-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HH+D7PBo0MwEOPQ6SXXmJcnQNZ3z1FTDzIfqA8ufyUycjr6cbyQvj7wO8XYN7+pk oKdv/Du7irpiF2SNoGvvXw== 0000804671-03-000012.txt : 20031010 0000804671-03-000012.hdr.sgml : 20031010 20031009195325 ACCESSION NUMBER: 0000804671-03-000012 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031008 ITEM INFORMATION: Other events FILED AS OF DATE: 20031010 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RESOURCES ACCRUED MORTGAGE INVESTORS 2 LP CENTRAL INDEX KEY: 0000804671 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 133368726 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16856 FILM NUMBER: 03935932 BUSINESS ADDRESS: STREET 1: 5 CAMBRIDGE CENTER CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6172343000 MAIL ADDRESS: STREET 1: 5 CAMBRIDGE CENTGER CITY: CAMBRIDGE STATE: MA ZIP: 02142 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCES ACCRUED MORTGAGE INVESTORS LP SERIES 88 DATE OF NAME CHANGE: 19880327 FORMER COMPANY: FORMER CONFORMED NAME: RESOURCES ACCRUED MORTGAGE INVESTORS LP SERIES 87 DATE OF NAME CHANGE: 19870518 8-K 1 name8k3e.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ---------------------------------- Date of report (Date of earliest event reported) October 8, 2003 Biggest Little Investments L.P. ---------------------------------- (Exact name of registrant as specified in its charter) Delaware 0-16856 13-3368726 ----------------- ----------- -------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification incorporation or No.) organization) 1175 West Moana Lane Reno, Nevada 89509 ------------------------ ----------- (Address of principal (Zip Code) executive offices) (775) 825-3355 --------------------------------------------------- (Registrant's telephone number, including area code) Resources Accrued Mortgage Investors 2, L.P. --------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. Other Events and Regulation FD Disclosure. On October 8, 2003, Resources Accrued Mortgage Investors 2, L.P., a Delaware limited partnership (the "Partnership"), received consents from the holders of a majority of its outstanding units of limited partnership interest ("Units") to adopt the Partnership's Second Amended and Restated Agreement of Limited Partnership (the "Amended LP Agreement"). Pursuant to the Amended LP Agreement, the Partnership will be renamed "Biggest Little Investments L.P." In addition, the Amended LP Agreement provides the Partnership with the ability to leverage its property in an effort to increase the value of the Partnership, to purchase additional real estate for investment and/or development and to make or acquire additional mortgage loans or short-term loans, as well as to reinvest operating income and proceeds from the sale or refinancing of its properties or the disposition of its mortgage loans. Finally, the Amended LP Agreement permits the Partnership to repurchase Units from the limited partners. Under its former partnership agreement, the Partnership was limited to owning and operating the Sierra Marketplace Shopping Center ("Sierra Marketplace"), since such agreement was drafted to deal with the funding of mortgage loans and not the ownership and operation of real estate. The general partner of the Partnership (the "General Partner") believes that the ability to reinvest proceeds and leverage assets of the Partnership will enable it to maximize the value of the Partnership. In addition, the General Partner hopes that the ability to sell and lease the Partnership's properties to affiliates of the General Partner will create leasing opportunities for Sierra Marketplace. An affiliate of the General Partner owns the property adjacent to Sierra Marketplace and the General Partner anticipates that this affiliate may lease space within Sierra Marketplace and/or work together with the General Partner to market space to businesses that are complementary to the property adjacent to Sierra Marketplace. ITEM 7. Financial Statements And Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Not applicable. (c) Exhibits. See Exhibit Index attached. -2- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized this 9th day of October, 2003. Resources Accrued Mortgage Investors 2 L.P. By: Maxum LLC Its General Partner By: /s/ Ben Farahi -------------------------------------- Ben Farahi Manager -3- EXHIBIT INDEX Exhibit Number Document - -------------- -------- 4(A) Second Amended and Restated Agreement of Limited Partnership of Resources Accrued Mortgage Investors 2, L.P. -4- Exhibit 4(A) SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF BIGGEST LITTLE INVESTMENTS L.P. Second Amended and Restated Limited Partnership Agreement ("Agreement") dated as of October 8, 2003, among Maxum LLC, a Nevada limited liability company, as the General Partner and the Limited Partners (as defined below). WHEREAS, on August 14, 1986, in accordance with and pursuant to the laws of the State of Delaware, certain entities formed a limited partnership named Resources Accrued Mortgage Investors 2, L.P. (the "Partnership"); WHEREAS, as of January 2, 2002, Maxum LLC, a Nevada limited liability company (the "General Partner"), became the sole general partner of the Partnership; WHEREAS, as of October 8, 2003, the General Partner obtained the consent of the requisite number of Limited Partners to change the name of the Partnership to Biggest Little Investments L.P. and to adopt this Second Amended and Restated Agreement of Limited Partnership of the Partnership. NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: 1. NAME, REGISTERED AGENT AND PLACE OF BUSINESS. The name of the Partnership is Biggest Little Investments L.P.; its registered office in Delaware is at 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808 and the name of the Partnership's registered agent for service of process at that address is Corporation Service Company. Its principal place of business is 1175 West Moana Lane, Suite 200, Reno, Nevada 89509 or such other place as the General Partner may hereafter determine. 2. DEFINITIONS. The following terms used in this Agreement shall (unless otherwise expressly provided herein or unless the context otherwise requires) have the following respective meanings: "Acquisition Expenses" shall mean the total of all fees and expenses related to the selection and acquisition of properties, whether or not made or acquired, including but not limited to, credit reports, appraisals, attorneys' fees and expenses, insurance, accountants' fees and expenses, travel and communications expenses, non-refundable option payments on property not acquired and miscellaneous expenses. "Acquisition Fees" shall mean the total of all fees and commissions paid by any Person, including the General Partner or its Affiliates, in connection with the origination or acquisition of any Mortgage Loan or selection and purchase, development or construction of any property by the Partnership whether designated as a Mortgage Placement Fee, real estate commission, Acquisition Fee, finder's fee, selection fee, Development Fee, Construction Fee, nonrecurring management fee, consulting fee or any other similar fee or commission, however designated and however treated for tax or accounting -5- purposes. Aggregate Acquisition Fees payable to all Persons in connection with the making or acquiring of Mortgage Loans and the purchase of Partnership properties may not exceed such compensation as is customarily charged in arm's-length transactions by others rendering similar services as an ongoing public activity in the same geographic locale and for comparable properties. "Additional Interest" shall mean the Partnership's share in the Appreciation of a property securing a Mortgage Loan. "Adjusted Contribution" shall mean the aggregate capital contributed in cash to the Partnership by the original purchasers of Units, reduced by any distributions of Disposition Proceeds and/or Net Sale or Refinancing Proceeds and/or Operating Cash Flow. "Affiliate" of a Person shall mean: (i) any Person directly or indirectly controlling, controlled by or under common control with the specified Person; (ii) any Person who, directly or indirectly, is the beneficial owner of 10% or more of any class of voting securities of, or otherwise has a substantial beneficial interest in, the specified Person or of which the specified Person is directly or indirectly the owner of 10% or more of any class of equity securities, or in which the specified Person has a substantial beneficial interest; (iii) any Person who is an officer, director, manager, trustee or partner of, or serves in a similar capacity with respect to, the specified Person; and (iv) if the specified Person is an officer, director, manager, trustee or partner, any entity for which the specified Person acts in any such capacity; provided, however, that a partner in a partnership or joint venture with (a) the Partnership or (b) an Affiliate of the General Partner, shall not by virtue of such relationship necessarily be deemed an Affiliate of such General Partner. For purposes of this definition, the term "control" shall include the control or ownership of 10% or more of the outstanding voting securities the Person referred to. "Appraised Value" shall mean the fair market value of any real property which is to be security for a Mortgage Loan, according to an MAI Appraisal. "Appreciation" with respect to a property underlying a Mortgage Loan, shall mean the amount calculated by subtracting (a)(i) the equity capitalization of the borrower (provided, however, that if a borrower owns more than one property, this calculation shall be based upon the equity capitalization of the borrower applicable to the property(ies) to which the Mortgage Loan relates), (ii) the aggregate of the outstanding Principal balances of all mortgage liens encumbering the mortgaged property, including the subject Mortgage Loan at the time of such calculation and (iii) all reasonable and ordinary expenses of sale, from (b) either the Appraised Value of the underlying property at the date of prepayment or maturity of the Mortgage Loan or the sales price of the property if the property is sold at the maturity or prepayment of the Mortgage Loan. "Certificate of Limited Partnership" shall mean the document, as amended, which was filed with the Secretary of State of the State of Delaware on August 14, 1986, pursuant to the Delaware Revised Uniform Limited Partnership Act, in connection with the formation of the Partnership, and in any other jurisdiction where the Partnership owns realty or must qualify to do business. -6- "Code" shall mean the Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent revenue laws. "Construction Fee" shall mean a fee for acting as a general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide Major Repairs and Rehabilitation on a Partnership Fixed Asset. "Development Fee" shall mean a fee for the packaging of a Partnership Fixed Asset, including negotiating and approving plans, and undertaking to assist in zoning, variances and financing for the specific Partnership Fixed Asset, either initially or at a later date. "Disposition" shall mean any Partnership transaction not in the ordinary course of its business including, without limitation, Principal payments, Additional Interest, prepayments, prepayment penalties, sales, exchanges, foreclosures or other dispositions of a Mortgage Loan, recoveries of damage awards and insurance proceeds but excluding the receipt of Sale or Refinancing Proceeds, all forms of interest payments when due on a Mortgage Loan (except Additional Interest) and business or rental interruption insurance proceeds. "Disposition Proceeds" shall mean receipts from Dispositions less (i) the amount paid or to be paid in connection with or as an expense of such Disposition; (ii) the amount necessary for the payment of all debts and obligations of the Partnership including, but not limited to, fees to the General Partner or its Affiliates; and (iii) any amount set aside by the General Partner for working capital reserves. "Distributions" shall mean any cash distributed to the Limited Partners and the General Partner arising from their interests in the Partnership, but shall not include any payment to the General Partner under the provisions of Articles 3 or 9. