EXHIBIT
10.1
LIMITED PARTNERSHIP AGREEMENT
OF
CNL
MACQUARIE INCOME, LP
RECITALS
This Limited Partnership Agreement (this “Agreement”)
is entered into this 7th day of April, 2009, between CNL
Macquarie Income GP, LLC , a Delaware limited liability company
(the “General Partner”) and the Limited Partners (as
defined below) set forth on Exhibit A attached hereto.
Capitalized terms used herein but not otherwise defined shall have
the meanings given them in Article 1.
AGREEMENT
WHEREAS, the General Partner is a wholly-owned direct subsidiary of
CNL Macquarie Global Income Trust, Inc., a Maryland corporation
(the “GP Parent” and, together with the General
Partner, the “GP Parties”), which GP Parent is also a
Limited Partner;
WHEREAS, the GP Parent intends to qualify as a real estate
investment trust under the Internal Revenue Code of 1986, as
amended;
WHEREAS, the GP Parties desire to conduct their current and future
business through the Operating Partnership (as defined below);
WHEREAS, in furtherance of the foregoing, the GP Parties desire to
contribute certain assets to the Operating Partnership from time to
time;
WHEREAS, in exchange for the GP Parties’ contribution of
assets, the parties desire that the Operating Partnership issue
Operating Partnership Units (as defined below) to the GP Parties in
accordance with the terms of this Agreement;
WHEREAS, in furtherance of the Operating Partnership’s
business, the Operating Partnership may acquire assets from time to
time by means of the contribution of such assets to the Operating
Partnership by the owners thereof in exchange for Operating
Partnership Units; and
WHEREAS, the parties hereto wish to establish herein their
respective rights and obligations in connection with all of the
foregoing and certain other matters;
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:
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 4.4 hereof.
“ADDITIONAL SECURITIES” means any additional REIT
Shares (other than REIT Shares issued in connection with a
redemption pursuant to Section 8.5 hereof or REIT Shares
issued pursuant to a dividend reinvestment plan of the GP Parent)
or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT
Shares issued from time to time by the GP Parent, as set forth in
Section 4.3(a).
“ADJUSTED CAPITAL ACCOUNT” means, with respect to a
given Partner and on a given date, such Partner’s Capital
Account balance plus the sum of such Partner’s share of
Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain
and the amount, if any and without duplication, that such Partner
would be obligated to contribute to the capital of the Operating
Partnership if the Operating Partnership were to undergo a
Hypothetical Liquidation as of such date.
“ADMINISTRATIVE EXPENSES” means (i) all
administrative and operating costs and expenses incurred by the
Operating Partnership, (ii) those administrative costs and
expenses of the GP Parties, including any salaries or other
payments to directors, officers or employees of the GP Parties, and
any accounting and legal expenses of the GP Parties, which
expenses, the Partners have agreed, are expenses of the Operating
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 GP Parties
that are attributable to Properties or partnership interests in a
Subsidiary Partnership that are owned by the GP Parties
directly.
“ADVISOR” or “ADVISORS” means CNL Macquarie
Global Income Advisors, LLC, a limited liability company organized
under the laws of the state of Delaware, or any successor advisor
to the GP Parent and the Operating Partnership. Notwithstanding the
forgoing, a Person hired or retained by CNL Macquarie Global Income
Advisors, LLC to perform property and securities management and
related services for the General Partner or the Operating
Partnership that is not hired or retained to perform substantially
all of the functions of CNL Macquarie Global Income Advisors, LLC
with respect to the General Partner or the Operating Partnership as
a whole shall not be deemed to be an Advisor.
“AFFILIATE” or “AFFILIATED” or any
derivation thereof means, when used with reference to a specified
Person, (i) any Person directly or indirectly owning,
controlling or holding, with the power to vote, ten percent
(10%) or more of the outstanding voting securities of such
other Person; (ii) any Person ten percent (10%) 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; or (v) any legal entity for
which such Person acts as an executive officer, director, trustee
or general partner. For purposes of the foregoing,
“control” (including the terms
“controlling,” “controlled by” and
“under common control with”) means the possession,
direct or
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indirect, of the power
to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by
contract or otherwise.
“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 Partners, number of Operating
Partnership Units issued to each Partner, and the Agreed Value of
non-cash Capital Contributions (if any) as of the date of
contribution are set forth on Exhibit A.
