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Exhibit 10.2
FORM OF
LIMITED PARTNERSHIP AGREEMENT
OF
BERKELEY INCOME TRUST OPERATING PARTNERS, L.P.
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ARTICLE 1. DEFINED
TERMS............................................................................................1
ARTICLE 2. PARTNERSHIP FORMATION AND
IDENTIFICATION.................................................................8
2.1
Formation................................................................................................8
2.2 Name, Office and Registered
Agent........................................................................8
2.3
Partners.................................................................................................8
2.4 Term and
Dissolution.....................................................................................8
2.5 Filing of Certificate and Perfection of Limited
Partnership..............................................9
2.6 Certificates Describing Partnership
Units................................................................9
ARTICLE 3. BUSINESS OF THE
PARTNERSHIP..............................................................................9
ARTICLE 4. CAPITAL CONTRIBUTIONS AND
ACCOUNTS......................................................................10
4.1 Capital
Contributions...................................................................................10
4.2 Additional Capital Contributions and Issuances of Additional
Partnership
Interests...............................................................................................10
4.3 Additional
Funding......................................................................................12
4.4 Capital
Accounts........................................................................................12
4.5 Percentage
Interests....................................................................................12
4.6 No Interest on
Contributions............................................................................13
4.7 Return of Capital
Contributions.........................................................................13
4.8 No Third Party
Beneficiary..............................................................................13
ARTICLE 5. PROFITS AND LOSSES;
DISTRIBUTIONS.......................................................................13
5.1 Allocation of Profit And
Loss...........................................................................13
5.2 Distribution of
Cash....................................................................................15
5.3 REIT Distribution
Requirements..........................................................................16
5.4 No Right to Distributions In
Kind.......................................................................16
5.5 Limitations on Return of Capital
Contributions..........................................................17
5.6 Distributions Upon
Liquidation..........................................................................17
5.7 Substantial Economic
Effect.............................................................................17
POWERS OF THE GENERAL
PARTNER...................................................................................................17
6.1 Management of the
Partnership...........................................................................17
6.2 Delegation of
Authority.................................................................................20
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6.3 Indemnification and Exculpation of
Indemnitees..........................................................20
6.4 Liability of the General
Partner........................................................................21
6.5 Reimbursement of General
Partner........................................................................22
6.6 Outside
Activities......................................................................................22
6.7 Employment or Retention of
Affiliates...................................................................23
6.8 General Partner
Participation...........................................................................23
6.9 Title to Partnership
Assets.............................................................................23
6.10
Miscellaneous...........................................................................................24
ARTICLE 7. CHANGES IN GENERAL
PARTNER..............................................................................24
7.1 Transfer of the General Partner's Partnership
Interest..................................................24
7.2 Admission of a Substitute or Additional General
Partner.................................................26
7.3 Effect of Bankruptcy, Withdrawal, Dissolution of a General
Partner......................................26
7.4 Removal of a General
Partner............................................................................27
ARTICLE 8. RIGHTS AND OBLIGATIONS OF THE LIMITED
PARTNERS..........................................................28
8.1 Management of the
Partnership...........................................................................28
8.2 Power of
Attorney.......................................................................................28
8.3 Limitation on Liability of Limited
Partners.............................................................28
8.4 Ownership by Limited Partner of Corporate General Partner or
Affiliate..................................28
8.5 Exchange
Right..........................................................................................29
ARTICLE 9. TRANSFERS OF LIMITED PARTNERSHIP
INTERESTS..............................................................30
9.1 Purchase for
Investment.................................................................................30
9.2 Restrictions on Transfer of Limited Partnership
Interests...............................................31
9.3 Admission of Substitute Limited
Partner.................................................................32
9.4 Rights of Assignees of Partnership
Interests............................................................33
9.5 Effect of Bankruptcy, Death, Incompetence or Termination of
a Limited Partner...........................33
9.6 Joint Ownership of
Interests............................................................................34
9.7 Redemption of Partnership
Units.........................................................................34
ARTICLE 10. BOOKS AND RECORDS; ACCOUNTING; TAX
MATTERS..............................................................34
10.1 Books and
Records.......................................................................................34
10.2 Custody of Partnership Funds; Bank
Accounts.............................................................34
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10.3 Fiscal and Taxable
Year.................................................................................35
10.4 Annual Tax Information and
Report.......................................................................35
10.5 Tax Matters Partner; Tax Elections; Special Basis
Adjustments...........................................35
10.6 Reports to Limited
Partners.............................................................................35
ARTICLE 11. AMENDMENT OF AGREEMENT;
MERGER..........................................................................36
ARTICLE 12. GENERAL
PROVISIONS......................................................................................36
12.1
Notices.................................................................................................36
12.2 Survival of
Rights......................................................................................37
12.3 Additional
Documents....................................................................................37
12.4
Severability............................................................................................37
12.5 Entire
Agreement........................................................................................37
12.6 Pronouns and
Plurals....................................................................................37
12.7
Headings................................................................................................37
12.8
Counterparts............................................................................................37
12.9 Governing
Law...........................................................................................37
EXHIBIT A - General Partner and Original Limited Partner,
Capital Contributions and
Percentage
Interests................................................................................................39
EXHIBIT B - Notice of Exercise of
Exchange......................................................................................40
EXHIBIT C - Indemnification
Guideline...........................................................................................41
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LIMITED PARTNERSHIP AGREEMENT
OF
BERKELEY INCOME TRUST OPERATING PARTNERS, L.P.
