SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF CBRE OPERATING PARTNERSHIP, L.P.

Exhibit 10.2

 

 

SECOND AMENDED AND RESTATED AGREEMENT

OF LIMITED PARTNERSHIP

OF

CBRE OPERATING PARTNERSHIP, L.P.

 

Dated as of January 30, 2009

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SECOND AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

CBRE OPERATING PARTNERSHIP, L.P.

THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated as of January 30, 2009, is entered into by and among CB Richard Ellis Realty Trust, a Maryland real estate investment trust, as the General Partner of and a Limited Partner in CBRE Operating Partnership, L.P., and the Persons (as defined below) whose names are set forth on Exhibit A, as attached hereto (as it may be amended from time to time).

AGREEMENT

WHEREAS, the parties hereto are party to an Amended and Restated Agreement of Limited Partnership, dated October 24, 2006 (the “Amended and Restated Agreement of Limited Partnership”), which amended and restated the Agreement of Limited Partnership, dated July 1, 2004 (the “Original Agreement of Limited Partnership”);

WHEREAS, the parties hereto wish to amend and restate the Amended and Restated Agreement of Limited Partnership to make certain other changes as agreed to among the parties; and

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby enter into this Second Amended and Restated Agreement of Limited Partnership (the “Agreement”) in its entirety and agree to continue the Partnership as a limited partnership under the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, as follows:

ARTICLE I

DEFINED TERMS

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. § 17-101, et seq., as it may be amended from time to time, and any successor to such statute.

“Additional Limited Partner” means a Person admitted to the Partnership as a Limited Partner pursuant to Section 12.02 hereof and who is shown as such on the books and records of the Partnership.

“Adjusted Capital Account” means the Capital Account maintained for each Partner as of the end of each Partnership Year (i) increased by any amounts which such Partner is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by the items described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-l(b)(2)(ii)(d)(6). The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“Adjusted Capital Account Deficit” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant Partnership Year.

“Adjusted Property” means any property the Carrying Value of which has been adjusted pursuant to Exhibit B hereto.

“Adjustment Date” has the meaning set forth in Section 4.02.B hereof.

“Advisor” means CBRE Advisors LLC, a Delaware limited liability company.

“Advisor Redemption Interest” has the meaning set forth in Section 8.07.A hereof.

“Advisor Redemption Interest Amount” has the meaning set forth in Section 8.07.A hereof.

“Advisory Agreement” means the second amended and restated agreement entered into among the General Partner, the Partnership and the Advisor, dated as of January 30, 2009.

“Affiliate” means, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

“Aggregate Class A Unit Purchase Price” means an amount equal to the sum of the amount of cash paid for the Class A Units, plus the Agreed Value of Contributed Property contributed for Class A Units.

“Aggregate Protected Amount” means the aggregate balances of the Protected Amounts, if any, of all Obligated Partners, if any, as determined on the date in question.

“Agreed Value” means (i) in the case of any Contributed Property, the 704(c) Value of such property as of the time of its contribution to the Partnership, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed; and (ii) in the case of any property distributed to a Partner by the Partnership, the Partnership’s Carrying Value of such property at the time such property is distributed, reduced by any indebtedness either assumed by such Partner upon such distribution or to which such property is subject at the time of distribution as determined under Section 752 of the Code and the Regulations thereunder.

“Agreement” means this Second Amended and Restated Agreement of Limited Partnership, as it may be amended, supplemented or restated from time to time.

“Amended and Restated Agreement of Limited Partnership” has the meaning set forth in the preamble of this Agreement.

“Assignee” means a Person to whom one or more Partnership Units have been transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.05 hereof.

“Bankruptcy” means, with respect to any Person, (a) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code or any other federal, state or foreign insolvency law, or such Person’s filing an answer consenting to or acquiescing in any such petition, (b) the making by such Person of any

 

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assignment for the benefit of its creditors, (c) the expiration of sixty (60) days after the filing of an involuntary petition under Title 11 of the Unites States Code, an application for the appointment of a receiver for a material portion of the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts under any other federal, state or foreign insolvency law, provided that the same shall not have been vacated, set aside or stayed within such 60-day period, (d) the entry against it of a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereinafter in effect, (e) the attachment or other judicial seizure of all or substantially all of its assets, which remains pending, (f) its acknowledgement in writing of its inability to pay its debts as they come due, (g) its entry into an offer of settlement, extension or composition to its creditors generally, (h) its taking any action for the purpose of effecting any of the foregoing, or (i) a determination by the Board, in its reasonable discretion, that such Person is bankrupt, insolvent or otherwise unable to pay its debts as they come due.

“Book-Tax Disparities” means, with respect to any item of Contributed Property or Adjusted Property, as of the date of any determination, the difference between the Carrying Value of such Contributed Property or Adjusted Property and the adjusted basis thereof for federal income tax purposes as of such date. A Partner’s share of the Partnership’s Book-Tax Disparities in all of its Contributed Property and Adjusted Property will be reflected by the difference between such Partner’s Capital Account balance as maintained pursuant to Exhibit B hereto and the hypothetical balance of such Partner’s Capital Account computed as if it had been maintained, with respect to each such Contributed Property or Adjusted Property, strictly in accordance with federal income tax accounting principles.

“Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

“Capital Account” means the Capital Account maintained for a Partner pursuant to Exhibit B hereto.

“Capital Contribution” means, with respect to any Partner, any cash, cash equivalents or the Agreed Value of Contributed Property which such Partner contributes or is deemed to contribute to the Partnership pursuant to Section 4.01 or 4.02 hereof.

“Capital Proceeds” means the net cash proceeds received by the Partnership from any Capital Transaction, after taking into account (i) all expenditures to be made out of such proceeds, (ii) payment of or provision for all debts and obligations to be satisfied as the result of or in connection with such Capital Transaction, (iii) payment of all costs and expenses incurred in connection with the receipt or collection of such proceeds and the setting aside of any reserves from such proceeds. Upon the occurrence of a transaction described in (vii) and (viii) of the definition of “Capital Transaction” below, Capital Proceeds shall be deemed to mean the notional net proceeds which would be available had the Partnership’s assets been liquidated at an amount sufficient to yield the price inherent in the subject transaction.

“Capital Transaction” means (i) any sale, exchange, transfer, assignment or other disposition of all or a portion of the Partnership’s assets or of any real estate interest in which the Partnership holds a direct or indirect interest, (ii) any financing or refinancing of any indebtedness of the Partnership or any financing or refinancing in respect of assets in which the Partnership holds a direct or indirect real estate interest, (iii) the taking of all or a portion of the assets of the Partnership (or of assets in which the Partnership holds a direct or indirect real estate interest) by any governmental authority through the exercise of the power of eminent domain or condemnation or the delivery of a deed or transfer in lieu of such taking, (iv) the receipt of the proceeds of hazard or casualty insurance (other than rental or business interruption insurance), (v) the repayment of principal on any loans made by the Partnership or any entity

 

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through which the Partnership holds a direct or indirect real estate interest, (vi) releases of Partnership reserves funded from previous transactions of a nature described above, (vii) any transaction in which the Partnership acquires an interest in the Advisor or (viii) any merger, sale or other transaction in which shareholders of the General Partner receive consideration for their shares in the General Partner (other than a dividend from the General Partner).

“Carrying Value” means (i) with respect to a Contributed Property or Adjusted Property, the 704(c) Value of such property reduced (but not below zero) by all Depreciation with respect to such Contributed Property or Adjusted Property, as the case may be, charged to the Partners’ Capital Accounts and (ii) with respect to any other Partnership property, the adjusted basis of such property for federal income tax purposes, all as of the time of determination. The Carrying Value of any property shall be adjusted from time to time in accordance with Exhibit B hereto, and to reflect changes, additions or other adjustments to the Carrying Value for dispositions and acquisitions of Partnership properties, as deemed appropriate by the General Partner.

“Cash Amount” means an amount of cash equal to the Value on the Valuation Date of the Shares Amount.

“Cause” means, with respect to termination of the Advisory Agreement, (i) fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by the Advisor, (ii) a material breach of the Advisory Agreement by the Advisor which remains uncured after 30 days’ written notice, (iii) the Bankruptcy or insolvency of the Advisor, CB Richard Ellis Investors L.L.C. and/or CB Richard Ellis Group, Inc. (collectively the “Sponsor Entities”), or (iv) there is a dissolution of any of the Sponsor Entities.

“Certificate” means the Certificate of Limited Partnership relating to the Partnership filed in the office of the Delaware Secretary of State on March 30, 2004, as amended from time to time in accordance with the terms hereof and the Act.

“Class A Interest” means the Partnership Interest represented by Class A Units issued pursuant to Section 4.02.B.

“Class A Unit” means Class A Units of the Partnership representing a portion of the Class A Interest.

“Class B Interest” means the profits interest issued pursuant to Section 4.02.D.

“Class B Partner” means the Partner that holds the Class B Interest.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific Section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

“Consent” means the consent or approval of a proposed action by a Partner given in accordance with Section 14.02 hereof.

“Contributed Property” means each property or other asset contributed to the Partnership, in such form as may be permitted by the Act, but excluding cash contributed or deemed contributed to the Partnership. Once the Carrying Value of a Contributed Property is adjusted pursuant to Exhibit B hereto, such property shall no longer constitute a Contributed Property for purposes of Exhibit B hereto, but shall be deemed an Adjusted Property for such purposes.

 

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“Conversion Factor” means 1.0; provided that in the event that the General Partner (i) declares or pays a dividend on its outstanding Shares in Shares or makes a distribution to all holders of its outstanding Shares in Shares, (ii) subdivides its outstanding Shares or (iii) combines its outstanding Shares into a smaller number of Shares, the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which shall be the number of 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 Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, subdivision or combination; and provided , further , that in the event that an entity shall cease to be the General Partner (the “Predecessor Entity”) and another entity shall become the General Partner (the “Successor Entity”), the Conversion Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the numerator of which is the Value of one share of the Predecessor Entity, determined as of the time immediately prior to when the Successor Entity becomes the General Partner, and the denominator of which is the Value of one Share of the Successor Entity determined as of that same date. For purposes of the second proviso in the preceding sentence, in the event that any stockholders of the Predecessor Entity will receive consideration in connection with the transaction in which the Successor Entity becomes the General Partner, the numerator in the fraction described above for determining the adjustment to the Conversion Factor (that is, the Value of one Share of the Predecessor Entity) shall be the sum of the greatest amount of cash and the fair market value of any securities and other consideration that the holder of one Share in the Predecessor Entity could have received in such transaction (determined without regard to any provisions governing fractional shares). 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 the event giving rise thereto; it being intended that (x) adjustments to the Conversion Factor are to be made in order to avoid unintended dilution or anti-dilution as a result of transactions in which Shares are issued, redeemed or exchanged without a corresponding issuance, redemption or exchange of Partnership Units and (y) if a Specified Redemption Date shall fall between the record date and the effective date of any event of the type described above, that the Conversion Factor applicable to such redemption shall be adjusted to take into account such event.