“AGREEMENT” means this Limited Partnership Agreement,
as amended, modified supplemented or restated from time to time, as
the context requires.
“APPLICABLE PERCENTAGE” has the meaning provided in
Section 8.5(b) hereof.
“ARTICLES OF INCORPORATION” means the Articles of
Incorporation of the GP Parent, as amended from time to time.
“BOARD OF DIRECTORS” or “BOARD” shall have
the meaning set forth in the Articles of Incorporation.
“CAPITAL ACCOUNT” has the meaning provided in
Section 4.5 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, deemed contributed or agreed
to be contributed, as the context requires, to the Operating
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 Operating Partnership Interest of such Partner.
Notwithstanding the foregoing, if, in connection with a Capital
Contribution of Property or other asset (other than cash), the
Operating Partnership assumes a liability or takes such Property or
other asset subject to a liability, then the amount of the Capital
Contribution shall be the Agreed Value of such Property or other
asset less the amount of such liability.
“CARRYING VALUE” means, with respect to any asset of
the Operating Partnership, the asset’s adjusted net basis for
federal income tax purposes or, in the case of any asset
contributed to the Operating Partnership, the Agreed Value of such
asset at the time of contribution, 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 Regulations Section 1.704-1(b)(2)(iv)(f), as
provided for in Section 4.5. In the case of any asset of the
Operating Partnership that has a Carrying Value that differs from
its adjusted tax basis, the Carrying Value shall be adjusted by the
amount of depreciation, depletion and amortization calculated for
purposes of the definition of Profit and Loss rather than the
amount of depreciation, depletion and amortization determined for
federal income tax purposes.
“CASH AMOUNT” means, with respect to Operating
Partnership Units as to which the Redemption Right has been
exercised via a Notice of Redemption, an amount of cash equal to
the lesser of (i) the Value of the REIT Shares Amount on the
date of receipt by the General
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Partner of a Notice of
Redemption or (ii) the applicable Redemption Price determined
by the General Partner.
“CERTIFICATE” means any instrument or document that is
required under the laws of the State of Delaware or any other
jurisdiction in which the Operating Partnership conducts business,
to be signed and sworn to by the Partners of the Operating
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 Operating Partnership as a
limited partnership, to effect the admission, withdrawal, or
substitution of any Partner of the Operating 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.
“CODE” means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute thereto.
Reference to any provision of the Code shall mean such provision as
in effect from time to time, as the same may be amended, and any
successor provision thereto, as interpreted by any applicable
regulations as in effect from time to time.
“COMMISSION” means the U.S. Securities and Exchange
Commission.
“CONVERSION FACTOR” means 1.0, provided that in the
event that the GP Parent (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 GP Parent shall
become the successor owner of the GP Parent’s Operating
Partnership Interest pursuant to any merger, consolidation or
combination of the GP Parent 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, and, provided further, that if Additional Securities
other than REIT Shares are issued or otherwise distributed to all
holders of the outstanding REIT Shares, then the Conversion Factor
shall be adjusted appropriately as determined by a majority of the
Independent Directors to reflect the value of such Additional
Securities. 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
Redemption 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 Redemption immediately prior to the record
date for such dividend, distribution, subdivision or
combination.
“DIRECTOR” shall have the meaning set forth in the
Articles of Incorporation.
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“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.
“EXCEPTED HOLDER LIMIT” shall have the meaning set
forth in the Articles of Incorporation.
“GAAP” means generally accepted accounting principles
as in effect in the United States of America from time to time or
such other accounting basis mandated by the Commission.
“GENERAL PARTNER” means CNL Macquarie Income GP, LLC, a
Delaware limited liability company, and any Person who becomes a
substitute or additional General Partner as provided herein, and
any of their successors as General Partner.
“GENERAL OPERATING PARTNERSHIP INTEREST” means an
Operating Partnership Interest held by the General Partner that is
a general partnership interest.
“GP PARTIES” has the meaning provided in the Recitals
hereof.
“HYPOTHETICAL LIQUIDATION” means a hypothetical series
of transactions occurring on a given date, in which the Operating
Partnership is liquidated and all assets of the Operating
Partnership, including cash, are sold for cash equal to their
Carrying Value, taking into account any adjustments thereto for
such period, all liabilities of the Operating Partnership are
satisfied in full in cash according to their terms (limited with
respect to each nonrecourse liability to the Carrying Value of the
assets securing such liability) and Net Sales Proceeds (after
satisfaction of such liabilities) are distributed in full pursuant
to Section 5.2(b)(ii).