Berkeley Income Trust Operating Partners, L.P. (the
"Partnership"), was
formed as a limited partnership under the law of the State of
Delaware, pursuant
to a Certificate of Limited Partnership filed with the Office of
the Secretary
of State of the State of Delaware on May, 2005. This Agreement
of Limited
Partnership ("Agreement") is entered into effective as of May,
2005 between
Berkeley Income Trust, Inc., a Maryland corporation (the
"General Partner") and
the Limited Partners set forth on Exhibit A hereto. Capitalized
terms used
herein but not otherwise defined shall have the meanings given
them in Article
1.
NOW, THEREFORE, in consideration of the foregoing, of mutual
covenants
between the parties hereto, and of other good and valuable
consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto
agree as follows:
ARTICLE 1.
DEFINED TERMS
The following defined terms used in this Agreement shall have
the meanings
specified below:
"Act" means the Delaware Revised Uniform Limited Partnership
Act, as it
may be amended from time to time.
"Additional Funds" has the meaning set forth in Section 4.3.
"Additional Securities" means any additional REIT Shares (other
than REIT
Shares issued in connection with an exchange pursuant to Section
8.5 hereof or
REIT Shares issued pursuant to a dividend reinvestment plan of
the General
Partner) or rights, options, warrants or convertible or
exchangeable securities
containing the right to subscribe for or purchase REIT Shares,
as set forth in
Section 4.2(a)(ii).
"Administrative Expenses" means (i) all administrative and
operating costs
and expenses incurred by the Partnership, (ii) those
administrative costs and
expenses of the General Partner, including any salaries or other
payments to
directors, officers or employees of the General Partner, and any
accounting and
legal expenses of the General Partner, which expenses, the
Partners have agreed,
are expenses of the Partnership and not the General Partner, and
(iii) to the
extent not included in clause (ii) above, REIT Expenses;
provided, however, that
Administrative Expenses shall not include any administrative
costs and expenses
incurred by the General Partner that are attributable to
Properties or
partnership interests in a Subsidiary Partnership (other than
this Partnership)
that are owned by the General Partner directly.
"Advisor or Advisors" means the Person or Persons, if any,
appointed,
employed or contracted with by the General Partner and
responsible for directing
or performing the day-to-day business affairs of the General
Partner, including
any Person to whom the Advisor subcontracts substantially all of
such functions.
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"Affiliate" or "Affiliated" means, as to any individual,
corporation,
partnership, trust, limited liability company or other legal
entity (other than
this Partnership), (i) any Person or entity directly or
indirectly through one
or more intermediaries controlling, controlled by, or under
common control with
another Person or entity; (ii) any Person or entity, directly or
indirectly
owning, controlling, or holding with power to vote ten percent
(10%) or more of
the outstanding voting securities of another Person or entity;
(iii) any
officer, director, general partner or trustee of such Person or
entity; (iv) any
Person ten percent (10%) or more of whose outstanding voting
securities are
directly or indirectly owned, controlled or held, with power to
vote, by such
other Person; and (v) if such other Person or entity is an
officer, director,
general partner, or trustee of a Person or entity, the Person or
entity for
which such Person or entity acts in any such capacity.
"Agreed Value" means the fair market value of a Partner's
non-cash Capital
Contribution as of the date of contribution as agreed to by such
Partner and the
General Partner. The names and addresses of the General Partner
and Original
Limited Partner, number of Partnership Units issued to each of
them, and their
respective Capital Contributions as of the date of contribution
is set forth on
Exhibit A.
"Agreement" means this Agreement of Limited Partnership, as
amended,
modified supplemented or restated from time to time, as the
context requires.
"Articles of Incorporation" means the Articles of Incorporation
of the
General Partner filed with the Maryland State Department of
Assessments and
Taxation, as amended or restated from time to time.
"Capital Account" has the meaning provided in Section 4.4
hereof.
"Capital Contribution" means the total amount of cash, cash
equivalents,
and the Agreed Value of any Property or other asset (other than
cash)
contributed or agreed to be contributed, as the context
requires, to the
Partnership by each Partner pursuant to the terms of this
Agreement. Any
reference to the Capital Contribution of a Partner shall include
the Capital
Contribution made by a predecessor holder of the Partnership
Interest of such
Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal
to the
Value of the REIT Shares Amount on the date of receipt by the
General Partner of
a Notice of Exchange.
"Certificate" means any instrument or document that is required
under the
laws of the State of Delaware, or any other jurisdiction in
which the
Partnership conducts business, to be signed and sworn to by the
Partners of the
Partnership (either by themselves or pursuant to the
power-of-attorney granted
to the General Partner in Section 8.2 hereof) and filed for
recording in the
appropriate public offices within the State of Delaware or such
other
jurisdiction to perfect or maintain the Partnership as a limited
partnership, to
effect the admission, withdrawal, or substitution of any Partner
of the
Partnership, or to protect the limited liability of the Limited
Partners as
limited partners under the laws of the State of Delaware or such
other
jurisdiction.
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"Code" means the Internal Revenue Code of 1986, as amended, and
as
hereafter amended from time to time. Reference to any particular
provision of
the Code shall mean that provision in the Code at the date
hereof and any
successor provision of the Code.
