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EXHIBIT 10.2
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AGREEMENT OF LIMITED PARTNERSHIP
OF
NNN HEALTHCARE/OFFICE REIT HOLDINGS, L.P.
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September 20, 2006
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 DEFINED
TERMS.................................................. 1
ARTICLE 2 ORGANIZATIONAL
MATTERS......................................... 13
2.1
Formation.........................................................
13
2.2
Name..............................................................
13
2.3 Registered Office and
Agent....................................... 14
2.4 Principal Place of
Business....................................... 14
2.5 Term and
Termination.............................................. 14
2.6 Power of
Attorney................................................. 14
2.7 Effectiveness of this
Agreement................................... 16
ARTICLE 3 PURPOSE AND
POWERS............................................. 16
3.1 Purpose and
Business.............................................. 16
3.2
Powers............................................................
17
ARTICLE 4 CAPITAL CONTRIBUTIONS; PARTNERSHIP UNITS; ADDITIONAL
FUNDS..... 17
4.1 Capital Contributions of the
Partners............................. 17
4.2 Issuance of Additional Partnership
Interests...................... 18
4.3 Issuance of Securities by the General
Partner..................... 18
4.4 Additional
Funds.................................................. 20
4.5 No Third-Party
Beneficiary........................................ 20
4.6 No
Interest.......................................................
20
4.7 No Preemptive
Rights.............................................. 20
ARTICLE 5
DISTRIBUTIONS..................................................
21
5.1
Distributions.....................................................
21
5.2 Qualification as a
REIT........................................... 23
5.3
Withholding.......................................................
23
5.4 Additional Partnership
Interests.................................. 23
ARTICLE 6
ALLOCATIONS....................................................
23
6.1 Allocation of Profits and Net
Losses.............................. 23
6.2 Special
Allocations............................................... 24
6.4 Revisions to Allocations to Reflect Issuance of
Partnership
Interests.........................................................
25
ARTICLE 7 MANAGEMENT AND OPERATIONS OF
BUSINESS.......................... 26
7.1
Management........................................................
26
7.2 Certificate of Limited
Partnership................................ 29
7.3 Reimbursement of the General
Partner.............................. 29
7.4 Acquisition of Limited Partner Interests by the General
Partner... 30
7.5 Transactions with
Affiliates...................................... 30
7.6
Indemnification...................................................
31
7.7 Liability of the General
Partner.................................. 34
7.8 Other Matters Concerning the General
Partner...................... 34
7.9 Title to Partnership
Assets....................................... 35
7.10 Reliance by Third
Parties........................................ 35
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED
PARTNERS..................... 36
8.1 Limitation of
Liability........................................... 36
8.2 No Right to Participate in the Management of
Business............. 36
8.3 Outside Activities of Limited
Partners............................ 36
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8.4 Return of
Capital................................................. 37
8.5 Rights of Limited Partners Relating to the
Partnership............ 37
8.6 Redemption
Right.................................................. 38
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND
REPORTS......................... 40
9.1 Records and
Accounting............................................ 40
9.2
Reports...........................................................
41
ARTICLE 10 TAX
MATTERS................................................... 41
10.1 Preparation of Tax
Returns....................................... 41
10.2 Tax
Elections....................................................
41
10.3 Tax Matters
Partner.............................................. 42
10.4 Organizational
Expenses.......................................... 43
10.5
Withholding......................................................
43
ARTICLE 11 TRANSFERS AND
WITHDRAWALS..................................... 44
11.1
Transfer.........................................................
44
11.2 Transfer of the General Partner's General Partner
Interest....... 44
11.3 Limited Partners' Rights to
Transfer............................. 45
11.4 Substituted Limited
Partners..................................... 46
11.5
Assignees........................................................
46
11.6 General
Provisions............................................... 47
ARTICLE 12 ADMISSION OF
PARTNERS......................................... 48
12.1 Admission of Successor General
Partner........................... 48
12.2 Admission of Additional Limited
Partners......................... 48
12.3 Amendment of Agreement and Certificate of Limited
Partnership.... 49
ARTICLE 13 DISSOLUTION, LIQUIDATION AND
TERMINATION...................... 49
13.1
Dissolution......................................................
49
13.2 Winding Up;
Liquidation.......................................... 50
13.3 No Obligation to Contribute
Deficit.............................. 51
13.4 Notice of
Dissolution............................................ 51
13.5 Termination of Partnership and Cancellation of Certificate
of
Limited
Partnership.............................................. 52
13.6 Reasonable Time for
Winding-Up................................... 52
13.7 Waiver of
Partition.............................................. 52
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT;
MEETINGS.................. 52
14.1
Amendments.......................................................
52
14.2 Meetings of the
Partners......................................... 52
ARTICLE 15 GENERAL
PROVISIONS............................................ 53
15.1 Addresses and
Notice............................................. 53
15.2 Titles and
Captions.............................................. 54
15.3 Pronouns and
Plurals............................................. 54
15.4 Further
Action................................................... 54
15.5 Binding
Effect................................................... 54
15.6
Creditors........................................................
54
15.7
Waiver...........................................................
54
15.8
Counterparts.....................................................
54
15.9 Applicable
Law................................................... 55
15.10 Invalidity of
Provisions........................................ 55
15.11
Merger..........................................................
55
15.12 No Rights as
Stockholders....................................... 55
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15.13 Entire
Agreement................................................ 55
EXHIBITS
Exhibit A -- Partner's Contributions and Partnership
Interests........... A-1
Exhibit B -- Form of Notice of Redemption
Request........................ B-1
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FORM OF
AGREEMENT OF LIMITED PARTNERSHIP
OF
NNN HEALTHCARE/OFFICE REIT HOLDINGS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP OF NNN Healthcare/Office
REIT
Holdings, L.P. (this "Agreement"), dated as of September , 2006,
is entered
into by and among NNN Healthcare/Office REIT, Inc., a Maryland
corporation, as
general partner (the "General Partner"), and those Persons who
have executed
this Agreement or a counterpart hereof, or who become parties
hereto pursuant to
the terms of this Agreement.
WITNESSETH
WHEREAS, the General Partner and the Initial Limited Partner
formed NNN
Healthcare/Office REIT Holdings, L.P. (the "Partnership") as a
limited
partnership pursuant to the Act by filing a certificate of
limited partnership
with the Secretary of State of the State of Delaware on April
20, 2006; and
WHEREAS, this Agreement shall constitute the "partnership
agreement"
(within the meaning of the Act) of the Partnership, and shall be
binding upon
all Persons now or at any time hereafter who are Partners;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations
set forth in this Agreement, and of other good and valuable
consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto,
intending legally to be bound, hereby agree as follows:
ARTICLE 1
DEFINED TERMS
Capitalized terms used in this Agreement (including exhibits,
schedules and
amendments) shall have the meanings set forth below or in the
Section of this
Agreement referred to below, except as otherwise expressly
indicated or limited
by the context in which they appear in this Agreement. All terms
defined in this
Agreement in the singular have the same meanings when used in
the plural and
vice versa. Accounting terms used but not otherwise defined
shall have the
meanings given to them under GAAP.
1.1 "ACT" means the Delaware Revised Uniform Limited Partnership
Act, as amended
from time to time, and any successor to such statute.
1.2 "ADDITIONAL LIMITED PARTNER" means a Person that has
executed and delivered
an additional limited partner signature page in the form
required by the General
Partner and has been admitted to the Partnership as a Limited
Partner pursuant
to Section 12.2.
1.3 "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any
Partner, the
negative balance, if any, in such Partner's Capital Account as
of the end of any
relevant Fiscal Year, determined after giving effect to the
following
adjustments:
(a) credit to such Capital Account any portion of such negative
balance
which such Partner (i) is treated as obligated to restore to the
Partnership
pursuant to the provisions of
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Treasury Regulations Section 1.704-1(b)(2)(ii)(c), or (ii) is
deemed to be
obligated to restore to the Partnership pursuant to the
penultimate sentences of
Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);
and
(b) debit to such Capital Account the items described in
Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
This definition of Adjusted Capital Account Deficit is intended
to comply with
the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
1.4 "ADVISOR" means Triple Net Properties, LLC, the advisor to
the Partnership
and the General Partner pursuant to the Advisory Agreement.
