Exhibit 10.2
FORM OF
LIMITED PARTNERSHIP AGREEMENT
OF
BERKELEY INCOME TRUST OPERATING PARTNERS, L.P.
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ARTICLE 1.
DEFINED
TERMS............................................................................................1
ARTICLE 2.
PARTNERSHIP FORMATION AND
IDENTIFICATION.................................................................8
2.1
Formation................................................................................................8
2.2
Name, Office and Registered
Agent........................................................................8
2.3
Partners.................................................................................................8
2.4
Term and
Dissolution.....................................................................................8
2.5
Filing of Certificate and Perfection of Limited
Partnership..............................................9
2.6
Certificates Describing Partnership
Units................................................................9
ARTICLE 3.
BUSINESS OF THE
PARTNERSHIP..............................................................................9
ARTICLE 4.
CAPITAL CONTRIBUTIONS AND
ACCOUNTS......................................................................10
4.1
Capital
Contributions...................................................................................10
4.2
Additional Capital Contributions and Issuances of Additional
Partnership
Interests...............................................................................................10
4.3
Additional
Funding......................................................................................12
4.4
Capital
Accounts........................................................................................12
4.5
Percentage
Interests....................................................................................12
4.6
No Interest on
Contributions............................................................................13
4.7
Return of Capital
Contributions.........................................................................13
4.8
No Third Party
Beneficiary..............................................................................13
ARTICLE 5.
PROFITS AND LOSSES;
DISTRIBUTIONS.......................................................................13
5.1
Allocation of Profit And
Loss...........................................................................13
5.2
Distribution of
Cash....................................................................................15
5.3
REIT Distribution
Requirements..........................................................................16
5.4
No Right to Distributions In
Kind.......................................................................16
5.5
Limitations on Return of Capital
Contributions..........................................................17
5.6
Distributions Upon
Liquidation..........................................................................17
5.7
Substantial Economic
Effect.............................................................................17
POWERS OF THE GENERAL
PARTNER...................................................................................................17
6.1
Management of the
Partnership...........................................................................17
6.2
Delegation of
Authority.................................................................................20
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6.3
Indemnification and Exculpation of
Indemnitees..........................................................20
6.4
Liability of the General
Partner........................................................................21
6.5
Reimbursement of General
Partner........................................................................22
6.6
Outside
Activities......................................................................................22
6.7
Employment or Retention of
Affiliates...................................................................23
6.8
General Partner
Participation...........................................................................23
6.9
Title to Partnership
Assets.............................................................................23
6.10
Miscellaneous...........................................................................................24
ARTICLE 7.
CHANGES IN GENERAL
PARTNER..............................................................................24
7.1
Transfer of the General Partner's Partnership
Interest..................................................24
7.2
Admission of a Substitute or Additional General
Partner.................................................26
7.3
Effect of Bankruptcy, Withdrawal, Dissolution of a General
Partner......................................26
7.4
Removal of a General
Partner............................................................................27
ARTICLE 8.
RIGHTS AND OBLIGATIONS OF THE LIMITED
PARTNERS..........................................................28
8.1
Management of the
Partnership...........................................................................28
8.2
Power of
Attorney.......................................................................................28
8.3
Limitation on Liability of Limited
Partners.............................................................28
8.4
Ownership by Limited Partner of Corporate General Partner or
Affiliate..................................28
8.5
Exchange
Right..........................................................................................29
ARTICLE 9.
TRANSFERS OF LIMITED PARTNERSHIP
INTERESTS..............................................................30
9.1
Purchase for
Investment.................................................................................30
9.2
Restrictions on Transfer of Limited Partnership
Interests...............................................31
9.3
Admission of Substitute Limited
Partner.................................................................32
9.4
Rights of Assignees of Partnership
Interests............................................................33
9.5
Effect of Bankruptcy, Death, Incompetence or Termination of a
Limited Partner...........................33
9.6
Joint Ownership of
Interests............................................................................34
9.7
Redemption of Partnership
Units.........................................................................34
ARTICLE 10.
BOOKS AND RECORDS; ACCOUNTING; TAX
MATTERS..............................................................34
10.1
Books and
Records.......................................................................................34
10.2
Custody of Partnership Funds; Bank
Accounts.............................................................34
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10.3
Fiscal and Taxable
Year.................................................................................35
10.4
Annual Tax Information and
Report.......................................................................35
10.5
Tax Matters Partner; Tax Elections; Special Basis
Adjustments...........................................35
10.6
Reports to Limited
Partners.............................................................................35
ARTICLE 11.
AMENDMENT OF AGREEMENT;
MERGER..........................................................................36
ARTICLE 12.
GENERAL
PROVISIONS......................................................................................36
12.1
Notices.................................................................................................36
12.2
Survival of
Rights......................................................................................37
12.3
Additional
Documents....................................................................................37
12.4
Severability............................................................................................37
12.5
Entire
Agreement........................................................................................37
12.6
Pronouns and
Plurals....................................................................................37
12.7
Headings................................................................................................37
12.8
Counterparts............................................................................................37
12.9
Governing
Law...........................................................................................37
EXHIBIT A - General Partner and Original
Limited Partner, Capital Contributions and
Percentage
Interests................................................................................................39
EXHIBIT B - Notice of Exercise of
Exchange......................................................................................40
EXHIBIT C - Indemnification
Guideline...........................................................................................41
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LIMITED PARTNERSHIP AGREEMENT
OF
BERKELEY INCOME TRUST OPERATING PARTNERS, L.P.
