EVEREST BAYBERRY, LP
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement, effective as of
March 21, 2006, is entered into by and among the Partners set forth
below, pursuant to the Act on the following terms and
conditions.
1.1
Formation . On or about
March 21, 2006, Lisa L. Longo organized the Partnership as a
California limited partnership by executing and delivering a
Certificate of Limited Partnership to the Secretary of State in
accordance with and pursuant to the Act.
1.2
Name and Place of Business . The name of the Partnership shall be Everest Bayberry, LP,
(the “Partnership”) and its principal place of business
shall be 199 S. Los Robles Avenue, Suite 200, Pasadena, California
91 101. The General Partner may change the principal place of
business of the Partnership as the General Partner may reasonably
determine to be necessary or desirable.
1.3
Business and Purpose :
The business of the Company shall be (a) to accomplish any lawful
business whatsoever, conducive to or expedient for the protection
or benefit of the Company and its assets and related, directly or
indirectly, to the acquisition, management or disposition of the
Property (as defined below), (b) the exercise of all other powers
necessary to or reasonably connected with the Partnership’s
business which may be legally exercised by a limited partnership
under the Act, and (c) to engage in all activities necessary,
customary, convenient, or incidental to any of the
foregoing.
1.4
Term . The Partnership
commenced on the filing of the Certificate of Limited Partnership
with the Secretary of State and shall continue for a period of
thirty (30) years from the date of this Agreement or for such
longer period as may be agreed upon by the Partners and permitted
by the Act, unless earlier terminated in accordance with the
provisions of this Agreement or the Act.
1.5
Registered Agent . The
Partnership’s initial registered agent shall be as provided
in the Certificate of Limited Partnership. The registered agent may
be changed from time to time by filing the name of the new
registered agent pursuant to the Act.
1.6
Qualification . The
General Partner shall cause the Partnership to be qualified or
authorized to do business in any state in which such qualification
or authorization is necessary in connection with the conduct of the
Partnership’s business.
1.7
Tax Classification . It
is the intention of the Partners that the Partnership shall be
classified as a partnership for federal income tax purposes. The
Partners shall make such amendments to this Agreement as are
reasonably necessary to ensure that the Partnership will be so
classified .
1.8
Certain Transactions .
Any Owner, General Partner or any Affiliate, or any equity holder,
officer, director, employee or any person owning a legal or
beneficial interest therein, may engage in or possess an interest
in any other business or venture of any nature or description,
whether or not such ventures are competitive with the Partnership
and no Owner, General Partner or other person or entity shall have
any interest in such other business or venture by reason of their
interest in the Partnership.
The definitions in this Agreement shall have the
following meanings:
“Act” shall mean the California Revised
Limited Partnership Act, as hereafter amended from time to
time.
“Affiliate” shall mean (a) any person
directly or indirectly controlling, controlled by or under common
control with another person; (b) a person owning or controlling 10%
or more of the outstanding voting securities of such other person;
(c) any officer, director, member or partner of such other person;
and ( d ) i f such other person is an officer, director, member or
partner, any company for which such person acts in any capacity. As
used herein, the term “person” includes any natural
person, corporation, trust, partnership, limited liability company,
unincorporated association or other legal entity.
“Agreement” shall mean this Limited
Partnership Agreement, as amended from time to time.
“Assignee” shall mean a person who has
acquired an Economic Interest in the Partnership but who has not
been admitted as a Substituted Partner.
“Capital Account” with respect to any
Partner (or such Partner’s assignee) shall mean such
Partner’s initial Capital Contribution adjusted as follows:
(a) a Partner’s Capital Account shall be increased by: (i)
such Partner’s share of Net Income; and (ii) any additional
cash Capital Contribution made by such Partner to the Partnership;
and (b) a Partner’s Capital Account shall be reduced by: (i)
such Partner’s share of Net Loss; and (ii) any Distributions
to such Partner; provided that, upon Liquidation of the Partnership
or of the Interest of any Partner, unsold Property will be valued
for Distribution at its fair market value and the Capital Account
of each Partner before such Distribution shall be adjusted to
reflect the allocation of gain or loss that would have been
realized had the Partnership then sold the Property for its fair
market value. Such fair market value shall not be less than the
amount of any nonrecourse indebtedness that is secured by the
Property. The Capital Account of a Substituted Partner or an
Assignee shall include the Capital Account of its transferor.