1.5 "ADVISORY AGREEMENT" means that certain Advisory Agreement
by and among the
Advisor, the Partnership and the General Partner dated as of
September , 2006.
1.6 "ADVISOR PARTICIPATION IN SALES PROCEEDS" has the meaning
set forth in
Section 5.1(c).
1.7 "AFFILIATE" means with respect to any Person, (i) any Person
directly or
indirectly owning, controlling or holding, with the power to
vote, ten percent
or more of the outstanding voting securities of such other
Person; (ii) any
Person ten percent or more of whose outstanding voting
securities are directly
or indirectly owned, controlled or held, with the power to vote,
by such other
Person; (iii) any Person directly or indirectly controlling,
controlled by or
under common control with such other Person; (iv) any executive
officer,
director, trustee or general partner of such other Person; and
(v) any legal
entity for which such Person acts as an executive officer,
director, trustee or
general partner.
1.8 "AGREEMENT" means this Agreement of Limited Partnership of
NNN
Healthcare/Office REIT Holdings, L.P., as originally executed
and as amended,
modified, supplemented or restated from time to time, as the
context requires.
1.9 "APPRAISED VALUE" means the value of the Partnership Assets
as determined by
an appraisal made by an Independent Appraiser.
1.10 "ARTICLES OF INCORPORATION" means the General Partner's
Articles of
Incorporation, filed with the Maryland State Department of
Assessments and
Taxation, or other organizational document governing the General
Partner, as
amended, modified, supplemented or restated from time to
time.
1.11 "ASSIGNEE" means a Person to whom one or more Partnership
Units have been
transferred in a manner permitted under this Agreement, but who
has not become a
Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
1.12 "AVAILABLE OPERATING CASH" means the cash flows derived by
the Partnership
from the operation of the Partnership's business (other than any
Net Sales
Proceeds or Capital Contributions) before any deduction for
depreciation or
amortization and after deduction of:
(a) all operating costs and expenses including taxes;
(b) all payments of principal, interest and other charges in
respect of any
Partnership indebtedness;
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(c) all expenditures for capital improvements to the Partnership
assets or
property; and
(d) all reserves, whether for working capital, debt repayment,
new
portfolio investments or otherwise (including for the redemption
of Partnership
Units) that are established by the General Partner in the
exercise of its sole
and absolute discretion.
1.13 "BUSINESS DAY" means any day except a Saturday, Sunday or
other day on
which commercial banks in Los Angeles, California are authorized
or required by
law to close.
1.14 "CAPITAL ACCOUNT" has the meaning set forth in Section
4.8.
1.15 "CAPITAL CONTRIBUTION" means, with respect to any Partner,
any cash, cash
equivalents or the fair market value of Contributed Property
that such Partner
contributes or is deemed to contribute to the Partnership
pursuant to Article 4.
1.16 "CARRYING VALUE" means (a) with respect to a Contributed
Property, the fair
market value of such Contributed Property at the time such
property is
contributed, as determined by the General Partner and agreed to
by the
contributing partner, without reduction for any liabilities
either assumed by
the Partnership upon such contribution or to which such property
was subject
when contributed, reduced (but not below zero) by all
Depreciation with respect
to such property charged to the Partners' Capital Accounts, and
(b) with respect
to any other Partnership Asset, the adjusted basis of such
Partnership Asset for
Federal income tax purposes, all as of the time of
determination; except that
the Carrying Values of all assets may, at the discretion of the
general Partner,
be adjusted to equal their respective fair market values (as
determined by the
General Partner), in accordance with the rules set forth in
Treasury Regulations
Section 1.704-1(b)(2)(iv)(f), as provided for in Section
4.8.
1.17 "CASH AMOUNT" means an amount of cash equal to the Value of
the REIT Stock
Amount on the Valuation Date.
1.18 "CERTIFICATE" means the Certificate of Limited Partnership
of the
Partnership, filed on April 20, 2006, as amended, restated,
supplemented or
otherwise modified from time to time as herein provided in
accordance with the
Act.
1.19 "CODE" means the Internal Revenue Code of 1986, as amended
from time to
time, and any subsequent Federal law of similar import, and, to
the extent
applicable, any Treasury Regulations promulgated thereunder.
1.20 "COMMON STOCK" means a share of the common stock of the
General Partner,
par value $.01 per share. Common Stock may be issued in one or
more classes or
series in accordance with the terms of the Articles of
Incorporation. If there
is more than one class or series of Common Stock, the term
"Common Stock" shall,
as the context requires, be deemed to refer to the class or
series of Common
Stock that correspond to the class or series of Partnership
Units for which the
reference to Common Stock is made.
1.21 "CONSENT" means the consent or approval of a proposed
action by a Partner
given in accordance with Section 14.2.
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1.22 "CONSENT OF THE OUTSIDE LIMITED PARTNERS" means the Consent
of the Outside
Limited Partners holding a number of Partnership Units greater
than fifty
percent (50%) of the aggregate Partnership Units held by all
Outside Limited
Partners.
1.23 "CONTRIBUTED PROPERTY" means each property or other asset
(but excluding
cash and cash equivalents), in such form as may be contributed
by a Partner to
the Partnership as permitted by the Act.
1.24 "DEPRECIATION" means, for each Fiscal Year, an amount equal
to the
depreciation, amortization or other cost recovery deduction
allowable with
respect to an asset for such year or other period for Federal
income tax
purposes; provided, that if the Carrying Value of an asset
differs from its
adjusted basis for Federal income tax purposes at the beginning
of any such year
or other period, Depreciation shall be determined in the manner
described in
Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or
1.704-3(d)(2), whichever
is applicable, and if such asset has a zero adjusted tax basis,
Depreciation
shall be an amount determined under any reasonable method
selected by the
General Partner.
1.25 "EFFECTIVE DATE" means the date of first closing of the
offering of Common
Stock pursuant to the Registration Statement.
1.26 "8% RETURN" means, with respect to the General Partner, an
amount
calculated like simple interest at the rate of eight percent
(8%) per annum
calculated on the varying daily balances of Invested Capital of
the General
Partner during the period to which the 8% Return relates, and
determined on the
basis of a 360-day year/30-day month, cumulative for the period
for which such
8% Return is being determined.
1.27 "8% RETURN ACCOUNT" means, with respect to the General
Partner, as of any
relevant date, an amount equal to the excess of (i) the 8%
Return that has
accrued with respect to the Invested Capital of the General
Partner through such
date, over (ii) the sum of (A) the cumulative distributions of
Available
Operating Cash and Net Sales Proceeds made to the General
Partner prior to such
relevant date pursuant to Section 5.1 hereof, and (B) the
cumulative amounts
paid to the General Partner in redemption of its Partnership
Units pursuant to
Section 8.6(g) as of such date, other than such distributions
and payments that
are applied to reduce the Unrecovered Contribution Account of
the General
Partner. All amounts distributed and paid to the General Partner
pursuant to
Sections 5.1 and 8.6(g) shall first be applied to reduce the
Unrecovered
Contribution Account of the General Partner until the balance of
such
Unrecovered Contribution Account equals zero ($0), and then
shall be applied to
reduce the 8% Return Account of the General Partner.
1.28 "ENTITY" means any general partnership, limited liability
company,
proprietorship, corporation, joint venture, joint-stock company,
limited
partnership, limited liability partnership, business trust,
firm, trust, estate,
governmental entity, cooperative, association or other foreign
or domestic
enterprise.
1.29 "ERISA" means the Employee Retirement Income Security Act
of 1974, as
amended from time to time (or any corresponding provisions of
succeeding laws).
1.30 "FISCAL YEAR" means the fiscal year of the Partnership and
shall be the
same as its taxable year, which shall be the calendar year
unless otherwise
determined by the General Partner in accordance with the
Code.
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1.31 "GAAP" means United States generally accepted accounting
principles, as in
effect from time to time.
1.32 "GENERAL PARTNER" means NNN Healthcare/Office REIT, Inc., a
Maryland
corporation, and any successor as general partner of the
Partnership.
1.33 "GENERAL PARTNER INTEREST" means a Partnership Interest
held by the General
Partner, in its capacity as general partner. A General Partner
Interest may be
expressed as a number of Partnership Units.