“INDEMNITEE” means (i) any Person made a party to
a proceeding by reason of its status as the General Partner or a
director, officer or employee of the General Partner or the
Operating Partnership, and (ii) such other Persons (including
Affiliates of the General Partner or the Operating Partnership) as
the General Partner may designate from time to time, in its sole
and absolute discretion.
“INDEPENDENT DIRECTOR” shall have the meaning set forth
in the Articles of Incorporation.
“INITIAL EFFECTIVE DATE” means the effective date of
the GP Parent’s initial registration statement filed with the
Commission on Form S-11 with respect to the issuance of REIT
Shares.
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“JOINT VENTURE” means joint venture or general
partnership arrangements in which the Operating Partnership or any
of its Subsidiaries is a co-venturer or partner and which are
established to acquire Real Properties.
“LIMITED PARTNER” means any Person named as a Limited
Partner on Exhibit A attached hereto, and any Person who becomes an
additional Limited Partner or a Substitute Limited Partner, in such
Person’s capacity as a Limited Partner in the Operating
Partnership.
“LIMITED PARTNERSHIP INTEREST” means the ownership
interest of a Limited Partner in the Operating 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 REIT Shares of the
GP Parent on a national securities exchange or the receipt by the
GP Parent’s stockholders of securities that are listed on a
national securities exchange in exchange for the GP Parent’s
REIT Shares. Upon such commencement of trading of the REIT Shares
on a national securities exchange, the REIT Shares shall be deemed
Listed.
“LOSS” has the meaning provided in Section 5.1(f)
hereof.
“MORTGAGES” means mortgages, deeds of trust or other
security interests on or applicable to Real Property.
“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 GP Parties or the
Operating 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 such definition, Net
Sales Proceeds means the proceeds of any such transaction less the
amount of selling expenses incurred by or on behalf of the GP
Parties or the Operating 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 such definition, Net Sales Proceeds means the
GP Parties’ or Operating Partnership’s pro rata share
of the proceeds of any such transaction received by the Joint
Venture less the amount of any selling expenses incurred by or on
behalf of the Joint Venture, less the amount of any selling
expenses, including legal fees and expenses incurred by or on
behalf of the GP Parties or the Operating Partnership. 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 GP Parties,
Operating Partnership or any Joint Venture, including all
commissions, closing costs and legal fees and expenses. In the case
of a transaction described in clause (i)(E) of such
definition, Net Sales Proceeds means the proceeds of any such
transaction less the amount of selling expenses incurred by or on
behalf of the GP Parties, including any legal fees and expenses and
other selling expenses incurred in connection with such
transaction. With respect to each of the transactions or series of
transactions described above in this definition, Net Sales Proceeds
means the proceeds of such transaction or series of transactions
less the amount of any
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real estate
commissions, closing costs, and legal fees and expenses and other
selling expenses incurred by or allocated to the GP Parties, the
Operating Partnership or any Joint Venture 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 proceeds of a
Sale. The repayment of debt shall be deducted from the proceeds of
a transaction for the purpose of calculating Net Sales
Proceeds.
“NOTICE OF REDEMPTION” means the Notice of Exercise of
Redemption Right substantially in the form attached as Exhibit B
hereto.
“OFFER” has the meaning set forth in
Section 7.1(b) hereof.
“OFFERING” means the initial offer and sale of REIT
Shares to the public.
“OP UNITHOLDERS” means all holders of Operating
Partnership Interests.
“OPERATING PARTNERSHIP” means CNL Macquarie Income, LP,
a Delaware limited partnership.
“OPERATING PARTNERSHIP INTEREST” means an ownership
interest in the Operating Partnership held by either a Limited
Partner or the General Partner and includes any and all benefits to
which the holder of such an Operating 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.
“OPERATING PARTNERSHIP UNIT” means a fractional,
undivided share of the Operating Partnership Interests of all
Partners issued hereunder. The allocation of Operating Partnership
Units among the Partners shall be as set forth on Exhibit A, as
such Exhibit may be amended from time to time.
“OWNERSHIP LIMIT” shall have the meaning set forth in
the Articles of Incorporation.