"Conversion Factor" means 1.0, provided that in the event that
the General
Partner (i) declares or pays a dividend on its outstanding REIT
Shares in REIT
Shares or makes a distribution to all holders of its outstanding
REIT Shares in
REIT Shares, (ii) subdivides its outstanding REIT Shares, or
(iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares,
the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by
a fraction, the
numerator of which shall be the number of REIT Shares issued and
outstanding on
the record date for such dividend, distribution, subdivision or
combination
(assuming for such purposes that such dividend, distribution,
subdivision or
combination has occurred as of such time), and the denominator
of which shall be
the actual number of REIT Shares (determined without the above
assumption)
issued and outstanding on such date and, provided further, that
in the event
that an entity other than an Affiliate of the General Partner
shall become
General Partner pursuant to any merger, consolidation or
combination of the
General Partner with or into another entity (the "Successor
Entity"), the
Conversion Factor shall be adjusted by multiplying the
Conversion Factor by the
number of shares of the Successor Entity into which one REIT
Share is converted
pursuant to such merger, consolidation or combination,
determined as of the date
of such merger, consolidation or combination. Any adjustment to
the Conversion
Factor shall become effective immediately after the effective
date of such event
retroactive to the record date, if any, for such event;
provided, however, that
if the General Partner receives a Notice of Exchange after the
record date, but
prior to the effective date of such dividend, distribution,
subdivision or
combination, the Conversion Factor shall be determined as if the
General Partner
had received the Notice of Exchange immediately prior to the
record date for
such dividend, distribution, subdivision or combination.
"Event of Bankruptcy as to any Person" means the filing of a
petition for
relief as to such Person as debtor or bankrupt under the
Bankruptcy Code of 1978
or similar provision of law of any jurisdiction (except if such
petition is
contested by such Person and has been dismissed within 90 days);
insolvency or
bankruptcy of such Person as finally determined by a court
proceeding; filing by
such Person of a petition or application to accomplish the same
or for the
appointment of a receiver or a trustee for such Person or a
substantial part of
his assets; commencement of any proceedings relating to such
Person as a debtor
under any other reorganization, arrangement, insolvency,
adjustment of debt or
liquidation law of any jurisdiction, whether now in existence or
hereinafter in
effect, either by such Person or by another, provided that if
such proceeding is
commenced by another, such Person indicates his approval of such
proceeding,
consents thereto or acquiesces therein, or such proceeding is
contested by such
Person and has not been finally dismissed within 90 days.
"Exchange Amount" means either the Cash Amount or the REIT
Shares Amount,
as selected by the General Partner in its sole and absolute
discretion pursuant
to Section 8.5(b) hereof.
"Exchange Right" has the meaning provided in Section 8.5(a)
hereof.
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"Exchanging Partner" has the meaning provided in Section 8.5(a)
hereof.
"General Partner" means Berkeley Income Trust, Inc., a
Maryland
corporation, and any Person who becomes a substitute or
additional General
Partner as provided herein, and any of their successors as
General Partner.
"General Partnership Interest" means a Partnership Interest held
by the
General Partner that is a general partnership interest.
"Indemnitee" means (i) the General Partner or a director,
officer or
employee of the General Partner or Partnership, (ii) the Advisor
or a director,
officer, employee of the Advisor or another agent of the Advisor
if such agent
is an Affiliate of the Advisor and (iii) such other Persons
(including
Affiliates of the General Partner, the Advisor or the
Partnership) as the
General Partner may designate from time to time, in its sole and
absolute
discretion.
"Independent Director" means a director of the General Partner
who is not
an officer or employee of the General Partner, any Affiliate of
an officer or
employee or any Affiliate of (i) any lessee of any property of
the General
Partner or any Subsidiary of the General Partner, (ii) any
Subsidiary of the
General Partner, or (iii) any partnership that is an Affiliate
of the General
Partner.
"Limited Partner" means any Person named as a Limited Partner on
Exhibit A
attached hereto, and any Person who becomes a Substitute Limited
Partner, in
such Person's capacity as a Limited Partner in the
Partnership.
"Limited Partnership Interest" means the ownership interest of a
Limited
Partner in the Partnership at any particular time, including the
right of such
Limited Partner to any and all benefits to which such Limited
Partner may be
entitled as provided in this Agreement and in the Act, together
with the
obligations of such Limited Partner to comply with all the
provisions of this
Agreement and of such Act.
"Listing" means the listing of the shares of the General
Partner's stock,
previously issued by the General Partner pursuant to an
effective registration
statement and such shares currently registered with the SEC
pursuant to an
effective registration statement, on a national securities
exchange or
over-the-counter market.
"Loss" has the meaning provided in Section 5.1(h) hereof.
"Management Agreement" means the agreement between the General
Partner and
the Advisor pursuant to which the Advisor will direct or perform
the day-to-day
business affairs of the General Partner.
"Notice of Exchange" means the Notice of Exercise of Exchange
Right
substantially in the form attached as Exhibit B hereto.
"NYSE" means the New York Stock Exchange.
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"Offer" has the meaning set forth in Section 7.1(c) hereof.
"Offering" means the initial offer and sale by the General
Partner and the
purchase by the Dealer Manager (as defined in the Prospectus) of
REIT Shares for
sale to the public.
