and their directors,
their officers and their employees as specified in the
Prospectus.
"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 Armata Financial Corp., 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, the Selling Agent, and
the General Partner, pursuant to which the Selling Agent will
offer and sell the Units on a best efforts basis.
"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 Person whose only relation
with the Partnership is as that of an independent property
manager, whose only compensation is as such. Sponsor does not
include wholly independent third parties such as attorneys,
accountants and underwriters whose only compensation is for
professional services rendered in connection with the
Offering or the operations of the Partnership. A Person may
also be a Sponsor of the Partnership by (i) taking the
initiative, directly or indirectly, in founding or organizing
the business or enterprise of the Partnership, either alone
or in conjunction with one or more other Persons, (ii)
receiving a material participation in the Partnership in
connection with the founding or organizing of the business of
the Partnership, in consideration of services or property, or
both services and property, (iii) having a substantial number
of relationships and contacts with the Partnership, (iv)
possessing significant rights to control Partnership
properties, (v) receiving fees for providing services to the
Partnership which are paid on a basis that is not customary
in the industry, or (vi) providing goods or services to the
Partnership on a basis which was not negotiated at
arm's-length with the Partnership.
"Subordinated Limited Partner" means Realty Associates
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.
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"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 terminates. The General Partner, at any time
and in its sole discretion, may determine to terminate the
Offering. Furthermore, if subscriptions for the Minimum
Offering Amount are not received and accepted on or prior to
twelve (12) months from the date of the Prospectus, the
Offering automatically will terminate. If the Offering is not
terminated as described above, the Offering will continue until
1,000,000 Units are sold (subject to increase by up to an
additional 2,000,000 Units in the sole discretion of the
General Partner) or such time as the General Partner determines
to terminate the Offering. However, the total offering period
will not exceed 24 months 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.
"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 Gross 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 II 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.
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Section 2.4 Term
The Partnership shall continue until December 31,
2015, unless the Partnership is sooner dissolved in
accordance with the provisions of this Agreement; however
the anticipated life of the Partnership does not exceed 20
years from the date of the Prospectus.
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.
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, 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 1.01% of the
Capital Contributions 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.
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 prior to twelve (12) months from the date of the
Prospectus, the Escrow Agent
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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.
B. Except to the extent of any interest income earned on an
Investors 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, 2040.
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.
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 Partners has a
negative balance in his Capital Account, to such Investors
or Partners, in proportion to their negative Capital
Accounts, until all such Capital Accounts have zero
balances;
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(ii) Second, 99% to the Investors and 1% to the
General Partner 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 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, and
(iv) Fourth, any remaining Profit shall be allocated
99% to the Investors and 1% to the
General Partner.
B. Loss from any Sale (and Loss from any deemed Sale
pursuant to Section 4.5) shall be allocated
99% to the Investors and 1% 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, 99% to the Investors in proportion to
their respective unpaid Preferred Returns and 1% to the
General Partner until each Investor has received an
amount equal to his unpaid Preferred Return, if any.
(ii) Second, 99% to the Investors in proportion to
their respective Adjusted Capital Balances and 1% to the
General Partner until each Investor has received an
amount equal to his Adjusted Capital Balance.
(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 the Subordinated Limited Partner, 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 transferred during a
taxable year of the Partnership 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 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. To the extent in any fiscal year the Subordinated
Limited Partner receives a distribution pursuant to Section
4.2A(iii) in excess of the amount of Profit allocated to the
Subordinated Limited Partner pursuant to Section 4.1A(iii),
such excess shall constitute the equivalent of a "guaranteed
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payment"pursuant to Section 707(c) of the Code and the
deduction attributable thereto shall be specially allocated 1%
to the General Partner and 99% to the Investors.
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss
from Operations A. Net Cash Flow shall be distributed 99% to the Investors and
1% 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 99% to the Investors and 1% 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 shall
be distributed among the Persons recognized as Investors on
the books of the Partnership on the first business day of the
month in which the distribution occurs.
E. Notwithstanding Sections 4.3C and 4.3D, the
Partnership shall adopt the daily proration method of
allocating Profit and Loss among persons who become Investors
pursuant to a closing of the sale of the Units on or before
the Termination Date of the Offering. Accordingly, each
Investor shall be allocated Profit and Loss beginning on the
date he is recognized on the books of the Partnership.