“Debt” means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person, (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof, and (iv) obligations of such Person incurred in connection with entering into a lease which, in accordance with generally accepted accounting principles, should be capitalized.

“Declaration of Trust” means the second amended and restated declaration of trust or other organizational document governing the General Partner, as amended or restated from time to time.

“Deemed Partnership Interest Value” means, as of any date with respect to any class of Partnership Interests, the Deemed Value of the Partnership Interest of such class multiplied by the applicable Partner’s Percentage Interest of such class.

“Deemed Value of the Partnership Interest” means, as of any date with respect to any class of Partnership Interest other than the Class B Interest, (a) if the shares of common beneficial interest (or other comparable equity interests) of the General Partner are Publicly Traded (i) the total number of

 

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shares of common beneficial interest (or other comparable equity interest) of the General Partner corresponding to Class A Units (as provided for in Section 4.02.B hereof) issued and outstanding as of the close of business on such date (excluding any treasury shares) multiplied by the Value of a share of such common beneficial interest (or other comparable equity interest) on such date divided by (ii) the Percentage Interest of the General Partner of the Class A Units on such date, and (b) otherwise, the aggregate Value of such class of Partnership Interests determined as set forth in the fourth and fifth sentences of the definition of Value.

“Depreciation” means, for each fiscal year, an amount equal to the federal income tax depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year, except that if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Carrying Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year bears to such beginning adjusted tax basis; provided , however , that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the General Partner.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Funding Debt” means the incurrence of any Debt by or on behalf of the General Partner for the purpose of providing funds to the Partnership.

“General Partner” means CB Richard Ellis Realty Trust, a Maryland real estate investment trust, or its successors as general partner of the Partnership.

“General Partner Payment” has the meaning set forth in Section 15.14 hereof.

“General Partnership Interest” means a Partnership Interest held by the General Partner that is a general partnership interest. A General Partnership Interest may be expressed as a number of Partnership Units.

“Incapacity” or “Incapacitated” means, (i) as to any individual Partner, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage his or her Person or estate,(ii) as to any corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter, (iii) as to any partnership which is a Partner, the dissolution and commencement of winding up of the partnership, (iv) as to any estate which is a Partner, the distribution by the fiduciary of the estate’s entire interest in the Partnership, (v) as to any trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a new trustee) or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties,

 

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(f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment or (h) an appointment referred to in clause (g) is not vacated within ninety (90) days after the expiration of any such stay.

“Indemnitee” means (i) any Person made a party to a proceeding or threatened with being made a party to a proceeding by reason of its status as (A) the General Partner, (B) a Limited Partner or (C) a director or officer of the Partnership or the General Partner and (ii) such other Persons (including Affiliates of the General Partner, a Limited Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

“IRS” means the Internal Revenue Service, which administers the internal revenue laws of the United States.

“Limited Partner” means any Person named as a Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended and restated from time to time, or any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a Limited Partner in the Partnership.

“Limited Partnership Interest” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Limited Partners 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. A Limited Partnership Interest may be expressed as a number of Partnership Units.

“Liquidating Event” has the meaning set forth in Section 13.01 hereof.

“Liquidator” has the meaning set forth in Section 13.02.A hereof.

“Listing Distribution” has the meaning set forth in Section 5.01.B(iii) hereof.

“Net Income” means, for any taxable period, the excess, if any, of the Partnership’s items of income and gain for such taxable period over the Partnership’s items of loss and deduction for such taxable period. The items included in the calculation of Net Income shall be determined in accordance with Exhibit B hereto. If an item of income, gain, loss or deduction that has been included in the initial computation of Net Income is subjected to the special allocation rules in Exhibit C hereto, Net Income or the resulting Net Loss, whichever the case may be, shall be recomputed without regard to such item.

“Net Loss” means, for any taxable period, the excess, if any, of the Partnership’s items of loss and deduction for such taxable period over the Partnership’s items of income and gain for such taxable period. The items included in the calculation of Net Loss shall be determined in accordance with Exhibit B. If an item of income, gain, loss or deduction that has been included in the initial computation of Net Loss is subjected to the special allocation rules in Exhibit C hereto, Net Loss or the resulting Net Income, whichever the case may be, shall be recomputed without regard to such item.

“New Securities” means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase shares of common beneficial interest (or other comparable equity interest) of the General Partner, excluding grants under any Stock Option Plan, or (ii) any Debt issued by the General Partner that provides any of the rights described in clause (i).

 

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“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

“Nonrecourse Liability” has the meaning set forth in Regulations Section 1.752-1(a)(2).