"OP Unitholders" means all holders of Partnership Interests.
"Original Limited Partner" means the Limited Partners designated
as
"Original Limited Partners" on Exhibit A hereto.
"Partner" means any General Partner or Limited Partner.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set
forth in
Regulations Section 1.704-2(i). A Partner's share of Partner
Nonrecourse Debt
Minimum Gain shall be determined in accordance with Regulations
Section
1.704-2(i)(5).
"Partnership" means Berkeley Income Trust Operating Partners,
L.P., a
Delaware limited partnership.
"Partnership Interest" means an ownership interest in the
Partnership held
by either a Limited Partner or the General Partner and includes
any and all
benefits to which the holder of such a Partnership Interest may
be entitled as
provided in this Agreement, together with all obligations of
such Person to
comply with the terms and provisions of this Agreement.
"Partnership Minimum Gain" has the meaning set forth in
Regulations
Section 1.704-2(d). In accordance with Regulations Section
1.704-2(d), the
amount of Partnership Minimum Gain is determined by first
computing, for each
Partnership nonrecourse liability, any gain the Partnership
would realize if it
disposed of the property subject to that liability for no
consideration other
than full satisfaction of the liability, and then aggregating
the separately
computed gains. A Partner's share of Partnership Minimum Gain
shall be
determined in accordance with Regulations Section
1.704-2(g)(1).
"Partnership Record Date" means the record date established by
the General
Partner for the distribution of cash pursuant to Section 5.2
hereof, which
record date shall be the same as the record date established by
the General
Partner for a distribution to its shareholders of some or all of
its portion of
such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership
Interests of all Partners issued hereunder. The allocation of
Partnership Units
among the Partners shall be as set forth on Exhibit A, as such
Exhibit may be
amended from time to time.
"Percentage Interest" means the percentage ownership interest in
the
Partnership of each Partner, as determined by dividing the
Partnership Units
owned by a Partner by the total number of Partnership Units then
outstanding.
The Percentage Interest of each Partner shall be as set forth on
Exhibit A, as
such Exhibit may be amended from time to time.
"Person" means any individual, partnership, limited liability
company,
corporation, joint venture, trust or other entity.
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"Profit" has the meaning provided in Section 5.1(h) hereof.
"Property" means any office or industrial property or other
investment in
which the Partnership holds an ownership interest.
"Prospectus" means the final prospectus delivered to purchasers
of REIT
Shares in the Offering.
"Regulations" means the Federal income tax regulations
promulgated under
the Code, as amended and as hereafter amended from time to time.
Reference to
any particular provision of the Regulations shall mean that
provision of the
Regulations on the date hereof and any successor provision of
the Regulations.
"Regulatory Allocations" has the meaning set forth in Section
5.1(i)
hereof.
"REIT" means a real estate investment trust under Sections 856
through 860
of the Code.
"REIT Expenses" means (i) costs and expenses relating to the
formation and
continuity of existence and operation of the General Partner and
any
Subsidiaries thereof (which Subsidiaries shall, for purposes
hereof, be included
within the definition of General Partner), including taxes, fees
and assessments
associated therewith, any and all costs, expenses or fees
payable to any
director, officer, or employee of the General Partner, (ii)
costs and expenses
relating to any public offering and registration of securities
by the General
Partner and all statements, reports, fees and expenses
incidental thereto,
including, without limitation, underwriting discounts and
selling commissions
applicable to any such offering of securities, and any costs and
expenses
associated with any claims made by any holders of such
securities or any
underwriters or placement agents thereof, (iii) costs and
expenses associated
with any repurchase of any securities by the General Partner,
(iv) costs and
expenses associated with the preparation and filing of any
periodic or other
reports and communications by the General Partner under federal,
state or local
laws or regulations, including filings with the SEC, (v) costs
and expenses
associated with compliance by the General Partner with laws,
rules and
regulations promulgated by any regulatory body, including the
SEC and any
securities exchange, (vi) costs and expenses associated with any
401(k) plan,
incentive plan, bonus plan or other plan providing for
compensation for the
employees of the General Partner, (vii) costs and expenses
incurred by the
General Partner relating to any issuing or redemption of
Partnership Interests,
and (viii) all other operating or administrative costs of the
General Partner
incurred in the ordinary course of its business on behalf of or
in connection
with the Partnership.
"REIT Share" means a common share of beneficial interest in the
General
Partner (or successor entity, as the case may be).
"REIT Shares Amount" means a number of REIT Shares equal to the
product of
the number of Partnership Units offered for exchange by an
Exchanging Partner,
multiplied by the Conversion Factor as adjusted to and including
the Specified
Exchange Date; provided that in the event the General Partner
issues to all
holders of REIT Shares rights, options, warrants or convertible
or exchangeable
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securities entitling the shareholders to subscribe for or
purchase REIT Shares,
or any other securities or property (collectively, the
"rights"), and the rights
have not expired at the Specified Exchange Date, then the REIT
Shares Amount
shall also include the rights issuable to a holder of the REIT
Shares Amount of
REIT Shares on the record date fixed for purposes of determining
the holders of
REIT Shares entitled to rights.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Service" means the United States Internal Revenue Service.
"Specified Exchange Date" means the first business day of the
month that
is at least 60 business days after the receipt by the General
Partner of the
Notice of Exchange.
