EVEREST HICKORY GLEN, LP
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Amended and Restated Agreement of Limited
Partnership of Everest Hickory Glen, LP (the
“Partnership”), effective as of December 6, 2006, is
entered into by and among the Partners set forth below, pursuant to
the Kansas Revised Uniform Limited Partnership Act (the
“Act”) on the following terms and
conditions.
1.1
Formation . On or about
March 26, 1999, the Partnership was organized as a Kansas limited
partnership under the name “Oak Terrace Joint Venture,
L.P.” by executing and delivering a Certificate of Limited
Partnership to the Secretary of State in accordance with and
pursuant to the Act, which was filed on March 26, 1999 (the
“Original Certificate”). The original Agreement of
Limited Partnership of the Partnership was made and entered into as
of March 31, 1999. On or about December 6, 2006, an Amended and
Restated Certificate of Limited Partnership was filed with the
Secretary of State in accordance with and pursuant to Section
56-la160 of the Act.
1.2
Name and Place of Business . The name of the Partnership shall be Everest Hickory Glen, LP
(the “Partnership”), and its principal place of
business shall be 199 S. Los Robles Avenue, Suite 200, Pasadena,
California 91101. The General Partner may change the name and or
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 Original Certificate with the
Secretary of State, and shall continue for the period ending
December 31, 2040 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 registered agent shall be as provided in the
Amended and Restated 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 Kansas Revised
Uniform 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) if 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 Amended and
Restated Agreement of Limited Partnership, 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
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 he
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 Amended and Restated
Certificate of Limited Partnership of Oak
Terrace Joint Venture, L.P., as filed with the Secretary of State
on December 6, 2006, 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 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 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 Oak Terrace, so long as Millenium Oak Terrace 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 11, 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 Oak Terrace” shall refer to
Millenium Oak Terrace, LLC, a California limited liability company,
199 S. Los Robles Ave., Suite 200, Pasadena, CA 91 101, Tax ID:
20-4104138.
“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).
“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 were issued to SIR 11. 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
SIR I1 on the date hereof and are equal to its 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 Hickory Glen
Apartments, an independent living community located at 1700 W.
Washington, City of Springfield, County of Sangamon, State of
Illinois (formerly known as “Oak Terrace Active Retirement
Center”) 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 Kansas
“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 (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.l(b).
|
3.
|
Capitalization and Financing.
|
3.1
Partner’s Capital
Contribution. The initial capital was contributed by SIR II in the
form of all right, title and interest in the Property, for which
the legal description is attached hereto as Exhibit A, together
with the other assets and liabilities related to such Property. In
consideration for the Property, SIR I1 received 100% of the
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.
|
4.
|
Allocation of Tax Items.
|
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.
|
5.
|
Distributions / Expenses.
|
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 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 (“Asset Management Fee”)
to the General Partner, or its designated Affiliate, of $2,000. The
Asset Management Fee shall be increased on January 1, 2008 and each
January 1 thereafter by the percentage change in the Consumer Price
Index from the prior January 1.
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; (i) 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; (I) 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) the 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; (p)
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 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, which may be provided by an
independent third-party. If the General Partner or an Affiliate
provides property management services, then the General Partner or
its Affiliate shall accept as compensation in full for the
performance of such services, a management fee in an amount equal
to the lesser of (a) five percent (5%) of the gross revenue of the
real property owned by the Partnership, and (b) the fee that an
independent, third-party property management company would
charge.
|
6.
|
Authority and Responsibilities of the General
Partner.
|
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 Oak
Terrace. 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 Kansas
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 convenient or beneficial to the Partnership; (d) employ
persons, who may be Affiliates of the General Partner, in the
operation and management of the bus