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. "Front-End Fees" shall mean fees and expenses paid by the Partnership for any services rendered during the period surrounding any new origination or acquisition of a Mortgage Loan or selection and purchase of a Partnership Fixed Asset by the Partnership, including Acquisition Fees, Acquisition Expenses and any other similar fees, however designated by the General Partner. "General Partner" shall include the General Partner and any other Person which succeeds it in such capacity as well as any additional General Partner. "Indemnified Persons" shall have the meaning ascribed to that term in Section 20.3. "Independent Advisor" shall mean a long-established, nationally recognized investment banking firm, accounting firm, mortgage banking firm, bank, real estate financial consulting firm or advisory firm with a staff of real estate professionals. "Investment in Properties" shall mean the amount actually paid or allocated to the making of or investment in Mortgage Loans or the purchase, -7- development, construction or improvement of properties acquired by the Partnership including the purchase of properties, working capital reserves allocable thereto and any other cash payments such as interest and taxes, but excluding Front-End Fees. "Limited Partner" shall mean any Unit holder who shall be admitted to the Partnership as a Limited Partner including as an additional or substituted Limited Partner. Reference to a Limited Partner shall refer to any one of them. "MAI Appraisal" shall mean an appraisal made by an independent qualified appraiser who is a member in good standing of the American Institute of Real Estate Appraisers. "Majority Vote" shall mean the affirmative vote of the holders of more than 50% of the outstanding Units. "Major Repairs and Rehabilitation" shall mean the repair, rehabilitation or reconstruction of a Partnership Fixed Asset where the aggregate costs exceed 10% of the fair market value of the Partnership Fixed Asset at the time of such services. "Mortgage Loans" shall mean notes, debentures, bonds and other evidences of indebtedness or obligations which are secured or collateralized by (a) fee or leasehold interests in real property, (b) other beneficial interests essentially equivalent to a mortgage on real property or (c) interests in partnerships, real estate investment trusts, join ventures or other entities which own or have an interest in real property. "Net Asset Value" shall mean the book value of all assets, including accrued interest on Mortgage Loans but excluding interest on temporary investments, minus all liabilities of the Partnership computed in accordance with generally accepted accounting principles. "Net Income" or "Net Loss" shall mean the taxable income or taxable loss of the Partnership (including the Partnership's share of income or loss of any partnership, venture or other entity which holds a Mortgage Loan), as determined for federal income tax purposes, computed (i) by taking into account each item of Partnership income, gain, loss, deduction or credit not already included in the computation of taxable income and taxable loss and (ii) by excluding each such Partnership item which is separately allocated pursuant to Article 10 hereof. "Operating Cash Flow" shall mean the gross cash revenues received by the Partnership as a result of the conduct by the Partnership of its business operations, including interest on Mortgage Loans or temporary investments and lease payments on net leases from builders and sellers, without deduction for depreciation, but not including: (i) any Capital Contributions received from Partners; (ii) the proceeds of any loans made to the Partnership; (iii) any Disposition Proceeds; or (iv) any Net Sale or Refinancing Proceeds; reduced by the sum of the following, to the extent made from such cash revenues: (x) all principal and interest payments on indebtedness of the Partnership, and all other sums paid to lenders (including loans made by Partners); (y) all cash expenditures (including expenditures for capital improvements and replacements) incurred incident to the normal operation of the Partnership's business, including any management fees; and (z) such cash reserves as the General Partner in its sole discretion deems reasonable, prudent, necessary and appropriate for proper operation of the Partnership business. -8- "Original Contribution" shall mean the amount of $250 for each Unit, which amount shall be attributed to such Unit in the hands of subsequent holders thereof. "Partners" shall mean collectively the General Partner and the Limited Partners and reference to a "Partner" shall be to any one of the Partners. "Partnership Act" shall mean the Delaware Revised Uniform Limited Partnership Act. "Partnership Fixed Assets" shall mean the real estate, together with the buildings, improvements, equipment, furniture, fixtures and personal property associated therewith, owned by the Partnership. "Person" shall mean any individual, corporation, partnership, joint venture, associate, joint stock company, trust, unincorporated organization, limited liability company or partnership or other legal entity. "Principal" of a Mortgage Loan shall mean the funds loaned to a borrower and upon which interest is calculated, but excluding accrued interest. "Property Management Fee" shall mean the fee which may be payable to Affiliates of the General Partner pursuant to Section 3.5.1. "Qualified Plans" shall mean qualified pension, profit sharing and other employee retirement benefit plans (including Keogh [H.R.10] Plans) and trusts, bank commingled trust funds for such plans and individual retirement accounts ("IRAs"). "Sale or Refinancing Proceeds" shall be whichever of the following shall be applicable: (i) consideration received by the Partnership in exchange for the Partnership Fixed Assets; (ii) compensation received by the Partnership (by way of insurance, eminent domain awards or otherwise) as reimbursement for the loss, destruction or other taking of the Partnership Fixed Assets; (iii) the amount of any refinancing of any indebtedness secured by the Partnership Fixed Assets; or (iv) any excess working capital reserve as determined by the General Partner, subject to any limitations imposed by this Agreement. "Net Sale or Refinancing Proceeds" shall be determined by subtracting from the Sale or Refinancing Proceeds the sum of: (i) any expenses incurred to obtain Sale or Refinancing Proceeds (including sales, refinancing or brokerage commissions subject to the provisions of this Agreement and attorneys' fees); (ii) the unpaid balance of any indebtedness relating to the Partnership Fixed Assets with respect to which Sale or Refinancing Proceeds are received; and (iii) provision for such reserves as the General Partner deems reasonable, appropriate and necessary to satisfy the Partnership's then outstanding indebtedness. Sale or Refinancing Proceeds shall include cash, deferred payment contracts, securities or other property. "Substantially All of the Assets" shall mean, unless the context otherwise dictates, Mortgage Loans and/or Partnership Fixed Assets representing 66 2/3% or more of the Net Asset Value of the Partnership assets as of the end of the most recently completed fiscal quarter. "Terminating Sale" shall have the meaning ascribed to that term in Section 10.14.5. -9- "Unit" shall mean a unit of limited partnership interest representing an Original Contribution. A Unit shall entitle the holder thereof to an interest in Net Income, Net Loss and Distributions of the Partnership as specified in Article 10 without regard to capital accounts. 3. PURPOSES. The purposes of the Partnership and certain limitations on its activities shall be as set forth below in Sections 3.1 through 3.6. 3.1 Investment in Mortgage Loans. 3.1.1 Investments. The Partnership shall invest in, hold, sell, dispose of and otherwise act with respect to first and junior Mortgage Loans on fee or leasehold interests in real property or other beneficial interests essentially equivalent to a mortgage on real property, as well as loans secured by interests in partnerships, real estate investment trusts, joint ventures or other entities. Upon a default in any of its Mortgage Loans, the Partnership may acquire, exchange, lease, manage, mortgage, encumber, improve, use, lend, borrow, operate, service, maintain, develop, convey, sell, subdivide, plat, trade and deal in or otherwise dispose of the underlying property upon such terms and conditions as the General Partner deems appropriate, subject to the provisions of this Agreement. 3.1.2 Mortgage Placement Fee Payable to the General Partner and its Affiliates. The General Partner or its Affiliates shall receive Mortgage Placement Fees in an amount not to exceed such compensation customarily charged in arm's-length transactions by others rendering similar services as an ongoing public activity in the same geographical location for comparable mortgage loans, payable on the funding of such Mortgage Loan, except where such funding is payable over a period of time. Services in connection with making Mortgage Loans shall include any of the following as required: negotiating and structuring transactions, coordinating closings including selecting counsel, causing to be reviewed legal documentation, disbursing Mortgage Loan proceeds, causing filings to be made, causing a review of and approving all title insurance arrangements, preparing reports for the Partners and other similar services. 3.2 Investment in Real Estate. 3.2.1 Investments. The Partnership shall purchase, exchange, acquire, lease, own, mortgage, encumber, improve or cause to be improved, use, lend, borrow, operate, service, maintain, develop, convey and otherwise dispose of and sell, handle, subdivide, plat, trade and deal in any property, commercial or multi-family, real, personal or mixed, choses in action, or any interest therein, including any non-income producing property, either directly or indirectly, as licensee or franchisee, individually or in association with other Persons, whether for the account of the Partnership, or as agent or representative for other individuals, partnerships, firms, corporations or entities, whether public, governmental or private, and generally engage in and conduct any form of business as may be necessary or convenient in connection with any activities in the various states, territories and dependencies of the United States and in the District of Columbia. The interests in real property to be acquired by the Partnership shall normally take the form of fee title or of a leasehold estate having a term, including renewal periods, of at least 45 years. The Partnership shall not acquire interests in other limited partnerships. -10- 3.2.2 Limitations on Investments in Certain Entities. (a) Controlling Interest. The Partnership shall not invest in any general partnership or joint venture unless it acquires a controlling interest in such general partnership or joint venture, or the Partnership has reserved for itself the right to control the general partnership or joint venture through its right to withhold approval of decisions having a material effect on the property (i.e., the sale or refinancing of the property; the expenditure of funds for capital improvements; the selection of depreciation and accounting methods for federal income tax purposes; the selection of the amount and type of insurance; and the making, termination or modification of long-term leases). In such event, duplicate property management or other fees shall not be permitted. (b) Determination of Value. In determining the value of the Partnership's interest in a joint venture arrangement, if the Partnership's investment is made at the time of the acquisition of the property, the Partnership's interest shall be equivalent to its cash contribution to the joint venture in relation to the total contribution made by the Partnership and its joint venture partner. In determining the value of the Partnership's interest in a joint venture arrangement with another program sponsored by the General Partner or its Affiliates, the Partnership shall obtain an appraisal prepared by an MAI Appraiser who shall determine the value of the property at the time the Partnership purchases its interest in such joint venture. The Partnership will then pay a pro-rata portion of such value to determine its investment in the joint venture. (c) Affiliated Investments. If the Partnership enters into a joint venture investment with the General Partner or its Affiliates subsequent to the acquisition of the property by the General Partner or its Affiliates, the Partnership will be subject to the restrictions set forth in this Agreement with respect to the ownership and sale or refinancing of Partnership Fixed Assets. The Partnership shall be permitted to invest in joint venture arrangements with another partnership or entity formed by the General Partner or any of its Affiliates only if all of the following conditions are met: (i) the two partnerships or entities have identical investment objectives; (ii) the Partnership will not incur any duplicate property management or other fees; (iii) the compensation to the General Partner and its Affiliates must be substantially identical in both partnerships or entities; (iv) the Partnership must have the right of first refusal to buy the interest of the other joint venture partner if said other partner wishes to sell the property held by such joint venture; and (v) the investment by each such joint venture partner must be on substantially the same terms and conditions. It should be noted that there is a potential risk of an impasse on joint venture decisions and there can be no assurance that the Partnership will have sufficient resources to exercise its right of first refusal. (d) Junior Trust Deeds. Investments by the Partnership in junior trust deeds and other similar obligations shall be prohibited, except for junior trust deeds which arise from the sale of Partnership Fixed Assets. 3.2.3 Financing. (a) Amount. The maximum amount of permanent indebtedness secured by Partnership Fixed Assets which may be incurred by the Partnership shall not exceed, with respect to any Partnership Fixed Asset, 80% of the Appraised Value of that Partnership Fixed Asset. -11- (b) Terms. The General Partner will use its best efforts to obtain financing under the most favorable terms available to the Partnership. (c) Affiliate Lenders. The Partnership may receive permanent loans (having a term in excess of 36 months) from an affiliated entity. 