EXECUTION COPY
AGREEMENT OF LIMITED
PARTNERSHIP
OF
BERKSHIRE MULTIFAMILY VALUE FUND,
L.P.
NYB 1502828.6
TABLE OF CONTENTS
Page
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ARTICLE I
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FORMATION
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1
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1.01.
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Formation
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1
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1.02.
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Name
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1
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1.03.
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Place of Business
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1
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1.04.
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Registered Office; Principal
Office
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1
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1.05.
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Term
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1
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ARTICLE II
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DEFINITIONS
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2
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2.01.
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Definitions
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2
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ARTICLE III
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PURPOSE AND BUSINESS
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10
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3.01.
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Business.
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10
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3.02.
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Authorized Activities.
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10
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3.03.
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Prohibited Activities
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13
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3.04.
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Commitment Transfer
Option
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14
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3.05.
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Coinvestment
Opportunities
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14
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ARTICLE IV
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BERKSHIRE INTERESTS AND
CAPITAL
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15
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4.01.
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General Partner
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15
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4.02.
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Limited Partners
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15
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4.03.
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Capital Contributions
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15
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4.04.
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Default by Partners
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17
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4.05.
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Interest
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20
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4.06.
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Capital Account
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20
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4.07.
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Withdrawal of Capital
Contributions
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21
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4.08.
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Restoration of Negative Capital
Accounts
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21
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4.09.
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Admission of Limited Partners After
First Closing
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21
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ARTICLE V
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PROFITS, LOSSES AND
DISTRIBUTIONS
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22
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5.01.
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Allocation of Profits and
Losses
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22
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5.02.
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Distributions
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22
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5.03.
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Tax Distributions
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23
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5.04.
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Withholding and Income
Taxes.
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23
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5.05.
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Form of Distributions.
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24
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NYB 1502828.6
TABLE OF CONTENTS
(continued)
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5.06.
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Retention of Net Investment
Revenues
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25
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ARTICLE VI
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RIGHTS AND OBLIGATIONS OF THE
GENERAL PARTNER
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25
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6.01.
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Management
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25
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6.02.
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Authority
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25
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6.03.
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Limitations on the General
Partner
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26
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6.04.
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Business with Affiliates
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27
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6.05.
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Liability for Acts and
Omissions
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28
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6.06.
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Partnership Costs and
Expenses
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31
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6.07.
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Organizational Expenses; General
Partner Fees; Placement Agent Fees
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31
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6.08.
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Key Man Provisions
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32
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6.09.
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Presentation of Opportunities to the
Partnership.
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33
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6.10.
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Other Activities
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34
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6.11.
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Miscellaneous Revenues
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34
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6.12.
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Investment Committee.
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34
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6.13.
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General Partner Claw Back
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34
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ARTICLE VII
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ASSIGNMENTS, WITHDRAWAL AND REMOVAL
OF THE GENERAL PARTNER 35
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7.01.
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Assignment or Withdrawal by the
General Partner
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35
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7.02.
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Voluntary Assignment or Withdrawal
of the General Partner
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35
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7.03.
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Bankruptcy of the General
Partner
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35
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7.04.
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Removal of the General
Partner.
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36
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7.05.
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Obligations of a Prior General
Partner
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38
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7.06.
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Successor General Partner
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38
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ARTICLE VIII
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RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS
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39
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8.01.
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Management of the
Partnership
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39
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8.02.
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Limitation on Liability
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39
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8.03.
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Power of Attorney
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39
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8.04.
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Confirmation of Credit Facilities
and Other Borrowings
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40
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ARTICLE IX
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TRANSFER OF LIMITED PARTNERSHIP
INTERESTS
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41
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9.01.
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Transfers
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41
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9.02.
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Transfer by Limited
Partners
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41
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NYB 1502828.6
TABLE OF CONTENTS
(continued)
Page
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9.03.
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Substitute Limited
Partner
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42
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9.04.
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Involuntary Withdrawal by Limited
Partners
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43
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ARTICLE X
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DISSOLUTION AND LIQUIDATION;
CONTINUATION
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43
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10.01.
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Dissolution
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43
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10.02.
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Liquidation
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44
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10.03.
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Continuation of
Partnership
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44
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ARTICLE XI
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REPRESENTATIONS AND WARRANTIES OF
THE PARTNERS
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44
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11.01.
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Representations and Warranties of
the Limited Partners
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44
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11.02.
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Representations and Warranties of
the General Partner
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45
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ARTICLE XII
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ACCOUNTING AND REPORTS
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46
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12.01.
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Books and Records
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46
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12.02.
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Tax Matters Partner
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47
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12.03.
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Reports to Partners
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48
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12.04.
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Partnership Funds
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49
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ARTICLE XIII
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CERTAIN ERISA MATTERS
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50
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13.01.
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Operating Company
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50
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13.02.
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ERISA Opinion
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50
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ARTICLE XIV
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AMENDMENTS AND MEETINGS
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52
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14.01.
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Amendment Procedure
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52
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14.02.
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Exceptions
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53
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14.03.
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Meetings and Voting
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54
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ARTICLE XV
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ADVISORY COMMITTEE
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54
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15.01.
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Selection of the Advisory
Committee
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54
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15.02.
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Meetings of and Action by the
Advisory Committee
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54
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15.03.
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Annual Meeting of Advisory
Committee
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55
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15.04.
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Functions of the Advisory
Committee
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55
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ARTICLE XVI
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MISCELLANEOUS
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56
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16.01.
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Title to Partnership
Property
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56
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16.02.
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Validity
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56
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16.03.
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Applicable Law
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56
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iii
NYB 1502828.6
TABLE OF CONTENTS
(continued)
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16.04.
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Binding Agreement
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56
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16.05.
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Waiver of Action for
Partition
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56
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16.06.
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Record of Limited
Partners
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57
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16.07.
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Headings
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57
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16.08.
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Terminology
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57
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16.09.
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Counterparts
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57
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16.10.
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Entire Agreement
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57
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16.11.
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Disclaimer
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57
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16.12.
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No Third Party Rights
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57
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16.13.
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Services to the
Partnership
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57
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16.14.
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Confidentiality
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58
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SCHEDULE A CAPITAL
COMMITMENTS
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S-1
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APPENDIX A
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PROFITS, LOSSES, TAX AND OTHER
ALLOCATIONS
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A-1
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EXHIBIT
1
,FORM OF SUBSCRIPTION
AGREEMENT E-1
iv
NYB 1502828.6
AGREEMENT OF LIMITED PARTNERSHIP
OF
BERKSHIRE MULTIFAMILY VALUE FUND,
L.P.
THIS AGREEMENT OF LIMITED
PARTNERSHIP is made as of August 12, 2005, by and among Berkshire
Multifamily Value Fund, GP, L.L.C., a Delaware limited liability
company, as the General Partner, and the Limited Partners. Each
capitalized term utilized in this Agreement shall have the meaning
ascribed to such term in Article II or Appendix A
.
RECITALS
WHEREAS, the parties desire to form
a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. §§ 17-101 et
seq ., as amended from time to time (the “
Act ”), for the purposes hereinafter set
forth.
NOW, THEREFORE, in consideration of
the mutual covenants herein contained, the parties hereto,
intending to be legally bound hereby, agree as follows:
ARTICLE I
FORMATION
1.01.
Formation . The Partnership
has been formed as a limited partnership under the laws of the
State of Delaware. The General Partner shall take all actions
necessary to assure the prompt filing of a Certificate of Limited
Partnership, as required by the Act. The General Partner shall
appoint such agents and attorneys for service of process as may be
necessary or appropriate in connection with the formation and
continuation of the Partnership under the laws of the State of
Delaware. The General Partner shall take all other necessary action
required by law to perfect and maintain the Partnership as a
limited partnership under the Act and in all other jurisdictions in
which the Partnership may elect to conduct business.
1.02.
Name . The name of the
Partnership is “Berkshire Multifamily Value Fund,
L.P.,” which name may be changed by the General Partner after
Notice to the Limited Partners.
1.03.
Place of Business . The
principal office and place of business of the Partnership is
located at One Beacon Street, Suite 1500, Boston, Massachusetts
02108. The General Partner may change the location of the
Partnership’s principal office and may establish such
additional offices of the Partnership as it may from time to time
determine upon Notice to the Limited Partners.
1.04.
Registered Office; Principal
Office . The address of the registered office of the
Partnership in the State of Delaware is 2711 Centerville Road,
Suite 400, Wilmington, Delaware 19808, and the registered agent for
service of process on the Partnership in the State of Delaware at
such registered office is the Corporation Service
Company.
1.05.
Term . The Partnership shall
continue in full force and effect from the date the Certificate of
Limited Partnership was filed through the date of dissolution and
termination of the Partnership as provided in Article X
hereof. At such time as the Partnership is terminated, a statement
of cancellation shall be filed with the appropriate governmental
office of the State of Delaware, as required by law.
NYB 1502828.6
ARTICLE II
DEFINITIONS
2.01.
Definitions . In addition to
the terms defined in Appendix A hereto, the following terms
have the definitions hereinafter indicated whenever used in this
Agreement with initial capital letters:
(A)
9% Investment Preferred Return : For each Limited
Partner, a 9% per annum return compounded annually, on such Limited
Partner’s aggregate Capital Contributions (other than Capital
Contributions returned pursuant to Section 4.09 hereof),
commencing on the later of the due date or the date of funding of
each such Capital Contribution and ending on the date such Capital
Contribution (or portion thereof) and the accrued and unpaid return
thereon is distributed pursuant to this Agreement.
(B)
12.5% Investment Preferred Return : For each Limited
Partner, a 12.5% per annum return compounded annually, on such
Limited Partner’s aggregate Capital Contributions (other than
Capital Contributions returned pursuant to Section 4.09
hereof), commencing on the later of the due date or the date of
funding of each such Capital Contribution and ending on the date
such Capital Contribution (or portion thereof) and the accrued and
unpaid return thereon is distributed pursuant to this
Agreement.
(C)
Act : The Delaware Revised Uniform Limited
Partnership Act, 6 Del. C. §§ 17-101 et
seq ., as it may be amended from time to time or any successor
statute.
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(D)
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Advisory
Committee : The
committee described in Article XV.