“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 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 Operating Partnership
nonrecourse liability, any gain the Operating 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 GP Parent for a
distribution to its shareholders of some or all of its portion of
such distribution.
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“PERCENTAGE INTEREST” means the percentage determined
by dividing the Operating Partnership Units owned by a Partner by
the total number of Operating 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.
“PROFIT” has the meaning provided in
Section 5.1(f) hereof.
“PROPERTY” means any Real Property, Real Estate Related
Securities or other investment in which the Operating Partnership
holds an ownership interest.
“REAL ESTATE RELATED SECURITIES” means the real estate
related securities investments, or such investments the General
Partner and the Advisor mutually designate as Real Estate Related
Securities to the extent such investments could be classified as
either Real Estate Related Securities or Real Property, which are
owned from time to time by the General Partner, the Operating
Partnership, Subsidiaries or Joint Ventures.
“REAL PROPERTY” means (i) land, including the
buildings located thereon, (ii) land only, and/or
(iii) the buildings only, which are owned from time to time by
the General Partner or the Operating Partnership, either directly
or through subsidiaries, joint venture arrangements or other
partnerships, or (iv) such investments the General Partner and
the Advisor mutually designate as Real Property to the extent such
investments could be classified as either Real Property or Real
Estate Related Securities. Properties sold by the General Partner
or any of its Affiliates to tenancy-in-common investors shall be
deemed Real Property for the purposes of this definition so long as
(a) such properties are being leased by the General Partner or
any of its Affiliate from the tenancy-in-common investors, and
(b) such properties are reflected as assets of the General
Partner in accordance with GAAP.
“REDEMPTION PRICE” means the Value of the REIT Shares
Amount on the date of receipt by the General Partner of a Notice of
Redemption multiplied by any discount determined by the General
Partner, including but not limited to, any discount based upon the
combined number of years that the applicable Partner has held the
Operating Partnership Units offered for redemption.
“REDEMPTION RIGHT” has the meaning provided in
Section 8.5(a) hereof.
“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(g) hereof.
“REIT” means a real estate investment trust as defined
pursuant to Sections 856 through 860 of the Code.
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“REIT EXPENSES” means (i) costs and expenses
relating to the formation and continuity of existence and operation
of the GP Parent and any Subsidiaries thereof (which Subsidiaries
shall, for purposes of this paragraph, be included within the
definition of GP Parent), including taxes, fees and assessments
associated therewith, any and all costs, expenses or fees payable
to any director, officer, or employee of the GP Parent,
(ii) costs and expenses relating to any public offering and
registration of securities by the GP Parent 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 GP Parent, (iv) costs and expenses
associated with the preparation and filing of any periodic or other
reports and communications by the GP Parent under federal, state or
local laws or regulations, including filings with the Commission,
(v) costs and expenses associated with compliance by the GP
Parent with laws, rules and regulations promulgated by any
regulatory body, including the Commission 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 GP Parent, (vii) costs
and expenses incurred by the GP Parent relating to any issuing or
redemption of Operating Partnership Interests, and (viii) all
other operating or administrative costs of the GP Parent incurred
in the ordinary course of its business on behalf of or in
connection with the Operating Partnership.
“REIT SHARE” means a common share of beneficial
interest in the GP Parent (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 Operating Partnership Units
offered for exchange by a Tendering Party, multiplied by the
Conversion Factor as adjusted to and including the Specified
Redemption Date; provided that in the event the GP Parent issues to
all holders of REIT Shares rights, options, warrants or convertible
or exchangeable 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 Redemption 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.
“RELATED PARTY” means, with respect to any Person, any
other Person whose ownership of shares of the GP Parent’s
capital stock would be attributed to the first such Person under
Code Section 544 (as modified by Code
Section 856(h)(1)(B)).
“SALE” or “SALES” means (i) any
transaction or series of transactions whereby: (A) the GP
Parties or the Operating Partnership directly or indirectly (except
as described in other subsections of this definition) sells,
grants, transfers, conveys, or relinquishes its ownership of any
Real Property or portion thereof, including any event with respect
to any Real Property which gives rise to a significant amount of
insurance proceeds or condemnation awards; (B) the GP Parties
or the Operating 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 GP Parties or the
Operating 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) sells, grants, transfers, conveys, or
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relinquishes its
ownership of any Real Property or portion thereof, including any
event with respect to any Real Property which gives rise to
insurance claims or condemnation awards; (D) the GP Parties or
the Operating 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 GP Parties,
the Operating Partnership or any Joint Venture directly or
indirectly (except as described in other subsections of this
definition) sells, grants, transfers, conveys, or relinquishes its
ownership of any other asset not previously described in this
definition or any portion thereof.