“Notice of Redemption” means a Notice of Redemption substantially in the form of Exhibit D attached hereto.

“Obligated Partner” means a Partner who has agreed in writing to be an Obligated Partner and has agreed and is obligated to make certain contributions, not in excess of such Obligated Partner’s Protected Amount, to the Partnership with respect to such Partner’s Capital Account Deficit upon the occurrence of certain events.

“Operating Cash Flow” means, with respect to any applicable period, the gross receipts of the Partnership during such period plus any reductions in reserves (other than reserves funded from proceeds of a Capital Transaction) occurring during such period, less (i) operating expenses actually paid during such period including without limitation taxes, insurance premiums, repair and maintenance costs and management fees, (ii) interest and principal paid during such period of indebtedness of the Partnership, (iii) additions to reserves made during such periods and (iv) expenditures for capital improvements and other capital items paid during such periods; provided , however , that Operating Cash Flow shall not include any receipts expenses or other charges that are taken into account in determining Capital Proceeds.

“Original Limited Partnership Agreement” has the meaning set forth in the preamble of this Agreement.

“Partner” means the General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners.

“Partner Minimum Gain” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

“Partner Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4).

“Partner Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

“Partnership” means CBRE Operating Partnership, L.P., the limited partnership formed under the Act and continued upon the terms and conditions set forth in this Agreement, and any successor thereto.

“Partnership Interest” means a Limited Partnership Interest or the General Partnership Interest 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. A Partnership Interest may be expressed as a number of Partnership Units.

“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

 

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“Partnership Record Date” means the record date established by the General Partner either (i) for distributions pursuant to Section 5.01 hereof, or (ii) if applicable, for determining the Partners entitled to vote on or consent to any proposed action for which the consent or approval of the Partners is sought pursuant to Section 14.02 hereof.

“Partnership Unit” means a fractional, undivided share of any Partnership Interests expressed as Units and issued pursuant to Sections 4.01 and 4.02 hereof, and includes Class A Units and any other classes or series of Partnership Units established after the date hereof. The number of Partnership Units outstanding and the Percentage Interests represented by such Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be amended and restated from time to time. The ownership of Partnership Units may be evidenced by a certificate in a form approved by the General Partner.

“Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year.

“Percentage Interest” means, as to a Partner holding a class of Partnership Interests, its interest in such class, determined by dividing the Partnership Units of such class owned by such Partner by the total number of Partnership Units of such class then outstanding as specified in Exhibit A attached hereto, as such Exhibit may be amended and restated from time to time, multiplied by the aggregate Percentage Interest allocable to such class of Partnership Interests.

“Person” means an individual, corporation, partnership, limited liability company, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“Protected Amount” means the amount, if any, specified on Exhibit B, with respect to any Obligated Partner, as such Exhibit may be amended from time to time.

“Publicly Traded” means listed or admitted to trading on the New York Stock Exchange, the American Stock Exchange or another national securities exchange or designated for quotation on the Nasdaq Global Select Market or the Nasdaq Global Market, or any successor to any of the foregoing.

“Recapture Income” means any gain recognized by the Partnership (computed without regard to any adjustment required by Section 743 of the Code) upon the disposition of any property or asset of the Partnership, which gain is characterized as ordinary income because it represents the recapture of deductions previously taken with respect to such property or asset.

“Redeeming Partner” has the meaning set forth in Section 8.06.A hereof.

“Redemption Amount” means either the Cash Amount or the Shares Amount, as determined by the General Partner in its sole and absolute discretion; provided that in the event that the Shares are not Publicly Traded at the time a Redeeming Partner exercises its Redemption Right the Redemption Amount shall be paid only in the form of the Cash Amount unless the Redeeming Partner, in its sole and absolute discretion, consents to payment of the Redemption Amount in the form of the Shares Amount. A Redeeming Partner shall have no right, without the General Partner’s consent, in its sole and absolute discretion, to receive the Redemption Amount in the form of the Shares Amount.

 

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“Redemption Right” has the meaning set forth in Section 8.06.A hereof.

“Regulations” means the Income Tax Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

“REIT” means a real estate investment trust under Section 856 of the Code.

“REIT Requirements” has the meaning set forth in Section 5.01.A hereof.

“Residual Gain” or “Residual Loss” means any item of gain or loss, as the case may be, of the Partnership recognized for federal income tax purposes resulting from a sale, exchange or other disposition of Contributed Property or Adjusted Property, to the extent such item of gain or loss is not allocated pursuant to Section 2 of Exhibit C hereto to eliminate Book-Tax Disparities.

“Safe Harbors” has the meaning set forth in Section 11.06.F hereof.

“Securities Act” means the Securities Act of 1933, as amended.

“Share” means a share of common beneficial interest (or other comparable equity interest) of the General Partner. Shares may be issued in one or more classes or series in accordance with the terms of the Declaration of Trust. In the event that there is more than one class or series of Shares, the term “Shares” shall, as the context requires, be deemed to refer to the class or series of Shares that correspond to the class or series of Partnership Interests for which the reference to Shares is made. When used with reference to Class A Units, the term “Shares” refers to shares of common beneficial interest (or other comparable equity interest) of the General Partner.