3.2.4 Other Affiliate Transactions. (a) Purchases and Leases of Property from Affiliates. Any Partnership Fixed Asset purchased or leased by the Partnership from the General Partner or its Affiliates will be purchased or leased upon terms which are fair to the Partnership at a price or rental not in excess of Appraised Value. In addition, the cost of the Partnership Fixed Asset and all improvements thereon will be clearly established. If the General Partner or its Affiliate's cost is less than the price to be paid by the Partnership, the price to be paid will not be deemed fair, regardless of the Appraised Value, unless material changes occur to the Partnership Fixed Asset which have increased the value since the General Partner or its Affiliates acquired the property. Material factors may include the passage of a significant amount of time (but in no event less than two years), the assumption by the General Partner or its Affiliates of the risk of obtaining a re-zoning of the property and its subsequent re-zoning, or some other extraordinary event which in fact increases the value of the Partnership Fixed Asset. The Partnership will also obtain from an Independent Advisor, a letter of opinion to the effect that any proposed purchase or lease from the General Partner or its Affiliates is fair and at least as favorable to the Partnership as a purchase or lease from an unaffiliated entity in similar circumstances. The Independent Advisor's compensation will be paid by the General Partner or its Affiliates and will not be reimbursable by the Partnership. The Partnership may not acquire Partnership Fixed Assets from a limited partnership in which the General Partner or its Affiliates have any interest. (b) Sales and Leases of Property to Affiliates. The Partnership shall not sell or lease Partnership Fixed Assets to the General Partner or its Affiliates except as follows: (i) The Partnership may lease Partnership Fixed Assets to the General Partner or its Affiliates pursuant to a lease-back arrangement, the terms of which are no less favorable to the Partnership than those offered to and accepted by Persons who are not Affiliates of the General Partner. (ii) The General Partner or its Affiliates may purchase Partnership Fixed Assets (or contract rights related thereto) from the Partnership only if the General Partner or its Affiliates agree to purchase any such Partnership Fixed Asset (or contract rights) at a purchase price equal to the fair market value thereof. (c) Purchases by Affiliates of Partnership Fixed Assets. The General Partner or its Affiliates may purchase Partnership Fixed Assets in their own name (and assume loans in connection therewith) and temporarily hold title thereto for the purpose of facilitating the acquisition of such Partnership Fixed Assets or the borrowing of money or obtaining of financing for the Partnership, or any other purpose related to the business of the Partnership, provided that such Partnership Fixed Assets are purchased by the Partnership on the terms and conditions set forth in 3.2.4(a) above, and provided there is no difference in interest rates of the loans secured by the Partnership Fixed Assets at the time acquired by the General Partner and the time acquired by the Partnership, nor any other benefit arising out of said -12- transaction to the General Partner apart from other compensation otherwise permitted by this Agreement. (d) Development, Construction or Major Repairs or Rehabilitation of Partnership Fixed Assets by Affiliates. The General Partner and its Affiliates may develop, construct or provide Major Repairs or Rehabilitation of Partnership Fixed Assets, or render any services in connection with such activities, only in accordance with the following: (i) The Development Fee paid in connection with such project shall not exceed 10% of the direct costs of the project (direct costs shall not include construction site personnel or utilities). (ii) The Construction Fee paid in connection with such project shall not exceed 10% of the direct costs of the project (direct costs shall not include construction site personnel or utilities). (iii) The only Front-End Fees paid to the General Partner or its Affiliates in connection with such project shall consist of a Development Fee, a Construction Fee and a real estate commission in connection with the acquisition of the land from Persons who are not Affiliates of the General Partner. Such fees, plus any additional Acquisition Fees and Acquisition Expenses to non-Affiliated Persons must be comparable to and competitive with the fees paid to non-Affiliated Persons rendering comparable services in the same geographical area. 3.2.5 Compensation to the General Partner and its Affiliates. (a) Acquisition Fees. The Partnership shall pay to the General Partner or its Affiliates, as initial consideration for their services in connection with the evaluation, investigation, negotiation, selection and purchase of all properties, and otherwise rendering acquisition services either directly or indirectly, Acquisition Fees in an amount equal to 2% of the price of each such Partnership Fixed Asset. (b) Refinancing Fees. The Partnership shall pay to the General Partner or its Affiliates, for services rendered in connection with the refinancing of a Partnership Fixed Asset, a mortgage placement fee equal to the lesser of: (i) 1% of the refinancing proceeds of the Partnership Fixed Asset; or (ii) fees which are competitive for similar services in the geographical area where the Partnership Fixed Asset is located. (c) Development Fees. The Partnership shall pay to the General Partner or its Affiliates, for services rendered in connection with the development and construction of any Partnership Fixed Asset, a Development Fee equal to 10% of the total costs of development. (d) Construction Fees. The Partnership shall pay to the General Partner or its Affiliates, for services rendered in connection with the development and construction of any Partnership Fixed Asset, a Construction Fee equal to 10% of the total costs of development. (e) Guaranty Fees. In the event that the General Partner or its Affiliates guaranty any indebtedness of the Partnership, the Partnership shall pay to the General Partner or such Affiliates, as the case may be, a fee in an amount competitive with guaranty fees of a similar nature. 3.3 Short-Term Loans. The Partnership shall lend funds on an unsecured basis for periods not to exceed one year at interest rates based on market conditions. -13- 3.4 Investment of Partnership Funds. The Partnership may reinvest Operating Cash Flow, Disposition Proceeds and/or Net Sale or Refinancing Proceeds, in the sole discretion of the General Partner, in additional Mortgage Loans and properties in accordance with the provisions of Section 10.8 below. 3.5 Other Fees Payable to the General Partner and its Affiliates. 3.5.1 Property Management Fees. An Affiliate of the General Partner may provide property management services should such services be required by the Partnership, including after foreclosure on a Mortgage Loan or with respect to any other Partnership Fixed Asset, and if so will be entitled to a fee which shall be paid monthly and shall be equal to the lesser of (a) fees which are competitive for similar services in the same geographic area or (b)(i) 5% of the gross revenues with respect to residential properties; (ii) 6% of the gross revenues with respect to industrial and commercial properties; or (iii) 1% of the gross revenues with respect to industrial and commercial properties which are leased on a long-term net basis (except for a one time initial leasing fee of 3% of gross revenues). Where an Affiliate of the General Partner provides property management services, any property management fees payable to unaffiliated parties will be paid out of the property management fees paid to the manager. Included in such fees shall be bookkeeping services and fees paid to unrelated persons for property management services. In the event that an Affiliate of the General Partner provides leasing services, such Affiliate shall be paid a fee which is competitive for similar services in the same geographic area. 3.5.2 Subordinated Real Estate Commission. The Partnership may pay for real estate brokerage services to all Persons involved in the sale of (a) properties acquired upon foreclosure of Mortgage Loans or (b) Partnership Fixed Assets, real estate brokerage fees which are reasonable, customary and competitive, taking into consideration the size, type and location of the Partnership Fixed Asset ("Competitive Commission"), and shall not in the aggregate exceed 6% of the gross sales price of the Partnership Fixed Asset; however, as to any Affiliate of the General Partner, such fees shall be paid only if such Affiliate provides a substantial amount of services in the sale effort and shall not exceed the lesser of (i) a percentage of the gross sales price of a Partnership Fixed Asset equal to one-half of the Competitive Commission, or (ii) 3% of the gross sales price of such Partnership Fixed Asset. The real estate brokerage fee shall be payable upon the completion of the sale of each Partnership Fixed Asset. 3.5.3 Insurance Commissions. Insurance commissions may be payable to insurance agencies affiliated with the General Partner for providing insurance brokerage services in connection with the issuance of insurance covering Partnership Fixed Assets or other properties owned by the Partnership or underlying Mortgage Loans, but only if the conditions set forth in Section 14.2.16 are satisfied. 3.6 Further Assurances. The Partnership shall do each and everything necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any one or more of the objectives herein enumerated, either alone, or in association with, or as agent or representative for, other Persons (whether public, governmental or private), or to accomplish any other lawful business whatsoever, or which shall at any time appear conducive to or expedient for the protection or benefit of the Partnership. -14- 4. TERM. The Partnership commenced concurrently with the filing of the Certificate of Limited Partnership with the Secretary of State of the State of Delaware, and shall continue until December 31, 2016, unless previously terminated in accordance with the provisions of this Agreement. 5. GENERAL PARTNER. 5.1 Capital Contributions of General Partner. The General Partner has succeeded to the interest of the former general partners of the Partnership, who contributed an aggregate of $1,000 in cash to the Partnership. At all times during the existence of the Partnership, the General Partner shall have an aggregate present and continuing interest in Net Income, Net Loss and Distributions according to the provisions of Article 10. 5.2 Capital Accounts. A separate capital account shall be maintained for the General Partner pursuant to Section 10.13 hereof. 5.3 Deficiencies. In the event that, immediately following the liquidation of the Partnership referred to in Section 18.2, the General Partner shall have a deficiency in its capital account as determined in accordance with tax accounting principles and if the assets available for distribution upon the dissolution and termination of the Partnership are insufficient to allow Distributions to the Limited Partners of amounts equal to the then balances in their capital accounts as determined in accordance with generally accepted tax principles, then the General Partner shall contribute in cash to the capital of the Partnership an amount equal to the lesser of (a) the deficiency in the General Partner's capital account or (b) the excess of 1.01% of the total Original Contribution over the total capital contributions of the General Partner. Such contribution shall be made no later than the end of the Partnership taxable year in which the liquidation occurs (of, if later, within 90 days after the date of such liquidation). 6. LIMITED PARTNERS. 6.1 Capital Accounts. A separate capital account shall be maintained for each Limited Partner pursuant to Section 10.13 hereof. 6.2 No Exchange of Units for Mortgage Loans or Partnership Fixed Assets. The Partnership shall not acquire Mortgage Loans or Partnership Fixed Assets in exchange for Units. 7. LIABILITY OF LIMITED PARTNERS. 7.1 General Limitation on Liability. Limited Partners shall not be bound by, or be personally liable for, the expenses, liabilities or obligations of the Partnership in excess of their contributions, and no Limited Partner shall be required to lend funds to the Partnership, to make any further contribution of capital to the Partnership or to repay to the Partnership, any Partner or any creditor of the Partnership all or any portion of any negative amount of such Limited Partner's capital account. 7.2 Certain Liabilities of Limited Partners. Under state law, it is possible that a Limited Partner may be liable to the Partnership to the extent of a previous Distribution made to such Limited Partner which represents a return of the Limited Partner's Original Contribution if the -15- Partnership does not have sufficient assets to discharge its liabilities. If a court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to make such payment, such obligation shall be the obligation of such Limited Partner and not of the General Partner. 8. UNITS. 8.1 Status of Units. Each Unit is fully paid and nonassessable. 8.2 Repurchases. Neither the Partnership, nor the General Partner or its Affiliates shall be obligated or required to redeem or purchase any Units. However, the Partnership may purchase outstanding Units if such purchase does not impair the capital or operations of the Partnership at a price determined by the General Partner, in its sole discretion, based on market considerations. A Limited Partner wishing to have such Limited Partner's Units purchased (the "Tendering Limited Partner") shall mail or deliver a written request therefor to the Partnership's principal office (executed by its trustee or authorized agent, if applicable), setting forth the name and address of the Tendering Limited Partner and the number of Units tendered. Such requests will be considered by the General Partner. The General Partner may request, and the Tendering Limited Partner shall provide, any further information needed by the General Partner in order to determine whether or not to accept the tender. In the event that the General Partner determines, in its sole discretion, to honor a request for purchase, it will notify the Tendering Limited Partner in writing of such fact and will forward to such Limited Partner the documents necessary to effect such purchase within 60 days thereafter. 9. PARTNERSHIP EXPENSES. 9.1 Reimbursement of Expenses. All Partnership expenses shall be billed directly to and paid by the Partnership. The General Partner and its Affiliates may be reimbursed by the Partnership for the actual cost to the General Partner or its Affiliates of goods and material used for or by the Partnership and obtained from unaffiliated parties and administrative services necessary to the prudent operation of the Partnership, provided that reimbursement for administrative services will be at the lesser of (a) the actual cost of such services or (b) the amount which the Partnership would be required to pay to independent parties for comparable services. 