“SECURITIES ACT” means the Securities Act of 1933, as
amended and the rules and regulations promulgated thereunder.
“SERVICE” means the United States Internal Revenue
Service.
“SPECIFIED REDEMPTION DATE” means the first business
day of the month that is at least sixty (60) business days
after the receipt by the General Partner of the Notice of
Redemption.
“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 Operating 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.
“SURVIVOR” has the meaning set forth in
Section 7.1(c) hereof.
“TAX MATTERS PARTNER” has the meaning described in
Section 10.5(a) hereof.
“TENDERED UNITS” has the meaning provided in
Section 8.5(a) hereof.
“TENDERING PARTY” has the meaning provided in
Section 8.5(a) hereof.
“TRANSACTION” has the meaning set forth in
Section 7.1(b) hereof.
“TRANSFER” has the meaning set forth in
Section 9.2(a) hereof.
“VALUE” means the fair market value per share of REIT
Shares which will equal: (i) if REIT Shares are Listed, the
average closing price per share for the previous thirty business
days, (ii) if REIT Shares are not Listed, the most recent
offering price per share or share equivalent of REIT Shares, until
December 31st of the year following the year in which the most
recently
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completed offering of
REIT Shares has expired (without taking into account any
discounts), and (iii) thereafter, such price per REIT Share as
the management of the General Partner determines in good faith.
ARTICLE 2
OPERATING
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1 Formation . The Operating Partnership was formed
as a limited partnership pursuant to the Act and all other
pertinent laws of the State of Delaware 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 Operating Partnership is CNL Macquarie Income, LP. The
specified office and place of business of the Operating Partnership
shall be c/o the General Partner, 450 South Orange Ave, Orlando, FL
32801. 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 Operating
Partnership’s registered agent in the State of Delaware is
The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, New Castle County, Delaware 19801. The
sole duty of the registered agent as such is to forward to the
Operating Partnership any notice that is served on it as registered
agent.
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2.3 Partners .
(a) The General Partner of the Operating Partnership is CNL
Macquarie Income GP, LLC, a Delaware limited liability company. Its
principal place of business is the same as that of the Operating
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 term of the Operating Partnership shall continue in full
force and effect until December 31, 2039, as such date may be
extended from time to time by the General Partner in its sole
discretion, except that the Operating Partnership shall be
dissolved 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, death, removal or withdrawal of a
General Partner unless the business of the Operating 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, death, withdrawal, removal or Event of Bankruptcy of a
partner in such partnership shall not be an event of dissolution of
the Operating 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;
(ii) The passage of ninety (90) days after the sale or other
disposition of all or substantially all of the assets of the
Operating Partnership (provided that if the Operating Partnership
receives an installment obligation as consideration for such sale
or other disposition, the Operating Partnership shall continue,
unless sooner dissolved under the provisions of this Agreement,
until such time as such note or notes are paid in full); or
(iii) The election by the General Partner that the Operating
Partnership should be dissolved.
(b) Upon dissolution of the Operating Partnership (unless the
business of the Operating 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
any Certificate(s) and liquidate the Operating 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 Operating Partnership (including those necessary to satisfy
the Operating 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 Operating
Partnership, any and all amendments to the Certificate(s) and all
requisite fictitious name statements and notices in such places and
jurisdictions as may be necessary to cause the Operating
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 Operating Partnership conducts
business.
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2.6 Certificates Describing Operating Partnership Units
. At the request of a Limited Partner, the General Partner, at
its option, may issue (but in no way is obligated to issue) a
certificate summarizing the terms of such Limited Partner’s
interest in the Operating Partnership, including the number of
Operating Partnership Units owned and the Percentage Interest
represented by such Operating 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 Operating Partnership Units
represented by this certificate are governed by and transferable
only in accordance with the provisions of the Limited Partnership
Agreement of CNL Macquarie Income, LP, as amended from time to
time.