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(E)
Affiliate : When used with reference to a specified
Person, (a) any Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by or is
under common control with the specified Person, (b) any Person
who, from time to time, is (i) an officer or director of a
specified Person, or (ii) a spouse or immediate family
relative of a specified Person, and (c) any Person which,
directly or indirectly, is the beneficial owner of 25% or more
of any class of equity securities or other ownership interests of
the specified Person or of which the specified Person is directly
or indirectly the owner of twenty-five percent 25% or more of
any class of equity securities or other ownership interests, which
definition shall, as applied to the General Partner, specifically
include (x) any officer, director, shareholder or member of
the General Partner or Berkshire Property Advisors, L.L.C. and
(y) any officer, director or 25% or more shareholder of
BIR.
(F)
Agreement : This Agreement of Limited Partnership, as
it may be amended from time to time.
(G)
Alternative Investment Vehicles : Shall have the
meaning ascribed to such term in Section 3.04.
(H)
Bankruptcy : For purposes of this Agreement, the
institution by a referenced Person of a voluntary case in
bankruptcy, or the voluntary taking advantage by a referenced
Person of any bankruptcy or insolvency law, or the entry of an
order, judgment or decree by a court of competent jurisdiction
which continues in effect and unstayed for 60 days of such
Person as bankrupt or insolvent, or the filing by such Person of
any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or
regulation, or the filing by such Person of any answer admitting
(or the failure by such Person to
2
NYB 1502828.6
make a required responsive pleading
to) the material allegations of a petition filed against such
Person in any such proceeding or the seeking or consenting to or
acquiescence in the judicial appointment of any trustee, fiscal
agent, receiver or liquidator of such Person or of all or any
substantial part of its properties or, if within 90 days after
the commencement of an involuntary case or action against such
Person seeking any bankruptcy, reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, the
failure of such case or action to have been dismissed or all orders
in proceedings thereunder affecting the operations or the business
of such Person stayed, or if the stay of any such order or
proceeding thereafter shall be set aside, or, if within
90 days after the judicial appointment without the consent or
acquiescence of such Person of any trustee, fiscal agent, receiver
or liquidator of such Person or of all or any substantial part of
its properties or the insolvency of such Person, such appointment
shall not have been vacated, or the making by such Person of a
general assignment for the benefit of creditors or the admission in
writing by such Person that its assets are insufficient to pay its
liabilities as they come due.
(I)
BIR : Berkshire Income Realty, Inc., a real estate
investment trust controlled by Affiliates of the
Partnership.
(J)
Business Day : Any day on which banks located in
Boston, Massachusetts are not required or authorized to be closed
for the conduct of regular banking business.
(K)
Capital Account : The account maintained by the
Partnership for each Partner as provided in Section 4.06 of
this Agreement.
(L)
Capital Commitment : With respect to each Partner,
the amount set forth on Schedule A opposite its name, as may
be amended from time to time pursuant to the terms of this
Agreement.
(M)
Capital Contribution : Unless otherwise provided in
this Agreement, the total amount of money contributed by each
Partner to the Partnership pursuant to the terms of this
Agreement.
(N)
Cause : (i) A material failure by the General
Partner to carry out its obligations hereunder which constitutes
fraud, willful misconduct, gross negligence or bad faith;
(ii) a failure of the General Partner to comply with the
provisions of Section 7.01 hereof; (iii) the engagement
by the General Partner or its Affiliates in criminal misconduct
directly or specifically related to the business of the
Partnership, or which, in the reasonable judgment of the Advisory
Committee, impairs or is likely to impair the General
Partner’s effectiveness in carrying out its obligations under
this Agreement or (iv) a material breach of this Agreement by
the General Partner, which material breach continues for a period
of 30 days (or (x) in the case of a failure by the
General Partner or any Limited Partner which is an Affiliate of the
General Partner to make a Capital Contribution (which shall be
considered a material breach by the General Partner hereunder),
such failure continues for a period of five days or (y) if the
material breach can be cured but is not capable of being cured
within such 30-day period, such longer period of time as is
necessary to cure such material breach provided that such cure is
diligently pursued during and after such 30-day period, but in no
event shall such cure period exceed 90 days) following the
receipt by the General Partner of Notice of such material breach
from the Advisory Committee (which Notice shall be sent upon the
determination by the Advisory Committee that such material breach
exists).
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(O)
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Closing
: The First Closing or a Subsequent
Closing, as the case may be.
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(P)
Code : The U.S. Internal Revenue Code of 1986, as
amended from time to time, and any successor statutory
provisions.
3
NYB 1502828.6
(Q)
Coinvestment Opportunities : Opportunities that the
General Partner, in its sole discretion, elects to provide to the
Limited Partners (in their individual capacities and not in their
capacities as Limited Partners) to invest in Investments alongside
the Partnership.
(R)
Coinvestment Vehicle : An entity formed by the
General Partner or its Affiliates for the purpose of investing in
one or more Coinvestment Opportunities.
(S)
Commitment Period : The period beginning on the First
Closing and ending on the third anniversary of the final Subsequent
Closing, unless (i) (a) in the opinion of counsel
selected by the General Partner, changes in applicable law after
the date hereof have materially adversely affected the ability of
the Partnership to achieve its investment objectives, and the
Advisory Committee has consented thereto, (b) the General
Partner determines, in its reasonable discretion, that there are
insufficient business opportunities consistent with the investment
objectives of the Partnership, and the Advisory Committee has
consented thereto or (c) at least 80% of the aggregate Capital
Commitments have been invested or committed or reserved for a
specified purpose (such as a follow-on investment) or utilized to
pay or reserved to pay Investment Expenses, in any of which events
the General Partner may terminate the Commitment Period prior to
the third anniversary of the final Subsequent Closing or
(ii) the Commitment Period is earlier terminated as otherwise
provided in this Agreement.
(T)
Compliance Taxes : Shall have the meaning ascribed to
such term in Section 5.04.
(U)
Consent : Either the written consent of a Person, or
the affirmative vote of such Person at a meeting duly called and
held pursuant to this Agreement, as the case may be, to do the act
or thing for which the Consent is solicited, or the act of granting
such Consent, as the context may require. Subject to
Section 14.03(C), reference to the Consent of a stated
percentage of the Percentage Interests of the Limited Partners
means the Consent of a number of the Limited Partners not then in
default whose combined Percentage Interests represent at least such
stated percentage of the total Percentage Interests of the Limited
Partners not then in default, or such higher percentage as is
required by applicable law. Except as otherwise herein specifically
provided, all Limited Partners shall be considered to constitute a
single class or group, and shall vote together, for purposes of
granting any Consent pursuant to this Agreement or the
Act.
(V)
Cumulative Investment Preferred Return : Both the 9%
Investment Preferred Return and the 12.5% Investment Preferred
Return.
(W)
Debt Ratio : The ratio of (A) the aggregate
amount of (x) debt secured by Investments or other assets of
the Partnership or any of its subsidiaries, (y) guarantees
secured by Investments or other assets of the Partnership or any of
its subsidiaries and (z) other indebtedness for borrowed money
maintained by the Partnership or any of its subsidiaries,
divided by (B) the value of the Investments owned by
the Partnership and its subsidiaries as determined in good faith by
the General Partner.
(X)
Derivatives : A financial instrument, product or
index which is not a direct investment, but instead derives its
economic characteristics from the economic characteristics of one
or more direct or derivative financial instruments, products or
indexes.
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(Y)
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Due Date
:
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Shall have the meaning ascribed to
such term in Section 5.04(D).
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4
NYB 1502828.6
(Z)
ERISA : The U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
statute.
(AA)
ERISA Partner : Any Limited Partner that has notified
the General Partner in writing that all or any portion of its
assets are assets of an employee benefit plan subject to Title I of
ERISA or Section 4975 of the Code or that it is a nominee for,
or is a trust established pursuant to, one or more such employee
benefit plans, or is a “governmental plan” within the
meaning of Section 3(32) of ERISA.
(BB)
Expert : An independent, nationally recognized
investment banking firm or other appropriate, independent valuation
expert, such as a broker, which Expert shall be selected in
accordance with the procedures described in the appropriate
sections of this Agreement.
(CC)
Fair Value : The fair value of any Interest or
Investment, as determined by the General Partner or, in the case of
Section 5.05, 7.03, 7.04 or 13.02, an Expert, using generally
accepted valuation methods in good faith. All valuations shall be
made taking into account all factors which might reasonably affect
the sales price of the Interest or Investment in question,
including, without limitation, if and as appropriate, the
anticipated impact on current market prices of immediate sale, the
lack of a market for such asset and the impact on present value of
factors such as the length of time before any such sales may become
possible and the cost and complexity of any such sales. For all
purposes of this Agreement, all valuations made by the General
Partner or any Expert shall be final and conclusive on the
Partnership and all Partners, their successors and assigns, absent
manifest error. In determining the Fair Value of assets, the
General Partner or Expert may obtain and rely on information
provided by any source or sources reasonably believed to be
accurate.
(DD)
First Closing : The first date that any Limited
Partner is admitted to the Partnership.
(EE)
Fiscal Year : The taxable year of the Partnership
which, except in the case of a short taxable year, shall be the
calendar year.
(FF)
General Partner : Berkshire Multifamily Value Fund,
GP, L.L.C., or any other Person who becomes a successor general
partner pursuant to the terms hereof.
(GG)
Indemnified Parties : Shall have the meaning ascribed
to such term in Section 6.05(A).
(HH)
Interest : The ownership interest of a Partner in the
Partnership at any particular time, including the right of such
Partner to any and all benefits to which such Partner may be
entitled as provided in this 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.
(II)
Investment : Any acquisition of or investment in,
whether in the form of debt or equity, real estate, a corporation,
partnership, trust, limited liability company or other entity, or a
group of assets purchased in a single transaction or group of
related transactions, or any other asset, including short-term
investments of cash.
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(JJ)
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Investment
Committee : The
committee described in Section 6.12.
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5
NYB 1502828.6
(KK)
Investment Company Act : The U.S. Investment Company
Act of 1940, as amended from time to time, or any successor
statute.
(LL)
Investment Expenses : The sum of
(i) Unconsummated Deal Costs, (ii) the Investment
Management Fee, (iii) Organizational Expenses and
(iv) Operating Expenses.
(MM)
Investment Management Fee : Shall have the meaning
ascribed to such term in Section 6.07(B).
(NN)
Investment Revenues : The sum of (i) all
receipts of the Partnership relating to the Investments other than
Capital Contributions, which receipts include, without limitation,
rents and other operating revenues, dividends, distributions and
interest and proceeds from the sale or other disposition of all or
a portion of the Investments (ii) any reserves previously set
aside which are deemed available for distribution by the General
Partner or Liquidator and (iii) any other miscellaneous
receipts or revenues of the Partnership related directly to
Investments held by the Partnership.