Berkeley
Income Trust Operating Partners, L.P. (the "Partnership"), was
formed as a limited partnership under the
law of the State of Delaware, pursuant
to a Certificate of Limited Partnership
filed with the Office of the Secretary
of State of the State of Delaware on May,
2005. This Agreement of Limited
Partnership ("Agreement") is entered into
effective as of May, 2005 between
Berkeley Income Trust, Inc., a Maryland
corporation (the "General Partner") and
the Limited Partners set forth on Exhibit A
hereto. Capitalized terms used
herein but not otherwise defined shall have
the meanings given them in Article
1.
NOW,
THEREFORE, in consideration of the foregoing, of mutual
covenants
between the parties hereto, and of other
good and valuable consideration, the
receipt and sufficiency of which are hereby
acknowledged, the parties hereto
agree as follows:
ARTICLE 1.
DEFINED TERMS
The
following defined terms used in this Agreement shall have the
meanings
specified below:
"Act"
means the Delaware Revised Uniform Limited Partnership Act, as
it
may be amended from time to time.
"Additional Funds" has the meaning set forth in Section 4.3.
"Additional Securities" means any additional REIT Shares (other
than REIT
Shares issued in connection with an
exchange pursuant to Section 8.5 hereof or
REIT Shares issued pursuant to a dividend
reinvestment plan of the General
Partner) or rights, options, warrants or
convertible or exchangeable securities
containing the right to subscribe for or
purchase REIT Shares, as set forth in
Section 4.2(a)(ii).
"Administrative Expenses" means (i) all administrative and
operating costs
and expenses incurred by the Partnership,
(ii) those administrative costs and
expenses of the General Partner, including
any salaries or other payments to
directors, officers or employees of the
General Partner, and any accounting and
legal expenses of the General Partner,
which expenses, the Partners have agreed,
are expenses of the Partnership and not the
General Partner, and (iii) to the
extent not included in clause (ii) above,
REIT Expenses; provided, however, that
Administrative Expenses shall not include
any administrative costs and expenses
incurred by the General Partner that are
attributable to Properties or
partnership interests in a Subsidiary
Partnership (other than this Partnership)
that are owned by the General Partner
directly.
"Advisor
or Advisors" means the Person or Persons, if any, appointed,
employed or contracted with by the General
Partner and responsible for directing
or performing the day-to-day business
affairs of the General Partner, including
any Person to whom the Advisor subcontracts
substantially all of such functions.
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"Affiliate" or "Affiliated" means, as to any individual,
corporation,
partnership, trust, limited liability
company or other legal entity (other than
this Partnership), (i) any Person or entity
directly or indirectly through one
or more intermediaries controlling,
controlled by, or under common control with
another Person or entity; (ii) any Person
or entity, directly or indirectly
owning, controlling, or holding with power
to vote ten percent (10%) or more of
the outstanding voting securities of
another Person or entity; (iii) any
officer, director, general partner or
trustee of such Person or entity; (iv) any
Person ten percent (10%) or more of whose
outstanding voting securities are
directly or indirectly owned, controlled or
held, with power to vote, by such
other Person; and (v) if such other Person
or entity is an officer, director,
general partner, or trustee of a Person or
entity, the Person or entity for
which such Person or entity acts in any
such capacity.
"Agreed
Value" means the fair market value of a Partner's non-cash
Capital
Contribution as of the date of contribution
as agreed to by such Partner and the
General Partner. The names and addresses of
the General Partner and Original
Limited Partner, number of Partnership
Units issued to each of them, and their
respective Capital Contributions as of the
date of contribution is set forth on
Exhibit A.
"Agreement" means this Agreement of Limited Partnership, as
amended,
modified supplemented or restated from time
to time, as the context requires.
"Articles
of Incorporation" means the Articles of Incorporation of the
General Partner filed with the Maryland
State Department of Assessments and
Taxation, as amended or restated from time
to time.
"Capital
Account" has the meaning provided in Section 4.4 hereof.
"Capital
Contribution" means the total amount of cash, cash equivalents,
and the Agreed Value of any Property or
other asset (other than cash)
contributed or agreed to be contributed, as
the context requires, to the
Partnership by each Partner pursuant to the
terms of this Agreement. Any
reference to the Capital Contribution of a
Partner shall include the Capital
Contribution made by a predecessor holder
of the Partnership Interest of such
Partner.
"Cash
Amount" means an amount of cash per Partnership Unit equal to
the
Value of the REIT Shares Amount on the date
of receipt by the General Partner of
a Notice of Exchange.
"Certificate" means any instrument or document that is required
under the
laws of the State of Delaware, or any other
jurisdiction in which the
Partnership conducts business, to be signed
and sworn to by the Partners of the
Partnership (either by themselves or
pursuant to the power-of-attorney granted
to the General Partner in Section 8.2
hereof) and filed for recording in the
appropriate public offices within the State
of Delaware or such other
jurisdiction to perfect or maintain the
Partnership as a limited partnership, to
effect the admission, withdrawal, or
substitution of any Partner of the
Partnership, or to protect the limited
liability of the Limited Partners as
limited partners under the laws of the
State of Delaware or such other
jurisdiction.
2
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"Code"
means the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time.
Reference to any particular provision of
the Code shall mean that provision in the
Code at the date hereof and any
successor provision of the Code.