1.34 "INCAPACITY" or "INCAPACITATED" means:
(a) as to any individual Partner, death, total physical
disability or entry
by a court of competent jurisdiction adjudicating him
incompetent to manage his
person or his estate;
(b) as to any corporation that is a Partner, the filing of a
certificate of
dissolution, or its equivalent, for the corporation or the
revocation of its
charter;
(c) as to any partnership that is a Partner, the dissolution
and
commencement of winding up of the partnership;
(d) as to any estate that is a Partner, the distribution by the
fiduciary
of the estate's entire interest in the Partnership;
(e) as to any trustee of a trust that is a Partner, the
termination of the
trust (but not the substitution of a new trustee); or
(f) as to any Partner, the bankruptcy of such Partner, which
shall be
deemed to have occurred when:
(i) the Partner commences a voluntary proceeding seeking
liquidation,
reorganization or other relief under any bankruptcy, insolvency
or other
similar law now or hereafter in effect;
(ii) the Partner is adjudged as bankrupt or insolvent, or a
final and
nonappealable order for relief under any bankruptcy, insolvency
or similar
law now or hereafter in effect has been entered against the
Partner;
(iii) the Partner executes and delivers a general assignment for
the
benefit of the Partner's creditors;
(iv) the Partner files an answer or other pleading admitting
or
failing to contest the material allegations of a petition filed
against the
Partner in any proceeding of the nature described in clause (ii)
above;
(v) the Partner seeks, consents to or acquiesces in the
appointment of
a trustee, receiver or liquidator for the Partner or for all or
any
substantial part of the Partner's assets;
(vi) any proceeding seeking liquidation, reorganization or
other
relief of or against such Partner under any bankruptcy,
insolvency or other
similar law now or
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hereafter in effect has not been dismissed within one hundred
twenty (120)
days after the commencement thereof;
(vii) the appointment without the Partner's consent or
acquiescence of
a trustee, receiver or liquidator has not been vacated or stayed
within
ninety (90) days of such appointment; or
(viii) an appointment referred to in clause (vii) which has
been
stayed is not vacated within ninety (90) days after the
expiration of any
such stay.
1.35 "INDEMNITEE" MEANS
(a) any Person made a party to a proceeding by reason of its
status
as:
(i) the General Partner,
(ii) a Limited Partner,
(iii) the Advisor,
(iv) a director, trustee, manager, member or officer of the
Partnership, the General Partner or the Advisor, or
(v) a director, trustee, manager, member or officer of any
other
Entity, serving in such capacity at the request of the
Partnership,
the General Partner or the Advisor, acting on behalf of the
Partnership or the General Partner, or
(b) such other Persons (including Affiliates of the General
Partner)
as the General Partner may designate from time to time (whether
before or
after the event giving rise to potential liability), in its sole
and
absolute discretion.
1.36 "INDEPENDENT APPRAISER" means an appraiser of real estate
with no material
current or prior business or personal relationship with the
Advisor, the
Partnership, the General Partner or the directors of the General
Partner, that,
in the determination of the General Partner, is qualified to
appraise real
estate by virtue of being engaged to a substantial extent in the
business of
rendering opinions regarding the value of assets of the type
held by the
Partnership. Membership in a nationally recognized appraisal
society such as the
American Institute of Real Estate Appraisers or the Society of
Real Estate
Appraisers shall be conclusive evidence of such
qualification.
1.37 "INITIAL LIMITED PARTNER" means NNN Healthcare/Office REIT
Advisor, LLC.
1.38 "INVESTED CAPITAL" means, with respect to the General
Partner, as of any
relevant date, an amount equal to the excess of (i) the
aggregate amount of cash
contributed or deemed contributed by the General Partner to the
Partnership from
the gross proceeds of the issuance by the General Partner of
REIT Stock or other
equity Securities pursuant to Article 4 hereof, over (ii) the
cumulative amounts
paid to the General Partner in redemption of its Partnership
Units pursuant to
Section 8.6(g) as of such date.
1.39 "IRS" shall mean the Internal Revenue Service of the United
States.
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1.40 "JOINT VENTURE" mean those joint venture or partnership
arrangements in
which the Partnership or any of its subsidiaries is a
co-venturer or general
partner established to acquire or hold Assets.
1.41 "LIEN" means any lien, security interest, mortgage, deed of
trust, charge,
claim, encumbrance, pledge, option, right of first offer or
first refusal and
any other right or interest of others of any kind or nature,
actual or
contingent, or other similar encumbrance of any nature
whatsoever.
1.42 "LIMITED PARTNER" means, prior to the admission of the
first Additional
Limited Partner to the Partnership, the Initial Limited Partner,
and thereafter
any Person named as a limited partner of the Partnership in
Exhibit A, as such
Exhibit may be amended from time to time, upon the execution and
delivery by
such Person of an additional limited partner signature page,
including any
Additional Limited Partner or Substituted Limited Partner in
each case, in such
Person's capacity as a limited partner of the Partnership.
1.43 "LIMITED PARTNER INTEREST" means a Partnership Interest of
a Limited
Partner in the Partnership. A Limited Partner Interest may be
expressed as a
number of Partnership Units.
1.44 "LIQUIDATING EVENT" has the meaning set forth in Section
13.1 hereof.
1.45 "LIQUIDATOR" has the meaning set forth in Section 13.2.
1.46 "LISTED MARKET PRICE" means, with respect to a share of
REIT Stock for a
specified trading day, shall be the last reported sale price on
such day or, if
no sale takes place on such day, the average of the closing bid
and asked prices
on such day, as reported on the national securities exchange on
which the REIT
Stock is listed for trading.
1.47 "LISTING AMOUNT" has the meaning set forth in Section
5.1(d).
1.48 "LISTING EVENT" means the listing of the REIT Stock on (i)
the New York
Stock Exchange, the American Stock Exchange, or the Global
Market and the Global
Select Market of the Nasdaq Stock Market (or any successor to
such entities) or
(ii) a national securities exchange (or tier or segment thereof)
that has
listing standards that the Securities and Exchange Commission
has determined by
rule are substantially similar to the listing standards
applicable to securities
described in Section 18(b)(1)(A) of the Securities Act.
1.49 "LISTING DATE" means the date on which a Listing Event
occurs.
1.50 "MARKET VALUE" means the market value of the REIT Stock as
of the date of a
Listing Event, which shall be equal to the product of (a) the
number of shares
of REIT Stock issued and outstanding at the time of the Listing
Event,
multiplied by (b) the average Listed Market Price of a share of
REIT Stock for
the 30 trading days beginning on the 180th day after the Listing
Date.
1.51 "MORTGAGE" means in connection with mortgage financing
provided, invested
in, participated in or purchased by the Partnership, all of the
notes, deeds of
trust, security interests or other evidences of indebtedness or
obligations,
which are secured or collateralized by Real Property owned by
the borrowers
under such notes, deeds of trust, security interests or other
evidences of
indebtedness or obligations.
1.52 "NASAA GUIDELINES" means the North American Securities
Administrators
Association, Inc. Statement of Policy Regarding Real Estate
Investment Trusts.
1.53 "NET ASSETS" means the total assets of the Partnership
(other than
intangibles) at cost, before deducting depreciation, reserves
for bad debts or
other non-cash reserves, less total liabilities, calculated
quarterly by the
Partnership on a basis consistently applied..