“Shares Amount” means a number of Shares equal to the product of the number of Class A Units offered for redemption by a Redeeming Partner times the Conversion Factor; provided that, in the event the General Partner issues to all holders of Shares rights, options, warrants or convertible or exchangeable securities entitling such holders to subscribe for or purchase Shares or any other securities or property (collectively, the “rights”), then the Shares Amount for any Class A Units outstanding prior to the issuance of such rights shall also include such rights that a holder of that number of Shares would be entitled to receive; and provided , further that, the Shares Amount shall be adjusted pursuant to Section 7.05 hereof in the event that the General Partner acquires Specially Distributed Assets.

“Specially Distributed Assets” has the meaning set forth in Section 7.05.A hereof.

“Specified Redemption Date” means the tenth Business Day after receipt by the General Partner of a Notice of Redemption; provided that, if the Shares are not Publicly Traded, the Specified Redemption Date means the thirtieth Business Day after receipt by the General Partner of a Notice of Redemption.

“Stock Option Plan” means any stock incentive plan of the General Partner, the Partnership or any Affiliate of the Partnership or the General Partner.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership or joint venture, 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.

“Substituted Limited Partner” means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.04 hereof.

 

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“Successor Entity” has the meaning set forth in the definition of “Conversion Factor” herein.

“Terminating Capital Transaction” means any sale or other disposition of all or substantially all of the assets of the Partnership for cash or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership for cash.

“Termination Date” means the date of termination of the Advisory Agreement.

“Termination Transaction” has the meaning set forth in Section 11.02.B hereof.

“Unrealized Gain” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (i) the fair market value of such property (as determined under Exhibit B hereto) as of such date, over (ii) the Carrying Value of such property (prior to any adjustment to be made pursuant to Exhibit B hereto) as of such date.

“Unrealized Loss” attributable to any item of Partnership property means, as of any date of determination, the excess, if any, of (i) the Carrying Value of such property (prior to any adjustment to be made pursuant to Exhibit B hereto) as of such date, over (ii) the fair market value of such property (as determined under Exhibit B hereto) as of such date.

“Valuation Date” means the date of receipt by the General Partner of a Notice of Redemption or, if such date is not a Business Day, the first Business Day thereafter.

“Value” means, with respect to any outstanding Shares of the General Partner that are Publicly Traded, the average of the daily market price for the ten (10) consecutive trading days immediately preceding the date with respect to which value must be determined or, if such date is not a Business Day, the immediately preceding Business Day. The market price for each such trading day shall be the closing 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 on such day. In the event that the outstanding Shares of the General Partner are Publicly Traded and the Shares Amount includes rights that a holder of Shares would be entitled to receive, then the Value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate. In the event that the Shares of the General Partner are not Publicly Traded, the Value of the Shares Amount per Partnership Unit offered for redemption (which will be the Cash Amount per Partnership Unit offered for redemption payable pursuant to Section 8.06 hereof) means the amount that a holder of one Partnership Unit would receive if each of the assets of the Partnership were to be sold for its fair market value on the Specified Redemption Date, the Partnership were to pay all of its outstanding liabilities, and the remaining proceeds were to be distributed to the Partners in accordance with the terms of this Agreement. Such Value shall be determined by the General Partner, acting in good faith and based upon a commercially reasonable estimate of the amount that would be realized by the Partnership if each asset of the Partnership (and each asset of each Partnership, limited liability company, joint venture or other entity in which the Partnership owns a direct or indirect interest) were sold to an unrelated purchaser in an arms’ length transaction where neither the purchaser nor the seller were under economic compulsion to enter into the transaction (without regard to any discount in value as a result of the Partnership’s minority interest in any property or any illiquidity of the Partnership’s interest in any property). In connection with determining the Deemed Value of the Partnership Interest for purposes of determining the number of additional Partnership Units issuable upon a Capital Contribution funded by an underwritten public offering of shares of common beneficial interest (or other comparable equity interest) of the General Partner, the Value of such shares shall be the public offering price per share of such class of the common beneficial interest (or other comparable equity interest) sold.

 

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“704(c) Value” of any Contributed Property means the fair market value of such property at the time of contribution as determined by the General Partner using such reasonable method of valuation as it may adopt. Subject to Exhibit B hereto, the General Partner shall, in its sole and absolute discretion, use such method as it deems reasonable and appropriate to allocate the aggregate of the 704(c) Values of Contributed Properties in a single or integrated transaction among each separate property on a basis proportional to their fair market values.

ARTICLE II

ORGANIZATIONAL MATTERS

Section 2.01. Organization

The Partnership is a limited partnership organized pursuant to the provisions of the Act and upon the terms and conditions set forth in the Agreement. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

Section 2.02. Name

The name of the Partnership is CBRE Operating Partnership, L.P. The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words “Limited Partnership,” “L.P.,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

Section 2.03. Registered Office and Agent; Principal Office

The address of the registered office of the Partnership in the State of Delaware shall be located at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 and the registered agent for service of process on the Partnership in the State of Delaware at such registered office shall be Corporation Service Company. The principal office of the Partnership shall be 515 South Flower Street, Suite 3100, Los Angeles, California 90071 or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.