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(OO)
|
Late Fee
: Shall have the meaning ascribed to
such term in Section 4.03(C).
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(PP)
Limited Partner : Any limited partner admitted to the
Partnership in accordance with the terms of this Agreement,
including any Substitute Limited Partner(s).
(QQ)
Liquidator : The General Partner, or if the General
Partner’s withdrawal or Bankruptcy caused the dissolution of
the Partnership, such other Person who may be appointed by a
majority of the Percentage Interests of the Limited Partners, who
shall be responsible for taking all action necessary or appropriate
to wind up the affairs and distribute the assets of the Partnership
following its dissolution.
(RR)
Marketable Securities : Securities which are traded
on a national securities exchange in the United States or included
for quotation on the Nasdaq National Market and are not subject to
restrictions on transfer as a result of applicable contract
provisions or the provisions of applicable securities laws or
regulations.
(SS)
Net Adjusted Capital Contribution : With respect to
each Partner, as of any time, the aggregate Capital Contributions
of such Partner as of such time, less the sum of (i) any
distributions in return of such Capital Contributions previously
made to such Partner pursuant to Sections 5.02(B) and
(ii) any refunds of Capital Contributions made (x) by
Partners participating in a Subsequent Closing in accordance with
Section 4.09, or (y) pursuant to
Section 4.03(A).
(TT)
Net Investment Revenues : For any period, the excess
of Investment Revenues over (i) Investment Expenses,
(ii) amounts paid or payable in respect of any loan or other
indebtedness and (iii) reserves maintained in accordance with
Sections 5.06 and 6.03(B).
(UU)
Noncontributing Partner : Shall have the meaning
ascribed to such term in Section 4.03(C).
(VV)
Notice : A writing containing the information
required by this Agreement to be communicated to a Person and
personally delivered to such Person or sent by facsimile or similar
electronic means, overnight courier or registered or certified
mail, postage prepaid, return receipt requested, to such Person at
the last known address of such Person as shown on the books of the
Partnership. A Notice shall be deemed given and received
effectively (i) upon personal delivery,
(ii) if
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NYB 1502828.6
sent by facsimile or similar
electronic means (excluding, for the avoidance of doubt, email),
when confirmation of transmission is received or, if such
confirmation is received on a day other than a Business Day, on the
next Business Day, (iii) if delivered by overnight courier, on
the next Business Day after delivery to the overnight courier
service and (iv) if sent by registered or certified mail,
three Business Days after delivery to the United States postal
service; provided, however , that any written communication
containing such information actually received by a Person shall
constitute Notice for all purposes of this Agreement.
(WW)
Operating Expenses : Except as otherwise specifically
provided in this Agreement, including, without limitation,
Section 6.06, all third-party costs and expenses of
maintaining the operations of the Partnership and its Investments
(to the extent not paid for or reimbursed by such Investment),
determined on a cash basis, including, without limitation, taxes;
fees and other governmental charges levied against the Partnership;
insurance, administrative fees; fees for outside services; audit
costs; expenses of custodians, outside counsel and accountants;
travel expenses for maintaining, acquiring and disposing of an
Investment and costs and expenses relating to litigation, and
specifically including the costs of any services provided by the
General Partner or its Affiliates in accordance with
Section 6.04, but specifically excluding the Investment
Management Fee, Unconsummated Deal Costs and Organizational
Expenses.
(XX)
Organizational Expenses : Expenses incurred in
connection with the organization and formation of the Partnership
and the offering of the Limited Partner Interests in the
Partnership, including, without limitation, legal and accounting
fees and expenses, printing costs, filing fees, the transportation,
meal and lodging expenses of the personnel of the General Partner
and all fees and costs due to any Placement Agent; provided,
that the amount of Organizational Expenses for which the
Partnership is obligated to reimburse the General Partner is
subject to the limitations set forth in Section 6.07(A); and,
provided , further , that all fees and costs owed by
the Partnership to any Placement Agent shall not be Organizational
Expenses for purposes of Section 6.07(A).
(YY)
Original Payment Date : Shall have the meaning
ascribed to such term in Section 4.03(C).
(ZZ)
Partner(s) : As the context may require, some or all
of the General Partner and the Limited Partners.
(AAA)
Partnership : The limited partnership referred to in
this Agreement, as said limited partnership may from time to time
be constituted.
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(BBB)
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Payment Date
: Shall have the meaning ascribed
to such term in Section 5.04(D).
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(CCC)
Percentage Interest : As of any given time, as to any
Partner, a fraction, expressed as a percentage, equal to the amount
of the Capital Commitment of such Partner divided by the total
Capital Commitments of all Partners, as may be adjusted from time
to time in accordance with the provisions of this
Agreement.
(DDD)
Person : Any individual, partnership, corporation,
limited liability company, trust or other entity.
(EEE)
Placement Agent : Any third party placement agent,
financial consultant or finder retained by the General Partner in
connection with the sale and offering of the Interests.
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NYB 1502828.6
(FFF)
Plan Assets Committee : Shall have the meaning
ascribed to such term in Section 13.02(B).
(GGG)
Plan Assets Regulations : The regulations contained
in 29 CFR § 2510.3-101 or successor
regulations.
(HHH) Prime
Rate : The rate of interest on such date as is published in
H.15(519) under the caption “Bank Prime Loan” or, if
not published by 3:00 P.M., New York City time, on the relevant
date, the rate as published in H.15 Daily Update, or such other
recognized electronic source used for the purpose of displaying
such rate, under the caption “Bank Prime Loan.” If such
rate is not yet published in H.15(519), H.15 Daily Update or
another recognized electronic source by 3:00 P.M., New York City
time, on the relevant date, then the Prime Rate “prime
rate” in effect at its principal office in New York
City.
(III)
Profits and Losses : Respectively, for each Fiscal
Year or other period, the Partnership’s taxable income or
loss for such Fiscal Year or other period, determined in accordance
with Code § 703(a) (for this purpose, all items of
income, gain, loss or deduction required to be stated separately
pursuant to Code § 703(a)(1) shall be included in taxable
income or loss), adjusted as follows:
(1) any
income of the Partnership that is exempt from U.S. federal income
tax and not otherwise taken into account in computing Profits or
Losses shall be added to such taxable income or loss;
(2) in
lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation (as defined in
Appendix A ) for such Fiscal Year or other
period;
(3) any
items that are specially allocated pursuant to
Appendix A shall not be taken into account in computing
Profits or Losses;
(4) any
expenditures of the Partnership described in Code
§ 705(a)(2)(B) (or treated as such under
Regulations § 1.704-1(b)(2)(iv)(i)) and not
otherwise taken into account in computing Profits or Losses shall
be deducted from such U.S. taxable income or loss;
(5) in
the event the Gross Asset Value of any Partnership asset is
adjusted in accordance with paragraph (B) of the definition of
Gross Asset Value in Appendix A , the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such Partnership asset for purposes of computing
Profits or Losses;
(6) gain
or loss resulting from any disposition of any Partnership asset
with respect to which gain or loss is recognized for U.S. federal
income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding the fact
that the adjusted tax basis of such Partnership asset differs from
its Gross Asset Value; and
(7) an
allocation of Partnership Profits or Losses to a Partner shall be
treated as an allocation to such Partner of the same share of each
item of income, gain, loss and deduction that has been taken into
account in computing such Profits or Losses.
Profits and Losses shall be further
determined and adjusted in accordance with the Regulations issued
under Section 704 of the Code.
8
NYB 1502828.6
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(JJJ)
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Refund Partner
: Shall have the meaning ascribed
to such term in Section 4.09.
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(KKK)
Regulations : The regulations of the U.S. Treasury
Department promulgated under the Code.
(LLL)
Remaining Capital Commitment : With respect to each
Partner at any given time, such Partner’s Capital Commitment
adjusted as follows: (i) reduced by such
Partner’s Capital Contributions; and (ii) increased
by (a) any refunds of Capital Contributions made by
Partners participating in a Subsequent Closing in accordance with
Section 4.09, (b) any unused Capital Contributions
refunded in accordance with Section 4.03(A) and (c)
distributions made during the period beginning on the date of the
First Closing and ending 18 months thereafter that represent a
return of Capital Contributions.
(MMM)
Securities Act : The U.S. Securities Act of 1933, as
amended, and all rules, rulings and regulations promulgated
thereunder.
(NNN)
Service : The U.S. Internal Revenue Service, a branch
of the U.S. Treasury Department.
(OOO)
Subscription Agreement : The agreement substantially
in the form of Exhibit 1 to be executed and delivered by
each Limited Partner at a Closing in which it is making a Capital
Commitment.
(PPP)
Subsequent Closing : A Closing that occurs after the
First Closing at which any existing Limited Partner increases its
Capital Commitment, or any additional Limited Partner is admitted
to the Partnership; provided , that if there are no
Subsequent Closings the final Subsequent Closing for purposes of
this Agreement shall be the First Closing, if the Capital
Commitments of the Partners (who are not Affiliates of the General
Partner) admitted to the Partnership at the First Closing are not
less than $300 million in the aggregate or, if such amount of
Capital Commitments are not then obtained, the nine month
anniversary of the First Closing.
(QQQ)
Substitute Limited Partner : Any Person admitted to
the Partnership as a Limited Partner pursuant to
Section 9.03.
(RRR)
Successor Fund : Shall have the meaning ascribed to
such term in Section 6.09(D).
(SSS)
Suitable Investment : An individual real
estate-related investment within the scope of Section 3.01(A);
provided , that, upon the request of the General Partner,
the Advisory Committee may determine any such investment shall not
be a Suitable Investment.
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(TTT)
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TMP
: Shall have the meaning ascribed to
such term in Section 12.02.
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(UUU)
Transaction in Progress : As of any given date, a
transaction in which the relevant Person (or any Person in which
such Person has an ownership interest or any other Affiliate of
such Person that is acting on behalf of such Person) has placed a
bid (whether binding or not, but if not binding with a material
deposit required) in a competitive bidding situation, or entered
into a letter of intent, memorandum of understanding or similar
document (whether or not such document created a legally binding
obligation to proceed with such transaction) or a definitive
agreement to proceed with such transaction.