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 distributed in
proportion to the Capital Accounts of the Partners and
Investors, determined after the allocations in Sections 4.IA
and 4.IB.
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 Sales
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 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
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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)(a)(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)(a) 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.l and 4.3 hereof.
The General Partner shall be authorized to interpret and
apply this Section 4.5D so as to satisfy the requirements 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.
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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 12.11.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 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.
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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 home 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;
(ii) to engage Persons, including a Sponsor 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 for which compensation is specifically
authorized in Sections 9.1 and 9.2 of this Agreement),
(a) the goods or services must be necessary to the
prudent operation of the Partnership, (b) the
compensation, price or fee must be equal to either (1)
the lesser of (A) the cost of such services or goods to
such Sponsor or (B) ninety percent (90%) of the
competitive price that would be charged by
non-affiliated persons or entities rendering similar
services in the same or comparable geographic location
or (C) ninety percent (90%) of the compensation, price
or fee charged by such Sponsor for rendering comparable
services or selling or leasing comparable goods on
competitive terms or (2) if at least ninety-five percent
(95%) of gross revenues attributable to the business of
rendering such services or selling or leasing such
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goods are derived from persons or entities other than
Affiliates, the compensation, price or fee charged by any
non-affiliated persons or entities who is rendering
comparable services or selling or leasing comparable goods
on competitive terms in the same geographic location; (c)
all such transactions shall be embodied in a written
contract that precisely 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; (d) the goods and services to be
provided and the written contract referred to in
subparagraph (c) above and the compensation and other terms
of such contracts must be fully disclosed in the
Prospectus; (e) the Sponsor must have been previously
engaged in the business of rendering such services or
selling or leasing such goods as an ordinary and ongoing
business for a period of at least three years; (f) the
Sponsor must receive at least thirty-three percent (33%) of
gross revenues for such goods or services from persons or
entities other than Affiliates; and (g) except for those
services to be provided pursuant to Subsection
5.2(A)(ii)(a)-(f) above and under agreements providing the
compensation referred to in Sections 9.1 and 9.2 of this
Agreement, any additional goods and services provided by a
Sponsor will be provided only (1) under extraordinary
circumstances, (2) if the compensation, price or fee is
competitive with the compensation, price or fee of any
non-affiliated persons or entities who is rendering
comparable services or selling or leasing comparable goods
on competitive terms which could not reasonably be made
available to the Partnership, (3) if the fees and other
terms of the contract are fully disclosed, (4) if the
Sponsor has been previously engaged in the business of
rendering such services or selling or leasing such goods,
independently of the Partnership and as an ordinary and
ongoing business, (5) if the compensation to be paid to the
Sponsor equals the lesser of the cost of such services or
goods to such 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,
(6) and if there is compliance with Subsection
5.2(A)(ii)(a) and (c) above;
(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 Partnership 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
Partnership Property, including without limitation, the
Parking Consulting Agreement and the Leases;
(vi) to borrow funds secured by any or all of the
Partnership Properties; to mortgage, pledge or otherwise
hypothecate a portion or all of the Partnership Properties
in connection with such borrowings, including without
limitation to secure the same by deed of trust, mortgage,
security interest, pledge or other lien or encumbrance on
any Partnership Property or any other assets of the
Partnership; to borrow funds on the general credit of the
Partnership; to issue evidences of indebtedness; and to
take any action and enter into any agreement necessary or
advisable in connection with such borrowings; such funds