"Subsidiary means" with respect to any Person, any corporation
or other
entity of which a majority of (i) the voting power of the voting
equity
securities or (ii) the outstanding equity interests is owned,
directly or
indirectly, by such Person.
"Subsidiary Partnership" means any partnership of which the
partnership
interests therein are owned by the General Partner or a direct
or indirect
subsidiary of the General Partner.
"Substitute Limited Partner" means any Person admitted to the
Partnership
as a Limited Partner pursuant to Section 9.3 hereof.
"Successor Entity" has the meaning provided in the definition
of
"Conversion Factor" contained herein.
"Surviving General Partner" has the meaning set forth in Section
7.1(d)
hereof.
"Transaction" has the meaning set forth in Section 7.1(c)
hereof.
"Transfer" has the meaning set forth in Section 9.2(a)
hereof.
"Value" means with respect to any security, the average of the
daily
market price of such security for the ten consecutive trading
days immediately
preceding the date of such valuation. The market price for each
such trading day
shall be: (i) if the security is listed or admitted to trading
on any securities
exchange or the NYSE, the sale price, regular way, on such day,
or if no such
sale takes place on such day, the average of the closing bid and
asked prices,
regular way, on such day, (ii) if the security is not listed or
admitted to
trading on any securities exchange or the NYSE, 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 (iii) if the security is
not listed or
admitted to trading on any securities exchange or the NYSE and
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
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 days
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<PAGE>
prior to the date in question) for which prices have been so
reported; provided
that if there are no bid and asked prices reported during the
ten days prior to
the date in question, the value of the security 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. In the
event the security includes any additional rights, 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.
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1 Formation. The Partnership was formed as a limited
partnership
pursuant to the Act for the purposes and upon the terms and
conditions set forth
in this Agreement.
2.2 Name, Office and Registered Agent. The name of the
Partnership is
Berkeley Income Trust Operating Partners, L.P. The specified
office and place of
business of the Partnership shall be 1012 Sutton Way, Grass
Valley, California
95945. The General Partner may at any time change the location
of such office,
provided the General Partner gives notice to the Partners of any
such change.
The name and address of the Partnership's registered agent is
Corporate Research
Services, Inc., 32 Lockerman Square, Suite 109, Dover, Delaware
19904. or any
other party designated by the General Partner from time to time.
The sole duty
of the registered agent as such is to forward to the Partnership
any notice that
is served on him as registered agent.
2.3 Partners.
(a) The General Partner of the Partnership is Berkeley Income
Trust,
Inc., a Maryland corporation. Its principal place of business is
the same as
that of the Partnership.
(b) The Limited Partners are those Persons identified as
Limited
Partners on Exhibit A hereto, as amended from time to time.
2.4 Term and Dissolution.
(a) The Partnership shall commence on formation pursuant to
Section
2.1 and shall continue in full force and effect until May __,
2065, unless the
Partnership is dissolved prior to that date upon the first to
occur of any of
the following events:
(i) The occurrence of an Event of Bankruptcy as to a General
Partner or the dissolution, removal or withdrawal of a General
Partner unless
the business of the Partnership is continued pursuant to Section
7.3(b) hereof;
provided that if a General Partner is on the date of such
occurrence a
partnership, the dissolution of such General Partner as a result
of the
dissolution, withdrawal, removal or Event of Bankruptcy of a
partner in such
partnership shall not be an event of dissolution of the
Partnership if the
business of such General Partner is continued by the remaining
partner or
partners, either alone or with additional partners, and such
General Partner and
such partners comply with any other applicable requirements of
this Agreement;
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(ii) The passage of 90 days after the sale or other
disposition of all or substantially all of the assets of the
Partnership
(provided that if the Partnership receives an installment
obligation as
consideration for such sale or other disposition, the
Partnership shall
continue, unless sooner dissolved under the provisions of this
Agreement, until
such time as such note or notes are paid in full);
(iii) The exchange of all Limited Partnership Interests
(other
than any of such interests held by the General Partner or
Affiliates of the
General Partner) for REIT Shares or the securities of any other
entity; or
(iv) The election by the General Partner that the
Partnership
should be dissolved.
(b) Upon dissolution of the Partnership (unless the business of
the
Partnership is continued pursuant to Section 7.3(b) hereof), the
General Partner
(or its trustee, receiver, successor or legal representative)
shall amend or
cancel the Certificate and liquidate the Partnership's assets
and apply and
distribute the proceeds thereof in accordance with Section 5.6
hereof.
Notwithstanding the foregoing, the liquidating General Partner
may either (i)
defer liquidation of, or withhold from distribution for a
reasonable time, any
assets of the Partnership (including those necessary to satisfy
the
Partnership's debts and obligations), or (ii) distribute the
assets to the
Partners in kind.
2.5 Filing of Certificate and Perfection of Limited Partnership.
The
General Partner shall execute, acknowledge, record and file at
the expense of
the Partnership, The Certificate any and all amendments thereto
and all
requisite fictitious name statements and notices in such places
and
jurisdictions as may be necessary to cause the Partnership to be
treated as a
limited partnership under, and otherwise to comply with, the
laws of each state
or other jurisdiction in which the Partnership conducts
business.