9.2 Limitations on Reimbursement. The General Partner and its Affiliates shall not be reimbursed by the Partnership for the following expenses: (a) services for which the General Partner or its Affiliates are entitled to compensation in the form of a separate fee pursuant to Article 3 hereof; (b) rent, depreciation, utilities or other administrative items generally constituting the General Partner's overhead; (c) salaries, fringe benefits, travel expenses or other administrative items incurred by or allocated to any controlling person of the General Partner or its Affiliates; for purposes of this subsection, "controlling person" shall mean: (i) any individual, regardless of title, who performs executive or senior management functions for the General Partner -16- or its Affiliates similar to those of executive management or senior management; (ii) directors; (iii) Persons holding 5% or more equity interest in the General Partner or its Affiliates or (iv) Persons having the power to direct or cause the direction of the General Partner or its Affiliates through ownership of voting securities, by contract or otherwise (it is not intended that every individual who carries a title such as vice president, senior vice president, secretary or treasurer be considered a controlling person); or (d) the fees and expenses of any Independent Advisor to the Partners with respect to transactions with Affiliated entities. 9.3 Partnership Obligations. Subject to Sections 9.1 and 9.2, the Partnership shall pay all expenses of the Partnership (which expenses shall be billed directly to the Partnership) which may include, but are not limited to: (a) all costs of personnel employed by the Partnership, the General Partner or its Affiliates and involved in the business of the Partnership; (b) legal, audit, accounting, brokerage and other fees; (c) printing, engraving and other expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and recording of documents evidencing ownership of an interest in the Partnership or in connection with the business of the Partnership; (d) fees and expenses paid to independent contractors, appraisers, mortgage bankers, brokers and servicers, leasing agents, consultants, on-site managers, real estate brokers, insurance brokers and other agents; (e) expenses in connection with the disposition, replacement, alteration, repair, remodeling, refurbishment, leasing, refinancing and operation of Partnership Fixed Assets upon foreclosure or otherwise, including the costs and expenses of foreclosures, insurance premiums, real estate brokerage, leasing commissions and maintenance of any such Partnership Fixed Asset and any tax or assessment thereon; (f) the cost of insurance as required in connection with the business of the Partnership; (g) expenses of organizing, revising, amending, converting, modifying or terminating the Partnership; (h) the cost of preparation and dissemination of information and documentation relating to potential Dispositions of Mortgage Loans; (i) expenses in connection with Distributions made by the Partnership to, and communications and bookkeeping and clerical work necessary in maintaining relations with, the Limited Partners, including reports of meetings of the Partnership, and of preparation of proxy statements and solicitations of proxies in connection therewith; (j) expenses in connection with preparing and mailing reports required to be furnished to Limited Partners for investor, tax reporting, federal securities law or other purposes, or which reports the General Partner deems the furnishing thereof to Limited Partners to be in the best interests of the Partnership; -17- (k) the cost incurred in connection with any litigation or proceeding in which the Partnership is involved, as well as in the examination, investigation or other proceedings conducted by any regulatory agency of the Partnership, including legal and accounting fees incurred in connection therewith; (l) computer services including the cost of any computer equipment or services used for or by the Partnership, including establishment and maintenance of investment records and processing of accounting records relating to the Partnership; (m) the cost of any accounting statistical or bookkeeping equipment necessary for the maintenance of the books and records of the Partnership; and (n) supervision and expense of professionals retained by the Partnership in connection with any of the foregoing, including, without limitation, attorneys, accountants and appraisers. 10. ALLOCATION OF INCOME AND LOSS AND DISTRIBUTIONS. 10.1 Allocations of Net Income, Net Loss and Tax Exempt Items. 10.1.1 Allocations. Except as otherwise provided in Sections 10.1.2, 10.3, 10.4 and 10.5 of this Agreement, Net Income (other than Net Income attributable to Disposition Proceeds and Net Sale or Refinancing Proceeds), Net Loss and all items of income exempt from federal income tax shall be allocated 2.5% to the General Partner and 97.5% to the Limited Partners. 10.1.2 Mandatory Allocations. Notwithstanding the foregoing, (a) in the event Code Section 704(c) or Code Section 704(c) principles applicable under Treas. Reg. 1.704-2 require allocations of income or loss of the Partnership in a manner different than set forth above, the provisions of Section 704(c) and the regulations thereunder shall control such allocations among the Partners, and (b) all deductions of the Partnership which are attributable to (i) any loan of the Partnership which is guaranteed by a Partner or (ii) any loan made to the Partnership by a Partner (or which are treated as such by Treas. Reg. under 1.704-2) shall be allocated solely to such Partner if so required by such Treas. Regs. 10.2 Apportionment of Net Income, Net Loss and Distributions Among Limited Partners. Except as otherwise provided in this Article 10, that portion of Net Income, Net Loss and Distributions allocated to the Limited Partners shall be apportioned among the Limited Partners for any calendar quarter in the ratio in which the number of Units owned by each Limited Partner on the first day of such calendar quarter bears to the total number of Units owned by all Limited Partners as of that date. 10.3 Allocations Causing Negative Capital Accounts. Notwithstanding Section 10.2, to the extent that any allocation of Net Loss and/or item of deduction to a Limited Partner would reduce such Limited Partner's capital account balance (determined after taking into account all prior Distributions and all prior allocations of Net Income and Net Loss) below zero or would increase the negative balance in such Limited Partner's capital account at a time when another Limited Partner has a positive capital account balance, such Net Loss shall instead be allocated pro rata to Limited Partners having positive capital account balances in proportion to their respective positive -18- capital account balances until such capital account balances are reduced to zero; provided, however, that in no event shall there be a reallocation of any item of income, gain, loss or deduction allocated among the Partners pursuant to this Agreement for prior years. In the event the provisions of this Paragraph 10.3 prohibit the allocation of any portion of Net Loss and/or item of deduction to every Limited Partner, such portion of the Net Loss shall instead be allocated to the General Partner. For purposes of determining a Limited Partner's capital account balance for purposes of Net Loss or deduction allocations under this Section 10.3, Distributions made prior to or contemporaneously with any allocation to a Limited Partner shall be reflected in such Partner's capital account prior to making such allocation to such Partner. For purposes of this Section 10.3 and Section 10.4, a Partner's capital account shall be reduced for the items described in Treas. Reg. 1.704-1(b)(ii)(d)(4), (5) and (6). For purposes of determining the amount of expected Distributions and expected capital account increases described in Treas. Reg. 1.704- 1(b)(ii)(d)(4), (5) and (6) referenced immediately above: (A) the rules set forth in Treas. Reg. 1.704-1(b)(2)(iii)(c) concerning the presumed value of Partnership Fixed Assets shall apply, and (B) gross income or Net Income allocated to a Partner pursuant to Section 10.4 hereof shall be taken into account. For purposes of this Section 10.3 and Section 10.4, a Partner's capital account shall be increased to the extent that such Partner is obligated to fund deficits in such Partner's capital account upon liquidation of the Partnership or is treated as obligated to restore such deficits pursuant to Treas. Reg. 1.704-1(b)(2)(ii)(c), any addition thereto pursuant to Treas. Reg. 1.704-2(g)(i) and 1.704-2(i)(5) after taking into account any changes during such year in partnership minimum gain (as determined in accordance with Treas. Reg. 1.704-2(d)) and in the minimum gain attributable to any Partner for nonrecourse debt (as determined under Treas. Reg. 1.704- 2(i)(3)). 10.4 Special Allocations. Notwithstanding the provisions of Section 10.3 hereof, (a) In the event any Partner unexpectedly receives any adjustments, allocations, or distributions described in Treas. Reg. 1.704- 1(b)(2)(ii)(d)(4), (5) and (6) which create or increase a deficit capital of such Partner, then items of Net Income and gain (consisting of a pro rata portion of each item of Partnership income, including gross income, and gain for such year and, if necessary, for subsequent years) shall be specially allocated to such Partner in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the deficit capital account so created as quickly as possible. It is the intent that this Section 10.4(a) be interpreted to comply with the alternate test for economic effect set forth in Treas. Reg. 1.704-1(b)(2)(ii)(d). (b) In the event any Partner would have a deficit capital account at the end of any Partnership taxable year which is in excess of the sum of any amount that such Partner is obligated to restore to the Partnership under Treas. Reg. 1.704-1(b)(2)(ii)(c) and such Partner's share of minimum gain as defined in Treas. Reg. 1.704-2(g)(1) (which is also treated as an obligation to restore in accordance with Treas. Reg. 1.704-1(b)(2)(ii)(d)), the capital account of such Partner shall be specially credited with items of Partnership income (including gross income) and gain in the amount of such excess as quickly as possible. -19- (c) Notwithstanding any other provision of this Section 10.4, if there is a net decrease in the Partnership's minimum gain as defined in Treas. Reg. 1.704-2(d) during a taxable year of the Partnership, then the capital account of each Partner shall be allocated items of income (including gross income) and gain for such year (and if necessary for subsequent years) equal to that Partner's share of the net decrease in Partnership minimum gain. This Section 10.4(c) is intended to comply with the minimum gain chargeback requirement of Treas. Reg. 1.704-2 and shall be interpreted consistently therewith. If in any taxable year that the Partnership has a net decrease in the Partnership's minimum gain, and the minimum gain chargeback requirement would cause a distortion in the economic arrangement among the Partners and it is not expected that the Partnership will have sufficient other income to correct that distortion, the General Partner may in its discretion (and shall, if requested to do so by a Partner) seek to have the Internal Revenue Service waive the minimum gain chargeback requirement in accordance with Treas. Reg. 1.704-2(f)(4). 10.5 Allocation of Net Income and Net Loss from Dispositions and Sale or Refinancing of Partnership Fixed Assets. Except as otherwise provided in Sections 10.1.2, 10.3, 10.4, 10.9 and 10.14, Net Income or Net Loss for tax purposes arising from a Disposition, or the sale or refinancing of a Partnership Fixed Asset, (other than a Terminating Sale) shall be allocated in the following order of priority: (a) to the Partners to the extent of and in proportion to the amount of Disposition Proceeds or Net Sale or Refinancing Proceeds in respect of which such Distribution is to be made which is to be distributed to each of them pursuant to Section 10.7 (other than pursuant to Section 10.7.1); and (b) the remainder of such Net Income, if any, shall be allocated to the Partners to the extent of the amount of Disposition Proceeds or Net Sale or Refinancing Proceeds to be distributed to the Partners pursuant to subparagraph 10.7.1. 10.6 Distributions of Operating Cash Flow. Distributions of Operating Cash Flow shall be allocated 97.5% to the Limited Partners and 2.5% to the General Partner. Such Distributions shall be apportioned among Limited Partners as Net Income and Net Loss are apportioned and, when available, may be distributed or reinvested in Mortgage Loans, properties or as otherwise permitted under Article 3 of this Agreement in the sole discretion of the General Partner. 10.7 Disposition Proceeds; Net Sale or Refinancing Proceeds. Except as otherwise provided in Section 10.8 below, Distributions of Disposition Proceeds and Net Sale or Refinancing Proceeds shall be made in the following order of priority: 10.7.1 First, 97.5% to the Limited Partners and 2.5% to the General Partner until each Limited Partner has received an amount which, when added to prior Distributions of Disposition Proceeds and Net Sale or Refinancing Proceeds and cash from reserves equals such Limited Partner's Original Contribution; 10.7.2 Second, 97.5% to the Limited Partners and 2.5% to the General Partner until each Limited Partner has received an amount which, when added to all prior Distributions to such Limited Partner from all sources other than pursuant to Section 10.7.1, equals at least a 12% per annum cumulative -20- compounded return on such Limited Partner's Adjusted Contribution, commencing as of the last day of the calendar quarter in which such Limited Partner's Original Contribution was received by the Partnership; and 10.7.3 Third, the remainder, 97.5% to the Limited Partners and 2.5% to the General Partner. 