may be borrowed from the General Partner, the Consultant,
or any of their Affiliates, banks, other institutional
lenders or private lenders, in order to complete the
investment of the Net Proceeds of the Offering, to
supplement working capital reserves, to make distributions
to Investors, for use in the business of the Partnership or
in furtherance of any or all of the purposes of the
Partnership, including without limitation, to repurchase
Units as long as such repurchase does not materially impair
the capital or operation of the Partnership;
(vii) to repay in whole or in part, negotiate,
refinance, recast, increase, renew, modify or extend any
secured, or other indebtedness affecting any Property and
in connection therewith to
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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 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
(although the General Partner may obtain financing and
place mortgages on the Properties at a later date);
(viii) to engage a person (including a Sponsor or
the Consultant) to sell any 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 the total compensation paid to
all persons (including the Consultant) shall be limited
to a Competitive Real Estate Commission, not to exceed
six percent (6%) of the contract price for the Sale of
any Partnership Property or assets, and, in addition,
if a Sponsor provides substantial amount of the
services in the sales effort, to pay the Sponsor up to
one-half of the Competitive Real Estate Commission, not
to exceed 1.5%, provided, however, that the payment of
such real estate commission to the Sponsor shall be
subordinated to the payment to Investors of their
Adjusted Capital Balance plus a six percent (6%) annual
cumulative return; if the Sponsor participates with an
independent broker on resale, the subordination
requirement shall apply only to the commission earned
by the Sponsor;
(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) pending the investment of the Partnership's
assets in the Properties, to invest the Part- nership's
assets in Interim Investments as determined by the
General Partner in its sole discretion and to similarly
invest the Working Capital Reserves;
(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 and as described in the Prospectus;
(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 income 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 determined advisable pursuant to 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 determined advisable
pursuant to 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;
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(xvi) to pay or reimburse any reasonable
out-of-pocket expenses incurred by the General Partner
or any of its Affiliates in connection with any report
pursuant to Section 10.3, provided that such payment or
reimbursement shall not exceed the lesser of (a) the
cost of such services to the General Partner or such
Affiliate or (b) ninety percent (90%) of the amount the
Partnership would be required to pay to independent
parties for comparable report preparation in the same
geographic location and no profit shall be made by the
General Partner or 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(xvi), 5.4A(xvii)
or 5.4A(xviii), to take any actions 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;
(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 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;
(xix) invest in general partnerships or joint
ventures with non-Affiliates that own or operate one or
more particular properties if the Partnership, alone or
together with any publicly registered Affiliate of the
Partnership meeting the requirements of Subsection
5.2(A)(xx) below, acquires a controlling interest in
such general partnership or joint venture, but in no
event shall duplicate fees be permitted. For purposes of
this Subsection 5.2(A)(xix) and Subsection 5.2(A)(xxii)
below, "controlling interest" means an equity interest
possessing the power to direct or cause the direction of
the management and policies of the general partnership
or joint venture, including the authority to: (a) review
all contracts entered into by the general partnership or
joint venture that will have a material effect on its
business or property; (b) cause a sale or refinancing of
the property or its interest therein subject in certain
cases where required by the partnership or joint venture
agreement, to limits as to time, minimum amounts and/or
a right of first refusal by the joint venture partner or
consent of the joint venture partner; (c) approve
budgets and major capital expenditures, subject to a
stated minimum amount; (d) veto any sale or refinancing
of the property, or, alternatively, to receive a
specified preference on sale or refinancing proceeds;
and (e) exercise a right of first refusal on any desired
sale or refinancing by the joint venture partner of its
interest in the property except for transfer to an
Affiliate of the joint venture partner.