Section 2.04. Term

The term of the Partnership commenced on March 30, 2004, the date on which the Certificate was filed in the office of the Secretary of State of the State of Delaware in accordance with the Act, and shall continue until it is dissolved sooner pursuant to the provisions of Article XIII hereof or as otherwise provided by law.

 

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ARTICLE III

PURPOSE

Section 3.01. Purpose and Business

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 be classified as a REIT, unless the General Partner ceases to qualify or is not qualified as a REIT for any reason or reasons not related to the business conducted by the Partnership; (ii) to enter into any partnership, joint venture, limited liability company or other similar arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged, directly or indirectly, in any of the foregoing; and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, the Partners acknowledge that the status of the General Partner as a REIT inures to the benefit of all the Partners and not solely the General Partner or its Affiliates.

Section 3.02. Powers

The Partnership is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real property, and lease, sell, transfer and dispose of real property; provided , however , that the Partnership shall not take, or refrain from taking, any action which, in the judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect the ability of the General Partner to continue to qualify as a REIT, (ii) could subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the General Partner or its securities, unless such action (or inaction) shall have been specifically consented to by the General Partner in writing.

Section 3.03. Partnership Only for Purposes Specified

The Partnership shall be a partnership only for the purposes specified in Section 3.01 above, and this Agreement shall not be deemed to create a partnership among the Partners with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.01 above.

ARTICLE IV

CAPITAL CONTRIBUTIONS AND ISSUANCES

OF PARTNERSHIP INTERESTS

Section 4.01. Capital Contributions of the Partners

A. Capital Contributions . On July 1, 2004, certain Partners made Capital Contributions to the Partnership. In connection with the General Partner’s initial public offering of common shares and as reflected in the Amended and Restated Agreement of Limited Partnership, CBRE REIT Holdings LLC exchanged the Class C Interest (as defined in the Original Agreement of Limited Partnership) for a number of Class A Units set forth on Exhibit A hereto. Exhibit A hereto reflects the Capital Contributions made by each Partner, the Class A Units assigned to each Partner and the Percentage Interest in the Partnership represented by such Class A Units. The Capital Accounts of the Partners and the Carrying Values of the Partnership’s Assets have been and will continue to be determined pursuant to Section I.D. of Exhibit B hereto to reflect the Capital Contributions made.

 

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B. General Partnership Interest . A number of Partnership Units held by the General Partner equal to one percent (1%) of all outstanding Class A Units shall be deemed to be the General Partnership Interest. All other Partnership Units held by the General Partner shall be deemed to be Limited Partnership Interests and shall be held by the General Partner in its capacity as a Limited Partner in the Partnership.

C. Capital Contributions By Merger . To the extent the Partnership acquires any property by the merger of any other Person into the Partnership, Persons who receive Partnership Interests in exchange for their interests in the Person merging into the Partnership shall become Partners and shall be deemed to have made Capital Contributions as provided in the applicable merger agreement and as set forth in Exhibit A hereto.

D. No Obligation to Make Additional Capital Contributions . Except as provided in Sections 7.05 and 10.05 hereof, the Partners shall have no obligation to make any additional Capital Contributions or provide any additional funding to the Partnership (whether in the form of loans, repayments of loans or otherwise). No Partner shall have any obligation to restore any deficit that may exist in its Capital Account, either upon a liquidation of the Partnership or otherwise, except as provided in Section 13.02 hereof.

Section 4.02. Issuances of Partnership Interests

A. General . The General Partner is hereby authorized to cause the Partnership from time to time to issue to Partners (including the General Partner and its Affiliates) or other Persons (including, without limitation, in connection with the contribution of property to the Partnership) Partnership Units or other Partnership Interests in one or more classes, or in one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties, all as shall be determined, subject to applicable Delaware law, by the General Partner in its sole and absolute discretion, 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 , that no such Partnership Units or other Partnership Interests shall be issued to the General Partner unless either (a) the Partnership Interests are issued in connection with the grant, award or issuance of Shares or other equity interests in the General Partner having designations, preferences and other rights such that the economic interests attributable to such Shares or other equity interests are substantially similar to the designations, preferences and other rights (except voting rights) of the additional Partnership Interests issued to the General Partner in accordance with this Section 4.02.A or (b) the Partnership Interests are issued to all Partners holding Partnership Interests in the same class in proportion to their respective Percentage Interests in such class. In the event that the Partnership issues Partnership Interests pursuant to this Section 4.02.A, the General Partner shall make such revisions to this Agreement (including but not limited to the revisions described in Section 5.04, Section 6.02 and Section 8.06 hereof) as it deems necessary to reflect the issuance of such additional Partnership Interests.