2.6 Certificates Describing Partnership Units. At the request of
a Limited
Partner, the General Partner, at its option, may issue a
certificate summarizing
the terms of such Limited Partner's interest in the Partnership,
including the
number of Partnership Units owned and the Percentage Interest
represented by
such Partnership Units as of the date of such certificate. Any
such certificate
(i) shall be in form and substance as approved by the General
Partner, (ii)
shall not be negotiable and (iii) shall bear a legend to the
following effect:
THIS CERTIFICATE IS NOT NEGOTIABLE. THE PARTNERSHIP UNITS
REPRESENTED BY THIS
CERTIFICATE ARE GOVERNED BY AND TRANSFERABLE ONLY IN ACCORDANCE
WITH THE
PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP OF BERKELEY
INCOME TRUST
OPERATING PARTNERS, L.P., AS AMENDED FROM TIME TO TIME.
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ARTICLE 3.
BUSINESS OF THE PARTNERSHIP
The purpose and nature of the business to be conducted by the
Partnership
is (i) to conduct any business that may be lawfully conducted by
a limited
partnership organized pursuant to the Act, 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 qualify as a REIT, unless the General
Partner otherwise
ceases to qualify as a REIT, (ii) to enter into any partnership,
joint venture
or other similar arrangement to engage in any of the foregoing
or the ownership
of interests in any entity engaged in any of the foregoing and
(iii) to do
anything necessary or incidental to the foregoing. In connection
with the
foregoing, and without limiting the General Partner's right in
its sole and
absolute discretion to cease qualifying as a REIT, the Partners
acknowledge that
the General Partner's current status as a REIT and the avoidance
of income and
excise taxes on the General Partner inures to the benefit of all
the Partners
and not solely to the General Partner. Notwithstanding the
foregoing, the
Limited Partners agree that the General Partner may terminate
its status as a
REIT under the Code at any time to the full extent permitted
under the Articles
of Incorporation. The General Partner shall also be empowered to
do any and all
acts and things necessary or prudent to ensure that the
Partnership will not be
classified as a "publicly traded partnership" for purposes of
Section 7704 of
the Code.
ARTICLE 4.
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1 Capital Contributions. The General Partner and the Limited
Partners
have made capital contributions to the Partnership in exchange
for the
Partnership Interests set forth opposite their names on Exhibit
A, as amended
from time to time.
4.2 Additional Capital Contributions and Issuances of
Additional
Partnership Interests. Except as provided in this Section 4.2 or
in Section 4.3,
the Partners shall have no right or obligation to make any
additional Capital
Contributions or loans to the Partnership. The General Partner
may contribute
additional capital to the Partnership, from time to time, and
receive additional
Partnership Interests in respect thereof, in the manner
contemplated in this
Section 4.2.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to
cause
the Partnership to issue such additional Partnership Interests
in the form of
Partnership Units for any Partnership purpose at any time or
from time to time,
to the Partners (including the General Partner) or to other
Persons for such
consideration and on such terms and conditions as shall be
established by the
General Partner in its sole and absolute discretion, all without
the approval of
any Limited Partners. Any additional Partnership Interests
issued thereby may be
issued in one or more classes, or one or more series of any of
such classes,
with such designations, preferences and relative, participating,
optional or
other special rights, powers and duties, including rights,
powers and duties
senior to Limited Partnership Interests, all as shall be
determined by the
General Partner in its sole and absolute discretion and without
the approval of
any Limited Partner, subject to Delaware law, including, without
limitation, (i)
the allocations of items of Partnership income, gain, loss,
deduction and credit
to each such class or series of Partnership Interests; (ii) the
right of each
such class or series of Partnership Interests to share in
Partnership
distributions; and (iii) the rights of each such class or series
of Partnership
Interests upon dissolution and liquidation of the Partnership;
provided,
however, that no additional Partnership Interests shall be
issued to the General
Partner unless:
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<PAGE>
(1) (A) the additional Partnership Interests are issued in
connection with an issuance of REIT Shares of or other interests
in the General
Partner, which shares or interests have designations,
preferences and other
rights, all such that the economic interests are substantially
similar to the
designations, preferences and other rights of the additional
Partnership
Interests issued to the General Partner by the Partnership in
accordance with
this Section 4.2 and (B) the General Partner shall make a
Capital Contribution
to the Partnership in an amount equal to the proceeds raised in
connection with
the issuance of such shares of stock of or other interests in
the General
Partner;
(2) the additional Partnership Interests are issued in
exchange for property owned by the General Partner with a fair
market value, as
determined by the General Partner, in good faith, equal to the
value of the
Partnership Interests; or
(3) the additional Partnership Interests are issued to all
Partners holding Partnership Units in proportion to their
respective Percentage
Interests.
In addition, the General Partner may acquire Partnership
Interests from
other Partners pursuant to this Agreement. In the event that the
Partnership
issues Partnership Interests pursuant to this Section 4.2(a),
the General
Partner shall make such revisions to this Agreement (without any
requirement of
receiving approval of the Limited Partners) as it deems
necessary to reflect the
issuance of such additional Partnership Interests and any
special rights,
powers, and duties associated therewith.
Without limiting the foregoing, the General Partner is
expressly
authorized to cause the Partnership to issue Partnership Units
for less than
fair market value, so long as the General Partner concludes in
good faith that
such issuance is in the best interests of the General Partner
and the
Partnership.