"Conversion Factor" means 1.0, provided that in the event that the
General
Partner (i) declares or pays a dividend on
its outstanding REIT Shares in REIT
Shares or makes a distribution to all
holders of its outstanding REIT Shares in
REIT Shares, (ii) subdivides its
outstanding REIT Shares, or (iii) combines its
outstanding REIT Shares into a smaller
number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the
Conversion Factor by a fraction, the
numerator of which shall be the number of
REIT Shares issued and outstanding on
the record date for such dividend,
distribution, subdivision or combination
(assuming for such purposes that such
dividend, distribution, subdivision or
combination has occurred as of such time),
and the denominator of which shall be
the actual number of REIT Shares
(determined without the above assumption)
issued and outstanding on such date and,
provided further, that in the event
that an entity other than an Affiliate of
the General Partner shall become
General Partner pursuant to any merger,
consolidation or combination of the
General Partner with or into another entity
(the "Successor Entity"), the
Conversion Factor shall be adjusted by
multiplying the Conversion Factor by the
number of shares of the Successor Entity
into which one REIT Share is converted
pursuant to such merger, consolidation or
combination, determined as of the date
of such merger, consolidation or
combination. Any adjustment to the Conversion
Factor shall become effective immediately
after the effective date of such event
retroactive to the record date, if any, for
such event; provided, however, that
if the General Partner receives a Notice of
Exchange after the record date, but
prior to the effective date of such
dividend, distribution, subdivision or
combination, the Conversion Factor shall be
determined as if the General Partner
had received the Notice of Exchange
immediately prior to the record date for
such dividend, distribution, subdivision or
combination.
"Event of
Bankruptcy as to any Person" means the filing of a petition for
relief as to such Person as debtor or
bankrupt under the Bankruptcy Code of 1978
or similar provision of law of any
jurisdiction (except if such petition is
contested by such Person and has been
dismissed within 90 days); insolvency or
bankruptcy of such Person as finally
determined by a court proceeding; filing by
such Person of a petition or application to
accomplish the same or for the
appointment of a receiver or a trustee for
such Person or a substantial part of
his assets; commencement of any proceedings
relating to such Person as a debtor
under any other reorganization,
arrangement, insolvency, adjustment of debt or
liquidation law of any jurisdiction,
whether now in existence or hereinafter in
effect, either by such Person or by
another, provided that if such proceeding is
commenced by another, such Person indicates
his approval of such proceeding,
consents thereto or acquiesces therein, or
such proceeding is contested by such
Person and has not been finally dismissed
within 90 days.
"Exchange
Amount" means either the Cash Amount or the REIT Shares Amount,
as selected by the General Partner in its
sole and absolute discretion pursuant
to Section 8.5(b) hereof.
"Exchange
Right" has the meaning provided in Section 8.5(a) hereof.
3
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"Exchanging Partner" has the meaning provided in Section 8.5(a)
hereof.
"General
Partner" means Berkeley Income Trust, Inc., a Maryland
corporation, and any Person who becomes a
substitute or additional General
Partner as provided herein, and any of
their successors as General Partner.
"General
Partnership Interest" means a Partnership Interest held by the
General Partner that is a general
partnership interest.
"Indemnitee" means (i) the General Partner or a director, officer
or
employee of the General Partner or
Partnership, (ii) the Advisor or a director,
officer, employee of the Advisor or another
agent of the Advisor if such agent
is an Affiliate of the Advisor and (iii)
such other Persons (including
Affiliates of the General Partner, the
Advisor or the Partnership) as the
General Partner may designate from time to
time, in its sole and absolute
discretion.
"Independent Director" means a director of the General Partner who
is not
an officer or employee of the General
Partner, any Affiliate of an officer or
employee or any Affiliate of (i) any lessee
of any property of the General
Partner or any Subsidiary of the General
Partner, (ii) any Subsidiary of the
General Partner, or (iii) any partnership
that is an Affiliate of the General
Partner.
"Limited
Partner" means any Person named as a Limited Partner on Exhibit
A
attached hereto, and any Person who becomes
a Substitute Limited Partner, in
such Person's capacity as a Limited Partner
in the Partnership.
"Limited
Partnership Interest" means the ownership interest of a Limited
Partner in the Partnership at any
particular time, including the right of such
Limited Partner to any and all benefits to
which such Limited Partner may be
entitled as provided in this Agreement and
in the Act, together with the
obligations of such Limited Partner to
comply with all the provisions of this
Agreement and of such Act.
"Listing"
means the listing of the shares of the General Partner's stock,
previously issued by the General Partner
pursuant to an effective registration
statement and such shares currently
registered with the SEC pursuant to an
effective registration statement, on a
national securities exchange or
over-the-counter market.
"Loss" has
the meaning provided in Section 5.1(h) hereof.
"Management Agreement" means the agreement between the General
Partner and
the Advisor pursuant to which the Advisor
will direct or perform the day-to-day
business affairs of the General
Partner.
"Notice of
Exchange" means the Notice of Exercise of Exchange Right
substantially in the form attached as
Exhibit B hereto.
"NYSE"
means the New York Stock Exchange.
4
<PAGE>
"Offer"
has the meaning set forth in Section 7.1(c) hereof.
"Offering"
means the initial offer and sale by the General Partner and the
purchase by the Dealer Manager (as defined
in the Prospectus) of REIT Shares for
sale to the public.
"OP
Unitholders" means all holders of Partnership Interests.
"Original
Limited Partner" means the Limited Partners designated as
"Original Limited Partners" on Exhibit A
hereto.
"Partner"
means any General Partner or Limited Partner.
"Partner
Nonrecourse Debt Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(i). A Partner's
share of Partner Nonrecourse Debt
Minimum Gain shall be determined in
accordance with Regulations Section
1.704-2(i)(5).