9
NYB 1502828.6
(VVV)
Transfer : A sale, assignment, transfer or other
disposition, or pledge, hypothecation or other encumbrance, of an
Interest and, with respect to the General Partner, any Transfer by
(i) the general partner of the General Partner of a
controlling interest in the General Partner or (ii) the
members of the general partner of the General Partner of a
controlling interest in the general partner of the General
Partner.
(WWW)
Unconsummated Deal Costs : Fees and expenses
(including travel expenses) paid to third parties for services
rendered in connection with an unconsummated
transaction.
(XXX)
Withholding and Income Taxes : Shall have the meaning
ascribed to such term in Section 5.04.
ARTICLE III
PURPOSE AND
BUSINESS
(A) The
primary purpose of the Partnership is to acquire, reposition,
manage and dispose of multifamily property debt and equity
Investments primarily located in select major metropolitan markets
of the United States. The Partnership may engage in open market
purchases, privately-negotiated transactions or other means of
pursuing an Investment, and may engage in Investments directly or
indirectly, through subsidiaries, partnership interests, joint
ventures or otherwise.
(B) The
Partnership may engage in any other activities permitted by law and
related or incidental to those referred to in this
Section 3.01, including making temporary investments pursuant
to Section 3.02(M) hereof.
3.02.
Authorized Activities
. In carrying out the purposes of
this Agreement, but subject to all other provisions of this
Agreement and applicable law, the Partnership is empowered and
authorized:
(A) to
acquire, invest in, lease, hold, mortgage, pledge, manage, operate
or otherwise deal in or with the Investments and any real or
personal property which may be necessary, convenient or incidental
to the accomplishment of the purposes of the Partnership, whether
directly or indirectly, through subsidiaries, partnership
interests, securities, joint ventures or otherwise, and to sell,
transfer or otherwise dispose of the Investments;
(B) to
construct, operate, develop, maintain, finance, refinance,
reposition, improve, own, sell, convey, assign, mortgage, lease or
foreclose upon any real estate and any personal property necessary,
convenient or incidental to the accomplishment of the purposes of
the Partnership;
(C) (i)
to borrow money and issue evidences of indebtedness and guarantees
to finance or refinance one or more of the Investments and
(ii) to secure any such evidences of indebtedness and
guarantees by mortgages, pledges or other liens, but only on the
specific assets of such Investment so that such evidences of
indebtedness and guarantees and documents securing the same, if
any, shall effectively provide in substance and legal effect for
recourse only to the specific assets of such Investment, with
exceptions customary for secured indebtedness of a comparable type;
provided, that this shall not increase the obligations of
any Limited Partner hereunder; and provided further , that
the General Partner shall use its reasonable best efforts in
directing the conduct of the business of the Partnership
to
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NYB 1502828.6
cause the Debt Ratio not to exceed
65% of the value of the Partnership’s Investments from and
after the end of the Commitment Period;
(D) (i)
in addition to borrowings under Section 3.02(C) (but still
subject to the limitation on the Debt Ratio contained in Section
3.02(C)), to enter into credit facilities, borrow money and issue
evidences of indebtedness (a) to pay Investment Expenses,
(b) to make deposits in lieu of, or in advance of, Capital
Contributions, and (c) for working capital for interim
financing of Investments in lieu of, or in advance of, Capital
Contributions and/or permanent financing, and (ii) to secure
any such indebtedness or credit facilities by mortgages, pledges or
other liens on any assets of the Partnership including, without
limitation, the Partnership’s or the General Partner’s
rights to call for Capital Contributions under Section 4.03
for the purposes described therein (and in connection therewith, to
collaterally assign to any lender, in connection with the
enforcement of its security interests granted for such indebtedness
or credit facility, the right to (x) make such call,
(y) receive the funds from such call and (z) exercise any
remedies of the Partnership or the General Partner (or the Advisory
Committee) under or related to this Agreement (including
Section 4.04) in respect of any such call or such Capital
Contribution), and to collaterally assign the Partnership’s
or the General Partner’s security interest in the Interest of
a Limited Partner pursuant to Section 4.04(B)(i);
provided, that any such evidence of indebtedness and
documents securing the same shall effectively provide in substance
and legal effect that no Limited Partner shall have any personal
liability for the payment of such indebtedness in excess of such
Limited Partner’s Remaining Capital Commitment; and
provided further, that no right or remedy referred to above
shall be effective to the extent such right or remedy would result
in a prohibited transaction under Section 406(a) of ERISA or
Section 4975(c)(1)(A)-(D) of the Code unless an exemption
therefrom shall have been obtained or otherwise apply;
(E) to
enter into, perform and carry out contracts of any kind necessary
or incidental to the accomplishment of the purposes of the
Partnership, including, without limitation, contracts with
Affiliates of the General Partner pursuant to
Section 6.04;
(F) to
bring, sue, prosecute, defend, settle or comprise actions at law or
in equity related to the purposes of the Partnership;
(G) to
purchase, cancel or otherwise retire or dispose of the Interest of
any Partner pursuant to the express provisions of this
Agreement;
(H) to
execute and deliver all documents in connection with the sale of
Limited Partner Interests, including but not limited to the
Subscription Agreements and any side letters with one or more
Limited Partners;
(I) to
lease those Investments in the form of real properties and collect
all rents and other income and to pay therefrom expenses of the
Partnership, including, without limitation, expenses relating to
such Investments;
(J) to
prepay in whole or in part, refinance, recast, assume, increase,
reduce, modify, extend, foreclose or transfer any mortgages
constituting or affecting any of the Investments, and in connection
therewith to execute any extensions, renewals, assumptions or
modifications of any mortgage or deed of trust constituting or
affecting any of the Investments;
(K) to
sell, exchange, transfer or otherwise dispose of all or any portion
of an Investment, including but not limited to a transfer of all or
any portion of the Investments to a publicly traded
company;
11
NYB 1502828.6
(L) to
incur all expenditures and pay the fees more particularly described
in Sections 6.06 and 6.07;
(M) to
(i) hold all or part of the assets, property or funds of the
Partnership in cash or cash equivalents, (ii) make interim
investments in U.S. government obligations, insured obligations
which are rated not lower than AA by Standard & Poors or have a
comparable rating from another nationally recognized rating agency,
collateralized bank time deposits, repurchase agreements, money
market funds, commercial paper which is rated not lower than P-1,
certificates of deposit which are rated not lower than AA by
Standard & Poors or have a comparable rating from another
nationally recognized rating agency and banker’s acceptances
eligible for purchase by the U.S. Federal Reserve and (iii) in
connection with its Investments, purchase customary hedging
instruments such as interest rate caps and collars, forward
contracts and other financial instruments relating to such
Investment designed to protect the Partnership against adverse
movements in currency, stock price movements and/or interest rates,
but not intended to speculate on an uncovered basis with respect to
the foregoing or to trade in the foregoing, and except as provided
in this clause (iii), the Partnership shall not be permitted
to purchase Derivatives;
(N) to
make debt or equity investments, including the acquisition of
Marketable Securities, in real estate-dependent
companies;
(O) to
engage in any kind of lawful activity, and perform and carry out
contracts of any kind, necessary or advisable in connection with
the accomplishment of the purposes of the Partnership;
and
(P) to
limit participation by “benefit plan investors” (as
defined in the Plan Assets Regulations promulgated by the
Department of Labor) to less than 25% of the Interests or exclude
ERISA Partners subject to Title I of ERISA or Section 4975 of the
Code altogether.
Notwithstanding any other provision
hereof to the contrary, in the event the General Partner exercises
its discretion to limit the participation of benefit plan investors
or ERISA Partners in the Partnership under Section 3.02(P),
(i) no transaction affecting the Interests shall be effective
if the General Partner determines such transaction would result in
benefit plan investors holding 25% or more of the Interests, as
determined for purposes of the Plan Assets Regulations,
(ii) the General Partner shall be authorized and empowered to
take any actions it deems appropriate in connection with assuring
compliance with the restrictions set forth in Section 3.02(P),
including, but not limited to, requiring representations and
agreements from current or prospective Limited Partners, and
precluding, or not otherwise giving effect to, any purchase,
acquisition, assignment or transfer of any Interest, or withdrawal
of any Limited Partner and (iii) if, as a result of any
transaction, investments by Limited Partners who have represented
that they are benefit plan investors would equal or exceed 25% of
the Interests, the General Partner may effect pro rata
withdrawals by Limited Partners who have represented that they are
benefit plan investors to reduce aggregate holdings of such benefit
plan investors to less than 25% of such Interests.
The General Partner shall not cause
the Partnership to acquire assets or engage in activities that
generate “unrelated business taxable income” within the
meaning of Section 512(a)(1) of the Code. Assets held,
directly or indirectly, through an entity treated as a corporation
for federal income tax purposes (including, but not limited to, a
corporation that has elected or will elect to be treated as a
“real estate investment trust” within the meaning of
Sections 856-860 of the Code) shall satisfy the requirements
of the preceding sentence and the General Partner is expressly
authorized to cause the Partnership to acquire and hold assets
directly or indirectly through such entities.
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NYB 1502828.6
3.03.
Prohibited Activities .