(xx) invest in general partnerships or joint
ventures with other publicly registered Affiliates of
the Partnership ("Related Venturer") only if all of the
following conditions are met: (a) the Partnership and
the Affiliate have substantially identical investment
objectives; (b) there are no duplicate fees; (c) the
compensation to the General Partner of the Partnership
is substantially identical to that of the general
partners of the Related Venture; (d) the Partnership and
the Affiliate each has a right of first refusal to buy
in the event the other wishes to sell property held in
the joint venture; and (e) the investment of each of the
Partnership and the Affiliate is on substantially the
same terms and conditions;
(xxi) invest in general partnerships or joint
ventures with Affiliates other than publicly registered
Affiliates of the Partnership only under the following
conditions: (a) the investment is necessary to relieve
the General Partner or an Affiliate from any commitment
to purchase a property in its own name temporarily to
facilitate its acquisition by the Partnership, which
commitment was entered into prior to the Termination
Date of the Offering; (b) there are no
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duplicate fees; (c) the investment of each entity is on
substantially the same terms and conditions; and (d) the
Partnership has a right of first refusal to buy in the
event the General Partner or an Affiliate wishes to sell
property held in the joint venture;
(xxii) Invest in general partnerships interests of
limited partnerships only under the following
conditions: (a) the Partnership alone or with any
publicly registered Affiliate of the Partnership meeting
the requirements of Subsection 5.2(A)(xx) above,
acquires a "controlling interest" as defined in
Subsection 5.2(A)(xix) above; (b) there are no duplicate
fees; (c) there is no additional compensation beyond
that permitted by Section IV of the NASAA guidelines as
in effect in September, 1990 (the "NASAA Guidelines");
and (d) the Partnership complies with Section V of the
NASAA Guidelines; and
(xxiii) Invest in limited partnership interests of
other limited partnerships (the "Lower-Tier
Partnerships") only if all of the following conditions
are met:
(a) If the general partner of the Lower-Tier
Partnership is a Sponsor of the Partnership:
(1) the Partnership shall not invest in such
Lower-Tier Partnership unless the partner-
ship agreement of the Lower-Tier Partnership
contains provisions complying with Section IX.F of
the NASAA Guidelines and provisions acknowledging
privity between the Lower- Tier Partnership's
general partner and the Unitholders; and
(2) compensation payable in the aggregate from
both partnership levels shall not exceed the
amounts permitted under Section IV of the NASAA
Guidelines. (b) If the general partner of the
Lower-Tier Partnership is not a Sponsor of the
Partnership:
(1) the Partnership shall not invest in the
Lower-Tier Partnership unless the partnership
agreement of the Lower-Tier Partnership contains
provisions complying with Sections II.E.
and F.; VII.A.-D.,H. and J., and IX.C. of the NASAA
Guidelines; and
(2) compensation payable at both tiers shall
not exceed the amounts permitted under Section IV
of the NASAA Guidelines. (c) Each Lower-Tier
Partnership shall have as its limited partners only
publicly registered
partnerships; provided, however, that special limited
partners not affiliated with the Sponsor shall be
permitted if the interests taken result in no diminution
in the control exercisable by the other limited
partners.
(d) No investment may be structured with more
than two partnership tiers.
(e) Duplicate fees shall be prohibited.
(f) Notwithstanding anything herein to the
contrary, Unitholders can, upon the vote of the majority
in interest of the Unitholders and without the
concurrence of the Sponsors, direct the General Partner
of the Partnership (acting on behalf of the Partnership)
to take any action permitted to a limited partner (e.g.,
the Partnership) in the Lower-Tier Partnership.
(g) The Partnership's prospectus must fully and
prominently disclose the two-tiered arrangement and any
risks related thereto.
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.
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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; (iv) approve or disapprove of the
Sale of all or substantially all of the Partnership
Property;
or
(v) terminate, upon 60 days notice, any contract
between the Partnership and the General
Partner or any Affiliate thereof.
B. Any action taken pursuant to Section 5.3A hereof shall
be void ab initio, if prior to or within sixty (60) 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 thirty
(30) 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:
(i) to purchase or acquire property other than as
described in the Prospectus or to invest more than 10% of
the Proceeds available for investment of the Offering in
unimproved, non-income producing property;
(ii) except as permitted in this Agreement, to do an
act required to be approved by the Investors under the
Act;
(iii) to reinvest in Properties any Net Cash Flow or
Net Proceeds from a Sale or Financing; (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;
A-20
(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 (but
not a program or partnership in which the General
Partner or an Affiliate has an interest) may purchase a
Property in its own name (and assume loans in
connection therewith) and temporarily hold title
thereto (but in no event purchase a Property held for a
period in excess of 12 months prior to the date of the
Prospectus), for the purpose of facilitating the
acquisition of the Property, or the borrowing of money
or obtaining of financing for the Partnership, or any