"Partnership" means Berkeley Income Trust Operating Partners, L.P.,
a
Delaware limited partnership.
"Partnership Interest" means an ownership interest in the
Partnership held
by either a Limited Partner or the General
Partner and includes any and all
benefits to which the holder of such a
Partnership Interest may be entitled as
provided in this Agreement, together with
all obligations of such Person to
comply with the terms and provisions of
this Agreement.
"Partnership Minimum Gain" has the meaning set forth in
Regulations
Section 1.704-2(d). In accordance with
Regulations Section 1.704-2(d), the
amount of Partnership Minimum Gain is
determined by first computing, for each
Partnership nonrecourse liability, any gain
the Partnership would realize if it
disposed of the property subject to that
liability for no consideration other
than full satisfaction of the liability,
and then aggregating the separately
computed gains. A Partner's share of
Partnership Minimum Gain shall be
determined in accordance with Regulations
Section 1.704-2(g)(1).
"Partnership Record Date" means the record date established by the
General
Partner for the distribution of cash
pursuant to Section 5.2 hereof, which
record date shall be the same as the record
date established by the General
Partner for a distribution to its
shareholders of some or all of its portion of
such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership
Interests of all Partners issued hereunder.
The allocation of Partnership Units
among the Partners shall be as set forth on
Exhibit A, as such Exhibit may be
amended from time to time.
"Percentage Interest" means the percentage ownership interest in
the
Partnership of each Partner, as determined
by dividing the Partnership Units
owned by a Partner by the total number of
Partnership Units then outstanding.
The Percentage Interest of each Partner
shall be as set forth on Exhibit A, as
such Exhibit may be amended from time to
time.
"Person"
means any individual, partnership, limited liability company,
corporation, joint venture, trust or other
entity.
5
<PAGE>
"Profit"
has the meaning provided in Section 5.1(h) hereof.
"Property"
means any office or industrial property or other investment in
which the Partnership holds an ownership
interest.
"Prospectus" means the final prospectus delivered to purchasers of
REIT
Shares in the Offering.
"Regulations" means the Federal income tax regulations promulgated
under
the Code, as amended and as hereafter
amended from time to time. Reference to
any particular provision of the Regulations
shall mean that provision of the
Regulations on the date hereof and any
successor provision of the Regulations.
"Regulatory Allocations" has the meaning set forth in Section
5.1(i)
hereof.
"REIT"
means a real estate investment trust under Sections 856 through
860
of the Code.
"REIT
Expenses" means (i) costs and expenses relating to the formation
and
continuity of existence and operation of
the General Partner and any
Subsidiaries thereof (which Subsidiaries
shall, for purposes hereof, be included
within the definition of General Partner),
including taxes, fees and assessments
associated therewith, any and all costs,
expenses or fees payable to any
director, officer, or employee of the
General Partner, (ii) costs and expenses
relating to any public offering and
registration of securities by the General
Partner and all statements, reports, fees
and expenses incidental thereto,
including, without limitation, underwriting
discounts and selling commissions
applicable to any such offering of
securities, and any costs and expenses
associated with any claims made by any
holders of such securities or any
underwriters or placement agents thereof,
(iii) costs and expenses associated
with any repurchase of any securities by
the General Partner, (iv) costs and
expenses associated with the preparation
and filing of any periodic or other
reports and communications by the General
Partner under federal, state or local
laws or regulations, including filings with
the SEC, (v) costs and expenses
associated with compliance by the General
Partner with laws, rules and
regulations promulgated by any regulatory
body, including the SEC and any
securities exchange, (vi) costs and
expenses associated with any 401(k) plan,
incentive plan, bonus plan or other plan
providing for compensation for the
employees of the General Partner, (vii)
costs and expenses incurred by the
General Partner relating to any issuing or
redemption of Partnership Interests,
and (viii) all other operating or
administrative costs of the General Partner
incurred in the ordinary course of its
business on behalf of or in connection
with the Partnership.
"REIT
Share" means a common share of beneficial interest in the
General
Partner (or successor entity, as the case
may be).
"REIT
Shares Amount" means a number of REIT Shares equal to the product
of
the number of Partnership Units offered for
exchange by an Exchanging Partner,
multiplied by the Conversion Factor as
adjusted to and including the Specified
Exchange Date; provided that in the event
the General Partner issues to all
holders of REIT Shares rights, options,
warrants or convertible or exchangeable
6
<PAGE>
securities entitling the shareholders to
subscribe for or purchase REIT Shares,
or any other securities or property
(collectively, the "rights"), and the rights
have not expired at the Specified Exchange
Date, then the REIT Shares Amount
shall also include the rights issuable to a
holder of the REIT Shares Amount of
REIT Shares on the record date fixed for
purposes of determining the holders of
REIT Shares entitled to rights.
"SEC"
means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Service"
means the United States Internal Revenue Service.
"Specified
Exchange Date" means the first business day of the month that
is at least 60 business days after the
receipt by the General Partner of the
Notice of Exchange.
"Subsidiary means" with respect to any Person, any corporation or
other
entity of which a majority of (i) the
voting power of the voting equity
securities or (ii) the outstanding equity
interests is owned, directly or
indirectly, by such Person.
"Subsidiary Partnership" means any partnership of which the
partnership
interests therein are owned by the General
Partner or a direct or indirect
subsidiary of the General Partner.
"Substitute Limited Partner" means any Person admitted to the
Partnership
as a Limited Partner pursuant to Section
9.3 hereof.
"Successor
Entity" has the meaning provided in the definition of
"Conversion Factor" contained herein.
