<PAGE>
EXHIBIT 10.2
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FORM OF
AGREEMENT OF LIMITED PARTNERSHIP
OF
NNN HEALTHCARE/OFFICE REIT HOLDINGS, L.P.
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_______________ __, 2006
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TABLE OF CONTENTS
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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 ____________ ___,
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
<PAGE>
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
_______ ___, 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 ___, 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 Triple Net Properties,
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 a
national
securities exchange.
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 ___, 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 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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(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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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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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 Amount. The Advisor agrees to execute such
documents
as
the General Partner may reasonably require in connection with
the
issuance of REIT Stock if the Listing Amount is paid in the form of
REIT
Stock as provided herein.
(e)
Distribution to Advisor Upon Termination.
(i) Upon a Termination Event, the Ad