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1.54 "NET SALES PROCEEDS" means in the case of a transaction
described in clause
(i)(A) of the definition of Sale, the proceeds of any such
transaction less the
amount of selling expenses incurred by or on behalf of the
Partnership,
including all real estate commissions, closing costs and legal
fees and
expenses. In the case of a transaction described in clause
(i)(B) of the
definition of Sale, Net Sales Proceeds means the proceeds of any
such
transaction less the amount of selling expenses incurred by or
on behalf of the
Partnership, including any legal fees and expenses and other
selling expenses
incurred in connection with such transaction. In the case of a
transaction
described in clause (i)(C) of the definition of Sale, Net Sales
Proceeds means
the proceeds of any such transaction actually distributed to the
Partnership
from the Joint Venture less the amount of any selling expenses,
including legal
fees and expenses incurred by or on behalf of the Partnership
(other than those
paid by the Joint Venture). In the case of a transaction or
series of
transactions described in clause (i)(D) of the definition of
Sale, Net Sales
Proceeds means the proceeds of any such transaction (including
the aggregate of
all payments under a Mortgage on or in satisfaction thereof
other than regularly
scheduled interest payments) less the amount of selling expenses
incurred by or
on behalf of the Partnership, including all commissions, closing
costs and legal
fees and expenses. In the case of a transaction described in
clause (i)(E) of
the definition of Sale, Net Sales Proceeds means the proceeds of
any such
transaction less the amount of selling expenses incurred by or
on behalf of the
Partnership, including any legal fees and expenses and other
selling expenses
incurred in connection with such transaction. In the case of a
transaction
described in clause (ii) of the definition of Sale, Net Sales
Proceeds means the
proceeds of such transaction or series of transactions less all
amounts
generated thereby which are reinvested in one or more
Partnership Assets within
180 days thereafter and less the amount of any real estate
commissions, closing
costs, and legal fees and expenses and other selling expenses
incurred by or
allocated to the Partnership in connection with such transaction
or series of
transactions. Net Sales Proceeds shall also include any amounts
that the General
Partner determines, in its discretion, to be economically
equivalent to the
proceeds of a Sale. Net Sales Proceeds shall not include (i) any
reserves
established by the General Partner, in its sole discretion and;
(ii) the receipt
by the Partnership of Capital Contributions.
1.55 "NONRECOURSE DEDUCTIONS" has the meaning set forth in
Treasury Regulations
Sections 1.704-2(b)(1) and 1.704-2(c).
1.56 "NONRECOURSE LIABILITIES" has the meaning set forth in
Treasury Regulations
Section 1.704-2(b)(3).
1.57 "NOTICE OF REDEMPTION REQUEST" means a notice of redemption
request
substantially in the form of Exhibit B attached hereto.
1.58 "OUTSIDE LIMITED PARTNERS" means the Limited Partners,
excluding the
Initial Limited Partner and any Limited Partner that is an
Affiliate of the
General Partner or the Initial Limited Partner.
1.59 "PARTNER" means a General Partner or a Limited Partner, and
"Partners"
means the General Partner and the Limited Partners,
collectively.
1.60 "PARTNER MINIMUM GAIN" means an amount, with respect to
each Partner's
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would
result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability,
determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
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1.61 "PARTNER NONRECOURSE DEBT" has the meaning set forth in
Treasury
Regulations Section 1.704-2(b)(4).
1.62 "PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth
in Treasury
Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a
Partnership taxable
year shall be determined in accordance with the rules of
Treasury Regulations
Section 1.704-2(i)(2).
1.63 "PARTNERSHIP" means NNN Healthcare/Office REIT Holdings,
L.P., and any
successor thereto.
1.64 "PARTNERSHIP ASSET" means the interest of the Partnership
in any Entity or
security (whether in corporate securities, equity, debt or
hybrid securities,
partnership or joint venture interests, other contractual rights
or otherwise),
or any other Real Estate Assets or other assets owned, directly
or indirectly,
by the Partnership, as determined by the General Partner.
1.65 "PARTNERSHIP INTEREST" means the entire ownership interest
of a Partner in
the Partnership at any particular time which represents a
Capital Contribution
by such Partner and which includes the right of such Partner to
any and all
benefits to which such Partner may be entitled as provided in
this Agreement,
together with the obligations of such Partner to comply with all
terms and
provisions of this Agreement. A Partnership Interest may be
expressed as a
number of Partnership Units.
1.66 "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in
Treasury
Regulations Section 1.704-2(b)(2), and the amount of Partnership
Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum
Gain, for a
Partnership taxable year shall be determined in accordance with
the rules of
Treasury Regulations Section 1.704-2(d).
1.67 "PARTNERSHIP RECORD DATE" means the record date established
by the General
Partner for the distribution by the Partnership of Available
Operating Cash, Net
Sales Proceeds or other Partnership Assets pursuant to Section
5.1 hereof, which
record date shall be the same as the record date established by
the General
Partner for a distribution to its stockholders of some or all of
its portion of
such distribution by the Partnership.
1.68 "PARTNERSHIP UNIT" means a unit of Partnership Interest
with the rights,
powers and duties set forth herein, designated as such on
Exhibit A and
expressed in the number set forth on Exhibit A, as such exhibit
may be amended
from time to time.
1.69 "PERCENTAGE INTEREST" means, as to each Partner, the
percentage determined
by dividing the total number of Partnership Units owned by such
Partner by the
aggregate number of Partnership Units then issued and
outstanding, as set forth
on Exhibit A, as such exhibit may be amended from time to
time.
1.70 "PERMITTED TRANSFEREE" means with respect to a Person, (a)
any Affiliate of
such Person, (b) the spouse of such Person or any ancestor,
descendent or
sibling of such Person or of the spouse of such Person, or (c)
any trust for the
benefit of such Person or any other person described in clause
(b) of this
Section 1.69.
1.71 "PERSON" means any individual or Entity, and the heirs,
executors,
administrators, legal representatives, successors and assigns of
such individual
or Entity where the context so permits.
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1.72 "PROFITS" and "LOSSES" has the meaning set forth in Section
6.2(f).
1.73 "PROHIBITED TRANSFEREE" means any Person who is a:
(a) person or entity who is a "designated national," "specially
designated
national," "specially designated terrorist," "specially
designated global
terrorist," "foreign terrorist organization," or "blocked
person" within the
definitions set forth in the Foreign Assets Control Regulations
of the United
States Treasury Department, 31 C.F.R., Subtitle B, Chapter V, as
amended;
(b) person acting on behalf of, or an entity owned or controlled
by, any
government against whom the United States maintains economic
sanctions or
embargoes under the Regulations of the United States Treasury
Department, 31
C.F.R., Subtitle B, Chapter V, as amended, including, but not
limited to, the
"Government of Sudan," the "Government of Iran," the "Government
of Cuba or any
Cuban national"; or
(c) person or entity subject to restrictions imposed by the
following
statutes or Regulations and Executive Orders issued thereunder:
the Trading with
the Enemy Act, 50 U.S.C. app. Sections 1 et. seq., the Iraq
Sanctions Act, Pub.
L. 101-513, Title V, Sections 586 to 586J, 104 Stat. 2047, the
National
Emergencies Act, 50 U.S.C. Sections 1601 et. seq., the
Antiterrorism and
Effective Death Penalty Act of 1996, Pub. L. 104-132, 110 Stat.
1214-1319, the
International Emergency Economic Powers Act, 50 U.S.C. Sections
1701 et seq.,
the United Nations Participation Act, 22 U.S.C. Section 287c,
the International
Security and Development Cooperation Act, 22 U.S.C. Section
2349aa-9, the
Nuclear Proliferation Prevention Act of 1994, Pub. L. 103-236,
108 Stat. 507,
the Foreign Narcotics Kingpin Designation Act, 21 U.S.C.
Sections 1901 et. seq.,
the Iran and Libya Sanctions Act of 1996, Pub. L. 104-172, 110
Stat. 1541, the
Cuban Democracy Act, 22 U.S.C. Sections 6001 et seq., the Cuban
Liberty and
Democratic Solidarity Act, 22 U.S.C. Sections 6021-91, and the
Foreign
Operations, Export Financing and Related Programs Appropriations
Act, 1997, Pub.
L. 104-208, 110 Stat. 3009-172, or any other law of similar
import as to any
non-U.S. country, person or entity, as each such Act or law has
been or may be
amended, adjusted, modified, or reviewed from time to time.
1.74 "PROPERTY" OR "PROPERTIES" means, as the context requires,
any, or all,
respectively, of the Real Property acquired by the Partnership,
directly or
indirectly through joint venture arrangements or other
partnership or investment
interests.
1.75 "REAL ESTATE ASSETS" means unimproved and improved real
property, real
estate-related assets and any direct or indirect interest
therein (including,
without limitation, fee or leasehold interests, options, leases,
partnership and
joint venture interests, equity and debt securities of entities
that own real
estate, first or second mortgages on real property, mezzanine
loans secured by
junior liens on real property, preferred equity interests
secured by a property
owner's interest in real property and other contractual rights
in real estate).