Notwithstanding any other provision of this Agreement, the
Partnership and the General Partner shall not be empowered or
authorized, without the Consent of the Advisory Committee,
to:
(A) invest
more than (i) 20% of the aggregate Capital Commitments of all
Partners in any one transaction, meaning one or more related
Investments for which a single investment decision is made and each
transaction is not evaluated separately and independently;
(ii) 10% of the aggregate Capital Commitments of all Partners
in any one real property Investment; (iii) 10% of the
aggregate Capital Commitments of all Partners in non-multifamily
Investments; provided , that non-multifamily Investments may
only be made to the extent they are related to multifamily assets
that the Partnership seeks to acquire or control; (iv) 15% of
the aggregate Capital Commitments of all Partners in loans or
debt-like instruments secured by multifamily Investments acquired
for the purposes of obtaining ownership of the underlying
collateral; provided , that an Investment shall cease to be
counted for purposes of this clause (iv) at such time as it
ceases to be a loan or debt-like instrument or (v) 5% of the
aggregate Capital Commitments of all Partners in ground-up
development transactions; provided, however , that after
consultation with and with the Consent of the Advisory Committee,
the Partnership may, and the General Partner may cause the
Partnership, without being subject to the limitations contained in
this paragraph, to contribute all or any portion of the
Partnership’s assets to one or more publicly traded entities
or to Affiliates of such publicly traded entities; and provided,
further , that multiple transactions with the same company or
with the same joint venture partner or sponsor shall not be
considered one Investment if each transaction is separately
evaluated and made independently and is not part of a single
investment decision;
(B) after
the Commitment Period, incur any additional indebtedness secured by
Investments or guarantees, if the Debt Ratio as of such date, would
exceed 65% of the Fair Value of all of the Partnership’s
Investments as of such date (excluding indebtedness included in the
calculation of the Debt Ratio), unless the Advisory Committee shall
have approved the specified indebtedness;
(C) pay
any expenses or to reimburse the General Partner for any of its
expenses incurred in connection with any potential investment for
the Partnership not purchased by the Partnership if such investment
is thereafter purchased by the General Partner, any party advised
by the General Partner or their Affiliates in accordance with the
terms hereof;
(D) except
as specifically provided herein, borrow money or enter into credit
facilities or purchase Derivatives;
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(E)
|
take any actions in violation of
applicable laws;
|
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|
(F)
|
enter into any transaction with an
Affiliate in violation of Section 6.04;
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(G) make
Investments in such a manner or in a jurisdiction in which the
limited liability of the Limited Partners would not be
respected;
(H) invest
in Marketable Securities, other than in connection with a
contribution of all or any portion of the Partnership’s
assets approved by the Advisory Committee and described in Section
3.03(A);
(I) acquire
Investments relating to real property situated in a country other
than the United States;
13
NYB 1502828.6
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(J)
|
acquire Investments in a
non-specified investment fund or similar venture;
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(K) except
as provided in Section 6.04(B)(ii)(b), acquire Investments in
assets in which the General Partner or its Affiliates has a
pre-existing ownership interest; or
(L) acquire
any Investment and have failed to call capital from the Partners in
respect of such Investment within six months of such acquisition in
an amount at least equal to 25% of the total acquisition cost of
such Investment.
3.04.
Commitment Transfer Option .
If the Partnership encounters legal, tax or regulatory impediments
to the making of a potential Investment, the General Partner may
offer the Partners the opportunity to reduce their Remaining
Capital Commitments in the Partnership by transferring a portion
thereof to one or more entities organized by or on behalf of the
General Partner or its Affiliates and having investment objectives,
economic terms, conditions and management substantially identical,
to the extent practicable, to those of the Partnership, but which
would not encounter such legal, tax or regulatory impediments
(“ Alternative Investment Vehicles ”);
provided , that the gains and losses of any such Alternative
Investment Vehicle shall be treated as having been realized by the
Partnership for all economic calculations under this Agreement with
respect to the Partners who participate in such Alternative
Investment Vehicle (including, without limitation, Article V
and the calculation of the General Partner claw back obligation
pursuant to Section 6.13); provided, further , that
(i) the General Partner or an Affiliate thereof shall serve as
the managing general partner or in some other managing fiduciary
capacity with respect to any such Alternative Investment Vehicle
and (ii) any such reduction in the Remaining Capital
Commitments does not cause an acceleration of any indebtedness
pursuant to or a default under any credit facility referred to in
Section 8.04. The General Partner will offer the Partners the
opportunity to participate in an Alternative Investment Vehicle in
proportion to their respective Percentage Interests; provided,
however, such offer will not be made to Limited Partners whose
participation, in the opinion of counsel to the Partnership, may
cause or contribute to such legal, tax or regulatory impediments.
To the extent a Limited Partner is precluded from, or elects not to
participate in, an Alternative Investment Vehicle, the interest in
the Alternative Investment Vehicle allocable to such
non-participating Limited Partner shall first be offered to the
participating Partners in proportion to their respective Percentage
Interests prior to soliciting other investors to participate in the
Alternative Investment Vehicle.
3.05.
Coinvestment Opportunities .
During the Commitment Period, the Partnership may, at the General
Partner’s sole and absolute discretion, provide Coinvestment
Opportunities to the Limited Partners in instances in which the
General Partner determines, in good faith, that it is not in the
best interests of the Partnership to invest (or that the
Partnership is prohibited from investing pursuant to the terms
hereof) the entire amount required to fund such Investment because
of the size of or risk inherent in such Investment or due to legal,
regulatory or tax considerations or that such Coinvestment
Opportunity is otherwise appropriate or feasible. Any Coinvestment
Opportunities provided to the Limited Partners will be on such
terms and conditions as the General Partner, in its sole
discretion, may determine; provided, however , that Notice
of all Coinvestment Opportunities shall be provided to all of the
Limited Partners and that all of the Limited Partners shall have an
opportunity to participate in such Coinvestment Opportunities on a
pro rata basis and, unless otherwise approved by the Advisory
Committee, shall have economic terms, as between the General
Partner and the Limited Partners, no less favorable to the Limited
Partners than the terms set forth in this Agreement. No Partner
shall in any event be obligated to make a coinvestment. If after
being offered to the Limited Partners, a portion of the
Coinvestment Opportunity is not subscribed for, the General Partner
may itself, or through an Affiliate, invest in that portion of the
Coinvestment Opportunity. The General Partner and its Affiliates
shall not invest in any Investment with the Partnership other than:
(a) through a Coinvestment Vehicle that
14
NYB 1502828.6
includes Limited Partners;
(b) through a Coinvestment Vehicle to invest amounts necessary
after a Coinvestment Opportunity has been offered to the Limited
Partners and the Limited Partners have not subscribed for the full
amount of the Coinvestment Opportunity; or (c) as permitted by
or in accordance with Section 6.04.
ARTICLE IV
BERKSHIRE INTERESTS AND
CAPITAL
(A) The
name and address of the General Partner is Berkshire Multifamily
Value Fund, GP, L.L.C., a Delaware limited liability company,
having an address at One Beacon Street, Suite 1500, Boston,
Massachusetts 02108.
(B) The
Capital Commitment of the General Partner, when combined with that
of other Affiliates of the General Partner, shall at all times be
equal to the lesser of (x) 10% of the total Capital
Commitments and (y) $25,000,000.
(C) Any
Limited Partner that is an Affiliate of the General Partner will
not be counted for any purpose when the Consent of the Limited
Partners is sought hereunder (including determining the aggregate
Percentage Interests of the Limited Partners). In the sole
discretion of the General Partner with respect to a particular
Investment, the General Partner may invest, or permit any Limited
Partner that is an Affiliate of the General Partner to invest, the
amount of capital that would otherwise be required from such
Partner through a separate coinvestment vehicle on substantially
the same terms and conditions as the Partnership, including the
sharing of applicable expenses.
4.02.
Limited Partners . The name,
address and Capital Commitment of each Limited Partner in the
Partnership are set forth on Schedule A , as amended from
time to time in accordance with the terms of this Agreement. A
Person acquiring a Limited Partner Interest directly from the
Partnership shall be admitted as a Limited Partner when such
Person’s Subscription Agreement is accepted by the General
Partner. A transferee acquiring a Limited Partner Interest through
a Transfer shall become a Substitute Limited Partner when the
provisions of Article IX have been complied with.
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|
4.03.
|
Capital
Contributions .
|
(A) Within
10 Business Days after a call issued as permitted by this
Agreement from time-to-time by delivery of Notice to the Limited
Partners from or on behalf of the General Partner, the Partners
shall make cash Capital Contributions to the capital of the
Partnership in the aggregate amount called, pro rata in accordance
with the Partners’ relative Capital Commitments as of the
date of such call; provided , however , that the
General Partner shall not be required to contribute amounts
pursuant to any call for Capital Contributions to the extent such
amounts will be used by the Partnership to pay Investment
Management Fees (as provided in Section 6.07(B)) or fees to
any Placement Agent (as provided in Section 6.07(C));
provided , further , that with respect to calls for
Capital Contributions in which the General Partner is not required
to contribute capital as provided in this Section 4.03(A),
each Limited Partner will make a Capital Contribution to the
capital of the Partnership equal to the product of the aggregate
amount of capital called multiplied by the quotient of the Limited
Partner’s Percentage Interest divided by the total Percentage
Interests of all the Limited Partners. The General Partner shall
have the right to call Capital Contributions:
(i) during
the Commitment Period (a) for the consummation of an
Investment by the Partnership, (b) for additional cash
investments for any reason in any Investment, (c) for
additional cash for Investment Expenses or (d) to repay or
prepay all or any portion of any outstanding financing of the
Partnership (regardless of when incurred and regardless of the
purpose of such financing); or
(ii) after
the Commitment Period, (a) to make, during a two-year period
following the termination of the Commitment Period, any follow-on
investments in an Investment (which amounts, in the case of this
clause (a), will be limited to an aggregate of 10% of the
Partners’ aggregate Capital Commitments), (b) to pay
Investment Expenses (which amounts, in the case of clauses (a)
and (b), will be limited to an aggregate of 15% of the
Partners’ aggregate Capital Commitments); or (c) to
complete Transactions in Progress by the Partnership as of the end
of the Commitment Period within 180 days of the end of the
Commitment Period (or such longer period as the General Partner may
propose and the Advisory Committee may approve).
(iii) Notwithstanding
anything contained herein to the contrary, in no event shall a call
issued by the General Partner request funds in excess of the
aggregate Remaining Capital Commitments of the Partners, and no
Partner shall be obligated to contribute amounts pursuant to any
call for Capital Contributions in excess of its Remaining Capital
Commitment. To the extent Capital Contributions for an Investment
have not been used by the Partnership to acquire such Investment
within 90 days of receipt thereof, the General Partner shall
either deliver a revised Notice to the Limited Partners stating
that such Capital Contributions will be used to fund an Investment
which is scheduled to close pursuant to a binding commitment within
30 days from the date of such Notice or shall return to the
Partners such unused Capital Contributions, treating such amounts
as distributions from a fully realized Investment; provided
, that the General Partner may retain for purposes of funding any
Investment Expenses or funding additional capital obligations to
existing Investments any such unused Capital Contributions. All
Capital Contributions shall be made by wire transfer in same day
funds to an account specified by the Partnership (unless another
account has been specified by lenders under any credit facility
referred to in Section 8.04) and shall not be credited unless
so paid. All Capital Contributions, whether used by the Partnership
to fund Investments or pay Investment Expenses (other than Capital
Contributions refunded to the Partners as set forth in
Section 4.09 below), or to repay or prepay any financing shall
accrue the Cumulative Investment Preferred Return from the time
contributed until returned to such Partner.