Notwithstanding anything to the contrary in this
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Agreement, Capital Accounts shall be maintained in
accordance with Treasury Regulations Section 1.704-l(b). References
in this Agreement to the Treasury Regulations shall include
corresponding subsequent provisions.
“Capital Contribution” shall mean the
amount of cash, or the agreed upon value of the Property, actually
contributed by a Partner to the capital of the Partnership pursuant
to Section 3.1; provided, however, that for any property
contributed to the Partnership in connection with a non-taxable
reorganization or similar transaction, the amount of Capital
Contribution ascribed to such Partner for such property shall be
determined in accordance with the Code and the rules and
regulations thereunder in effect at the time of such
reorganization.
“Cash Available For Distribution” shall
mean the net cash realized by the Partnership from all sources
(exclusive of Capital Contributions) calculated on a
calendar-quarter basis, including but not limited to the operations
of the Partnership and the sale or financing of all or any portion
of the Property, after payment of all cash expenditures of the
Partnership, including but not limited to operating expenses, all
fees and costs payable to the General Partner or Affiliates, all
asset management fees, all payments of principal and interest on
indebtedness (including payments on loans from Partners), expenses
for repairs and maintenance, capital improvements and replacements,
and such reserves and retentions as the General Partner and all of
the Partners reasonably determine to be necessary and desirable in
connection with the Partnership’s operations, its existing
assets and any anticipated acquisitions.
“Certificate of Limited Partnership”
shall mean, the Certificate of Limited Partnership of Everest
Bayberry, LP, as filed with the Secretary of State, as the same may
be amended or restated from time to time.
“Code” shall mean the Internal Revenue
Code of 1986, as amended, or corresponding provisions of
subsequently enacted federal revenue laws.
“Distribution” shall refer to any money
or the fair market value of other Property transferred without
consideration to Partners with respect to their interests in the
Partnership, but shall not include any amounts paid pursuant to
Section 5.4.
“Economic Interest” shall mean an
interest in the Net Income, Net Loss and Distributions of the
Partnership but shall not include any right to vote or to
participate in the management of the Partnership. The initial
Economic Interests are held only by the Partners and are equal to
their Partnership Interests.
“Event of Insolvency” shall occur when
an order for relief against a Partner is entered under Chapter 7 of
the federal bankruptcy law, or (a) a Partner: (i) makes a general
assignment for the benefit of creditors, (ii) files a voluntary
petition under the federal bankruptcy law, (iii) files a petition
or answer seeking for that Partner a reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, (iv) files an answer
or other pleading
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admitting or failing to contest the material
allegations of a petition filed against a Partner in any proceeding
of this nature, or (v) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of that Partner
or of all or a substantial part of that Partner’s properties;
or (b) the expiration of 60 days after either (i) the commencement
of any proceeding against a Partner seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law, or regulation, if the
proceeding has not been dismissed, or (ii) the appointment without
a Partner’s consent or acquiescence of a trustee, receiver,
or liquidator of a Partner or of all or any substantial part of a
Partner’s properties, if the appointment has not been vacated
or stayed (or if within 60 days after the expiration of any such
stay, the appointment is not vacated); or (c) becomes
“bankrupt” within the meaning of the Act.
“General Partner” shall refer to
Millenium Bayberry, so long as Millenium Bayberry is General
Partner hereunder. The term General Partner shall also refer to any
successor General Partner who is elected to such position, so long
as such successor is General Partner hereunder.
“Interest” shall mean a Partnership
Interest or an Economic Interest, “Liability Event”
shall have the meaning ascribed to it in Section 6.7
below.
“Limited Partner” shall mean SIR II, and
any person or entity who is issued units of Partnership Interest by
the Partnership and admitted to the Partnership as a limited
partner, and any Substituted Partner that is the transferee or
other successor to the Partnership Interest thereof.
“Liquidation” shall mean in respect to
the Partnership the earlier of the date upon which the Partnership
is terminated under Section 708(b)(l) of the Code or the date upon
which the Partnership ceases to be a going concern (even though it
may exist for purposes of winding up its affairs, paying its debts
and distributing any remaining balance to its Partners), and in
respect to a Partner where the Partnership is not in Liquidation,
“Liquidation” means the date upon which occurs the
termination of the Partner’s entire interest in the
Partnership by means of a Distribution or the making of the last of
a series of Distributions (in one or more years) to the Partner by
the Partnership.