other purpose related to the business of the
Partnership, provided that the Property is purchased by
the Partnership for a price no greater than the cost of
the Property to the Sponsor, except compensation in
accordance with the NASAA Guidelines, and provided
there is no difference in interest rates of the loans
secured by the Property at the time acquired by the
Sponsor and the time acquired by the Partnership, nor
any other benefit arising out of such transaction to
the Sponsor apart from compensation otherwise permitted
under the NASAA Guidelines; accordingly, all income
generated and expenses associated with the Property
shall be treated as belonging to the Partnership; the
Sponsor shall not sell a Property to the Partnership
pursuant to this section 5.4.A(xi) if the cost of the
Property exceeds the funds reasonably anticipated to be
available to the Partnership to purchase the Property;
if the cost of the Properties acquired by the Sponsor
on behalf of the Partnership exceeds Partnership funds
available, the General Partner shall determine the
Properties to be acquired by the Partnership based
solely upon fulfilling the Partnership's objectives of
obtaining a diversified portfolio of Properties
believed to have significant future potential for
eventual sale as development sites;
(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 a total indebtedness incurred by
the Partnership in excess of 50% of the fair market
value of the assets of the Partnership at the time the
debt is incurred as determined by an independent
appraisal; provided, however, 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)
and shall exclude any indebtedness incurred by the
Partnership for necessary working capital;
(xv) make loans of any kind, except to the extent
of receiving purchase money obligations in connection
with the Sale of any Property;
(xvi) 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 (provided that
no Units owned by the General Partner or its Affiliates
shall be entitled to vote with respect to such
transaction);
(xvii) 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;
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(xviii) without the Majority Vote of the Investors,
to restructure the Partnership as a real estate investment
trust ("REIT") for federal income tax purposes; or
(xix) 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 receive any compensation, fee or expense not
otherwise permitted to be paid to it under
the terms of this Agreement or the Prospectus;
(ii) to cause the Partnership to acquire a Property,
or to grant options with respect to, sell, convey, or
assign such Property to the Consultant or the Parking Lot
Operator, without first having obtained an appraisal
prepared by a competent, independent appraiser which
supports the real property acquisition or sale by the
Partnership;
(iii) 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;
(iv) to cause the Partnership to lend money or other\
assets to the General Partner or any Affiliate thereof;
(v) to grant to the General Partner or any Affiliate
thereof an exclusive listing for the Sale of
any assets of the Partnership;
(vi) to receive any rebate or give-up, or to
participate in any reciprocal business arrangement with
the General Partner or an Affiliate thereof which would
circumvent the provisions of this Agreement or the NASAA
Guidelines;
(vii) to cause the Partnership to acquire a Property
that is under construction without completion bonds, fixed
price guarantees or other satisfactory arrangements; or
(viii) 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
distribution of the
proceeds of the Sale or Financing 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 (unless such competitive activity would have a
material adverse effect upon the business of 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. Prior to the commencement of the Offering, the
General Partner shall have a net worth of at least $500,000,
and at all times during the Offering and thereafter during
the term of the Partnership, the General Partner shall have
and will use its best efforts to maintain a net worth equal
to at least (i) 10% of the Capital Contributions until
$10,000,000 of Capital Contributions have been raised, (ii)
$1,000,000 thereafter until $20,000,000 of Capital
Contributions have been raised and (iii) 5% of the Capital
Contributions thereafter until $25,000,000 of Capital
Contributions have been raised, or such other minimum net
worth as may be necessary or appropriate in accordance with
the advice of counsel to the Partnership (such net worth in
each instance to be exclusive of the General Partner's
interest in the Partnership and any notes and accounts
receivable from or notes and accounts payable to the
Partnership).
D. The General Partner shall 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.
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 by any person or entity in any manner except for the
exclusive 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 of at least 84.5%. Any proceeds of
the Offering not invested within the later of two (2) years
after the date of the Prospectus or one (1) year after the
Termination Date of the Offering (except for necessary
operating capital) and any offering and organizational
expenses attributable to such returned proceeds shall be
distributed pro rata to the
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Investors as a return of capital so long as the adjusted
Investment in Properties is in compliance with the preceding
sentence.
G. Except for payment of the Sales Commissions and the
re-allowance of all or part of the Due Diligence Expense
Reimbursement Fee and the Offering and Organization Expense
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.