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NYB 1502828.6
(B) Except
as provided below, Notices provided pursuant to
Section 4.03(A) above relating to an Investment shall, where
applicable, set forth the anticipated closing date of such
Investment, the date by which the Partnership expects to fund the
Investment and a brief description of the Investment to be made.
Subject to Section 16.14, at the request of any Limited
Partner, the General Partner will provide such additional
information as may be reasonably requested by such Limited Partner
concerning a proposed Investment and which (a) is within the
General Partner’s possession or (b) if not within the
General Partner’s possession, relates to whether such Limited
Partner would be in violation of an applicable law or regulation by
making a Capital Contribution to such Investment and is available
to the General Partner through commercially reasonable efforts, but
subject to any confidentiality obligations by which the Partnership
or the General Partner is then bound. If the General Partner
determines that, because of a need to keep an Investment by the
Partnership confidential, notifying the other Partners of the
identity of an Investment would cause a risk of jeopardizing that
Investment or of detriment to the anticipated profits from that
Investment, the General Partner may omit that information from the
Notice to be provided pursuant to this Section 4.03. In such a
case, the General Partner shall (i) include in such Notice as
much information as it deems prudent, in light of the risks
referred to in the preceding sentence, about the nature of the
Investment, and (ii) notify each other Partner of the identity
of the Investment as soon as the General Partner deems such Notice
to be prudent, but in any event not later than the date such
Investment is required to be publicly disclosed (in the case of
Investments in Marketable Securities) or two Business Days prior to
the date such Investment is intended to be made (in the case of all
Investments other than Marketable Securities).
(C) Notwithstanding
any of the foregoing provisions of this Paragraph 4.03, if the
General Partner has not exercised its discretion to limit
investment from benefit plan investors on ERISA Partners under
Section 3.02(P), no ERISA Partner shall be required to make
its initial Capital Contribution to the Partnership unless
(i) the General Partner states in the Notice for such Capital
Contribution that such Capital Contribution is required in
connection with the Partnership’s initial Investment,
(ii) together with such Notice, the General Partner has
delivered to such ERISA Partner the affirmative opinion described
in clause (A) of the first sentence of Section 13.02(A)
with respect to the “initial valuation date” and
(iii) such Capital Contribution is to be made
contemporaneously with or subsequent to the closing date of the
Investment to which it is related. If, by virtue of this
Section 4.03(C), any ERISA Partner is excused from paying its
pro rata share of any Capital Contribution in respect of Investment
Expenses (such ERISA Partner being a “ Noncontributing
Partner ”), the other Limited Partners shall not be
obligated to make up any shortfall but the General Partner may pay
any such unpaid Investment Expenses, and such Noncontributing
Partner will, at such time as the General Partner requires the
Partners to make Capital Contributions toward an Investment which
complies with the foregoing requirements, (i) make an
additional Capital Contribution in an amount equal to its pro rata
share of the Investment Expenses with respect to which such
Noncontributing Partner was excused from making a Capital
Contribution by virtue of this Section 4.03(C) and
(ii) make a payment of a fee (the “ Late
Fee ”) in an amount equal to such additional Capital
Contribution multiplied by the product of (A) the Prime Rate
as of the date such Capital Contribution would have been required
but for this Section 4.03(C) (the “ Original
Payment Date ”) plus two percent and (B) the
number of days elapsed from the Original Payment Date until the
date the Late Fee is paid divided by 365 (which Late Fee shall
not reduce such Noncontributing Partner’s Remaining Capital
Commitment), which Capital Contribution and Late Fee shall be paid
to the General Partner to the extent the General Partner paid such
Investment Expenses and otherwise to the Partnership.
|
4.04.
|
Default by
Partners .
|
(A) In
the event that any Partner shall be in default in its obligation to
make any Capital Contribution pursuant to Section 4.03 to the
Partnership and such default shall continue for five
17
NYB 1502828.6
Business Days following Notice from
the General Partner, in addition to the remedies provided at law or
in equity, the General Partner may commence legal proceedings to
compel the defaulting Partner to make the Capital Contribution;
provided, however , such Partner shall not be deemed in
default if it fails to make such Capital Contribution with respect
to an Investment and submits as justification therefor at least two
Business Days prior to the date on which a Capital Contribution is
required or has previously submitted as justification therefor
(i) an opinion of in-house or outside counsel (which opinion
shall be reasonably satisfactory to the General Partner) that with
respect to such Partner there is a substantial likelihood that it
would be in violation of an applicable law or regulation or
(ii) if the Partner is a government sponsored entity or an
Affiliate thereof, a certification, signed by a senior executive
officer of the Partner, that it would be in violation of the
government sponsored entity’s investment guidelines relating
to affordability and tenant income, which were disclosed to the
General Partner prior to the date of this Agreement, in each case
by making such Capital Contribution or any future Capital
Contributions to the Partnership; provided, further, however
, that for all purposes of this Section 4.04, to the extent
that a Capital Contribution is called for or applied to repay or
prepay the indebtedness of the Partnership, such Capital
Contribution shall not be treated as made to or with respect to an
Investment. Upon receipt of such acceptable opinion of counsel or
Notice, such Partner shall be precluded from making any Capital
Contributions to such Investment and the General Partner may elect
to either not make the Investment or to make such Investment
without the participation of such Partner. If the General Partner
or any Limited Partner that is an Affiliate of the General Partner
is the defaulting Partner, the Advisory Committee shall be deemed
substituted for the General Partner regarding the sending or
receipt of Notices or the taking of other actions by the General
Partner under this Section 4.04 in respect of the defaulting
General Partner or the Limited Partner which is an Affiliate of the
General Partner.
In addition, if the Partner is (and
has represented to the General Partner in writing prior to its
admission to the Partnership that it is) a “private
foundation” within the meaning of Section 509 of the
Code and the Partner provides an opinion of counsel to the General
Partner (which opinion and counsel are reasonably satisfactory to
the General Partner) to the effect that continued participation in
the Partnership may (i) subject such Partner to excise taxes
imposed by Subchapter A of Chapter 42 of the Code (other
than Sections 4940 and 4942 thereof) or (ii) constitute a
material breach of the fiduciary duties of its trustees under any
federal or state law applicable to private foundations or any rule
or regulation adopted thereunder by any agency, commission or
authority having jurisdiction, then the following steps shall be
taken: (A) as soon as reasonably possible, the General
Partner shall consult with the Partner; (B) the General
Partner shall review the opinion of counsel referred to above,
consider the options available to the Partnership for mitigating,
preventing or curing any adverse consequences to the Partner that
may arise as a result of the situation described in such opinion,
and the General Partner shall then take such actions as it deems
necessary and appropriate to mitigate, prevent or cure such adverse
consequences, taking into account the interests of all Partners and
of the Partnership as a whole; and (C) thereafter, if the
Partner still maintains that, notwithstanding such action to be
taken by the General Partner, any of the conditions set forth in
clause (i) or (ii) in this paragraph will continue to exist on
or after the fifteenth Business Day following the delivery date of
such opinion, then (1) the obligation of the Partner to make
Capital Contributions to the Partnership shall cease and
(2) notwithstanding Article 9 of this Agreement, the
General Partner shall consent to either (x) the transfer of
such Partner’s Interest to a Person that is reasonably
satisfactory to the General Partner (and the General Partner will
provide reasonable assistance to such Partner in effecting the
transfer) or (y) the withdrawal of such Partner from the
Partnership in accordance with Section 13.02(B)(iii) of this
Agreement (as if the Investor were an ERISA Partner with the right
to withdraw under that Section).
(B) In
the event that a Partner shall be in default of its obligation to
make a Capital Contribution to the Partnership and such default
shall continue for five Business Days following Notice from the
General Partner, then, in addition to the remedies provided in
paragraph (A) of this Section 4.04,
18
NYB 1502828.6
the General Partner shall have the
right, in its reasonable discretion, to allow the Partners, in
proportion to the respective Percentage Interests of those Partners
who elect to participate, to exercise either or both of the
following remedies:
(i) lend
to the defaulting Partner all or any part of the funds required of
such defaulting Partner, which loan shall bear interest at a rate
equal to the greater of (x) the lender’s cost of funds,
and (y) seven percent in excess of the Prime Rate, and shall
be secured by the defaulting Partner’s Interest and the
defaulting Partner’s Remaining Capital Commitment;
or
(ii) purchase
100% of the Interest of the defaulting Partner for an amount, in
cash, equal to the lesser of 50% of (a) the Net Adjusted
Capital Contributions of the defaulting Partner and (b) the
book value of such Interest, as of the date of such default,
determined in accordance with generally accepted accounting
principles consistently applied and exercised by Notice delivered
to such defaulting Partner within 20 Business Days of such
default; provided, however , that if the General Partner is
the defaulting Partner, the non-defaulting Partners may not
purchase the Interest of the General Partner pursuant to this
Section 4.04(B)(ii), but instead will have the right to
exercise the remedies available under this Agreement for acts of
the General Partner which constitute Cause; provided ,
further , that if the Partners do not elect to purchase 100%
of the defaulting Partner’s Interest, the General Partner may
solicit one or more Persons (which may include the General Partner
or any of its Affiliates) to purchase, in cash, such Interest at a
price to be determined by the General Partner, in its sole
discretion (but not less than the price offered to the Partners),
and such Person(s) shall be admitted as Substitute Limited
Partner(s).
(C) (i) In
the event that the General Partner does not permit the Partners to
exercise the remedy set forth in paragraph 4.04(B)(ii), then,
unless otherwise determined by the General Partner, in addition to
the remedies set forth in this Section 4.04, a defaulting
Limited Partner shall not be entitled to (i) make any further
Capital Contributions (including those to the Investment with
respect to which such defaulting Limited Partner initially
defaulted) to the Partnership with respect to any Investment,
(ii) except as otherwise provided in this Section 4.04,
receive any further distributions by the Partnership until the
final liquidation and termination of the Partnership, (iii) be
counted as a Limited Partner for voting purposes,
(iv) participate in any Consent of the Limited Partners or
(v) be entitled to be a member of the Advisory Committee. No
defaulting Limited Partner’s Interest shall be counted in
connection with the giving or withholding of any Consent. Each
defaulting Limited Partner shall remain fully liable to the
creditors of the Partnership, to the extent provided by law, as if
such default had not occurred, the full amount of such defaulting
Limited Partner’s Capital Commitment (and Capital
Contributions, as the case may be) shall be included in calculating
the amount of the Investment Management Fee and such defaulting
Limited Partner shall remain liable for its share of the Investment
Management Fee.