10.7.4 The Distributions set forth in Sections 10.7.2 and 10.7.3 are subject to the payment of the subordinated real estate commission, if any, described in Section 3.5.2, with payment of such commission, if any, being subordinated to certain Distributions to the Limited Partners as provided in Section 3.5.2. 10.8 Reinvestment Option. All Operating Cash Flow, Disposition Proceeds and Net Sale or Refinancing Proceeds received by the Partnership during any calendar quarter shall be distributed within 60 days following the end of such calendar quarter. Notwithstanding the immediately preceding sentence, the Partnership may reinvest Operating Cash Flow, Disposition Proceeds and Net Sale or Refinancing Proceeds in additional Mortgage Loans or Partnership Fixed Assets or as otherwise permitted pursuant to Article 3 hereof. Prior to any reinvestment, the General Partner must believe that any additional investment will enhance the overall return to the Limited Partners and is consistent with the Partnership's overall investment policies. 10.9 Distributions of Liquidation Proceeds. Notwithstanding the provisions of Section 10.7 above, Distributions of Proceeds arising in connection with a Terminating Sale shall be distributed to the General Partner and Limited Partners in accordance with the positive balances in their respective capital accounts after allocating income from the Disposition pursuant to Section 10.14 hereof. 10.10 One Percent Interest of General Partner. Notwithstanding any provision to the contrary in this Agreement, in no event shall the General Partner's interests in each material item of the Partnership income, gain, loss, deduction or credit be less than 1% of each such item at all times during the existence of the Partnership. 10.11 Fees/Distributions. To the extent that the Partnership shall be entitled to any deduction for federal income tax purposes as a result of any Distributions made to the General Partner, such deduction shall be allocated for federal income tax purposes to the General Partner. To the extent that any fee payable to the General Partner is recharacterized as a Partnership distribution, gross income of the Partnership of equivalent amount shall be allocated to the General Partner prior to making the other tax allocations required by this Article 10. Any deduction attributable to the receipt by the General Partner of an interest in the Partnership shall be allocated to the Limited Partners on a per Unit basis. Any income recognized by the Partnership attributable to amounts paid or payable to the Partnership by the General Partner or its Affiliates which is required to be distributed solely to the Limited Partners shall be allocated to the Limited Partners in proportion to and to the extent of such amounts which are required to be distributed to each Limited Partner. 10.12 Distribution Subject to Payments. All Distributions are subject to the payment of Partnership expenses and to the maintenance of reasonable reserves. In addition, the Partnership may not pay any Distribution to the extent that, after giving effect to the Distribution, all liabilities of the -21- Partnership, other than liabilities to partners on account of their interests in the Partnership, exceed the fair value of the Partnership assets. 10.13 Capital Accounts. 10.13.1 Increases and Decreases. A separate capital account shall be maintained for each Partner. The capital account of each Partner shall be increased by (a) the amount of money contributed by such Partner to the capital of the Partnership; and (b) such Partner's share of Partnership Net Income (or item thereof) and any income or gain that is exempt from federal income taxation. The capital account of each Partner shall be decreased by (i) the amount of money distributed to such Partner by the Partnership; (ii) such Partner's share of Net Loss (or item thereof) for tax purposes; and (iii) such Partner's share of expenditures of the Partnership which are neither deductible nor properly chargeable to capital account under Code Section 705(a)(2)(B) or are treated as such expenditures under Treas. Reg. 1.704-1(b)(2)(iv)(i). 10.13.2 Single Capital Account. A Partner who has more than one interest in the Partnership shall have a single capital account that reflects all such interests, regardless of the class of interests owned by such Partner (e.g., general or limited) and regardless of the time or manner in which such interests were acquired. 10.13.3 Contribution of Property. In the event that property (other than cash) is contributed (or deemed contributed pursuant to the provisions of Code Section 708) by a Partner to the Partnership, the computation of capital accounts, as set forth in this Section 10.13, shall be adjusted as follows: (a) the contributing Partner's capital account shall be increased by the fair market value of the property contributed to the Partnership by such Partner (net of liabilities secured by contributed property that the Partnership is considered to assume or take subject to under Code Section 752); and (b) as required by Treas. Reg. 1.704-1(b)(2)(iv)(g) and 1.704- 1(b)(4)(i), if the capital account of any Partner reflects a fair market value for property which differs from such property's adjusted basis, each Partner's capital account shall be adjusted to take account of the amount of book gain and book loss (other than book loss attributable to expenditures of the Partnership described in Section 10.13.1(iii)) allocated to such Partner pursuant to Article 10 hereof and shall not take into account the Net Income and Net Loss for tax purposes allocated to such Partner pursuant to this Article 10. 10.13.4 Special Rules. In the event that property is distributed (or deemed distributed pursuant to the provisions of Code Section 708) by the Partnership to a Partner the following special rules shall apply: (a) the capital accounts of the Partners receiving the distribution first shall be adjusted (as provided in Code 704(b) and Treas. Reg. 1.704- 1(b)(2)(iv)(e)) to reflect the manner in which the unrealized income, gain, loss and deduction inherent in such property (that has not already been reflected in the Partners' capital accounts) would be allocated to such Partners if there were a taxable disposition of such property for its fair market value on the date of distribution; and -22- (b) the capital account of the Partner who is receiving the distribution of property from the Partnership shall be charged with the fair market value of the property at the time of distribution (net of liabilities secured by such property that such Partner is considered to assume or take subject to under Code Section 752). 10.13.5 Capital Account Maintenance Requirements. The foregoing provisions are intended to satisfy the capital account maintenance requirements of Code Section 704(b) and Treas. Reg. 1.704-1(b)(2)(iv) and such provisions shall be modified to the extent required by such Section or any successor provision thereto. 10.14 Termination Rules. In connection with a Terminating Sale, Net Income shall be allocated as follows: 10.14.1 first, to all Partners having negative capital account balances in proportion to and to the extent of their respective negative capital account balances; 10.14.2 then, to the Partners until the capital account balance of each Partner (determined after making the allocation described in subparagraph 10.14.1 but before distributing the proceeds from such Terminating Sale) shall be equal to the Distributions which would be made to such Partner if the Proceeds from such sale were distributed pursuant to Sections 10.7.1. 10.7.2 and 10.7.3; 10.14.3 in the event that Net Income to be allocated to Limited Partners pursuant to Section 10.14.2 shall be insufficient to bring the capital account balance of each Limited Partner, to whom such allocation is required, to said balance, then such Net Income shall be allocated first to Limited Partners having the smallest capital accounts per Unit so as to equalize, to the extent possible, the capital accounts per Unit of all Limited Partners; and 10.14.4 the remainder of such Net Income, if any, shall be allocated 2.5% to the General Partner and 97.5% to the Limited Partners. The portion of the Net Income under this Section 10.14.4 which is allocated to the Limited Partners as a group, shall, to the extent of any unpaid cumulative return of the Limited Partners under Section 10.7.2, first be allocated among the Limited Partners pro rata in proportion to such unpaid return due each Limited Partner. 10.14.5 A "Terminating Sale" shall mean the disposition of the last one-third in Principal amount of the Partnership's Mortgage Loans and Partnership Fixed Assets, commencing with the first such disposition. 11. ASSIGNMENT OF UNITS. 11.1 Procedures. Subject to Sections 11.3 and 11.4, Limited Partners shall have the right to assign ten or more whole Units, provided, however, unless prohibited by any applicable state securities law, four Units may be acquired or retained by IRA or Keogh Plans, and provided further that a Limited Partner must assign all of such Limited Partner's Units if such Limited Partner would otherwise retain less than the minimum amount. Such assignment shall be made by a written instrument, the terms of which are not in contravention of any of the provisions of this Agreement, which instrument shall be duly executed by the assignor of such Units; provided, however, that -23- no proposed assignment of a Unit shall be effective for any purpose until the "effective date" of such assignment (as defined in Section 11.2) shall have occurred. A Limited Partner shall, within thirty days after assignment, notify the General Partner of such proposed assignment of a beneficial interest in any Units which occurs without a transfer of record ownership. 11.2 Treatment of Assignor and Assignee; Effective Date. An assignee shall be entitled to receive allocations of Net Income, Net Loss and Distributions and all reports and other notices from the Partnership attributable to Units assigned from and after the "effective date" of the assignment of such Units. The Partnership and the General Partner shall be entitled to treat the assignor of such Units as the absolute owner thereof in all respects, and shall incur no liability for allocations of Net Income, Net Loss or Distributions, or transmittal of reports and notices required to be given to Limited Partners hereunder which are made in good faith to such assignor until such "effective date" and transfers of Units shall not be recognized for any purpose until the "effective date." The "effective date" of an assignment on which the assignee shall be deemed an assignee of record shall be the first day of the calendar quarter following the later of (a) the date set forth on the written instrument of assignment, a copy of which has been delivered to the Partnership, or (b) the date on which the Partnership has actual notice of the proposed assignment of Units. 11.3 Restrictions. (a) Except as provided in this Section 11.3, no assignment of Units by a Limited Partner may be made if (i) the Units sought to be assigned, when added to the total of all other Units assigned within the period of twelve consecutive months prior to the proposed date of assignment would, in the opinion of counsel for the Partnership, result in the termination of the Partnership under the Code, or (ii) if in the opinion of counsel for the Partnership, such assignment would be in violation of any applicable federal or state securities laws (including any investor suitability standard). However, with respect to clause (i), such assignment may be made if upon the application and at the expense of the Limited Partner desiring to assign such Limited Partner's Units, there shall have been granted to the transferring Limited Partner and the Partnership a private ruling by the Internal Revenue Service that the proposed assignment would not cause a termination. (b) In order to prevent the Partnership from being treated as a "publicly traded partnership" for federal tax purposes, when the General Partner determines in its sole discretion, that a proposed transfer was effected on a secondary market (or a substantial equivalent thereof), the General Partner has the right to refuse to recognize any such attempted transfer of Units, or economic rights therein, which would constitute a transfer in a secondary market (or a substantial equivalent thereof) as defined under Code Section 7704 and any regulations promulgated thereunder. The Limited Partners agree not to transfer their Units on a secondary market (or a substantial equivalent thereof). The Limited Partners agree to provide all information respecting transfers which the General Partner deems necessary in order to determine whether the transfer occurred on a secondary market (or a substantial equivalent thereof). In the event that the determination that a transfer would be effected on a secondary market (or substantial equivalent thereof) is made, the General Partner shall exercise such right by taking any actions it deems necessary or appropriate in its reasonable discretion so that such transfer is not in fact recognized. The right to exercise the foregoing restriction on transfers shall not be -24- exercised if the General Partner determines in its reasonable discretion that the exercise of such restriction would result in the Partnership being deemed to hold plan assets for purposes of ERISA. The General Partner shall incur no liability to any investor or prospective investor for any action or inaction by it in connection with the foregoing, provided it acted in good faith. 11.4 Ineffective Transfers. Any assignment, sale, exchange or other transfer in contravention of any of the provisions of this Article 11 shall be void and deemed ineffectual and shall not bind or be recognized by the Partnership. 