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 conduct, act or omission performed or
omitted to be performed by any or all of them on behalf of or
for the Partnership within the scope of the authority
conferred on them by this Agreement, provided that the General
Partner determines, in good faith, that such conduct, act or
omission was in the best interests of the Partnership, except
for acts of negligence or misconduct. The Partnership shall
not incur the cost of that portion of any liability insurance
which insures the General Partner or its Affiliates against
any liability as to which the General Partner or its
Affiliates may not be indemnified under Section 5.10 herein.
Section 5.10 Indemnification
A. The General Partner, Affiliates of the General Partner
performing certain services on behalf of the Fund and any
person acting as a broker/dealer 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 conduct, act or omission
performed or omitted to be performed by any or all of them on
behalf of or for the Partnership within the scope of the
authority conferred on them by this Agreement, if the General
Partner determines, in good faith, that such conduct, act or
omission was in the best interests of the Partnership and that
such act or omission did not constitute negligence or
misconduct, 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,
Affiliates of the General Partner performing certain services
on behalf of the Fund and any person acting as a broker/dealer
shall not be indemnified by the Partnership for any loss,
liability, or expense arising from or out of an alleged
violation of federal or state securities laws unless (i) there
has been a successful adjudication on the merits of each count
involving securities laws violations, (ii) such claims have
been dismissed with prejudice on the merits by a court of
competent jurisdiction or (iii) 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,
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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.
ARTICLE VI
TRANSFERABILITY OF THE GENERAL PARTNERS 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, the General Partner 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 recordation of an amendment of the Partnership's
Certificate to reflect such withdrawal or retirement.
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 Additional 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 recordation of an amendment of the Certificate
to reflect the admission of the Successor or Additional
General Partner.
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
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Partnership, (ii) if the General Partner is removed pursuant to
Section 5.3A, and (iii) upon 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.
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 to continue the Partnership's
existence, 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 One Hundred Twenty (120) 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
such General Partners Interest shall be acquired by the
Partnership pursuant to Section 6.5. 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 withdrawal of a General Partner, the Partnership
shall purchase the Partnership Interest of the withdrawn
General Partner. The price of the withdrawn General Partner's
Interest shall be such Interest's then present fair market
value as determined by mutual agreement or, if an agreement can
not be reached, 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
equal to the lowest rate permitted under the Code that avoids
the imputation of interest income to the withdrawn General
Partner, such note to have a term of five years and provide for
equal annual installments of principal and interest. If the
withdrawal is voluntary, payment shall be made by delivery of
an unsecured promissory note bearing no interest, with
principal payable only from distributions which the withdrawn
General Partner would have
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received under this Agreement had the 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 Assignee Units to Investors
A. Pursuant to Sections 3.2 and 7.1C 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 7.1F, 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 Sections 3.2 and 3.3; (ii)
all rights to receive cash distributions pursuant
to Article IV; (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's 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 prohib-
ited if one of the following restrictions applies and, as. to
(i), (ii), (iii) and (iv), the prohibition on
transfer is supported by an opinion of counsel:
(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 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 the 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 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 through 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 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
minor or incompetent (unless such transfer or
assignment shall be made to a legal guardian on such
person's behalf). B. An Investor or Limited Partner
desiring or intending
to transfer such Person's Units must
provide Notification to the General Partner of such desire
or intent at least forty-five (45) days, or such other
shorter period as the General Partner in its sole discretion
may permit, prior to such transfer.
C. In order to record a transfer 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 all reasonable expenses connected with
such transfer (with no profit to any party in the
transaction) which fee shall not exceed $200.
D. In no event shall an Investor be permitted to
transfer a fraction of a Unit.
E. Upon the transfer of any Units (other than the
conversion to Limited Partnership Interests pursuant to
Section 7.5), the Preferred Return with respect to such
Units win be calculated as of the first day of the calendar
quarter following the final closing for the sale of Units.
For purposes of this Agreement, an assignment of any Units
shall be deemed to be a transfer.
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 attributable to the converted
Units shall be credited to the Capital Account of the
Substitute Limited Partner. Similarly, the Preferred Return
will continue to be calculated as of the first day of the
calendar quarter following such Investor's admission to the
Partnership. 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
A-29
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.
B. At any time after the Termination Date of the Offering,
the Partnership may, in its sole discretion and with or
without the use of borrowed funds, 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 Partnership; 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 have 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.