"Surviving
General Partner" has the meaning set forth in Section 7.1(d)
hereof.
"Transaction" has the meaning set forth in Section 7.1(c)
hereof.
"Transfer"
has the meaning set forth in Section 9.2(a) hereof.
"Value"
means with respect to any security, the average of the daily
market price of such security for the ten
consecutive trading days immediately
preceding the date of such valuation. The
market price for each such trading day
shall be: (i) if the security is listed or
admitted to trading on any securities
exchange or the NYSE, the sale price,
regular way, on such day, or if no such
sale takes place on such day, the average
of the closing bid and asked prices,
regular way, on such day, (ii) if the
security is not listed or admitted to
trading on any securities exchange or the
NYSE, the last reported sale price on
such day or, if no sale takes place on such
day, the average of the closing bid
and asked prices on such day, as reported
by a reliable quotation source
designated by the General Partner, or (iii)
if the security is not listed or
admitted to trading on any securities
exchange or the NYSE and no such last
reported sale price or closing bid and
asked prices are available, the average
of the reported high bid and low asked
prices on such day, as reported by a
reliable quotation source designated by the
General Partner, or if there shall
be no bid and asked prices on such day, the
average of the high bid and low
asked prices, as so reported, on the most
recent day (not more than ten days
7
<PAGE>
prior to the date in question) for which
prices have been so reported; provided
that if there are no bid and asked prices
reported during the ten days prior to
the date in question, the value of the
security shall be determined by the
General Partner acting in good faith on the
basis of such quotations and other
information as it considers, in its
reasonable judgment, appropriate. In the
event the security includes any additional
rights, then the value of such rights
shall be determined by the General Partner
acting in good faith on the basis of
such quotations and other information as it
considers, in its reasonable
judgment, appropriate.
ARTICLE 2.
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1
Formation. The Partnership was formed as a limited partnership
pursuant to the Act for the purposes and
upon the terms and conditions set forth
in this Agreement.
2.2 Name,
Office and Registered Agent. The name of the Partnership is
Berkeley Income Trust Operating Partners,
L.P. The specified office and place of
business of the Partnership shall be 1012
Sutton Way, Grass Valley, California
95945. The General Partner may at any time
change the location of such office,
provided the General Partner gives notice
to the Partners of any such change.
The name and address of the Partnership's
registered agent is Corporate Research
Services, Inc., 32 Lockerman Square, Suite
109, Dover, Delaware 19904. or any
other party designated by the General
Partner from time to time. The sole duty
of the registered agent as such is to
forward to the Partnership any notice that
is served on him as registered agent.
2.3
Partners.
(a) The General Partner of the Partnership is Berkeley Income
Trust,
Inc., a Maryland corporation. Its principal
place of business is the same as
that of the Partnership.
(b)
The Limited Partners are those Persons identified as Limited
Partners on Exhibit A hereto, as amended
from time to time.
2.4 Term
and Dissolution.
(a) The Partnership shall commence on formation pursuant to
Section
2.1 and shall continue in full force and
effect until May __, 2065, unless the
Partnership is dissolved prior to that date
upon the first to occur of any of
the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, removal or
withdrawal of a General Partner unless
the business of the Partnership is
continued pursuant to Section 7.3(b) hereof;
provided that if a General Partner is on
the date of such occurrence a
partnership, the dissolution of such
General Partner as a result of the
dissolution, withdrawal, removal or Event
of Bankruptcy of a partner in such
partnership shall not be an event of
dissolution of the Partnership if the
business of such General Partner is
continued by the remaining partner or
partners, either alone or with additional
partners, and such General Partner and
such partners comply with any other
applicable requirements of this Agreement;
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(ii) The passage of 90 days after the sale or other
disposition of all or substantially all of
the assets of the Partnership
(provided that if the Partnership receives
an installment obligation as
consideration for such sale or other
disposition, the Partnership shall
continue, unless sooner dissolved under the
provisions of this Agreement, until
such time as such note or notes are paid in
full);
(iii) The exchange of all Limited Partnership Interests (other
than any of such interests held by the
General Partner or Affiliates of the
General Partner) for REIT Shares or the
securities of any other entity; or
(iv) The election by the General Partner that the Partnership
should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of
the
Partnership is continued pursuant to
Section 7.3(b) hereof), the General Partner
(or its trustee, receiver, successor or
legal representative) shall amend or
cancel the Certificate and liquidate the
Partnership's assets and apply and
distribute the proceeds thereof in
accordance with Section 5.6 hereof.
Notwithstanding the foregoing, the
liquidating General Partner may either (i)
defer liquidation of, or withhold from
distribution for a reasonable time, any
assets of the Partnership (including those
necessary to satisfy the
Partnership's debts and obligations), or
(ii) distribute the assets to the
Partners in kind.
2.5 Filing
of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge,
record and file at the expense of
the Partnership, The Certificate any and
all amendments thereto and all
requisite fictitious name statements and
notices in such places and
jurisdictions as may be necessary to cause
the Partnership to be treated as a
limited partnership under, and otherwise to
comply with, the laws of each state
or other jurisdiction in which the
Partnership conducts business.