1.76 "REAL PROPERTY" means land, rights in land (including
leasehold interests),
and any buildings, structures, improvements, furnishings,
fixtures and equipment
located on or used in connection with land and rights or
interests in land.
1.77 "REDEEMING PARTNER" has the meaning set forth in Section
8.6.
1.78 "REDEMPTION AMOUNT" means either the Cash Amount or the
REIT Stock Amount,
as determined by the General Partner in its sole and absolute
discretion.
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1.79 "REDEMPTION RIGHT" has the meaning set forth in Section
8.6.
1.80 "REGISTRATION STATEMENT" means the Registration Statement
on Form S-11
filed by the General Partner with the Securities and Exchange
Commission on
April 28, 2006, and any amendments thereto made at any time.
1.81 "REIT" means a "real estate investment trust" as defined
under Section 856
of the Code.
1.82 "REIT NOTICE" has the meaning set forth in Section
8.6(g).
1.83 "REIT REQUIREMENTS" has the meaning set forth in Section
5.2.
1.84 "REIT STOCK" means the Common Stock and all other shares of
capital stock
of the General Partner.
1.85 "REIT STOCK AMOUNT" means a number of shares of REIT Stock
equal to the
number of Partnership Units offered for redemption by a
Redeeming Partner;
provided that in the event that the General Partner issues to
all holders of
REIT Stock rights, options, warrants, or convertible or
exchangeable securities
entitling stockholders of the General Partner to acquire REIT
Stock, or any
other securities or property (collectively, the "rights"), then
the REIT Stock
Amount shall also include such rights that a holder of that
number of shares of
REIT Stock would be entitled to receive.
1.86 "SALE" means (i) any transaction or series of transactions
whereby: (A) the
Partnership directly or indirectly (except as described in other
subsections of
this definition) sells, grants, transfers, conveys, or
relinquishes its
ownership of any Property or portion thereof, including the
lease of any
Property consisting of a building only, and including any event
with respect to
any Property which gives rise to a significant amount of
insurance proceeds or
condemnation awards; (B) the Partnership directly or indirectly
(except as
described in other subsections of this definition) sells,
grants, transfers,
conveys, or relinquishes its ownership of all or substantially
all of the
interest of the Partnership in any Joint Venture in which it is
a co-venturer or
partner; (C) any Joint Venture directly or indirectly (except as
described in
other subsections of this definition) in which the Partnership
as a co-venturer
or partner sells, grants, transfers, conveys, or relinquishes
its ownership of
any Property or portion thereof, including any event with
respect to any
Property which gives rise to insurance claims or condemnation
awards; (D) the
Partnership directly or indirectly (except as described in other
subsections of
this definition) sells, grants, conveys or relinquishes its
interest in any
Mortgage or portion thereof (including with respect to any
Mortgage, all
payments thereunder or in satisfaction thereof other than
regularly scheduled
interest payments) of amounts owed pursuant to such Mortgage and
any event which
gives rise to a significant amount of insurance proceeds or
similar awards; or
(E) the Partnership directly or indirectly (except as described
in other
subsections of this definition) sells, grants, transfers,
conveys, or
relinquishes its ownership of any other Partnership Asset not
previously
described in this definition or any portion thereof, but (ii)
not including any
transaction or series of transactions specified in clause (i)
(A) through (E)
above in which the proceeds of such transaction or series of
transactions are
reinvested by the Partnership in one or more Partnership Assets
within 180 days
thereafter, and not including the receipt by the Partnership of
Capital
Contributions.
1.87 "SECURITIES" has the meaning set forth in Section
4.3(a).
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1.88 "SECURITIES ACT" means the Securities Act of 1933, as
amended.
1.89 "SPECIFIED REDEMPTION DATE" means the tenth (10th) Business
Day after
receipt by the General Partner of a Notice of Redemption Request
(or, in the
case of the General Partner exercising the Redemption Right,
after the date of
the General Partner's receipt of a REIT Notice).
1.90 "STOCK INCENTIVE PLANS" means, collectively, any and all
plans adopted from
time to time by the General Partner pursuant to which REIT Stock
is issued, or
options to acquire REIT Stock are granted, to employees or
directors of the
General Partner, employees of the Partnership or employees of
their respective
Affiliates in consideration for services or future services.
1.91 "SUBSIDIARY" means, with respect to any Person, any Entity
of which a
majority of the voting power or the voting equity securities,
and/or the
outstanding equity interests (whether or not voting), is owned,
directly or
indirectly, by such Person.
1.92 "SUBSTITUTED LIMITED PARTNER" means a Person who is
admitted as a Limited
Partner to the Partnership pursuant to Section 11.4 hereof.
1.93 "TERMINATING SALE TRANSACTION" means any sale or other
disposition (other
than a deemed disposition pursuant to Code Section 708(b)(1)(B)
and the Treasury
Regulations thereunder) of all or substantially all of the
assets of the
Partnership or a related series of transactions that, taken
together, result in
the sale or other disposition of all or substantially all of the
assets of the
Partnership.
1.94 "TERMINATION AMOUNT" has the meaning set forth in Section
5.1(e).
1.95 "TERMINATION EVENT" means the expiration of the Advisory
Agreement or any
termination of the Advisor as advisor to the Partnership and the
General Partner
under the terms of the Advisory Agreement, other than any
termination for
"Cause" (as defined in the Advisory Agreement) and other than
any termination of
the Advisory Agreement due to the occurrence of a Listing
Event.
1.96 "TERMINATION NOTE" has the meaning set forth in Section
5.1(e).
1.97 "TRANSFER" means to give, sell, assign, pledge,
hypothecate, devise,
bequeath, or otherwise dispose of, transfer, or permit to be
transferred, during
life or at death. The word "Transfer," when used as a noun,
shall mean any
Transfer transaction.
1.98 "TREASURY REGULATIONS" means the Federal income tax
regulations, including
any temporary or proposed regulations, promulgated under the
Code, as such
Treasury Regulations may be amended from time to time (it being
understood that
all references herein to specific sections of the Treasury
Regulations shall be
deemed also to refer to any corresponding provisions of
succeeding Treasury
Regulations).
1.99 "UNRECOVERED CONTRIBUTION ACCOUNT" means, with respect to
the General
Partner, as of any relevant date, the excess of (i) the
aggregate amount of cash
contributed or deemed contributed by the General Partner to the
Partnership
pursuant to the provisions of Article 4 as of such date, over
(ii) the sum of
(A) the cumulative distributions of Available Operating Cash and
Net Sales
Proceeds made to the General Partner prior to such relevant date
pursuant to
Section 5.1 hereof, and (B) the cumulative amounts paid to the
General Partner
in redemption of its Partnership Units pursuant to Section
8.6(g) as of such
date. All amounts distributed and paid to
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the General Partner pursuant to Sections 5.1 and 8.6(g) shall
first be applied
to reduce the Unrecovered Contribution Account of the General
Partner until the
balance of such Unrecovered Contribution Account equals zero
($0), and then
shall be applied to reduce the 8% Return Account of the General
Partner.
1.100 "VALUATION DATE" means the date of receipt by the General
Partner of a
Notice of Redemption Request (or, in the case of the General
Partner exercising
the Redemption Right, the date of the General Partner's receipt
of a REIT
Notice) or, if such date is not a Business Day, the first
Business Day
thereafter.
1.101 "VALUE" means, with respect to a share of REIT Stock, (a)
if REIT Stock is
traded on a national securities exchange or otherwise traded
over-the-counter,
the average of the daily Market Price (as defined below) for
shares of REIT
Stock for the ten (10) consecutive trading days immediately
preceding the
Valuation Date, or (b) if REIT Stock is not traded in a manner
described in
clause (a), the value of a share of REIT Stock as determined by
the General
Partner acting in good faith on the basis of such quotations and
other
information as it considers, in its reasonable judgment,
appropriate. The
"Market Price" for each such trading day shall be (i) the last
reported sale
price on such day or, if no sale takes place on such day, the
average of the
closing bid and asked prices on such day, as reported by a
reliable quotation
source designated by the General Partner; or (ii) if no such
last reported sale
price or closing bid and asked prices are available, the average
of the reported
high bid and low asked prices on such day, as reported by a
reliable quotation
source designated by the General Partner, or (iii) if there
shall be no bid and
asked prices on such day, the average of the high bid and low
asked prices, as
so reported, on the most recent day (not more than ten (10) days
prior to the
date in question) for which prices have been so reported. In the
event the REIT
Stock Amount includes rights that a holder of REIT Stock would
be entitled to
receive, then the Value of such rights shall be determined by
the General
Partner acting in good faith on the basis of such quotations and
other
information as it considers, in its reasonable judgment,
appropriate.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 FORMATION.