(ii) Upon Issuance of Additional Securities. The General
Partner shall not issue any additional REIT Stock (other then
REIT Stock issued
in connection with an exchange pursuant to Section 8.5 hereof)
or rights,
options, warrants or convertible or exchangeable securities
containing the right
to subscribe for or purchase REIT Stock (collectively,
"Additional Securities"
other than to all holders of REIT Stock, unless (A) the General
Partner shall
cause the Partnership to issue to the General Partner, as the
General Partner
may designate, Partnership Interests or rights, options,
warrants or convertible
or exchangeable securities of the Partnership having
designations, preferences
and other rights, all such that the economic interests are
substantially similar
to those of the Additional Securities, and (B) the General
Partner contributes
the net proceeds from the issuance of such Additional Securities
and from any
exercise of rights contained in such Additional Securities,
directly and through
the General Partner, to the Partnership; provided, however, that
the General
Partner is allowed to issue Additional Securities in connection
with an
acquisition of a property to be held directly by the General
Partner, but if and
only if, such direct acquisition and issuance of Additional
Securities have been
approved and determined to be in the best interests of the
General Partner and
11
<PAGE>
the Partnership by a majority of the Independent Directors (as
defined in the
General Partner's Articles of Incorporation). Without limiting
the foregoing,
the General Partner is expressly authorized to issue Additional
Securities for
less than fair market value, and to cause the Partnership to
issue to the
General Partner corresponding Partnership Interests, so long as
(x) the General
Partner concludes in good faith that such issuance is in the
best interests of
the General Partner and the Partnership, including without
limitation, the
issuance of REIT Shares and corresponding Partnership Units
pursuant to an
employee share purchase plan providing for employee purchases of
REIT Shares at
a discount from fair market value or employee stock options that
have an
exercise price that is less than the fair market value of the
REIT Shares,
either at the time of issuance or at the time of exercise, and
(y) the General
Partner contributes all proceeds from such issuance to the
Partnership. For
example, in the event the General Partner issues REIT Shares for
a cash purchase
price and contributes all of the proceeds of such issuance to
the Partnership as
required hereunder, the General Partner shall be issued a number
of additional
Partnership Units equal to the product of (A) the number of such
REIT Shares
issued by the General Partner, the proceeds of which were so
contributed,
multiplied by (B) a fraction, the numerator of which is 100%,
and the
denominator of which is the Conversion Factor in effect on the
date of such
contribution.
(b) Certain Deemed Contributions of Proceeds of Issuance of
REIT
Shares. In connection with any and all issuances of REIT Shares,
the General
Partner shall make Capital Contributions to the Partnership of
the proceeds
therefrom, provided that if the proceeds actually received and
contributed by
the General Partner are less than the gross proceeds of such
issuance as a
result of any underwriter's discount or other expenses paid or
incurred in
connection with such issuance, then the General Partner shall be
deemed to have
made Capital Contributions to the Partnership in the aggregate
amount of the
gross proceeds of such issuance and the Partnership shall be
deemed
simultaneously to have paid such offering expenses in accordance
with Section
6.5 hereof and in connection with the required issuance of
additional
Partnership Units to the General Partner for such Capital
Contributions pursuant
to Section 4.2(a) hereof.
4.3 Additional Funding. If the General Partner determines that
it is in
the best interests of the Partnership to provide for additional
Partnership
funds ("Additional Funds") for any Partnership purpose, the
General Partner may
(i) cause the Partnership to obtain such funds from outside
borrowings, or (ii)
elect to have the General Partner or any of its Affiliates
provide such
Additional Funds to the Partnership through loans or
otherwise.
4.4 Capital Accounts. A separate capital account (a "Capital
Account")
shall be established and maintained for each Partner in
accordance with
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, or (iii) the Partnership is liquidated within the
meaning of
Regulation Section 1.704-1(b)(2)(ii)(g), 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
12
<PAGE>
with 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.
4.5 Percentage Interests. If the number of outstanding
Partnership Units
increases or decreases during a taxable year, each Partner's
Percentage Interest
shall be adjusted by the General Partner effective as of the
effective date of
each such increase or decrease to a percentage equal to the
number of
Partnership Units held by such Partner divided by the aggregate
number of
Partnership Units outstanding after giving effect to such
increase or decrease.
If the Partners' Percentage Interests are adjusted pursuant to
this Section 4.5,
the Profits and Losses for the taxable year in which the
adjustment occurs shall
be allocated between the part of the year ending on the day when
the
Partnership's property is revalued by the General Partner and
the part of the
year beginning on the following day either (i) as if the taxable
year had ended
on the date of the adjustment or (ii) based on the number of
days in each part.
The General Partner, in its sole and absolute discretion, shall
determine which
method shall be used to allocate Profits and Losses for the
taxable year in
which the adjustment occurs. The allocation of Profits and
Losses for the
earlier part of the year shall be based on the Percentage
Interests before
adjustment, and the allocation of Profits and Losses for the
later part shall be
based on the adjusted Percentage Interests.
4.6 No Interest on Contributions. No Partner shall be entitled
to interest
on its Capital Contribution.
4.7 Return of Capital Contributions. No Partner shall be
entitled to
withdraw any part of its Capital Contribution or its Capital
Account or to
receive any distribution from the Partnership, except as
specifically provided
in this Agreement. Except as otherwise provided herein, there
shall be no
obligation to return to any Partner or withdrawn Partner any
part of such
Partner's Capital Contribution for so long as the Partnership
continues in
existence.