12. SUBSTITUTED LIMITED PARTNERS. 12.1 Requirements. Notwithstanding Article 11, no assignee shall have the right to become a substituted Limited Partner in place of such assignee's assignor unless all of the following conditions are first satisfied: 12.1.1 the provisions of this Article 12 are complied with; 12.1.2 the instrument of assignment sets forth the intention of the assignor that the assignee succeed to the assignor's interest as a substituted Limited Partner in the Limited Partner's place; 12.1.3 the assignor and assignee shall have executed and acknowledged such other instruments as the General Partner may deem necessary or desirable to effect such substitution, including the written acceptance and adoption by the assignee of the provisions of this Agreement, as the same may be amended, and execution, acknowledgement and delivery to the General Partner of a special power of attorney, the form and content of which are described herein; and 12.1.4 a transfer fee sufficient to cover all reasonable expenses connected with such substitution (not to exceed $150) shall have been paid to the Partnership. 12.2 Consent. By executing or adopting this Agreement, each Limited Partner hereby consents to the admission of additional or substituted Limited Partners by the General Partner and to an assignee of Units becoming a substituted Limited Partner in accordance with the foregoing. 12.3 Amendments. The General Partner shall cause this Agreement and, if required by the Partnership Act or any other applicable law, any separate Certificate of Limited Partnership, to be amended to reflect the admission and/or substitution of Limited Partners at least once in each calendar month, but not later than thirty days after the effective date of the assignment of a Unit. 12.4 Special Exercise of the Rights of a Limited Partner. If a Limited Partner dies, such Limited Partner's executor, administrator or trustee, or if a Limited Partner is adjudicated incompetent, such Limited Partner's committee, guardian or conservator, or if a Limited Partner is adjudicated bankrupt, the trustee or receiver of such Limited Partner's estate, shall have all the rights of a Limited Partner for the purpose of settling or managing such Limited Partner's estate and such power as the decedent, incompetent or bankrupt possessed to assign all or any part of such Limited Partner's Units and to join with the assignee thereof in satisfying -25- conditions precedent to such assignee becoming a substituted Limited Partner. The death, dissolution or bankruptcy of a Limited Partner shall not dissolve the Partnership. 13. BOOKS, RECORDS, ACCOUNTINGS AND REPORTS. 13.1 Location of Records. The Partnership's books and records, this Agreement and any amendment hereto or restatement hereof, any separate Certificate of Limited Partnership and any amendment thereto or restatement thereof, and copies of each appraisal of properties underlying Mortgage Loans or constituting Partnership Fixed Assets shall be maintained at the principal offices of the Partnership or such other place as the General Partner may determine and shall be open to inspection, examination and copying by Limited Partners or their duly authorized representatives at all reasonable times. A reasonable charge for copying may be charged by the Partnership. The Limited Partners shall not receive copies of this Agreement and any amendment hereto or restatement hereof, the Certificate of Limited Partnership and any amendment thereto or restatement thereof or a current list of all Partners in the Partnership unless they request in writing a copy from the General Partner and pay any necessary duplication fee. Each appraisal of property underlying a Mortgage Loan or constituting a Partnership Fixed Asset shall be maintained by the Partnership and available for such inspection and examination for a period of at least five years following the date of first funding of the Mortgage Loan or closing date of the acquisition of the Partnership Fixed Asset, respectively. 13.2 Annual Reports. The General Partner shall have prepared at least annually (a) financial statements (balance sheet, statement of income or loss, partners' equity and changes in financial position) prepared in accordance with generally accepted accounting principles and accompanied by a report therein containing an opinion of an independent certified public accounting firm; (b) a statement of cash flow; (c) Partnership information necessary in the preparation of the Limited Partners' federal income tax returns; (d) a report of the business of the Partnership; (e) a statement as to the compensation received by the General Partner and its Affiliates during the year from the Partnership, which statement shall set forth the services rendered or to be rendered by the General Partner and its Affiliates and the amount of fees received, and (e) a report identifying Distributions from: (i) Operating Cash Flow of that year and/or prior years; (ii) Disposition Proceeds and Net Sale or Refinancing Proceeds; and (iii) cash from working capital reserve accounts and other sources, together with a breakdown of all costs reimbursed to the General Partner and its Affiliates from the Partnership. Within the scope of the annual audit, the independent certified public accountants must verify the allocation of such costs to the Partnership. The method of verification shall be in accordance with generally accepted accounting standards and shall include such tests of the accounting records and such other auditing procedures which the independent certified public accountants consider appropriate in the circumstances. Copies of the annual report shall be distributed to each Limited Partner within 120 days after the close of each taxable year of the Partnership; provided, however, all Partnership information necessary in the preparation of the Limited Partners' federal income tax returns shall be distributed to each Limited Partner not later than 75 days subsequent to December 31 of each year. Quarterly and other financial information will be posted on the Partnership's website on a timely basis. -26- 13.3 Report on Acquisitions. Within 60 days after the end of each calendar quarter in which the Partnership has funded a Mortgage Loan or closed an acquisition of a Partnership Fixed Asset, a report will be submitted to each Limited Partner describing the terms of such Mortgage Loan or such Partnership Fixed Asset and such other information as the General Partner deems appropriate. 13.4 ERISA Report. To enable Limited Partners subject to annual reporting requirements under ERISA to file such annual reports as they relate to an investment in the Partnership, within 75 days after the close of the Partnership's fiscal year, the General Partner shall furnish Limited Partners with appraisals or good faith estimates of fair market value of the Partnership's assets. 13.5 Information Returns. The General Partner shall cause information returns for the Partnership to be prepared and timely filed with the appropriate authorities. 13.6 Miscellaneous Reports. The General Partner shall cause to be prepared and timely filed, with appropriate federal and state regulatory and administrative bodies, all reports required to be filed with such entities under then current applicable laws, rules and regulations. A Limited Partner shall be provided with a copy of any such report upon request upon payment of any duplication fee. 14. RIGHTS, AUTHORITY, POWERS, RESPONSIBILITIES AND DUTIES OF THE GENERAL PARTNER. 14.1 Services of the General Partner. The General Partner shall only be responsible for the following services to the Partnership: 14.1.1 supervising the organization of the Partnership; 14.1.2 arranging for (a) the identification of suitable investments for the Partnership; (b) a review of the significant factors in deciding whether to make a particular investment; and (c) the making of such final investment decision; 14.1.3 supervising Partnership management, which includes: (a) establishing policies for the operation of the Partnership; (b) causing the Partnership's agents or employees to arrange for the provision of services necessary to the operation of the Partnership (including any necessary mortgage servicing, property management, accounting and legal services and services relating to Distributions by the Partnership); (c) when necessary or appropriate, approving actions to be taken by the Partnership; (d) providing advice, consultation, analysis and supervision with respect to the Partnership making or acquiring Mortgage Loans and acquiring Partnership Fixed Assets (including compliance with federal, state and local regulatory requirements and procedures); (e) executing documents on behalf of the Partnership and (f) making all decisions as to accounting matters; and 14.1.4 approving the terms of Dispositions and sales or refinancings of Partnership Fixed Assets, including establishing the terms for and arranging any such transaction. -27- 14.2 Powers of the General Partner. The conduct of the Partnership's business shall be controlled solely by the General Partner in accordance with this Agreement. The General Partner will have responsibility for the selection, evaluation, negotiation, financing and disposition of Partnership Mortgage Loans and Partnership Fixed Assets as well as overall administrative responsibility for the Partnership and the responsibility for operations over all Mortgage Loans made and Partnership Fixed Assets acquired. The General Partner shall have all authority, rights and powers conferred by law and those required or appropriate to the management of the Partnership's business which, by way of illustration but not by way of limitation, shall, subject only to the provisions of Section 14.4, include the right, authority and power: 14.2.1 to make or purchase Mortgage Loans or interests therein and to purchase properties in its own name or an Affiliate's name or in the name of a nominee, a trust or otherwise and hold title thereto temporarily for the purpose of facilitating such origination or acquisition or for any other purpose related to the business of the Partnership, subject to the terms and conditions set forth in Article 3 of this Agreement; 14.2.2 to originate, acquire, hold, foreclose, sell, dispose of and otherwise act with respect to Mortgage Loans, in such Principal amounts and upon such other terms as the General Partner deems to be in the best interests of the Partnership for both Affiliated and nonaffiliated entities, including Mortgage Loans on properties with respect to which an Affiliate of the General Partner has made a loan; 14.2.3 to purchase, exchange, acquire, lease, own, mortgage, encumber, improve, develop or cause to be improved, use, lend, borrow, operate, service, maintain, develop, convey and otherwise dispose of and sell, handle, subdivide, plat, trade and deal in any property, commercial or multi-family, real, personal or mixed, choses in action, or any interest therein, including any non-income producing property, either directly or indirectly, as licensee or franchisee, individually or in association with other Persons, whether for the account of the Partnership, or as agent or representative for other individuals, partnerships, firms, corporations or entities, whether public, governmental or private, subject to the terms and conditions of this Agreement; 14.2.4 to make short-term loans in accordance with the provisions of Section 3.3 hereof; 14.2.5 to utilize Operating Cash Flow, Disposition Proceeds or Net Sale or Refinancing Proceeds for making Mortgage Loans and/or Investment in Properties; 14.2.6 to employ persons in the operation and management of the business of the Partnership including, but not limited to, agents, employees, managers, accountants, attorneys, consultants, architects, contractors, engineers and others, on such terms and for such compensation as the General Partner shall determine, provided that the General Partner and its Affiliates shall only receive compensation and reimbursement as provided in Articles 3 and 9 and provided further that any such agreement shall be terminated immediately upon dissolution of the Partnership under Section 18.2; 14.2.7 to open bank accounts and deposit and maintain funds in the name of the Partnership in banks or savings and loan associations; -28- 14.2.8 to deposit funds with banks with which both the Partnership and Affiliates may have written or informal requirements which provide for the maintenance of "compensating balance" arrangements, provided that the Partnership shall advise such banks that the Partnership's funds may not be used for compensating balance purposes except for the sole benefit of the Partnership; 14.2.9 to allow the Partnership to borrow money from the General Partner or its Affiliates on a short-term basis, at any time and from time to time, and in connection therewith to pay interest and other financing charges or fees which shall not exceed the interest and other financing charges or fees which would be charged by unrelated lending institutions or comparable loans for the same purpose, in the same locality of the Partnership Fixed Asset if the loan is made in connection with a particular Partnership Fixed Asset, provided, however, that no prepayment charge or penalty shall be required by the General Partner or its Affiliates on any such loan to the Partnership secured by either a first or a junior or all-inclusive trust deed, mortgage or encumbrance on a Partnership Fixed Asset, except to the extent that such prepayment charge or penalty is attributable to the underlying encumbrance; 14.2.10 to obtain and pay for all insurance coverage that the General Partner, in its sole discretion, determines to be necessary or desirable for the protection of the Partnership, any property owned by the Partnership and any of the Partners, including comprehensive liability insurance in connection with the Partnership Fixed Assets and umbrella liability