The Partnership is a limited partnership organized pursuant to
the
provisions of the Act and upon the terms and conditions set
forth in this
Agreement. Except as expressly provided herein to the contrary,
the rights and
obligations of the Partners and the administration and
termination of the
Partnership shall be governed by the Act.
2.2 NAME
The name of the Partnership is NNN Healthcare/Office REIT
Holdings, L.P.
The Partnership's business may be conducted under such name or
under any other
name or names deemed advisable by the General Partner, including
the name of the
General Partner or any Affiliate thereof. The words "Limited
Partnership,"
"L.P.," "Ltd." or similar words or letters shall be included in
the
Partnership's name where necessary for the purposes of complying
with the laws
of any jurisdiction that so requires. The General Partner,
acting in its sole
and absolute discretion without the Consent of any Limited
Partner, may change
the name of the Partnership. The General Partner shall notify
the Limited
Partners of any such name change in the next regular
communication to the
Limited Partners. Upon termination of the Partnership or the
termination,
resignation or withdrawal of the Initial Limited Partner as the
Advisor, all of
the Partnership's
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right, title and interest in and to the use of the name "NNN
Healthcare/Office
REIT Holdings, L.P. and any variation thereof, shall become the
property of the
Initial Limited Partner, and if requested to do so by the
Initial Limited
Partner, the Partnership shall change the name of the
Partnership to exclude the
term "NNN." Neither the Partnership nor any Limited Partner
shall have any right
or interest in and to the use of any such name or mark.
2.3 REGISTERED OFFICE AND AGENT
The address of the registered office of the Partnership in the
State of
Delaware shall be c/o The Corporation Trust Company, Corporation
Trust Center,
1209 Orange Street, Suite 400, Wilmington, New Castle County, DE
19801, or such
other place as may be designated from time to time by the
General Partner. The
name of the registered agent for service of process on the
Partnership in the
State of Delaware at such address shall be The Corporation Trust
Company,
Corporation Trust Center, 1209 Orange Street, Suite 400,
Wilmington, New Castle
County, DE 19801, or such other Person as may be designated from
time to time by
the General Partner.
2.4 PRINCIPAL PLACE OF BUSINESS
The Partnership may maintain offices at such other place or
places within
or outside the State of Delaware as the General Partner deems
advisable. The
principal office of the Partnership shall be 1551 North Tustin
Avenue, Suite 200
Santa Ana, CA 92705, or such other place as the General Partner
may from time to
time designate by notice to the Limited Partners.
2.5 TERM AND TERMINATION
The term of the Partnership shall commence on the date hereof
and shall
continue until December 31, 2036, unless the Partnership is
dissolved sooner
pursuant to the provisions of Article 13 or as otherwise
provided by law.
2.6 POWER OF ATTORNEY
(a) Each Limited Partner and each Assignee who accepts
Partnership Units
(or any other Partnership Interest or any rights, benefits or
privileges
associated therewith) is deemed to irrevocably constitute and
appoint the
General Partner, any Liquidator and authorized officers and
attorneys-in-fact of
each, and each such Person acting singly, in each case with full
power of
substitution, as its true and lawful agent and attorney-in-fact,
with full power
and authority in its name, place and stead to:
(i) execute, swear to, acknowledge, deliver, file and record in
the
appropriate public offices:
(A) all certificates, documents and other instruments
(including,
without limitation, this Agreement and the Certificate and
all
amendments or restatements thereof) that the General Partner or
the
Liquidator deems appropriate or necessary to form, qualify or
continue
the existence or qualification of the Partnership as a
limited
partnership (or a partnership in which the Limited Partners
have
limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may or plans to
conduct
business or own property, including, without limitation, any
documents
necessary or advisable to convey any Contributed Property to
the
Partnership;
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<PAGE>
(B) all instruments that the General Partner or any
Liquidator
deems appropriate or necessary to reflect any amendment,
change,
modification or restatement of this Agreement in accordance with
its
terms;
(C) all conveyances and other instruments or documents that
the
General Partner or any Liquidator deems appropriate or necessary
to
reflect the dissolution and liquidation of the Partnership
pursuant to
the terms of this Agreement, including, without limitation,
a
certificate of cancellation;
(D) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other
events
described in, Article 11, 12 or 13 hereof or any Capital
Contribution
of any Partner;
(E) all certificates, documents and other instruments relating
to
the determination of the rights, preferences and privileges
of
Partnership Interests;
(F) all amendments to this Agreement as provided in Article
14
hereof; and
(G) all other instruments that may be required by law to be
filed
on behalf of or relating to the Partnership and that are not
inconsistent with this Agreement; and
(ii) execute, swear to, seal, acknowledge and file all
ballots,
consents, approvals, waivers, certificates and other
instruments
appropriate or necessary, in the sole and absolute discretion of
the
General Partner or any Liquidator, to make, evidence, give,
confirm or
ratify any vote, consent, approval, agreement or other action
which is made
or given by the Partners hereunder or is consistent with the
terms of this
Agreement or appropriate or necessary, in the sole discretion of
the
General Partner or any Liquidator, to effectuate the terms or
intent of
this Agreement.
Nothing contained herein shall be construed as authorizing the
General
Partner or any Liquidator to amend this Agreement except in
accordance with
Article 14 hereof or as may be otherwise expressly provided for
in this
Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable
and a power coupled with an interest, in recognition of the fact
that each of
the Partners will be relying upon the power of the General
Partner and any
Liquidator to act as contemplated by this Agreement in any
filing or other
action by it on behalf of the Partnership, and it shall survive
and not be
affected by the subsequent Incapacity of any Limited Partner or
Assignee and/or
the Transfer of all or any portion of such Limited Partner's or
Assignee's
Partnership Units and shall extend to such Limited Partner's or
Assignee's
heirs, successors, assigns and personal representatives.
(c) Each such Limited Partner or Assignee hereby agrees to be
bound by any
representation made by the General Partner or any Liquidator,
acting in good
faith pursuant to such power of attorney, and each such Limited
Partner or
Assignee hereby waives any and all defenses which may be
available to contest,
negate or disaffirm the action of the General Partner or any
Liquidator, taken
in good faith under such power of attorney.
(d) Each Limited Partner or Assignee shall execute and deliver
to the
General Partner or the Liquidator, within fifteen (15) days
after receipt of the
General Partner's or
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Liquidator's request therefor, such further designation, powers
of attorney and
other instruments as the General Partner or the Liquidator, as
the case may be,
deems necessary to effectuate this Agreement and the purposes of
the
Partnership.
(e) Any Person dealing with the Partnership may conclusively
presume and
rely upon the fact that any instrument referred to in this
Section 2.6, executed
by the General Partner or the Liquidator acting as
attorney-in-fact, is
authorized by and binding on the Partnership, without further
inquiry.
2.7 EFFECTIVENESS OF THIS AGREEMENT
This Agreement shall govern the operations of the Partnership
and the
rights and restrictions applicable to the Partners, to the
extent permitted by
law. Pursuant to Section 17-101(12) of the Act, all Persons who
become holders
of Partnership Interests shall be bound by the provisions of
this Agreement. The
execution by a Person of this Agreement and acceptance thereof
by the General
Partner in accordance with the terms of this Agreement or the
receipt of
Partnership Interests by a Person as a successor or assign of an
existing
Partner and the consent of the General Partner to the admission
of such Person
as a Substituted Limited Partner in accordance with the terms of
this Agreement
shall be deemed to constitute a request that the records of the
Partnership
reflect such admission, and shall be deemed to be a sufficient
act to comply
with the requirements of Section 17-101(12) of the Act and to so
cause that
Person to become a Partner as of the date of acceptance of its
Capital
Contribution by the Partnership and to bind that Person to the
terms and
conditions of this Agreement (and to entitle that Person to the
rights of a
Partner hereunder).