ARTICLE 3
BUSINESS OF
THE OPERATING PARTNERSHIP
The purpose and nature of the business to be conducted by the
Operating 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 GP Parent at all
times to qualify as a REIT, unless the GP Parent otherwise ceases
to qualify as a REIT, and in a manner such that the GP Parent will
not be subject to any taxes under Section 857 or 4981 of the
Code, (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 GP Parent’s right in its sole and absolute
discretion to qualify or cease qualifying as a REIT, the Partners
acknowledge that the GP Parent intends to qualify as a REIT for
federal income tax purposes and upon such qualification the
avoidance of income and excise taxes on the GP Parent inures to the
benefit of all the Partners and not solely to the GP Parent.
Notwithstanding the foregoing, the Limited Partners agree that the
GP Parent 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 on behalf of the Operating
Partnership shall also be empowered to do any and all acts and
things necessary or prudent to ensure that the Operating
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 initial Limited Partner have made capital contributions to the
Operating Partnership in exchange for the Operating Partnership
Units set forth opposite their names on Exhibit A , as such
Exhibit may be amended from time to time.
4.2 Additional Capital Contributions - General .
Except as provided in Section 4.3 or in Section 4.4, the
Partners shall have no right or obligation to make any additional
Capital Contributions or loans to the Operating Partnership.
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4.3 Additional Capital Contributions and Issuances of
Additional Operating Partnership Units . The GP Parent or
the General Partner may contribute additional capital to the
Operating Partnership, from time to time, and receive additional
Operating Partnership Interests in respect thereof, in the manner
contemplated in this Section 4.3.
(a) Issuances of Additional Operating Partnership Interests
.
(i) General . Subject to Section 4.3(d) hereof, the
General Partner is hereby authorized to cause the Operating
Partnership to issue such additional Operating Partnership
Interests in the form of Operating Partnership Units for any
Operating Partnership purpose at any time or from time to time,
including but not limited to Operating Partnership Units issued in
connection with acquisitions of properties, 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 Operating 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 Operating
Partnership income, gain, loss, deduction and credit to each such
class or series of Operating Partnership Interests; (ii) the
right of each such class or series of Operating Partnership
Interests to share in Operating Partnership distributions; and
(iii) the rights of each such class or series of Operating
Partnership Interests upon dissolution and liquidation of the
Operating Partnership; provided, however, that no additional
Operating Partnership Interests shall be issued to the GP Parties
unless:
(1) (A) the additional Operating Partnership Interests are
issued in connection with an issuance of REIT Shares of or other
interests in the GP Parent, 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 Operating
Partnership Interests issued to the General Partner by the
Operating Partnership in accordance with this Section 4.3 and
(B) the General Partner or the GP Parent shall make an actual
Capital Contribution to the Operating Partnership in an amount
equal to the net proceeds raised in connection with the issuance of
such shares of stock of or other interests in the GP Parent (and,
if applicable, such GP Party shall make a deemed Capital
Contribution as described in Section 4.3(c) hereof);
(2) the additional Operating 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 Operating Partnership Interests; or
(3) the additional Operating Partnership Interests are issued to
all Partners holding Operating Partnership Units in proportion to
their respective Percentage Interests.
Without limiting the foregoing, the General Partner is expressly
authorized to cause the Operating Partnership to issue Operating
Partnership Units for less than fair market value, so
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long as the General
Partner concludes in good faith that such issuance is in the best
interests of the General Partner and the Operating Partnership.