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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 Partners 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, 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) all costs of personnel (excluding
rent or depreciation, utilities, capital equipment, and
other administrative
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items) employed full-time or part-time by the Partnership and
involved in the business of the Partnership or who perform
services on behalf of the Partnership or its Affiliates and
allocated pro rata to their administrative or professional
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 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 Sales Commissions and
the Due Diligence Expense Reimbursement Fee;
(ii) to the General Partner or its Affiliates, the
Offering and Organization Expense Fee; (iii) to the
General Partner or its Affiliates, the General
Partner Acquisition Fee; (iv) to the General Partner
or its Affiliates, reimbursement of Acquisition
Expenses, if any,
incurred by the General Partner or its Affiliates on
behalf of the Partnership in connection with
the investigation or acquisition of the Properties;
(v) to the General Partner, the Asset Based Fee for
each fiscal year of the Partnership; and (vi) to the
General Partner or its Affiliates, the Disposition
Advisory Fee.
B. The total of the fees owed to the General Partner and
its Affiliates and described in (i), (ii) and (iii) above
shall in no event exceed 13% of the Gross Proceeds of the
Offering.
C. The total of all compensation paid to all persons
(including the Consultant) for Acquisition Expenses and
Acquisition Fees shall be limited to the lesser of such
compensation customarily charged in arms' length transactions
by others rendering similar services as an ongoing public
activity in the same geographical location and for comparable
property or an amount equal to 18% 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
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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 who requests such
information upon payment of a reasonable charge for copy
work.
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 necessary for the preparation of 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.
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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 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; (ii)
for a period of at least five (5) years, records of the
appraisals made of the Partnership 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 and (iii) a
list of the names and addresses of all Investors, which
list shall be made available to any Investor or Limited
Partner or his representative who requests such information
in furtherance of Partnership business and at such person's
cost.
G. Within sixty (60) days after the end of each fiscal
quarter during which there have been Property acquisitions,
a report (which may be part of the quarterly report) shall
be sent to all Limited Partners and Investors until the Net
Proceeds of the Offering are committed to Investment in
Properties or returned to the Investors. The report shall
contain the following information:
(i.) the location and a description of the general character of all
Properties acquired or presently intended to be acquired by the Partnership
during the quarter;
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(ii.) the present or proposed use of the Properties and their suitability
and adequacy for such use; (iii.) the terms of any material lease affecting the
Property; and (iv.) a statement that title insurance has been or will be
obtained on all Properties acquired.
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, 'm 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.
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
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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.
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 attor- ney-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
or the General Partner, to the principal place of
business of the Partnership set forth in Section 2.2
(unless Notification of a
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change of the principal office is given) and addressed to
the appropriate party, 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 or the General Partner 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 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
Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be deemed severable from the remainder of
this Agreement, and the remaining provisions contained in
this Agreement shall be construed to preserve to the
maximum permissible extent the intent and purposes of
this Agreement. The invalidity or unenforce- ability of a
provision in any jurisdiction shall not, in and of
itself, invalidate or render unenforce- able such
provision in any other jurisdiction.
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 understandings,
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
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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 from a Sale or
Financing; (iv) increase the amount of the Capital
Contributions required to be paid by the Investors; or
(v) extend the Termination Date of the Offering.
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 12.11B 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 Financing
among the Partners and Investors if the Partnership is
advised at any time by the Partnership'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.
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IN WITNESS WHEREOF, parties hereto have executed this
Agreement under seal as of the date first above written.
GENTERAL PARTNER
ATTEST: REALTY PARKING COMPANY II, INC.
By: (SEAL)
Name: Name:
Title: Title:
SUBORDINATED LIMITED PARTNER
WITNESS: REALTY ASSOCIATES LIMITED
PARTNERSHIP
By: RESIDUAL INVESTMENT ASSOCIATES,
A Maryland limited partnership,
General Partner
By: A.B. RESIDUAL, INC., General Partner
By: (SEAL)
Name:
Title:
ASSIGNOR LIMIT ED PARTNER
ATTEST: PARKING PROPERTIES HOLDING
CO., INC.
By: (SEAL)
Name: Name:
Title: Title:
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