4.8 No Third Party Beneficiary. No creditor or other third party
having
dealings with the Partnership shall have the right to enforce
the right or
obligation 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. None of the rights or obligations of the
Partners herein
set forth to make Capital Contributions or loans to the
Partnership shall be
deemed an asset of the Partnership for any purpose by any
creditor or other
third party, nor may such rights or obligations be sold,
transferred or assigned
by the Partnership or pledged or encumbered by the Partnership
to secure any
debt or other obligation of the Partnership or of any of the
Partners. In
addition, it is the intent of the parties hereto that no
distribution to any
Limited Partner shall be deemed a return of money or other
property in violation
of the Act. However, if any court of competent jurisdiction
holds that,
notwithstanding the provisions of this Agreement, any Limited
Partner is
obligated to return such money or property, such obligation
shall be the
obligation of such Limited Partner and not of the General
Partner. Without
limiting the generality of the foregoing, a deficit Capital
Account of a Partner
shall not be deemed to be a liability of such Partner nor an
asset or property
of the Partnership.
13
<PAGE>
ARTICLE 5.
PROFITS AND LOSSES; DISTRIBUTIONS
5.1 Allocation of Profit And Loss.
(a) General. Profit and Loss of the Partnership for each fiscal
year
or other applicable period of the Partnership shall be allocated
among the
Partners in accordance with their respective Percentage
Interests.
(b) Minimum Gain Chargeback. Notwithstanding any provision to
the
contrary, (i) any expense of the Partnership that is a
"nonrecourse deduction"
within the meaning of Regulations Section 1.704-2(b)(1) shall be
allocated in
accordance with the Partners' respective Percentage Interests,
(ii) any expense
of the Partnership that is a "partner nonrecourse deduction"
within the meaning
of Regulations Section 1.704-2(i)(2) shall be allocated to the
Partner that
bears the "economic risk of loss" of such deductions in
accordance with
Regulations Section 1.704-2(i)(1), (iii) if there is a net
decrease in
Partnership Minimum Gain within the meaning of Regulations
Section 1.704-2(f)(1)
for any Partnership taxable year, then, subject to the
exceptions set forth in
Regulations Section 1.704-2(f)(2),(3), (4) and (5), items of
gain and income
shall be allocated among the Partners in accordance with
Regulations Section
1.704-2(f) and the ordering rules contained in Regulations
Section 1.704-2(j),
and (iv) if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain
within the meaning of Regulations Section 1.704-2(i)(4) for any
Partnership
taxable year, then, subject to the exceptions set forth in
Regulations Section
1.704-(2)(g), items of gain and income shall be allocated among
the Partners in
accordance with Regulations Section 1.704-2(i)(4) and the
ordering rules
contained in Regulations Section 1.704-2(j). A Partner's
"interest in
partnership profits" for purposes of determining its share of
the nonrecourse
liabilities of the Partnership within the meaning of Regulations
Section
1.752-3(a)(3) shall be such Partner's Percentage Interest.
(c) Qualified Income Offset. If a Partner unexpectedly receives
in
any taxable year an adjustment, allocation, or distribution
described in
subparagraphs (4), (5), or (6) of Regulations Section
1.704-1(b)(2)(ii)(d) that
causes or increases a deficit balance in such Partner's Capital
Account that
exceeds the sum of such Partner's shares of Partnership Minimum
Gain and Partner
Nonrecourse Debt Minimum Gain, as determined in accordance with
Regulations
Sections 1.704-2(g) and 1.704-2(i), such Partner shall be
allocated specially
for such taxable year (and, if necessary, later taxable years)
items of income
and gain in an amount and manner sufficient to eliminate such
deficit Capital
Account balance as quickly as possible as provided in
Regulations Section
1.704-1(b)(2)(ii)(d). This Section 5.1(e) is intended to
constitute a "qualified
income offset" under Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall
be interpreted consistently therewith. After the occurrence of
an allocation of
income or gain to a Partner in accordance with this Section
5.1(e), to the
extent permitted by Regulations Section 1.704-1(b), items of
expense or loss
shall be allocated to such Partner in an amount necessary to
offset the income
or gain previously allocated to such Partner under this Section
5.1(e).
14
<PAGE>
(d) Capital Account Deficits. Loss shall not be allocated to
a
Limited Partner to the extent that such allocation would cause
or increase a
deficit in such Partner's Capital Account at the end of any
fiscal year (after
reduction to reflect the items described in Regulations
Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6)) to exceed the sum of such
Partner's shares
of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain, as
determined in accordance with Regulations Sections 1.704-2(g)
and 1.704-2(i).
Any Loss in excess of that limitation shall be allocated to the
General Partner.
After the occurrence of an allocation of Loss to the General
Partner in
accordance with this Section 5.1(d), to the extent permitted by
Regulations
Section 1.704-1(b), Profit shall be allocated to such Partner in
an amount
necessary to offset the Loss previously allocated to each
Partner under this
Section 5.1(d).
(e) Allocations Between Transferor and Transferee. If a
Partner
transfers any part or all of its Partnership Interest, the
distributive shares
of the various items of Profit and Loss allocable among the
Partners during such
fiscal year of the Partnership shall be allocated between the
transferor and the
transferee Partner either (i) as if the Partnership's fiscal
year had ended on
the date of the tran
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