2.6
Certificates Describing Partnership Units. At the request of a
Limited
Partner, the General Partner, at its
option, may issue a certificate summarizing
the terms of such Limited Partner's
interest in the Partnership, including the
number of Partnership Units owned and the
Percentage Interest represented by
such Partnership Units as of the date of
such certificate. Any such certificate
(i) shall be in form and substance as
approved by the General Partner, (ii)
shall not be negotiable and (iii) shall
bear a legend to the following effect:
THIS CERTIFICATE IS NOT NEGOTIABLE. THE
PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE ARE GOVERNED BY AND
TRANSFERABLE ONLY IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT OF LIMITED
PARTNERSHIP OF BERKELEY INCOME TRUST
OPERATING PARTNERS, L.P., AS AMENDED FROM
TIME TO TIME.
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ARTICLE 3.
BUSINESS OF THE PARTNERSHIP
The
purpose and nature of the business to be conducted by the
Partnership
is (i) to conduct any business that may be
lawfully conducted by a limited
partnership organized pursuant to the Act,
provided, however, that such business
shall be limited to and conducted in such a
manner as to permit the General
Partner at all times to qualify as a REIT,
unless the General Partner otherwise
ceases to qualify as a REIT, (ii) to enter
into any partnership, joint venture
or other similar arrangement to engage in
any of the foregoing or the ownership
of interests in any entity engaged in any
of the foregoing and (iii) to do
anything necessary or incidental to the
foregoing. In connection with the
foregoing, and without limiting the General
Partner's right in its sole and
absolute discretion to cease qualifying as
a REIT, the Partners acknowledge that
the General Partner's current status as a
REIT and the avoidance of income and
excise taxes on the General Partner inures
to the benefit of all the Partners
and not solely to the General Partner.
Notwithstanding the foregoing, the
Limited Partners agree that the General
Partner may terminate its status as a
REIT under the Code at any time to the full
extent permitted under the Articles
of Incorporation. The General Partner shall
also be empowered to do any and all
acts and things necessary or prudent to
ensure that the Partnership will not be
classified as a "publicly traded
partnership" for purposes of Section 7704 of
the Code.
ARTICLE 4.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1
Capital Contributions. The General Partner and the Limited
Partners
have made capital contributions to the
Partnership in exchange for the
Partnership Interests set forth opposite
their names on Exhibit A, as amended
from time to time.
4.2
Additional Capital Contributions and Issuances of Additional
Partnership Interests. Except as provided
in this Section 4.2 or in Section 4.3,
the Partners shall have no right or
obligation to make any additional Capital
Contributions or loans to the Partnership.
The General Partner may contribute
additional capital to the Partnership, from
time to time, and receive additional
Partnership Interests in respect thereof,
in the manner contemplated in this
Section 4.2.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to cause
the Partnership to issue such additional
Partnership Interests in the form of
Partnership Units for any Partnership
purpose at any time or from time to time,
to the Partners (including the General
Partner) or to other Persons for such
consideration and on such terms and
conditions as shall be established by the
General Partner in its sole and absolute
discretion, all without the approval of
any Limited Partners. Any additional
Partnership Interests issued thereby may be
issued in one or more classes, or one or
more series of any of such classes,
with such designations, preferences and
relative, participating, optional or
other special rights, powers and duties,
including rights, powers and duties
senior to Limited Partnership Interests,
all as shall be determined by the
General Partner in its sole and absolute
discretion and without the approval of
any Limited Partner, subject to Delaware
law, including, without limitation, (i)
the allocations of items of Partnership
income, gain, loss, deduction and credit
to each such class or series of Partnership
Interests; (ii) the right of each
such class or series of Partnership
Interests to share in Partnership
distributions; and (iii) the rights of each
such class or series of Partnership
Interests upon dissolution and liquidation
of the Partnership; provided,
however, that no additional Partnership
Interests shall be issued to the General
Partner unless:
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(1) (A) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares
of or other interests in the General
Partner, which shares or interests have
designations, preferences and other
rights, all such that the economic
interests are substantially similar to the
designations, preferences and other rights
of the additional Partnership
Interests issued to the General Partner by
the Partnership in accordance with
this Section 4.2 and (B) the General
Partner shall make a Capital Contribution
to the Partnership in an amount equal to
the proceeds raised in connection with
the issuance of such shares of stock of or
other interests in the General
Partner;
(2) the additional Partnership Interests are issued in
exchange for property owned by the General
Partner with a fair market value, as
determined by the General Partner, in good
faith, equal to the value of the
Partnership Interests; or
(3) the additional Partnership Interests are issued to all
Partners holding Partnership Units in
proportion to their respective Percentage
Interests.
In
addition, the General Partner may acquire Partnership Interests
from
other Partners pursuant to this Agreement.
In the event that the Partnership
issues Partnership Interests pursuant to
this Section 4.2(a), the General
Partner shall make such revisions to this
Agreement (without any requirement of
receiving approval of the Limited Partners)
as it deems necessary to reflect the
issuance of such additional Partnership
Interests and any special rights,
powers, and duties associated
therewith.
Without
limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to
issue Partnership Units for less than
fair market value, so long as the General
Partner concludes in good faith that
such issuance is in the best interests of
the General Partner and the
Partnership.