(ii) Upon Issuance of Additional Operating Partnership
Interests . The GP Parent shall not issue any Additional
Securities other than to all holders of REIT Shares, unless
(A) the General Partner shall cause the Operating Partnership
to issue to the General Partner or GP Parent, as the General
Partner may designate, Operating Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the
Operating 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 or GP Parent contributes the 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 or GP Parent, to the Operating
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 or GP Parent,
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 GP Parties and the Operating Partnership
by a majority of the Independent Directors. Without limiting the
foregoing, the GP Parent is expressly authorized to issue
Additional Securities for less than fair market value, and to cause
the Operating Partnership to issue to the General Partner or GP
Parent corresponding Operating Partnership Interests, so long as
(x) the General Partner concludes in good faith that such
issuance is in the best interests of the GP Parties and the
Operating Partnership, including without limitation, the issuance
of REIT Shares and corresponding Operating 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 or GP Parent contributes all proceeds from such issuance to
the Operating Partnership. For example, in the event the GP Parent
issues REIT Shares for a cash purchase price and contributes all of
the proceeds of such issuance to the Operating Partnership as
required hereunder, the GP Parent shall be issued a number of
additional Operating Partnership Units equal to the product of
(A) the number of such REIT Shares issued by the GP Parent,
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) Issuances of Operating Partnership Interests for
Services . Subject to Section 4.3(d) hereof, the General
Partner, in its sole and absolute discretion, may also
(a) issue Operating Partnership Units or designate a new class
of Operating Partnership Units for issuance to Persons in exchange
for services provided or to be provided by such Persons to or for
the benefit of the Operating Partnership; and (b) require such
Persons who provide services to or for the benefit of the Operating
Partnership to make a Capital Contribution to the Operating
Partnership in connection with the issuance of Operating
Partnership Units to such Person. Further, the General Partner, in
its sole and absolute discretion, may (a) subject such
Operating Partnership Units to vesting, forfeiture and additional
restrictions on transfer pursuant to the terms of a vesting
agreement and (b) amend the Operating Partnership Agreement to
provide for (A) special allocations of Net Income or Net Loss
to such Operating Partnership Units, (B) the redemption or
forfeiture of such Operating Partnership Units upon certain events,
(C) the terms and conditions of the conversion of such
Operating Partnership Units to Common Operating
15
Partnership Units,
(D) voting rights of the holders of such Operating Partnership
Units and/or (E) such other matters as the General Partner
deems appropriate.
(c) Certain Deemed Contributions of Administrative Expenses.
In connection with any and all issuances of REIT Shares, the GP
Parent shall make, directly or indirectly through the General
Partner, Capital Contributions to the Operating Partnership of the
net proceeds therefrom, provided that if the net proceeds actually
received and contributed by the GP Parent or 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 issuance, or if the GP Parent or General Partner
pays or incurs any other Administrative Expenses in connection with
any such issuance or otherwise, then the GP Parent or General
Partner shall be deemed to have made Capital Contributions to the
Operating Partnership in the aggregate amount of such
Administrative Expenses (including, without limitation, the
difference between the gross proceeds of any such issuance and the
net proceeds actually received and contributed by the GP Parent or
General Partner) and the Operating Partnership shall be deemed
simultaneously to have paid such Administrative Expenses in
accordance with Section 6.5 hereof and in connection with the
required issuance of additional Operating Partnership Units to the
General Partner for such Capital Contributions pursuant to
Section 4.3(a) hereof.
(d) Convention for Date of Capital Contributions . Except as
otherwise may be determined by the General Partner in its sole
discretion, in connection with any Capital Contributions made to
the Operating Partnership, and any issuance of Operating
Partnership Interests by the Operating Partnership, pursuant to
this Section 4.3, such Capital Contributions shall be deemed
to have been made to the Operating Partnership, and such Operating
Partnership Interests shall be deemed to have been issued by the
Operating Partnership, effective on the last business day of the
calendar month in which such Capital Contributions (or other
consideration provided to the Operating Partnership, in the case of
Section 4.3(b) hereof) are actually transferred to the
Operating Partnership. Any transfers of cash or property made to
the Operating Partnership prior to the effective date determined in
accordance with this Section 4.3(d) shall be treated as an
advance and shall not earn interest or any other return prior to
such effective date. This Section 4.3(d) shall apply for all
purposes under this Agreement, including for purposes of
maintaining Capital Accounts and for purposes of any revaluations
of the property of the Operating Partnership pursuant to
Section 4.5 hereof.
4.4 Additional Funding . If the General Partner
determines that it is in the best interests of the Operating
Partnership to provide for additional Operating Partnership funds
(“Additional Funds”) for any Operating Partnership
purpose, the General Partner may (i) cause the Operating
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 Operating
Partnership through loans or otherwise, provided, however, that the
Operating Partnership may not borrow money from its Affiliates
(excluding the General Partner for this purpose), unless a majority
of the Directors of the GP Parent (including a majority of
Independent Directors) not otherwise interested in such transaction
approve the transaction as being fair, competitive, and
commercially reasonable and no less favorable to the Operating
Partnership than loans between unaffiliated parties under the same
circumstances.