policies covering all Limited Partners, subject, however, to the restriction that the Partnership shall not incur the cost of that portion of liability insurance which insures the General Partner or its Affiliates for any liability as to which the General Partner or its Affiliates are prohibited from being indemnified under this Agreement; 14.2.11 to prepare or cause to be prepared reports, statements and other relevant information for distribution to the Limited Partners, including annual reports; 14.2.12 to require in all Partnership obligations that the General Partner shall not have any personal liability thereon but that the person or entity contracting with the Partnership is to look solely to the Partnership and its assets for satisfaction, and in the event that any such obligation has personal liability, the General Partner may require its satisfaction prior to contracts without such personal liability, provided, however, that the inclusion of the aforesaid provisions shall not materially affect the cost of the service or material being supplied and all Partnership obligations are satisfied in accordance with prudent business practices as to time and manner of payment; 14.2.13 to cause the Partnership to make or revoke any of the elections permitted by the Code; 14.2.14 to select as the Partnership's accounting year a calendar year or such fiscal year as approved by the Internal Revenue Service; 14.2.15 to determine the appropriate accounting method or methods to be used by the Partnership in maintaining its books and records; -29- 14.2.16 to purchase insurance brokerage services from an Affiliate in connection with obtaining insurance on any Partnership Fixed Asset, but only if (a) the cost of providing such service, including the cost of the insurance, is no greater than the lowest quotation obtained from two unaffiliated insurance agencies, and the coverage and terms are likewise comparable; and (b) the Affiliate is independently engaged in the business of providing such services to persons other than Affiliates and at least 75% of its insurance brokerage service gross revenue is derived from persons other than Affiliates; 14.2.17 to assure any Person dealing with the Partnership or the General Partner that such Person may rely upon a certificate signed by the General Partner as authority with respect to: (a) the identity of the General Partner or any Limited Partner, (b) the existence or nonexistence of any fact which constitutes a condition precedent to acts by the General Partner or in any other manner germane to the affairs of the Partnership; (c) the Persons who are authorized to execute and deliver any instrument or document of the Partnership; or (d) any act or failure to act by the Partnership or as to any other matter whatsoever involving the Partnership or any Partner; 14.2.18 to take such steps, including making any amendment to this Agreement, as the General Partner determines are advisable or necessary in order to preserve the tax status of the Partnership as a pass-through entity for federal income tax purposes, including, without limitation, imposing restrictions on transfers of Units (provided such restrictions on transfers do not cause the Partnership's assets to be deemed to be "plan assets" with respect to investors which are qualified pension, profit sharing and other employee retirement benefit plans (including Keogh [H.R.10] Plans) and trusts, bank commingled trust funds for such plans and individual retirement accounts); 14.2.19 in the event that either (i) the assets of the Partnership would constitute "plan assets" for purposes of ERISA or (ii) the transactions contemplated hereunder would constitute prohibited transactions under ERISA or the Code and an exemption for such transactions could not be obtained from the Department of Labor (or the General Partner determines not to seek such an exemption), upon notice to all Limited Partners but without the consent of any Limited Partner, (a) to restructure the Partnership's activities to the extent the General Partner deems necessary (after consulting with counsel) to comply with any exemption in the final plan asset regulation adopted by the Department of Labor or to comply with any requirement the Department of Labor might impose as a condition to granting a prohibited transaction exemption or (b) to compel a dissolution and termination of the Partnership; 14.2.20 in addition to any amendment otherwise authorized herein, to amend this Agreement from time to time without the consent of the Limited Partners, (a) to add to the representations, duties or obligations of the General Partner or its Affiliates or surrender any right or power granted to the General Partner or its Affiliates herein, for the benefit of the Limited Partners; -30- (b) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with law or with any other provision herein, or to add any other provision with respect to matters or questions arising under this Agreement which would not be inconsistent with law or with the provisions of this Agreement; (c) to delete from or add any provision to this Agreement required to be so deleted or added by the staff of the Securities and Exchange Commission or by a state securities commissioner or similar such official, which addition or deletion is deemed by such commission or official to be for the benefit or protection of the Limited Partners; (d) to change the name of the Partnership to any lawful name which it may select; (e) to reflect the addition or substitution of Limited Partners or the reduction of capital accounts upon the return of capital to Partners; or (f) to the extent the General Partner reasonably believes necessary or desirable to comply with the law or to preserve the tax benefits associated with an investment in Units, or to take advantage of new tax benefits or to avoid tax detriments for any Limited Partner as a result of new legislation, regulations, and/or judicial or administrative interpretations of the law (such permitted actions may include, but are not limited to, amending provisions of this Agreement concerning tax allocations, or taking action under this Agreement pertaining to ERISA plan assets or prohibited transaction exemptions, or avoiding reclassification of the Partnership as other than a pass-through entity for tax purposes or avoiding reclassification of the character of its income for tax purposes). Such amendments shall be deemed to be made pursuant to the General Partner's fiduciary obligation to the Partnership and the Limited Partners, and no such amendment shall give rise to any claim or cause of action by any Limited Partner. 14.2.21 to place record title to or ownership of, or the right to own, Mortgage Loans, Partnership Fixed Assets or other Partnership assets in the name or names of a nominee or nominees, trustee or trustees for any purpose convenient or beneficial to the Partnership; 14.2.22 to redeem or repurchase Units on behalf of the Partnership in accordance with the provisions of this Agreement; and 14.2.23 to execute, acknowledge and deliver any and all instruments to effectuate all of the foregoing, and to take all such action in connection therewith as the General Partner shall deem necessary or appropriate. 14.3 Comparison With General Partnership. The General Partner shall, except as otherwise provided in this Agreement or the Partnership Act, have all the rights and powers and shall be subject to all the restrictions of a partner in a partnership without limited partners. 14.4 Limitations. Neither the General Partner nor any Affiliate shall have the authority to: -31- 14.4.1 enter into contracts with the Partnership which would bind the Partnership after the removal, adjudication of bankruptcy or insolvency of the last remaining General Partner or continue the business with Partnership assets after the occurrence of such event; 14.4.2 alter the primary purposes of the Partnership as set forth in Article 3; 14.4.3 receive any rebate or give-up or participate in any reciprocal business arrangement which would enable it or an Affiliate to circumvent any of the provisions of this Agreement; 14.4.4 cause the Partnership to invest in any Mortgage Loan or Partnership Fixed Asset through joint ventures with an Affiliate except in accordance with Section 3 of this Agreement; 14.4.5 cause the Partnership to invest in any Mortgage Loan or Partnership Fixed Asset with unaffiliated co-lenders except on the same terms and conditions (although not necessarily the same percentage interest) as such co-lenders; 14.4.6 cause the Partnership to exchange Units for Mortgage Loans or Partnership Fixed Assets; 14.4.7 do any act in contravention of this Agreement or which would make it impossible to carry on the ordinary business of the Partnership; 14.4.8 confess a judgment against the Partnership in connection with any threatened or pending legal action; 14.4.9 possess any Partnership asset or assign the rights of the Partnership in specific Partnership assets for other than a Partnership purpose; 14.4.10 perform any act (other than an act required by this Agreement or any act taken in good faith reliance upon counsel's opinion) which would, at the time such act occurred, subject any Limited Partner to liability as a general partner in any jurisdiction; 14.4.11 employ, or permit the employment of, the funds or assets of the Partnership in any manner except for the exclusive benefit of the Partnership; 14.4.12 commingle the Partnership funds with those of any other Person except to the extent that funds are temporarily retained by property managers or mortgage servicers and except that funds of the Partnership and funds of other partnerships sponsored by the General Partner or its Affiliates may be held in an account or accounts established and maintained for the purpose of making computerized disbursements and/or short-term investments; provided, however, that Partnership funds are protected from claims of such other partnerships and/or their creditors; 14.4.13 operate the Partnership in such a manner as to have the Partnership classified as an "investment company" for purposes of the Investment Company Act of 1940; -32- 14.4.14 except as specifically provided for in this Agreement, cause the Partnership to invest in or underwrite the securities of other issuers for any purposes; 14.4.15 cause the Partnership to invest in real estate contracts of sale unless such contracts of sale are in recordable form and are appropriately recorded in the chain of title; 14.4.16 grant the General Partner or any Affiliate an exclusive right to sell or exclusive employment to sell the Partnership's investments for the Partnership; 14.4.17 cause the Partnership to make any Mortgage Loan to Affiliates or buy, sell or lease any Partnership Fixed Asset to or from Affiliates or renegotiate, dispose of or enter into, cause or permit the occurrence of any subsequent material transaction with respect to any Mortgage Loan or Partnership Fixed Asset to any Affiliate or make any other loan to the General Partner or its Affiliates except as permitted by, and in accordance with the terms set forth in, Article 3 hereof. 14.4.18 cause the Partnership to invest in Mortgage Loans unless it first obtains a mortgagee's or owner's title insurance policy or commitment as to the priority of the mortgage or the condition of title; 14.4.19 cause the Partnership to invest in or make Mortgage Loans on any one property if the aggregate amount of all mortgage loans outstanding on the property including the Principal amount of the Partnership's Mortgage Loan, would exceed an amount equal to 80% of the Appraised Value of the property at the time the Mortgage Loan is made, as determined in an MAI Appraisal unless substantial justification exists because of the presence of other underwriting criteria; provided that the Partnership may loan additional funds to a borrower if the Principal outstanding plus such outstanding indebtedness and additional advances do not exceed 80% of the Appraised Value of the underlying property at the time the Mortgage Loan is made or at the time of any new appraisal (for purposes of this section 14.4.19, the "aggregate amount of all mortgage loans outstanding on the property including the Principal amount of the Partnership's Mortgage Loan," shall include all interest (excluding contingent participations in income and/or appreciation in value of the mortgaged property - e.g. Additional Interest), the current payment of which may be deferred pursuant to the terms of such loans to the extent that deferred interest on each loan exceeds 5% per annum of the principal balance of the loan); 14.4.20 except as provided in Article 16, admit a person as a General Partner except with the consent of the Limited Partners as provided for in this Agreement; 14.4.21 except as permitted by Article 3, receive any insurance brokerage fee or write any insurance policy covering any of the properties underlying the Mortgage Loans; 14.4.22 cause the Partnership to acquire limited partnership interests in any other limited partnership; 14.4.23 incur aggregate borrowing of the Partnership with respect to Partnership Fixed Assets in excess of 80% of the aggregate value as determined by the lender as of the date of financing as to all such properties which are financed; or -33- 14.4.24 cause the Partnership to incur that portion of liability insurance which insures the Indemnified Persons for any liability from which such Indemnified Persons are prohibited from being indemnified pursuant to Article 20 of this Agreement. 14.5 No Personal Liability. The General Partner shall have no personal liability for the repayment of the Original Contributions of any Limited Partner or to repay the Partnership any portion or all of any negative balance in their capital accounts, except as otherwise provided in Section 5.3. 