(ii) Furthermore, the
Percentage Interest of a defaulting Limited Partner in the
Partnership at the time of such Partner’s default shall be
reduced by 50%, and the Percentage Interest of each non-defaulting
Partner in the Partnership shall be increased by an amount equal to
the product of (x) a fraction, the numerator of which is such
non-defaulting Partner’s Percentage Interest in the
Partnership and the denominator of which is the Percentage Interest
of all non-defaulting Partners in the Partnership, multiplied by
(y) an amount equal to 50% of the Percentage Interest of the
defaulting Partner in the Partnership. The Capital Accounts and Net
Adjusted Capital Contributions of the Members shall be
automatically adjusted to reflect such reductions and increases;
provided, however , that nothing herein shall reduce the
Remaining Capital Commitment of any Partner or increase the
obligations of any
19
NYB 1502828.6
non-defaulting Partner (including,
but not limited to, any Capital Commitment). If the General Partner
is the defaulting Partner and the Partners do not remove the
General Partner for Cause pursuant to Section 7.04 hereof,
then the provisions of this paragraph shall apply to any Limited
Partner that is an Affiliate of the General Partner as if such
Limited Partner was the defaulting Partner; provided , that
the Percentage Interest of any such Limited Partner shall be
reduced by 50% of the General Partner’s Percentage
Interest.
(iii) Notwithstanding anything
to the contrary in this Agreement, except to the extent the General
Partner, acting in its reasonable discretion (but subject to the
rights of any lender under a credit facility referred to in
Section 8.04), agrees otherwise with a defaulting Limited
Partner in writing, amounts otherwise distributable to such
defaulting Limited Partner shall not be distributed, but shall
instead be deposited in a bank account selected by the General
Partner. Prior to the dissolution and liquidation of the
Partnership, amounts deposited in such bank account may be used to
repay any loans made pursuant to Section 4.04(B)(i) above, to
pay such defaulting Limited Partner’s portion of the
Investment Management Fee, or to pay such defaulting Limited
Partner’s portion of the Partnership’s indebtedness.
Upon the dissolution and liquidation of the Partnership, the
defaulting Limited Partner shall be entitled to receive the balance
of its Capital Account which it is intended will equal the amount
of any funds which may then be in such bank account up to a maximum
of such defaulting Limited Partner’s Net Adjusted Capital
Contributions (after adjustment as described above), with any
excess distributed to all other Partners in accordance with
Section 5.02 in accordance with their then current relative
Percentage Interests, and the allocation of Profits and Losses
under Appendix A shall be adjusted as appropriate to
reflect the above adjustments to the Percentage Interests of the
defaulting Limited Partner and the other Partners.
(D) The
remedies set forth in this Section 4.04 shall not be exclusive
of any other remedy which the Partnership or the Partners may have
at law or in equity or under this Agreement, it being agreed that
the Partners shall be personally liable for the making of their
Capital Contributions. Each of the Partners agrees to the remedies
set forth in this Section 4.04, and further agrees that the
exercise of any or all of such remedies shall be subject to the
provisions of any agreements made by the Partnership and/or the
General Partner with lenders in connection with a credit facility
referred to in Section 8.04.
(E) The
Limited Partners hereby irrevocably appoint the General Partner as
their attorney-in-fact, and the General Partner hereby irrevocably
appoints any substitute General Partner as its attorney-in-fact, in
each case with power of substitution, for the purpose of executing
any and all documents, including, without limitation, loan
agreements, promissory notes, and transfer and sale documents which
the General Partner deems necessary to implement the rights and
remedies set forth in this Section 4.04. Such power of
attorney granted herein shall be deemed to be coupled with an
interest, and such power of attorney shall, to the extent permitted
by law, survive the death, disability, incompetency, withdrawal,
removal, or Bankruptcy of the defaulting Partner.
4.05.
Interest . Interest earned
on Partnership funds shall inure to the benefit of the Partnership.
The Partners shall not receive interest on their Capital
Contributions (other than as provided in Section 4.09) or
Capital Accounts.
(A) The
Partnership shall maintain a book capital account in accordance
with the following provisions for each Partner (and any other
person who acquires an Interest):
20
NYB 1502828.6
(i) To
each Partner’s Capital Account there shall be credited the
amount of cash contributed by such Partner, the initial Gross Asset
Value of any other asset contributed by such Partner to the capital
of the Partnership (net of liabilities secured by such contributed
property that the Partnership assumes or takes subject to), such
Partner’s distributive share of Profits, the amount of any
Partnership liabilities assumed by the Partner or secured by
distributed assets that such Partner takes subject to and any other
items in the nature of income or gain that are allocated to such
Partner pursuant to Appendix A ; and
(ii) To
each Partner’s Capital Account there shall be debited the
amount of cash distributed to the Partner, the Gross Asset Value of
any Partnership asset distributed to such Partner pursuant to any
provision of this Agreement (net of liabilities secured by such
distributed property that such Partner assumes or takes subject
to), such Partner’s distributive share of Losses and any
other items in the nature of expenses or losses that are allocated
to such Partner pursuant to Appendix A .
(B) In
the event that a Partner’s Interest or portion thereof is
transferred within the meaning of
Regulations § 1.704-1(b)(2)(iv)(f), the transferee
shall succeed to the Capital Account of the transferor to the
extent that it relates to the Interest or portion thereof so
transferred.
(C) In
the event that the Gross Asset Values of Partnership assets are
adjusted, as contemplated in paragraph (B) or (C) of the
definition of “Gross Asset Value” in
Appendix A , or the Interest of the General Partner is
converted to that of a special Limited Partner under
Section 7.04, the Capital Accounts of the Partners shall be
adjusted to reflect the aggregate net adjustments as if the
Partnership sold the relevant assets for their fair market values
and recognized gain or loss for U.S. federal income tax purposes
equal to the amount of such aggregate net adjustment.
(D) The
foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to
comply with Regulations § 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such
Regulations.
4.07.
Withdrawal of Capital
Contributions . Except as otherwise provided in this
Agreement or by law, (i) no Partner shall have the right to
withdraw or reduce its Capital Contributions or its Capital
Commitment, or to demand and receive property other than property
distributed by the Partnership in accordance with the terms hereof
in return for its Capital Contributions, and (ii) any return
of Capital Contributions to the Limited Partners shall be solely
from Partnership assets, and the General Partner shall not be
personally liable for any such return.
4.08.
Restoration of Negative Capital
Accounts . Subject to Sections 6.05 and 6.13,
neither the General Partner nor any other Partner shall be
obligated to restore any deficit balance in its Capital Account or
shall be personally liable for the return of the Capital
Contributions of the Limited Partners, or any portion thereof, it
being expressly understood that (x) any such return shall be
made solely from Partnership assets and (y) a deficit in a
Partner’s Capital Account shall not constitute a Partnership
asset.
4.09.
Admission of Limited Partners After
First Closing . The Limited Partners agree that the
General Partner shall have the right to admit additional Limited
Partners to the Partnership, or permit an existing Limited Partner
to increase its Capital Commitment, in one or more Subsequent
Closings without the Consent of the Limited Partners in accordance
with the terms hereof, but in no event shall a Subsequent Closing
occur later than nine months after the First Closing or at any
time when the aggregate Capital Commitments of the Limited Partners
who are not Affiliates of the General Partner are
21
NYB 1502828.6
at least $300 million. The Limited
Partners hereby consent to such admission of the additional Limited
Partners and the increase in the Capital Commitment of other
existing Limited Partners after the First Closing, and agree to
take all reasonable actions requested by the General Partner to
effectuate the same. Unless there has been a material change or
significant event (including a full or partial realization)
relating to an Investment that would justify a different valuation
in the view of the General Partner, additional Limited Partners
admitted to the Partnership or existing Limited Partners who
increase their Capital Commitments pursuant to a Subsequent Closing
will contribute amounts (as described below) to the Partnership,
which amounts (other than amounts contributed pursuant to
clause (b) below and interest on amounts contributed pursuant
to clause (b) below, which amounts will be paid to the General
Partner) will be refunded to existing Limited Partners pro rata in
accordance with the sum of their Net Adjusted Capital Contributions
(with any such refunded Capital Contributions being entitled only
to interest thereon as provided below and not being entitled to a
Cumulative Investment Preferred Return thereon). The amount
required from each Partner participating in a Subsequent Closing
shall be equal to (a) the product of (i) a fraction, the
numerator of which equals the additional Limited Partner’s
Capital Commitment or the increase in the existing Partner’s
Capital Commitment, as the case may be, and the denominator of
which equals the Capital Commitments of all Partners (including the
Capital Commitments of all additional Limited Partners and the
increase in Capital Commitments of all existing Partners) and
(ii) all Net Adjusted Capital Contributions (other than the
portion thereof drawn to pay the Investment Management Fee),
plus (b) (i) the Investment Management Fee
attributable to the additional Limited Partner’s Capital
Commitment or the increase in the existing Limited Partner’s
Capital Commitment as if such Capital Commitment had been made on
the First Closing and (ii) the placement agent fee owed by the
Partnership to the Placement Agent in respect of the additional
Limited Partner’s Capital Commitment or the increase in the
existing Limited Partner’s Capital Commitment, plus
(c) an amount representing interest on the average daily
balance of such amounts described in clauses (a) and (b) of
this sentence at a per annum rate equal to 9%; provided ,
that the interest component of such payment shall not be deemed a
Capital Contribution; provided , further , that
Partners participating in Subsequent Closings shall not contribute
capital or otherwise participate in Investments to the extent such
Investments have been realized prior to the date of the Subsequent
Closing. For purposes of this Agreement, Capital Contributions made
pursuant to this Section 4.09 and refunded pursuant hereto to
a Limited Partner which participated in a previous Closing (a
“ Refund Partner ”) will be deemed for
all purposes of this Agreement to have been made by the
contributing Limited Partner (and not the Refund Partner) as of the
date on which the Refund Partner actually made such Capital
Contribution.
ARTICLE V
PROFITS, LOSSES AND
DISTRIBUTIONS
5.01.
Allocation of Profits and
Losses . Profits and Losses shall be allocated as set
forth in Appendix A hereto.
5.02.