“Majority in Interest” shall mean the
Partners owning more than fifty percent (50%) of the Partnership
Voting Rights of all Partners who are entitled to approve the issue
in question. “Millenium Bayberry” shall refer to
Millenium Bayberry, LLC, a California limited liability company,
199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID:
20-4596460.
“Net Income” or “Net Loss”
shall mean, respectively, for each taxable year of the partnership
the taxable income and ‘taxable loss of the Partnership as
determined for federal income tax purposes in accordance with
Section 703(a) of the Code (including all
items of income, gain, loss, or deduction required
to be separately stated pursuant to Section 703(a)(l) of the
Code).
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“Notice of Transfer” shall mean the
notice described in Section 10.2.1
“Organization Expenses” shall mean all
expenses incurred in connection with the organization and formation
of the Partnership including, but not limited to, legal,
accounting, tax planning fees, promotional fees or expenses, filing
or recording fees, property inspections and research, and other
costs or expenses in connection therewith.
“Owner” shall mean a Partner or the
holder of an Economic Interest.
“Partner” shall refer to any person or
entity who is admitted to the Partnership as a General Partner,
Limited Partner or Substituted Partner and who has not ceased to be
a Partner.
“Partnership Interest” shall mean a
Partner’s entire interest in the Partnership including such
Partner’s Economic Interest and Partnership Voting Rights.
The initial Partnership Interests are 53.661 equal units of Partnership
Interest to be issued to SIR II. Nothing herein shall imply any
restriction on the General Partner’s ability to issue
additional units of Partnership Interest in accordance with this
Agreement and the Act.
“Partnership Voting Rights” shall mean
the voting and other rights and privileges that the Partner may
enjoy by being a Partner, other than the Partner’s Economic
Interest. The initial Partnership Voting Rights are held only by
the Partners on the date hereof and are equal to their Partnership
Interests.
“Prime Rate” shall mean the reference
rate announced from time-to-time by East West Bank, and changes in
the Prime Rate shall be deemed to occur on the date that changes in
such rate are announced.
“Principal” shall mean any direct or
indirect owner of not less than fifteen percent (15%) of the voting
interests or economic benefits of the General Partner or any
Partner.
“Property” shall mean Bayberry Crossing
Retail Center, located at 523 SE Melody Lane, Lee’s Summit,
MO 64063 and/or any or all of such tangible or intangible personal
property as may be acquired by the Partnership for the operation of
the Property.
“Secretary of State” shall mean the
Secretary of State of California.
“SIR II” shall mean Secured Investment
Resources Fund, L.P. I1 a Delaware limited partnership, 199 S. Los
Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID: 36-
3451000.
“Substitute Partner” shall mean an
Assignee who has become a Partner in accordance with the procedures
specified in Article 10.
“Total Capitalization” shall mean the
sum of (a) the outstanding principal balance of any debt
obligations of the Partnership (not including short-term accounts
payable) and
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(b) the outstanding, Unreturned Capital
Contributions, as calculated as of the last day of the preceding
calendar month.
“Unreturned Capital Contribution” shall
mean the aggregate Capital Contributions made by a Partner from
time to time less the aggregate Distributions to such Partner made
pursuant to Section 5.1 (b).
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3.
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Capitalization and Financing.
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3.1
Partner’s Capital Contribution
. The initial capital shall be contributed by SIR II
in the form of all right, title and interest in Bayberry Crossing,
a shopping center located in Lee’s Summit, MO for which the
legal description is attached hereto as Ex hibit A , together with the other assets and liabilities related to such
property (collectively, the “Property”). In
consideration for the Property, SIR II will receive 53,661 units of
Partnership Interest.
3.2
Liabilities of Partners . Except as specifically provided in this Agreement, Partners
shall not be required to make any contributions to the Partnership
and no Partner shall be liable for the debts, liabilities,
contracts, or any other obligations of the Partnership except with
regard to their Capital Contributions as indicated herein, nor
shall the Partners be required to lend any funds to the Partnership
or to repay to the Partnership, any Partner, or any creditor of the
Partnership any portion or all of any deficit balance in a
Partner’s Capital Account.
3.3
Partner Loans . The
General Partner or an Affiliate may make an unsecured loan to the
Partnership to the extent required to pay the Partnership’s
operating expenses, including debt service or capital expenditures.