(ii) Upon Issuance of Additional Securities. The General
Partner shall not issue any additional REIT
Stock (other then REIT Stock issued
in connection with an exchange pursuant to
Section 8.5 hereof) or rights,
options, warrants or convertible or
exchangeable securities containing the right
to subscribe for or purchase REIT Stock
(collectively, "Additional Securities"
other than to all holders of REIT Stock,
unless (A) the General Partner shall
cause the Partnership to issue to the
General Partner, as the General Partner
may designate, Partnership Interests or
rights, options, warrants or convertible
or exchangeable securities of the
Partnership having designations, preferences
and other rights, all such that the
economic interests are substantially similar
to those of the Additional Securities, and
(B) the General Partner contributes
the net proceeds from the issuance of such
Additional Securities and from any
exercise of rights contained in such
Additional Securities, directly and through
the General Partner, to the Partnership;
provided, however, that the General
Partner is allowed to issue Additional
Securities in connection with an
acquisition of a property to be held
directly by the General Partner, but if and
only if, such direct acquisition and
issuance of Additional Securities have been
approved and determined to be in the best
interests of the General Partner and
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<PAGE>
the Partnership by a majority of the
Independent Directors (as defined in the
General Partner's Articles of
Incorporation). Without limiting the foregoing,
the General Partner is expressly authorized
to issue Additional Securities for
less than fair market value, and to cause
the Partnership to issue to the
General Partner corresponding Partnership
Interests, so long as (x) the General
Partner concludes in good faith that such
issuance is in the best interests of
the General Partner and the Partnership,
including without limitation, the
issuance of REIT Shares and corresponding
Partnership Units pursuant to an
employee share purchase plan providing for
employee purchases of REIT Shares at
a discount from fair market value or
employee stock options that have an
exercise price that is less than the fair
market value of the REIT Shares,
either at the time of issuance or at the
time of exercise, and (y) the General
Partner contributes all proceeds from such
issuance to the Partnership. For
example, in the event the General Partner
issues REIT Shares for a cash purchase
price and contributes all of the proceeds
of such issuance to the Partnership as
required hereunder, the General Partner
shall be issued a number of additional
Partnership Units equal to the product of
(A) the number of such REIT Shares
issued by the General Partner, the proceeds
of which were so contributed,
multiplied by (B) a fraction, the numerator
of which is 100%, and the
denominator of which is the Conversion
Factor in effect on the date of such
contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of
REIT
Shares. In connection with any and all
issuances of REIT Shares, the General
Partner shall make Capital Contributions to
the Partnership of the proceeds
therefrom, provided that if the proceeds
actually received and contributed by
the General Partner are less than the gross
proceeds of such issuance as a
result of any underwriter's discount or
other expenses paid or incurred in
connection with such issuance, then the
General Partner shall be deemed to have
made Capital Contributions to the
Partnership in the aggregate amount of the
gross proceeds of such issuance and the
Partnership shall be deemed
simultaneously to have paid such offering
expenses in accordance with Section
6.5 hereof and in connection with the
required issuance of additional
Partnership Units to the General Partner
for such Capital Contributions pursuant
to Section 4.2(a) hereof.
4.3
Additional Funding. If the General Partner determines that it is
in
the best interests of the Partnership to
provide for additional Partnership
funds ("Additional Funds") for any
Partnership purpose, the General Partner may
(i) cause the Partnership to obtain such
funds from outside borrowings, or (ii)
elect to have the General Partner or any of
its Affiliates provide such
Additional Funds to the Partnership through
loans or otherwise.
4.4
Capital Accounts. A separate capital account (a "Capital
Account")
shall be established and maintained for
each Partner in accordance with
Regulations Section 1.704-1(b)(2)(iv). If
(i) a new or existing Partner acquires
an additional Partnership Interest in
exchange for more than a de minimis
Capital Contribution, (ii) the Partnership
distributes to a Partner more than a
de minimis amount of Partnership property
as consideration for a Partnership
Interest, or (iii) the Partnership is
liquidated within the meaning of
Regulation Section 1.704-1(b)(2)(ii)(g),
the General Partner shall revalue the
property of the Partnership to its fair
market value (as determined by the
General Partner, in its sole and absolute
discretion, and taking into account
Section 7701(g) of the Code) in accordance
with Regulations Section
1.704-1(b)(2)(iv)(f). When the
Partnership's property is revalued by the General
Partner, the Capital Accounts of the
Partners shall be adjusted in accordance
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<PAGE>
with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to
reflect the manner in which the
unrealized gain or loss inherent in such
property (that has not been reflected
in the Capital Accounts previously) would
be allocated among the Partners
pursuant to Section 5.1 if there were a
taxable disposition of such property for
its fair market value (as determined by the
General Partner, in its sole and
absolute discretion, and taking into
account Section 7701(g) of the Code) on the
date of the revaluation.
4.5
Percentage Interests. If the number of outstanding Partnership
Units
increases or decreases during a taxable
year, each Partner's Percentage Interest
shall be adjusted by the General Partner
effective as of the effective date of
each such increase or decrease to a
percentage equal to the number of
Partnership Units held by such Partner
divided by the aggregate number of
Partnership Units outstanding after giving
effect to such increase or decrease.
If the Partners' Percentage Interests are
adjusted pursuant to this Section 4.5,
the Profits and Losses for the taxable year
in which the adjustment occurs shall
be allocated between the part of the year
ending on the day when the
Partnership's property is revalued by the
General Partner and the part of the
year beginning on the following day either
(i) as if the taxable year had ended
on the date of the adjustment or (ii) based
on the number of days in each part.
The General Partner, in its sole and
absolute discretion, shall determine which
method shall be used to allocate Profits
and Losses for the taxable year in
which the adjustment occurs. The allocation
of Profits and Losses for the
earlier part of the year shall be based on
the Percentage Interests before
adjustment, and the allocation of Profits
and Losses for the later part shall be
based on the adjusted Percentage
Interests.
4.6 No
Interest on Contributions. No Partner shall be entitled to
interest
on its Capital Contribution.