B. Percentage Interest Adjustments in the Case of Capital Contributions for Class A Units . Upon the acceptance of additional Capital Contributions in exchange for Class A Units, the Percentage Interest related thereto shall be equal to the product of (1) a fraction, the numerator of which is equal to the amount of cash, if any, plus the Agreed Value of Contributed Property, if any, contributed with respect to such additional Partnership Units and the denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests for all outstanding Class A Units (computed as of the Business Day immediately preceding the date on which the additional Capital Contributions are made (an “Adjustment Date”)) plus (ii) the aggregate amount of additional Capital Contributions contributed to the

 

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Partnership on such Adjustment Date in respect of such additional Class A Units and (2) the Percentage Interest attributable to the Class A Interest as provided in Exhibit A hereto. The Percentage Interest of each other Partner holding Class A Units not making a full pro rata Capital Contribution shall be adjusted to the product of (1) a fraction the numerator of which is equal to the sum of (i) the Deemed Partnership Interest Value of such Limited Partner (computed as of the Business Day immediately preceding the Adjustment Date) plus (ii) the amount of additional Capital Contributions (such amount being equal to the amount of cash, if any, plus the Agreed Value of Contributed Property, if any, so contributed), if any, made by such Partner to the Partnership in respect of such Class A Units as of such Adjustment Date and the denominator of which is equal to the sum of (i) the Deemed Value of the outstanding Class A Units (computed as of the Business Day immediately preceding such Adjustment Date) plus (ii) the aggregate amount of the additional Capital Contributions contributed to the Partnership on such Adjustment Date in respect of such additional Class A Units and (2) the Percentage Interest attributable to the Class A Interest as provided in Exhibit A hereto. For purposes of calculating a Partner’s Percentage Interest of Class A Units pursuant to this Section 4.02.B, (a) cash Capital Contributions by the General Partner will be deemed to equal the cash contributed by the General Partner plus (1) in the case of cash contributions funded by an offering of any equity interests in or other securities of the General Partner, the offering costs attributable to the cash contributed to the Partnership, and (2) in the case of Class A Units issued pursuant to Section 7.05.E hereof, an amount equal to the difference between the Value of the Shares sold pursuant to any Stock Option Plan and the net proceeds of such sale.

C. Classes of Partnership Interests . From and after the date hereof, subject to Section 4.02.A above, the Partnership shall have two classes of Partnership Interests, entitled the “Class A Interest,” (represented by Class A Units) and the “Class B Interest.” Class A Units or new classes of Partnership Interests may be issued to newly admitted Partners in exchange for the contribution by such Partners of cash, real estate partnership interests, stock, notes or other assets or consideration.

D. The Class B Interest . On July 1, 2004, the General Partner issued the Class B Interest to an Affiliate of the Advisor in exchange for services performed or to be performed for the Partnership and its Subsidiaries, and admitted such Person as a Limited Partner. The Class B Partner is entitled to certain distributions as provided in Section 5.01.B and certain preferential allocations of items of income and gain under Section 6.01.D. The Class B Interest is subject to the transfer restrictions set forth in Article XI and is subject to redemption pursuant to Section 8.07.

Section 4.03. No Preemptive Rights

Except to the extent expressly granted by the Partnership pursuant to another agreement, no Person shall have any preemptive, preferential or other similar right with respect to (i) additional Capital Contributions or loans to the Partnership or (ii) issuance or sale of any Partnership Units or other Partnership Interests.

Section 4.04. Other Contribution Provisions

In the event that any Partner other than the Class B Partner is admitted to the Partnership and is given a Capital Account in exchange for services rendered to the Partnership, such transaction shall be treated by the Partnership and the affected Partner as if the Partnership had compensated such Partner in cash, and the Partner had contributed such cash to the capital of the Partnership. In addition, with the consent of the General Partner, one or more Limited Partners may enter into contribution agreements with the Partnership which have the effect of providing a guarantee of certain obligations of the Partnership.

 

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Section 4.05. No Interest on Capital

No Partner shall be entitled to interest on its Capital Contributions or its Capital Account.

ARTICLE V

DISTRIBUTIONS

Section 5.01. Requirement and Characterization of Distributions

A. General . Except as otherwise provided herein, the General Partner shall make distributions at such times and in such amounts as it may determine. Such distributions shall be made to the Partners who are Partners on the Partnership Record Date for such distribution. Notwithstanding anything to the contrary contained herein, in no event may a Partner receive a distribution with respect to a Class A Unit for a quarter or shorter period if such Partner is entitled to receive a distribution relating to such period with respect to a Share for which such Class A Unit has been redeemed or exchanged. Unless otherwise expressly provided for herein or in an agreement at the time a new class of Partnership Interests is created in accordance with Article IV hereof, no Partnership Interest shall be entitled to a distribution in preference to any other Partnership Interest. The General Partner shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with the qualification of the General Partner as a REIT, to make distributions (a) to Limited Partners so as to preclude any such distribution or portion thereof from being treated as part of a sale of property by a Limited Partner under Section 707 Code or the Regulations thereunder; provided that, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of any distribution to a Limited Partner being so treated, and (b) to the General Partner in an amount sufficient to enable the General Partner to pay stockholder dividends that will (1) satisfy the requirements for qualification as a REIT under the Code and the Regulations (the “REIT Requirements”) and (2) avoid any federal income or excise tax liability for the General Partner.

B. Method .

(i) Each holder of Partnership Interests shall be entitled to a distribution in accordance with the rights of any such class of Partnership Interests, including any preference in distribution. All distributions within a class of Partnership Interests shall be pro rata in proportion to the respective Percentage Interests of the holders of such Partnership Interests on such Partnership Record Date. All distributions of Operating Cash Flow will be made pro rata among the holders of the Class A Interest in accordance with their respective Percentage Interests.