Any such loan shall bear interest at a rate not to exceed the Prime
Rate plus one percent (1%) and provide for the payment of principal
and any accrued but unpaid interest in accordance with the terms of
the promissory note evidencing such loan, but in no event later
than upon dissolution of the Partnership. Such advances shall not
be deemed a Capital Contribution. No Partner shall be liable to any
other Partner for unpaid advances or unpaid interest on any such
loan. Any unpaid advances, together with accrued and unpaid
interest, shall be payable solely out of Cash Available For
Distribution as provided in Section 5.1 and Section 12.3. Loan
repayments under Section 5.1 and Section 12.3 shall be made in the
priority that the most recently made Partner loan shall be repaid
first, and payments shall first be applied to unpaid interest and
then to unpaid principal.
3.4
No Withdrawal of Capital Contributions
. Except upon dissolution and liquidation of the
Partnership, no Owner shall have the right to withdraw its Capital
Contribution.
3.5
No Interest on Capital Contributions
. No Owner shall be entitled to interest of any kind
on its Capital Contribution.
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4.
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Allocation of Tax Items.
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4.1
Net Income Allocations . Net Income for any fiscal year shall be allocated as follows:
(a) first, among the Owners in proportion to and to the extent of
Net Loss allocated to the Owners under Section 4.2 until the
aggregate Net Income allocated to the Owners under this Section 4.1
for such fiscal year and all previous fiscal years is equal to the
aggregate Net Loss allocated to the Owners pursuant to Section 4.2
for all previous fiscal years; and (b) the balance, if any, among
the Owners in proportion to their respective Economic
Interests.
4.2
Net Loss Allocations .
Net Loss for any fiscal year shall be allocated as follows: (a)
first, among the Owners in proportion to and to the extent of Net
Income allocated to the Owners under Section 4.1 until the
aggregate Net Loss allocated pursuant to this Section 4.2 for such
fiscal year and all previous fiscal years equals the aggregate Net
Income allocated to the Owners pursuant to Section 4.1 for all
previous fiscal years; and (b) the balance, if any, among the
Owners in proportion to their respective Economic
Interests.
4.3
Allocation of Partnership Items
. Whenever a proportionate part of Net Income or Net
Loss is allocated to an Owner, every item of income, gain, loss or
deduction entering into the computation of such Net Income or Net
Loss, and every item of credit or tax preference related to such
allocation and applicable to the period during which such Net
Income or Net Loss was realized shall be allocated to the Owner in
the same proportion.
4.4
Assignment . Except to
the extent the Code requires otherwise, in the event of the
assignment of an Interest, the Net Income and Net Loss arising from
other than a sale or refinancing of Property shall be apportioned
as between the assigning Owner and his Assignee based upon the
number of months of their respective ownership during the year in
which the assignment occurs, without regard to the results of the
Partnership’s operations during the period before or after
such assignment, and Net Income, Net Loss and Distributions from a
sale or refinancing of the Property will be allocated among the
Owners as of the date of any such transaction.
4.5
Provisions of Regulations . Notwithstanding the foregoing, allocations required to be
made under the regulations under Code Section 704 shall be made as
required therein, including allocations constituting qualified
income offsets and minimum gain chargebacks.
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5.
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Distributions / Expenses.
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5.1
Cash Available For Distribution
. Except as otherwise provided in Article 12, Cash
Available For Distribution shall be distributed in the following
order of priority: (a) first, to repay any Partner loans made
pursuant to Section 3.3; (b) second, the balance, if any, among the
Owners in proportion to their Economic Interests. Distributions of
Cash
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Available For Distribution shall be reviewed within
twenty (20) days after the end of each calendar quarter and made as
soon thereafter as possible.
5.2
Asset Management Fee .
The Partnership shall pay, as an operating expense, a monthly asset
management fee to the General Partner of $1,000.
5.3
Compensation to the Partners, General Partner and
Affiliates . The Partners, the General
Partner and their Affiliates shall receive compensation from the
Partnership for services rendered or to be rendered only as
specified in this Agreement.
5.4
Partnership Expenses .