4.7 Return
of Capital Contributions. No Partner shall be entitled to
withdraw any part of its Capital
Contribution or its Capital Account or to
receive any distribution from the
Partnership, except as specifically provided
in this Agreement. Except as otherwise
provided herein, there shall be no
obligation to return to any Partner or
withdrawn Partner any part of such
Partner's Capital Contribution for so long
as the Partnership continues in
existence.
4.8 No
Third Party Beneficiary. No creditor or other third party
having
dealings with the Partnership shall have
the right to enforce the right or
obligation of any Partner to make Capital
Contributions or loans or to pursue
any other right or remedy hereunder or at
law or in equity, it being understood
and agreed that the provisions of this
Agreement shall be solely for the benefit
of, and may be enforced solely by, the
parties hereto and their respective
successors and assigns. None of the rights
or obligations of the Partners herein
set forth to make Capital Contributions or
loans to the Partnership shall be
deemed an asset of the Partnership for any
purpose by any creditor or other
third party, nor may such rights or
obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered
by the Partnership to secure any
debt or other obligation of the Partnership
or of any of the Partners. In
addition, it is the intent of the parties
hereto that no distribution to any
Limited Partner shall be deemed a return of
money or other property in violation
of the Act. However, if any court of
competent jurisdiction holds that,
notwithstanding the provisions of this
Agreement, any Limited Partner is
obligated to return such money or property,
such obligation shall be the
obligation of such Limited Partner and not
of the General Partner. Without
limiting the generality of the foregoing, a
deficit Capital Account of a Partner
shall not be deemed to be a liability of
such Partner nor an asset or property
of the Partnership.
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ARTICLE 5.
PROFITS AND LOSSES; DISTRIBUTIONS
5.1
Allocation of Profit And Loss.
(a) General. Profit and Loss of the Partnership for each fiscal
year
or other applicable period of the
Partnership shall be allocated among the
Partners in accordance with their
respective Percentage Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to
the
contrary, (i) any expense of the
Partnership that is a "nonrecourse deduction"
within the meaning of Regulations Section
1.704-2(b)(1) shall be allocated in
accordance with the Partners' respective
Percentage Interests, (ii) any expense
of the Partnership that is a "partner
nonrecourse deduction" within the meaning
of Regulations Section 1.704-2(i)(2) shall
be allocated to the Partner that
bears the "economic risk of loss" of such
deductions in accordance with
Regulations Section 1.704-2(i)(1), (iii) if
there is a net decrease in
Partnership Minimum Gain within the meaning
of Regulations Section 1.704-2(f)(1)
for any Partnership taxable year, then,
subject to the exceptions set forth in
Regulations Section 1.704-2(f)(2),(3), (4)
and (5), items of gain and income
shall be allocated among the Partners in
accordance with Regulations Section
1.704-2(f) and the ordering rules contained
in Regulations Section 1.704-2(j),
and (iv) if there is a net decrease in
Partner Nonrecourse Debt Minimum Gain
within the meaning of Regulations Section
1.704-2(i)(4) for any Partnership
taxable year, then, subject to the
exceptions set forth in Regulations Section
1.704-(2)(g), items of gain and income
shall be allocated among the Partners in
accordance with Regulations Section
1.704-2(i)(4) and the ordering rules
contained in Regulations Section
1.704-2(j). A Partner's "interest in
partnership profits" for purposes of
determining its share of the nonrecourse
liabilities of the Partnership within the
meaning of Regulations Section
1.752-3(a)(3) shall be such Partner's
Percentage Interest.
(c) Qualified Income Offset. If a Partner unexpectedly receives
in
any taxable year an adjustment, allocation,
or distribution described in
subparagraphs (4), (5), or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d) that
causes or increases a deficit balance in
such Partner's Capital Account that
exceeds the sum of such Partner's shares of
Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as
determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i), such
Partner shall be allocated specially
for such taxable year (and, if necessary,
later taxable years) items of income
and gain in an amount and manner sufficient
to eliminate such deficit Capital
Account balance as quickly as possible as
provided in Regulations Section
1.704-1(b)(2)(ii)(d). This Section 5.1(e)
is intended to constitute a "qualified
income offset" under Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall
be interpreted consistently therewith.
After the occurrence of an allocation of
income or gain to a Partner in accordance
with this Section 5.1(e), to the
extent permitted by Regulations Section
1.704-1(b), items of expense or loss
shall be allocated to such Partner in an
amount necessary to offset the income
or gain previously allocated to such
Partner under this Section 5.1(e).
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(d) Capital Account Deficits. Loss shall not be allocated to a
Limited Partner to the extent that such
allocation would cause or increase a
deficit in such Partner's Capital Account
at the end of any fiscal year (after
reduction to reflect the items described in
Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to
exceed the sum of such Partner's shares
of Partnership Minimum Gain and Partner
Nonrecourse Debt Minimum Gain, as
determined in accordance with Regulations
Sections 1.704-2(g) and 1.704-2(i).
Any Loss in excess of that limitation shall
be allocated to the General Partner.
After the occurrence of an allocation of
Loss to the General Partner in
accordance with this Section 5.1(d), to the
extent permitted by Regulations
Section 1.704-1(b), Profit shall be
allocated to such Partner in an amount
necessary to offset the Loss previously
allocated to each Partner under this
Section 5.1(d).
(e) Allocations Between Transferor and Transferee. If a Partner
transfers any part or all of its
Partnership Interest, the distributive shares
of the various items of Profit and Loss
allocable among the Partners during such
fiscal year of the Partnership shall be
allocated between the transferor and the
transferee Partner either (i) as if the
Partnership's fiscal year had ended on
the date of the transfer, or (ii) based on
the numb