Distributions . Subject to
Sections 4.04, 5.03, 5.06 and 7.04, Net Investment Revenues
shall be distributed quarterly or, in the discretion of the General
Partner, more frequently, to the extent available, in the following
order of priority. Net Investment Revenues first shall be allocated
among the Partners in proportion to their respective Percentage
Interests. Net Investment Revenues allocated under this paragraph
to a Partner (including the General Partner) shall then be
distributed as between such Partner (including the General Partner)
and the General Partner (in respect of its carried interest) in the
following order of priority:
22
NYB 1502828.6
(A)
First, 100% to such Partner until distributions to such Partner of
Net Investment Revenues pursuant to this Section 5.02(A) on a
cumulative basis equal the 9% Investment Preferred
Return;
(B)
Second, 100% to such Partner until distributions to such Partner of
Net Investment Revenues pursuant to this Section 5.02(B) on a
cumulative basis equal such Partner’s Capital
Contributions;
(C)
Third, 80% to such Partner and 20% to the General Partner (in
respect of its carried interest) until distributions to such
Partner of Net Investment Revenues pursuant to Section 5.02(A)
and this Section 5.02(C) on a cumulative basis equal the 12.5%
Investment Preferred Return;
(D)
Fourth, 40% to such Partner and 60% to the General Partner (in
respect of its carried interest) until distributions to the General
Partner of Net Investment Revenues on a cumulative basis (in
respect of its carried interest) equal 20% of all distributions of
Net Investment Revenues made pursuant to Section 5.02(A),
5.02(C) and 5.02(D); and
(E) Any
balance, (i) 80% to such Partner and (ii) 20% to the
General Partner (in respect of its carried interest).
Investment results from an
Alternative Investment Vehicle will be aggregated with investment
results from the Partnership for purposes of determining
distributions by the Partnership to the Partners participating in
such Alternative Investment Vehicle under this Section.
5.03.
Tax Distributions .
Notwithstanding the distribution provisions of Section 5.02,
the General Partner shall receive a cash advance against future
distributions pursuant to Sections 5.02(C), 5.02(D) and
5.02(E), if any, to the extent that annual distributions actually
received by the General Partner pursuant to Sections 5.02(C),
5.02(D) and 5.02(E) are not sufficient for the General Partner to
pay when due any income tax imposed on it for allocations made to
it pursuant to Appendix A with respect to or in
contemplation of such distributions, including allocations pursuant
to Section 2.3 of Appendix A , calculated using
the highest effective marginal federal, state and local income tax
rates for an individual resident in Boston, Massachusetts (taking
into account the character and holding period of items of income
and the deductibility of state and local income taxes for federal
income tax purposes) that is attributable to income allocated to
the General Partner with respect to such distributions hereunder.
Future distributions otherwise to be made to the General Partner
pursuant to Sections 5.02(C), 5.02(D) and 5.02(E) shall be
reduced by the amount of any prior advances made to the General
Partner under this Section 5.03 until all such advances are
restored to the Partnership in full.
23
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|
5.04.
|
Withholding and Income
Taxes .
|
(A)
Allocation of Withholding and Income Taxes . Any
withholding or income taxes (and related tax credits) imposed by
any jurisdiction on distributions of Net Investment Revenues or
related items of income, gain, loss or deduction of the
Partnership, or incurred directly or indirectly by the Partnership
with respect to its interest in any Investment, shall be allocated
to each Partner pro rata in accordance with such Partner’s
Capital Contributions attributable to the Investment giving rise to
such Net Investment Revenues, or related items of income, gain,
loss or deduction; provided, however , that any increase or
decrease in such taxes (and related tax credits) resulting from the
identity, nationality, residence or status of a Partner will be
specially allocated to that Member.
(B)
Calculation of Net Investment Revenues Before Withholding and
Income Taxes . The amount of any item of Net Investment
Revenues distributable to the Partners pursuant to
Section 5.02, and the amount of any item of Partnership
income, gain, loss or deduction allocable to the Partners pursuant
to Appendix A , shall be determined without regard to
any withholding or income taxes (i.e., as if the Partnership had
distributed or allocated, as the case may be, the amount of such
Net Investment Revenues or items of income, gain, loss or
deduction, without diminution by the amount of such withholding or
income taxes).
(C)
Payment of Withholding and Income Taxes . The General
Partner shall withhold from amounts distributable to the Partners
or otherwise pay over to the appropriate taxing authorities amounts
of withholding or income tax required to be so withheld or paid
over. The General Partner will use reasonable efforts to obtain a
receipt with respect to all such withholding or income taxes paid
and to forward to each Partner a copy of such receipt.
(D)
Liability for Withholding and Income Taxes . Each
Partner agrees to indemnify and hold harmless the Partnership and
the General Partner from and against any liability with respect to
its allocable share of any withholding or income taxes as
determined under Section 5.04(A); provided ,
however , that the foregoing indemnity shall not apply to
penalties imposed as a result of the General Partner’s fraud,
willful misconduct or gross negligence. If the Partnership is
required to pay over any withholding or income taxes as provided in
Section 5.04(C) with respect to a Partner as to whom there are
insufficient distributable amounts to pay such Partner’s
allocable share of such withholding or income taxes, the General
Partner shall promptly notify such Partner of the amount of
withholding or income taxes due from such Partner (i.e., the amount
by which the Partner’s allocable share of such withholding or
income taxes exceeds the amount otherwise distributable to such
Partner) and the date (the “ Due Date ”)
such taxes are required to be paid by the Partnership to the
relevant taxing authorities. Such Partner shall pay to the
Partnership its allocable share of such taxes no later than the
later of (i) two Business Days before the Due Date of the
relevant withholding or income tax or (ii) 10 Business
Days after Notice was sent to the Partner as described above. If
the Partner fails to pay its allocable share of the withholding or
income taxes by the date described in the preceding sentence (the
“ Payment Date ”), (i) such amount
shall bear interest from the Payment Date until the date actually
paid at a rate equal to the lesser of (x) the Prime Rate plus
two percent or (y) the maximum lawful rate of interest,
compounded annually, (ii) the Partnership shall be entitled to
collect such sum from amounts otherwise distributable to such
Partner pursuant to Section 5.02 and (iii) the
Partnership may exercise any and all rights and remedies to collect
such sum from such Partner that a creditor would have to collect a
debt from a debtor under applicable law. Any payment made by a
Partner to the Partnership pursuant to this Section 5.04(D)
shall not constitute a Capital Contribution.
5.05.
Form of Distributions
. The General Partner shall use
commercially reasonable efforts to convert the assets of the
Partnership to cash prior to the distribution thereof, unless
such
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conversion reasonably could have a
materially adverse effect on the value of such assets.
Notwithstanding the foregoing, distributions of Net Investment
Revenues made prior to the dissolution and liquidation of the
Partnership may only take the form of cash or Marketable
Securities. Upon liquidation and termination of the Partnership,
the Partnership may distribute non-Marketable Securities or other
assets in the discretion of the General Partner, if the General
Partner reasonably believes that doing so is in the best interests
of the Partnership; provided, however , that the Partnership
will not make any distribution of Marketable Securities,
non-Marketable Securities or other assets to any Partner if the
General Partner has been notified in writing by such Partner not to
do so. In the event of any such notification, the General Partner
will, subject to applicable legal restrictions, retain such
Marketable Securities, non-Marketable Securities or other assets
and use reasonable commercial efforts to sell on behalf of and at
the direction of such Partner any Marketable Securities,
non-Marketable Securities or other assets that would otherwise have
been distributed to such Partner and shall distribute to such
Partner the proceeds of such sale, net of the expenses related
thereto. Notwithstanding the foregoing, any retained Marketable
Securities, non-Marketable Securities or other assets shall be
deemed for all purposes of this Agreement to have been distributed
to the Partner at their Fair Value as determined below regardless
of ultimate sales proceeds. For purposes of determining the Fair
Value of such assets, and the corresponding allocation of Profits
or Losses, each of the General Partner and the Advisory Committee
shall either agree on an Expert or each select an Expert, and such
Experts shall then select an Expert, which mutually selected Expert
shall determine the Fair Value of such assets. The fees and
expenses of each Expert shall be borne by the Partnership, and the
calculations of the mutually selected Expert shall be final and
conclusive on the Partnership and all of the Partners.
Distributions of assets in kind shall be allocated in accordance
with Section 5.02 as if such assets were Net Investment
Revenues. In the event that the General Partner intends to make a
Distribution of assets in kind, the General Partner shall deliver a
Notice to the Limited Partners no later than five Business Days
prior to such Distribution.
5.06.
Retention of Net Investment
Revenues . The Partnership shall be permitted, in the
discretion of the General Partner, to retain and not distribute
some or all of the Investment Revenues for purposes of
(i) paying to the General Partner the Investment Management
Fee, (ii) paying any Operating Expenses incurred by the
Partnership or for which the Partnership is obligated to reimburse
the General Partner, (iii) repaying any indebtedness incurred
by the Partnership, including indebtedness incurred to pay the
Investment Management Fee, Operating Expenses or to fund one or
more of the Investments or (iv) making follow-on investments
in Investments, provided, however , that with respect to
clause (iv) above, such retained amounts must be utilized
within six months of the date of retention other than with respect
to the repayment of indebtedness under a credit facility referred
to in Section 8.04, for which there shall be no such
limitation.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF
THE GENERAL PARTNER
6.01.
Management . Subject to the
provisions of this Agreement, the General Partner has the full,
exclusive and complete right, power, authority, discretion,
obligation and responsibility vested in or assumed by a general
partner of a limited partnership under the Act and as otherwise
provided by law, including those necessary to make all decisions
affecting the business of the Partnership and to take those actions
specified in Section 3.02. Subject to the other provisions of
this Agreement, the General Partner is hereby vested with the full,
exclusive and complete right, power and discretion to operate,
manage and control the affairs of the Partnership to the best of
its ability and shall carry out the business of the Partnership.
The General Partner shall devote substantially all of its time to
the proper performance of its duties hereunder.
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(A) The
General Partner has the authority to bind the Partnership, by
execution of documents or otherwise, to any obligation consistent
with the provisions of this Agreement. Subject to, and except as
otherwise provided in Sections 6.03 and 6.04, the General
Partner may contract or otherwise deal with any Person for the
transaction of the business of the Partnership, which Person may,
under the supervision of the General Partner, perform any acts or
services for the Partnership as the General Partner may approve and
the General Partner shall use reasonable care in the selection and
retention of such Persons.
(B) The
General Partner may rely on and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party
or parties.
(C) The
General Partner may consult with legal counsel, accountants,
appraisers, management consultants,