Subject to the limitations set forth in Section 5.3, the
Partnership shall pay directly, or reimburse the General Partner or
the Partners, as the case may be, for all of the reasonable costs
and expenses of the Partnership’s operations, including,
without limitation, the following costs and expenses: (a) all
Organization Expenses advanced or otherwise paid by the General
Partner or the Partners; (b) all reasonable costs of personnel
employed by the Partnership and directly involved in the
Partnership’s business; (c) all compensation due to any
Partner or its Affiliate; (d) all costs of personnel employed by
any Partner or the General Partner or their Affiliates to the
extent of their direct involvement in the business of the
Partnership (provided, however, that such costs shall not include
compensation to the Principals); (e) all costs of borrowed money
and taxes applicable to the Partnership; (f) legal, accounting,
audit, brokerage, and other fees; (g) fees and expenses paid to
independent contractors, mortgage bankers, real estate brokers, and
other agents; (h) costs of acquiring, owning, developing,
improving, operating, and disposing of Property; (i) expenses
incurred in connection with the alteration, maintenance, repair,
remodeling, refurbishment, leasing and operation of Property; (j)
all expenses incurred in connection with the maintenance of
Partnership books and records, the preparation and dissemination of
reports, financial statements, tax returns or other information to
Partners and the making of Distributions to Partners; (k) expenses
incurred in preparation and filing reports, returns or other
information with appropriate regulatory agencies; (1) expenses of
insurance as required in connection with the business of the
Partnership; (m) costs incurred in connection with any litigation,
or any examination, investigation, or other proceedings conducted
by any regulatory agency, including legal and accounting fees, in
which the Partnership may become involved; (n) the actual costs of
goods and materials used by or for the Partnership; (o) costs of
services that could be performed directly for the Partnership by
independent parties such as legal, accounting, secretarial or
clerical, reporting, transfer agent, data processing and
duplicating services but which are in fact performed by the General
Partner or its Affiliates, but not in excess of the lesser of: (i)
the actual costs to the General Partner or its Affiliates of
providing such services; or (ii) the amounts which the Partnership
would otherwise be required to pay to independent parties for
comparable services in the same geographic locale; @) expenses of
Partnership administration, accounting, documentation and
reporting, (q) expenses of revising, amending, modifying, or
terminating this Agreement; (r) reasonable travel expenses of the
General Partner or any Partner incurred in connection with the
business of the Partnership; (s) taxes and other governmental fees
and charges payable by the Partnership; and (t) all other
costs
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and expenses incurred in connection with the
business of the Partnership reasonably approved in
budgets.
5.5
Property Management .
From and after the date hereof, the General Partner shall provide
or arrange for the provision of property management services for
the Partnership. The Partnership will pay the General Partner, and
General Partner shall accept as compensation in full for the
performance of property management services, a management fee in an
amount equal to five percent (5%) of the gross revenue of the real
property owned by the Partnership. The General Partner is permitted
to retain an independent third-party or an Affiliate to provide
property management services at no additional cost to the Company,
and retain any difference between the cost thereof and the General
Partner’s fee as compensation for the General Partner’s
supervision of such other party.
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6.
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Authority and Responsibilities of the General
Partner.
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6.1
Management . The
business and affairs of the Partnership shall be managed by its
General Partner. Except as otherwise provided in Section 6.4 and
Section 8.2, the General Partner shall have full and complete
authority, power and discretion to manage and control the business,
affairs and Properties of the Partnership, to make all decisions
regarding those matters and to perform any and all other acts or
activities customary or incident to the management of the
Partnership’s business. All actions taken by General Partner
in good faith shall not constitute a breach of its fiduciary duty
to the Partnership and its Partners. Liability for actions taken by
General Partner in good faith shall only apply as set forth in
Section 6.7.
6.2
Number, Tenure and Qualifications
. The Partnership shall have one General Partner.
The initial General Partner shall be Millenium Bayberry. Neither
the initial General Partner nor any successor General Partner shall
be removed except as provided in Section 7.2. The General Partner
need not be a resident of the State of California or an
Owner.
6.3
General Partner’s Authority
. The General Partner shall have all authority,
rights and powers conferred by law (subject only to Sections 6.4
and 6.5) and those required or appropriate to the management of the
Partnership’s business, which, by way of illustration but not
by way of limitation, shall include the right, authority and power
to cause the Partnership to: (a) acquire, hold, develop, lease,
rent, operate, sell, exchange and otherwise dispose of Property;
(b) borrow money, pledge or mortgage or subject any Property to any
mortgage or security device on any Property; (c) enter into such
contracts and agreements as the General Partner determines to be
reasonably necessary or appropriate in connection with the
Partnership’s business and purpose (including contracts with
Affiliates of the General Partner), and any contract of insurance
that the General Partner deems necessary or appropriate for the
protection of the Partnership and the General Partner, including
errors and omissions insurance, for the conservation of Partnership
assets, or for any purpose convenie