4.5 Capital Accounts . A separate capital account (a
“Capital Account”) shall be established and maintained
for each Partner in accordance with Regulations
Section 1.704-
16
1(b)(2)(iv). If
(i) a new or existing Partner acquires an additional Operating
Partnership Interest in exchange for more than a de minimis Capital
Contribution or for the provision of services to or for the benefit
of the Operating Partnership, (ii) the Operating Partnership
distributes to a Partner more than a de minimis amount of Operating
Partnership property or money as consideration for an Operating
Partnership Interest, or (iii) the Operating Partnership is
liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), the General Partner may, at its
discretion, revalue the property of the Operating 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 Operating
Partnership’s property is revalued by the General Partner,
the Capital Accounts of the Partners shall be adjusted in
accordance 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.
4.6 Percentage Interests . If the number of
outstanding Operating 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 Operating Partnership Units held by such
Partner divided by the aggregate number of Operating Partnership
Units outstanding after giving effect to such increase or decrease.
If the Partners’ Percentage Interests are adjusted pursuant
to this Section 4.6, 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 number of outstanding
Operating Partnership Units changes 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.
4.7 No Interest On Contributions . No Partner shall
be entitled to interest on its Capital Contribution.
4.8 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
Operating 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
Operating Partnership continues in existence.
4.9 No Third Party Beneficiary . No creditor or other
third party having dealings with the Operating 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
17
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 Operating Partnership shall be deemed an asset of the Operating
Partnership for any purpose by any creditor or other third party,
nor may such rights or obligations be sold, transferred or assigned
by the Operating Partnership or pledged or encumbered by the
Operating Partnership to secure any debt or other obligation of the
Operating 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 Operating Partnership.
ARTICLE 5
PROFITS AND
LOSSES; DISTRIBUTIONS
5.1 Allocation of Profit and Loss .
(a) General . Profit and Loss (or items thereof) of the
Operating Partnership for each fiscal year of the Operating
Partnership shall be allocated as follows:
(i) Profit . Profit of the Operating Partnership for each
fiscal year shall be allocated to the OP Unitholders, pro
rata in accordance with their respective Percentage
Interests.
(ii) Loss . Loss of the Operating Partnership for each
fiscal year shall be allocated to the OP Unitholders, pro
rata in accordance with their respective Percentage
Interests.
(b) Nonrecourse Deductions; Minimum Gain Chargeback .
Notwithstanding any provision to the contrary, (i) any expense
of the Operating Partnership that is a “nonrecourse
deduction” within the meaning of Regulations
Section 1.704-2(b)(1) shall be allocated to the OP Unitholders
in accordance with their respective Percentage Interests,
(ii) any expense of the Operating 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” with
respect to the liability to which such deductions are attributable
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 Operating 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 Operating
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 excess nonrecourse liabilities of
18
the Operating
Partnership within the meaning of Regulations
Section 1.752-3(a)(3) shall be such Partner’s Percentage
Interest.
(c) Qualified Income Offset. Notwithstanding any provision
to the contrary, 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)(1)
and 1.704-2(i)(5), 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(c) 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(c), 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(c).
(d) Capital Account Deficits. Notwithstanding any provision
to the contrary, items of expense or 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 Adjusted 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)), as determined in accordance with Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5). Any items of expense or
loss in excess of that limitation shall be allocated to the General
Partner. After the occurrence of an allocation of items of expense
or loss to the General Partner in accordance with this
Section 5.1(d), to the extent permitted by Regulations
Section 1.704-1(b), items of income or gain shall be allocated
to such Partner in an amount necessary to offset the items of loss
or deduction previously allocated to such Partner under this
Section 5.1(d).
(e) Allocations Between Transferor and Transferee . If a
Partner transfers any part or all of its Operating Partnership
Interest, the distributive shares of the various items of Profit
and Loss allocable among the Partners during such fiscal year of
the Operating Partnership shall be allocated between the transferor
and the transferee Partner either (i) as if the Operating
Partnership’s fiscal year had ended on the date of the
transfer, or (ii) based on the number of days of such fiscal
year that each was a Partner without regard to the results of
Operating Partnership activities in the respective portions of such
fiscal year in which the transferor and the transferee were
Partners. The General Partner, in its sole and absolute discretion,
shall determine which method shall be used to allocate the
distributive shares of the various items of Profit and Loss between
the transferor and the transferee Partner.
(f) Definition of Profit and Loss . “Profit” and
“Loss” and any items of income, gain, expense, or loss
referred to in this Agreement shall be determined in accordance
with federal income tax accounting principles, as mo