ARTICLE 3
PURPOSE AND POWERS
3.1 PURPOSE AND BUSINESS
The purpose and nature of the business to be conducted by the
Partnership
is to conduct any business that may be lawfully conducted by a
limited
partnership organized pursuant to the Act including, without
limitation, to
engage in the following activities:
(a) to acquire, hold, own, develop, construct, improve,
maintain, operate,
sell, lease, transfer, encumber, convey, exchange and otherwise
dispose of or
deal with Real Estate Assets;
(b) to acquire, hold, own, develop, construct, maintain,
operate, sell,
lease, transfer, encumber, convey, exchange and otherwise
dispose of or deal
with other real and personal property of all kinds;
(c) acquire own, hold for investment and ultimately dispose of
general and
limited partner interests, and stock, warrants, options or other
equity and debt
interests in Entities, and exercise all rights and powers
granted to the owner
of any such interests;
(d) make any type of investment and engage in any other lawful
act or
activity for which limited partnerships may be formed under the
Act, and by such
statement all lawful acts and activities shall be within the
purposes of the
Partnership;
(e) to undertake such other activities as may be necessary,
advisable,
desirable or convenient to the business of the Partnership;
and
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(f) to engage in such other ancillary activities as shall be
necessary or
desirable to effectuate the foregoing purposes; provided,
however, that such
business shall be limited to and conducted in such a manner as
to permit the
General Partner at all times to be classified as a REIT, unless
the General
Partner determines not to qualify as a REIT or ceases to qualify
as a REIT for
reasons other than the conduct of the business of the
Partnership.
3.2 POWERS
(a) The Partnership is empowered to do any and all acts and
things
necessary, appropriate, proper, advisable, incidental to or
convenient for the
furtherance and accomplishment of the purposes and business
described in Section
3.1 and for the protection and benefit of the Partnership
including, without
limitation, full power and authority to enter into, perform, and
carry out
contracts of any kind, to borrow money and to issue evidences of
indebtedness,
whether or not secured by mortgage, trust deed, pledge or other
Lien, and,
directly or indirectly, to acquire, hold, own, develop,
construct, improve,
maintain and operate Real Estate Assets, and to sell, lease,
transfer, encumber,
convey, exchange and otherwise dispose of Real Estate
Assets.
(b) The General Partner also is empowered to do any and all acts
and things
necessary, appropriate or advisable to ensure that the
Partnership will not be
classified as a "publicly traded partnership" within the meaning
of Section 7704
of the Code, including, but not limited to, imposing
restrictions on Transfers
of Partnership Units.
ARTICLE 4
CAPITAL CONTRIBUTIONS; PARTNERSHIP UNITS;
ADDITIONAL FUNDS
4.1 CAPITAL CONTRIBUTIONS OF THE PARTNERS
(a) Initial Capital Contributions. The General Partner and the
Initial
Limited Partner have made or shall make on the Effective Date,
the Capital
Contributions as set forth on Exhibit A to this Agreement in
exchange for the
number of Partnership Units set forth opposite their names on
Exhibit A. At such
time as Additional Limited Partners are admitted to the
Partnership, each such
Additional Limited Partner shall make Capital Contributions in
the amount set
forth opposite such Limited Partner's name on Exhibit A, as it
shall be amended
at the time of such contribution.
(b) Deemed Capital Contributions. To the extent the Partnership
acquires
any property by the merger of any other Person into the
Partnership or the
contribution of assets by any other Person to the Partnership,
Persons who
receive Partnership Interests in exchange for their interests in
the Person
merging into or contributing assets to the Partnership shall
become Partners and
shall be deemed to have made Capital Contributions as provided
in the applicable
merger agreement or contribution agreement and as set forth in
Exhibit A, as it
shall be amended to reflect such deemed Capital
Contributions.
(c) Partnership Units. Each Partner shall own Partnership Units
in the
amounts set forth for such Partner in Exhibit A and shall have a
Percentage
Interest in the Partnership as set forth in Exhibit A, which
Percentage Interest
shall be adjusted in Exhibit A from time to time by the General
Partner to the
extent necessary to reflect accurately redemptions, additional
Capital
Contributions, the issuance of additional Partnership Units or
similar events
having an effect on
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the number of Partnership Units held by, and the Percentage
Interest of, any
Partner. Each Partnership Unit shall entitle the holder thereof
to one vote on
all matters on which the Partners (or any portion of the
Partners) are entitled
to vote under this Agreement.
(d) No Additional Capital Contributions. Except as provided in
Sections
4.3(a) and 10.5, the Partners shall have no obligation to make
any additional
Capital Contributions or provide any additional funding to the
Partnership
(whether in the form of loans or otherwise) and no Partner shall
have any
obligation to restore any deficit that may exist in its Capital
Account, either
upon a liquidation of the Partnership or otherwise.
4.2 ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS
(a) The General Partner is authorized to cause the Partnership
to issue
additional Partnership Interests (or options or warrants to
acquire Partnership
Interests) in the form of Partnership Units or other Partnership
Interests in
one or more series or classes to any Persons at any time or from
time to time,
on such terms and conditions as the General Partner shall
establish in each case
in its sole and absolute discretion subject to Delaware law,
including, without
limitation, (i) the allocations of items of Partnership income,
gain, loss,
deduction and credit to each class or series of Partnership
Interests, (ii) the
right of each class or series of Partnership Interests to share
in Partnership
distributions, and (iii) the rights of each class or series of
Partnership
Interest upon dissolution and liquidation of the Partnership;
provided, that, no
such Partnership Interests shall be issued to the General
Partner unless either
(A) the Partnership Interests are issued pursuant to Section
4.3, or (B) the
additional Partnership Interests are issued to all Partners
holding Partnership
Interests in the same class in proportion to their respective
Percentage
Interests in such class.
(b) Subject to the limitations set forth in Sections 4.2(a) and
4.3(a), the
General Partner may take such steps as it, in its sole and
absolute discretion,
deems necessary or appropriate to admit any Person as a Limited
Partner of the
Partnership in accordance with Section 12.2 or to issue any
Partnership
Interests, including, without limitation, amending the
Certificate, Exhibit A or
any other provision of this Agreement.
(c) Without limiting the foregoing, the General Partner is
expressly
authorized to cause the Partnership to issue Partnership
Interests (or options
to acquire Partnership Interests) for less than fair market
value, so long as
the General Partner concludes in good faith that such issuance
is in the
interest of the Partnership and the Partners (for example, and
not by way of
limitation, the issuance of Partnership Units in connection with
a Stock
Incentive Plan providing for employee purchases of REIT Stock
and corresponding
Partnership Units at a discount from fair market value or
employee options that
have an exercise price that is less than the fair market value
of the REIT Stock
and corresponding Partnership Units covered by the option,
either at the time of
issuance or at the time of exercise).
4.3 ISSUANCE OF SECURITIES BY THE GENERAL PARTNER
(a) General. The General Partner shall not issue any debt
securities,
preferred stock, Common Stock, any other class of REIT Stock or
rights, options,
warrants or other securities convertible into or exchangeable
for preferred
stock, Common Stock or any other class of REIT Stock
(collectively,
"Securities"), other than (1) as payment of the REIT Stock
Amount in connection
with a redemption of Partnership Units pursuant to Section 8.6,
(2) upon the
conversion, exchange or exercise of other outstanding securities
of the General
Partner in
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accordance with the terms of such securities, or (3) to all
holders of REIT
Stock on a pro rata basis, unless the General Partner shall:
(i) in the case of REIT Stock or other equity Securities other
than
Securities described in clause (ii) below, (A) contribute to
the
Partnership the proceeds of or consideration (including any
property or
other non-cash assets) received upon the issuance of such
Securities, and
(B) receive from the Partnership in consideration for such
contributions
Partnership Interests with the same terms and conditions,
including
dividend, dividend priority and liquidation preference, as are
applicable
to such Securities (including, for purposes of clarification,
Partnership
Units in the case of any issuance of Common Stock by the General
Partner);
(ii) in the case of options, warrants or other rights to
purchase REIT
Stock, or other equity securities convertible into or
exchangeable for REIT
Stock, (A) contribute to the Partnership the proceeds of or
consideration
(including any property or other non-cash assets) received upon
the
issuance of such equity Securities, and (B) receive from the
Partnership in
consideration for such contributions a number of options,
warrants or other
rights to purchase Partnership Interests equal to the number of
such
Securities issued by the General Partner, with equivalent
rights,
preferences and limitations to the terms of such equity
Securities; and
(iii) in the case of debt securities, lend to the Partnership
the
proceeds of or consideration received for such Securities on the
same terms
and conditions, including interest rate and repayment schedule,
as shall be
applicable with respect to or incurred in connection with the
issuance of
such Securities and the proceeds of, or consideration received
from, any
subsequent exercise, exchange or conversion thereof (if
applicable).