(ii) All distributions of Capital Proceeds, and distributions upon a winding up or liquidation of the Partnership pursuant to Section 13.02 hereto or a Terminating Capital Transaction, shall be made: (A) first, 100% to the holders of the Class A Interest in accordance with their respective Percentage Interests on the Partnership Record Date until the General Partner has received cumulative distributions under Section 5.01.B(i) and this Section 5.01.B(ii) equal to the aggregate Capital Contributions made by the holders of the Class A Interest to the Partnership plus a cumulative, uncompounded return thereon of 7% per annum, determined by taking into account the dates on which all such Capital Contributions and distributions were made and (B) second, (1) 85% to the holders of the Class A Interest, in accordance with their respective Percentage Interests on the Partnership Record Date, and (2) 15% to the Class B Partner on the Partnership Record Date. No distributions shall be made pursuant to this Section 5.01.B(ii) to the Class B Partner if the Shares become Publicly Traded.

 

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(iii) In the event that the Shares become Publicly Traded, the Class B Partner will be entitled to receive the amount that would have been distributed to the Class B Partner as described in Section 5.01.B(ii) if the Partnership had distributed to the Partners upon liquidation an amount (the “Listing Distribution”) equal to the market value of the General Partner’s listed Shares based upon the average closing price, or the average of the bid and asked prices, as the case may be, during a period of thirty (30) days during which such Shares are traded beginning 150 days after the Shares become Publicly Traded. The Listing Distribution shall be reduced by any previous distributions made to the Class B Partner by the Partnership pursuant to Section 5.01.B(ii). The Listing Distribution shall be paid within 10 Business Days of the determination of the market value of the General Partner’s listed Shares as described above. The Listing Distribution shall be paid, as determined by the General Partner’s board of trustees, including a majority of the independent trustees, either in the form of cash or Shares or through a promissory note. In the event that the Listing Distribution is satisfied through a promissory note, the terms and conditions of any such promissory note shall be determined by the General Partner’s board of trustees, including a majority of the independent trustees. The Class B Interest shall be redeemed upon the payment to the Class B Partner of the Listing Distribution.

Section 5.02. Amounts Withheld

All amounts withheld pursuant to the Code or any provisions of any state or local tax law and Section 10.05 hereof with respect to any allocation, payment or distribution to the General Partner, the Limited Partners or Assignees shall be treated as amounts distributed to the General Partner, Limited Partners or Assignees pursuant to Section 5.01 above for all purposes under this Agreement.

Section 5.03. Distributions Upon Liquidation

Proceeds from a Terminating Capital Transaction shall be distributed to the Partners in accordance with Section 13.02 hereof.

Section 5.04. Revisions to Reflect Issuance of Additional Partnership Interests

In the event that the Partnership issues additional Partnership Interests to the General Partner or any Additional Limited Partner pursuant to Article IV hereof, the General Partner shall make such revisions to this Article V as it deems necessary to reflect the issuance of such additional Partnership Interests. Subject to Section 8.08, such revisions shall not require the consent or approval of any other Partner.

ARTICLE VI

ALLOCATIONS

Section 6.01. Allocations For Capital Account Purposes

For purposes of maintaining the Capital Accounts and in determining the rights of the Partners among themselves, the Partnership’s items of income, gain, loss and deduction (computed in accordance with Exhibit B hereto) shall be allocated among the Partners in each taxable year (or portion thereof) as provided herein below.

A. Allocations of Net Income . Except as otherwise provided herein, Net Income for any Partnership Year or other applicable period shall be allocated in the following order and priority:

(i) First, to the General Partner to the extent the cumulative Net Loss allocated to the General Partner pursuant to subparagraph (B)(v) below exceeds the cumulative Net Income allocated to the General Partner pursuant to this subparagraph (A)(i);

 

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(ii) Second, to each Obligated Partner until the cumulative Net Income allocated to such Obligated Partner pursuant to this subparagraph (A)(ii) equals the cumulative Net Loss allocated to such Obligated Partner under subparagraph (B)(iv) below (and, among the Obligated Partners, pro rata in proportion to their respective percentages of the cumulative Net Loss allocated to all Obligated Partners pursuant to subparagraph (B)(iv) below);

(iii) Third, to the General Partner until the cumulative Net Income allocated to the General Partner pursuant to this subparagraph (A)(iii) equals the cumulative Net Loss allocated to the General Partner pursuant to subparagraph (B)(iii) below;

(iv) Fourth, to the holders of any Partnership Interests that are entitled to any preference upon liquidation until the cumulative Net Income allocated under this subparagraph (iv) equals the cumulative Net Loss allocated to such Partners under subparagraph (B)(ii);

(v) Fifth, to the holders of any Partnership Interest that is entitled to any preference in distribution in accordance with the rights of any other class of Partnership Interests until each such Partnership Interest has been allocated, on a cumulative basis pursuant to this subparagraph (A)(v), Net Income equal to the amount of distributions received which are attributable to such preference with respect to such class of Partnership Interest (and, within such class, pro rata in proportion to the respective Percentage Interests as of the last day of the period for which such allocation is made);

(vi) Thereafter, with respect to Partnership Interests (other than the Class B Interest) that are not entitled to any preference in distribution or with respect to which distributions are not limited to any preference in distribution, pro rata to each such class in accordance with their P