(b) Splits. The Partnership shall (i) make a distribution in
Partnership
Units, (ii) subdivide its outstanding Partnership Units, or
(iii) combine its
outstanding Partnership Units into a smaller number of
Partnership Units, in the
event the General Partner takes an analogous action with respect
to the Common
Stock. The intent of the previous sentence is that one
Partnership Unit remains
the economic equivalent of one share of Common Stock without
dilution. If the
General Partner determines that it is necessary or desirable to
make any filings
under the Act or otherwise in order to reference the existence
of such action,
the General Partner may cause such filings to be made, which
filings might take
the form of amendments to the Certificate; provided, however,
that, unless
specifically required by this Agreement or the Act after giving
effect to the
terms of this Agreement, no approval or consent of any Partners
shall be
required in connection with the making of any such filing.
(c) Treatment of Proceeds. If the proceeds actually received by
the General
Partner in connection with an issuance of Securities by the
General Partner are
less than the gross proceeds of such offering, grant, award or
issuance as a
result of any underwriter's discounts, commissions or other fees
or expenses
paid or incurred in connection with such offering, grant, award
or issuance,
then the General Partner shall be deemed to have made a Capital
Contribution to
the Partnership in the amount of the gross proceeds of such
offering, grant,
award or issuance and the Partnership shall be deemed
simultaneously to have
paid pursuant to Section 7.3(c) for the amount of such
expenses.
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<PAGE>
4.4 ADDITIONAL FUNDS
(a) The sums of money required to finance the business and
affairs of the
Partnership shall be derived from the initial Capital
Contributions made to the
Partnership by the Partners as set forth in Section 4.1 and from
funds generated
from the operation and business of the Partnership.
(b) In the event additional financing is needed from sources
other than as
set forth in Section 4.4(a) for any reason, the General Partner
may, in its sole
and absolute discretion, in such amounts and at such times as it
solely shall
determine to be necessary or appropriate:
(i) cause the Partnership to issue additional Partnership
Interests
and admit additional Limited Partners to the Partnership in
accordance with
Section 4.2;
(ii) make additional Capital Contributions to the Partnership
(subject
to the provisions of Section 4.3(a));
(iii) cause the Partnership to borrow money, enter into loan
arrangements, issue debt securities, obtain letters of credit or
otherwise
borrow money on a secured or unsecured basis;
(iv) make a loan or loans to the Partnership (subject to
Section
4.3(a)); or
(v) cause the Partnership to sell any assets or properties
directly or
indirectly owned by the Partnership.
4.5 NO THIRD-PARTY BENEFICIARY
No creditor or other third party having dealings with the
Partnership shall
have the right to enforce the right or obligations of any
Partner to make
Capital Contributions or loans or to pursue any other right or
remedy hereunder
or at law or in equity, it being understood and agreed that the
provisions of
this Agreement shall be solely for the benefit of, and may be
enforced solely
by, the parties hereto and their respective successors and
assigns.
4.6 NO INTEREST
No Partner shall be entitled to interest on any Capital
Contribution or on
such Partner's Capital Account.
4.7 NO PREEMPTIVE RIGHTS
Subject to any preemptive rights that may be granted in
connection with the
issuance of Partnership Interests under Section 4.3(a), no
Person shall have any
preemptive or other similar right with respect to any:
(a) additional Capital Contributions or loans to the
Partnership; or
(b) issuance or sale of any Partnership Units or other
Partnership
Interests.
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<PAGE>
4.8 CAPITAL ACCOUNTS
The Partnership shall establish and maintain throughout the life
of the
Partnership for each Partner a separate "Capital Account" in
accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv). If (i) a new or
existing Partner
acquires an additional Partnership Interest in exchange for more
than a de
minimis Capital Contribution, (ii) the Partnership distributes
to a Partner more
than a de minimis amount of Partnership property as
consideration for a
Partnership Interest, (iii) the Partnership is liquidated within
the meaning of
Treasury Regulation Section 1.704-1(b)(2)(ii)(g), or (iv) at
such other times as
the General Partner may determine so long as such adjustment is
made under
generally accepted industry accounting practices within the
meaning of Treasury
Regulations Section 1.704-1(b)(2)(iv)(f)(5), the General Partner
shall revalue
the property of the Partnership to its fair market value (as
determined by the
General Partner, in its sole and absolute discretion, and taking
into account
Section 7701(g) of the Code) in accordance with Regulations
Section
1.704-1(b)(2)(iv)(f). When the Partnership's property is
revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted
in accordance
with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f) and (g),
which generally
require such Capital Accounts to be adjusted to reflect the
manner in which the
unrealized gain or loss inherent in such property (that has not
been reflected
in the Capital Accounts previously) would be allocated among the
Partners
pursuant to Section 5.1 if there were a taxable disposition of
such property for
its fair market value (as determined by the General Partner, in
its sole and
absolute discretion, and taking into account Section 7701(g) of
the Code) on the
date of the revaluation.
ARTICLE 5
DISTRIBUTIONS
5.1 DISTRIBUTIONS
(a) General. Subject to the provisions of Sections 5.3, 5.4,
8.6(b),
11.6(d) and 13.2, the General Partner shall cause the
Partnership to distribute
to the Partners as of the applicable Partnership Record Date, at
such times as
the General Partner shall determine, amounts of Available
Operating Cash and Net
Sales Proceeds in the manner set forth in this Section 5.1.
(b) Available Operating Cash. Available Operating Cash shall be
distributed
to the Partners as determined by the General Partner in its sole
and absolute
discretion in accordance with their respective Percentage
Interests as of the
applicable Partnership Record Date.
(c) Net Sales Proceeds. Net Sales Proceeds shall be distributed
to the
Partners as determined by the General Partner in its sole and
absolute
discretion in accordance with their respective Percentage
Interests as of the
applicable Partnership Record Date until the Unrecovered
Contribution Account
and 8% Return Account of the General Partner have been reduced
to zero ($0).
Thereafter, 15% of any Net Sales Proceeds shall be distributed
to the Advisor
(in its capacity as Partner) (such distributions, the "Advisor
Participation in
Sales Proceeds"), and 85% of such Net Sales Proceeds shall be
distributed to the
Partners as determined by the General Partner in its sole and
absolute
discretion in accordance with their respective Percentage
Interests as of the
applicable Partnership Record Date.
(d) Distribution to Advisor Upon Listing.
(i) Upon a Listing Event, the Advisor shall no longer be
entitled to
any distributions of the Advisor Participation in Sales Proceeds
under
Section 5.1(c). If the
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Advisor has not been terminated under the Advisory Agreement as
of the
Listing Date, the Advisor (in its capacity as Partner) shall
receive a
distribution ("Listing Amount"), which shall be paid within five
(5)
Business Days of the determination of the Market Value, in an
amount equal
to 15% of the amount, if any, by which (A) the Market Value plus
the
cumulative distributions made to the General Partner from the
inception of
the Partnership through the Listing Date exceeds (B) the sum of
(1) the
Invested Capital of the General Partner as of the Listing Date,
and (2) the
8% Return that has accrued with respect to the Invested Capital
of the
General Partner from the inception of the Partnership through
the Listing
Date.
(ii) The Listing Amount shall be paid, as determined by the
General
Partner's board of directors, including a majority of the
independent
directors, either in the form of cash or REIT Stock with a
Market Value
equal to the Listing Amou
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