14.6 Notice of Limitation on Liability. The General Partner shall use its best efforts, in the conduct of the Partnership's business, to put all suppliers and other Persons with whom the Partnership does business on notice that the Limited Partners are not liable for Partnership obligations and all agreements to which the Partnership is a party shall include a statement to the effect that the Partnership is a limited partnership organized under the Partnership Act; but the General Partner shall not be liable to the Limited Partners for any failure to give such notice to such suppliers or other Persons. 14.7 Accounting Matters. The General Partner shall make all decisions as to accounting matters in connection with the accounting methods adopted by the Partnership in accordance with generally accepted accounting principles and procedures applied on a consistent basis and shall make all decisions with respect to tax accounting matters in accordance with tax accounting principles. The General Partner may rely on the Partnership's independent certified public accountants to determine whether such decisions are in accordance with generally accepted accounting principles. 14.8 Tax Matters Partner. The General Partner is designated the "Tax Matters Partner" in accordance with Section 6231(a)(7) of the Code and, in connection therewith and in addition to all other powers given thereunder, shall have all other powers needed to perform fully hereunder including, without limitation, the power to retain all attorneys and accountants of its choice and the right to settle any audit without the consent of the Limited Partners. 14.9 Funds and Assets. The General Partner shall have a fiduciary responsibility for the safekeeping and use of all funds and assets of the Partnership, whether or not in its immediate possession or control, and shall not employ, or permit another to employ, such funds or assets in any manner except for the exclusive benefit of the Partnership. 14.10 Preservation of Tax Status. The General Partner shall use its best efforts to take such actions as are necessary to preserve the Partnership's status as a partnership or other pass-through entity for tax purposes in light of any amendment to the Code or administrative or judicial interpretations thereof. 15. RIGHTS AND POWERS OF THE LIMITED PARTNERS 15.1 Control. Limited Partners shall take no part in any manner in the control, conduct or operation of the Partnership and shall have no right or authority to act for or bind the Partnership. -34- 15.2 Voting Rights. Limited Partners shall have the right, by Majority Vote, to vote only upon the following matters affecting the basic structure of the Partnership: 15.2.1 removal of a General Partner and election of a successor General Partner in place thereof; 15.2.2 subject to and in accordance with the provisions of Article 16 and Section 18.1.1, election of a successor General Partner and continuation of the business of the Partnership; 15.2.3 termination and dissolution of the Partnership pursuant to Article 18; 15.2.4 amendment of this Agreement, provided such amendment is not for any of the purposes set forth in Sections 14.2.18, 14.2.19 or 14.2.20; 15.2.5 sale of all or Substantially All of the Assets of the Partnership in a single sale, or in multiple sales in the same twelve-month period, except in the liquidation and winding-up of the business of the Partnership upon its termination and dissolution in the ordinary course of business, or merger of the Partnership with and into another entity where the Partnership does not survive the merger; 15.2.6 a material change in the Partnership's purposes set forth in Article 3 above; 15.2.7 voluntary assignment of the General Partner's interest in the Partnership, except as otherwise provided in Section 16.5; and 15.2.8 extension of the term of the Partnership. 15.3 Meetings; Notices. The General Partner may at any time call a meeting of the Limited Partners or for a vote, without a meeting, of the Limited Partners on matters on which they are entitled to vote, and shall call for such meeting or vote following receipt of written request therefor of Limited Partners holding 10% or more of the Units held by all Limited Partners as of the date of receipt of such written request ("notice date"). Within 10 days of such notice date, the General Partner shall notify all Limited Partners of record as of the notice date as to the time and place of the Partnership meeting, if called, or if no such meeting has been called, the date upon which the votes will be counted, and shall deliver a detailed statement of the action proposed, including a verbatim statement of the wording of any resolution proposed for adoption by the Limited Partners and of any proposed amendment to this Agreement. The date of any Partnership meeting or the date upon which such votes, without a meeting, will be counted shall be not less than ten nor more than sixty days following mailing of the notice thereof by the General Partner. All expenses of the voting and such notification shall be borne by the Partnership. If a meeting is adjourned to another time or place, and if an announcement of the adjournment of time or place is made at the meeting, it shall not be necessary to give any notice of the adjourned meeting. The presence in person or by proxy of a majority in interest of the Limited Partners shall constitute a quorum at all meetings of the Limited Partners; provided, however, that if there be no such quorum, holders of a majority in interest of the Limited Partners present may adjourn the meeting from time to time without further notice until a quorum shall -35- have been obtained. No notice of the time, place or purpose of any meeting of Limited Partners need be given to any Limited Partner who attends in person or is represented by proxy, except for a Limited Partner attending a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business on the ground that the meeting is not lawfully called or convened, or to any Limited Partner entitled to such notice who, in writing, executed and filed with the records of the meeting, either before or after the time thereof, waives such notice. 15.4 Voting Procedures. A Limited Partner shall be entitled to cast one vote for each Unit that such Limited Partner owns: (a) at a meeting, in person, by written proxy or by a signed writing directing the manner in which such Limited Partner desires that his, her or its vote be cast, which writing must be received by the General Partner prior to such meeting; or (b) without a meeting by a signed writing directing the manner in which such Limited Partner desires that his, her or its vote be cast, which writing must be received by the General Partner prior to the date upon which the votes of Limited Partners of record on the notice date, whether at a meeting or otherwise, shall be counted. No General Partner shall be entitled to vote unless and to the extent it owns Units. The laws of the State of Delaware pertaining to the validity and use of corporate proxies shall govern the validity and use of proxies given by Limited Partners. At each meeting of Limited Partners, the General Partner shall appoint such officers and adopt such rules for the conduct of such meeting as the General Partner shall deem appropriate. In connection with each meeting or vote without a meeting of the Limited Partners, the Partnership shall provide for proxies or written consents which specify a choice between approval and disapproval of each matter to be acted upon at the meeting or by vote without a meeting. For purposes of obtaining a written vote under this Agreement, the General Partner may require a written response within a specified time, but not less than ten days nor more than 45 days. 15.5 Limitations. No Limited Partner shall have the right or power to: (a) withdraw or reduce his contribution to the capital of the Partnership except as a result of the dissolution of the Partnership; (b) bring an action for partition against the Partnership; (c) cause the termination and dissolution of the Partnership by court decree or otherwise, except as set forth in this Agreement or as provided by law; or (d) demand or receive property other than cash in return for such Limited Partner's contribution. No Limited Partner shall have priority over any other Limited Partner either as to the return of contributions of capital or as to Net Income, Net Loss or Distributions. Other than upon the termination and dissolution of the Partnership or as otherwise provided by this Agreement, there has been no time agreed upon when the contribution of each Limited Partner may be returned. 16. REMOVAL, BANKRUPTCY OR DISSOLUTION OF THE GENERAL PARTNER AND TRANSFER OF THE GENERAL PARTNER'S INTEREST. 16.1 Removal by Limited Partners. The General Partner may be removed from the Partnership and a successor General Partner elected upon a Majority Vote of the Limited Partners. Written notice of the removal of the General Partner shall be served upon such General Partner either by certified or by registered mail, return receipt requested, or by personal service. Such notice shall set forth the date upon which the removal is to become effective. Should the General Partner be removed from the Partnership, any portion of the fees or any other fee or reimbursable expense pursuant to -36- Articles 3 or 9 payable under this Agreement which is then due but not yet paid, shall be paid by the Partnership to the General Partner or its Affiliates, as the case may be, in cash within 30 days of the date of removal as stated in the written notice of removal, unless such amount is included in the price for the General Partner's interest in the Partners as determined under Section 16.3 hereof. 16.2 Purchase of General Partner Interest. Upon the removal, adjudication of bankruptcy, dissolution or other cessation to exist of the General Partner, its interest in the Net Income, Net Loss and Distributions of the Partnership shall be purchased by the Partnership for a price determined according to the provisions of Section 16.3, provided there is at least one remaining General Partner at such time (including a successor General Partner elected pursuant to this Section 16.2) and the business of the Partnership is continued. Until the dissolution of the Partnership, the General Partner shall not take any voluntary step to dissolve itself or to withdraw from the Partnership. The General Partner's entire interest in the Partnership shall not be assignable, except as provided in Section 16.5, without a Majority Vote of Limited Partners. Any entity to which the entire interest of the General Partner in the Partnership is assigned in compliance with this Section shall be substituted in its stead as a General Partner of the Partnership by the filing of appropriate amendments to the Partnership Agreement and to any separate Certificate of Limited Partnership. 16.3 Sale Price. Upon the sale of its interest pursuant to Section 16.2, the General Partner (the "Terminated Partner") shall receive from the Partnership the fair market value of its interest in the Partnership, determined by agreement between the Terminated Partner and the Partnership or, if they cannot agree, by arbitration in accordance with the then current rules of the American Arbitration Association in Reno, Nevada. The expenses of arbitration shall be borne equally by the Terminated Partner and the Partnership. For this purpose, the fair market value of the interest of the Terminated Partner shall be deemed to be the amount the Terminated Partner would receive upon dissolution and termination of the Partnership under Section 18.2 assuming such dissolution or termination occurred on the date of the dissolving event and assuming the assets of the Partnership were sold for their then fair market value without compulsion of the Partnership to sell such them. In the case of voluntary withdrawal, payment shall be made by a non-interest bearing unsecured promissory note with principal payable from Distributions, if any, which the Terminated Partner otherwise would have received had the Terminated Partner not withdrawn as a General Partner in the Partnership. In the case of involuntary withdrawal, removal, adjudication of bankruptcy or dissolution, payment shall be made by a promissory note bearing 9% simple interest per annum on the unpaid principal amount with principal and all unpaid accrued interest subject to mandatory prepayment from any Distribution which the Terminated Partner otherwise would have received and the remaining unpaid principal balance and unpaid accrued interest on such promissory note due and payable five years from the date of the occurrence of the applicable event specified in Section 18.1. 16.4 Purchase by Successor General Partner. When a successor General Partner is elected under Section 16.2, such successor General Partner ("Acquiring Partner") shall purchase from the Partnership, within 60 days of its election, the interest which the Partnership purchased from the Terminated Partner. For such interest the Acquiring Partner shall pay the amount determined pursuant to Section 16.3 to be the fair market value of such interest. Payment shall be made by a promissory note bearing 9% simple -37- interest per annum on the unpaid principal amount secured by assignment by the Acquiring Partner to the Partnership of the future Distributions by the Partnership to the Acquiring Partner, which principal amount together with accrued interest shall be payable at the times and in the amount equal to 75% of such Distributions until such time as the principal amount together with accrued interest is paid in full, but shall become due and payable in full by the Acquiring Partner at such time as the Partnership is wound up and liquidated. 16.5 No Limitation on Merger or Reorganization of the General Partner. Nothing in this Agreement shall be deemed to prevent the assignment by the General Partner of its economic interest in the Partnership or the merger or reorganization of the General Partner into or with any other entity, or the transfer of all the membership interests of the General Partner and the assumption of the rights and duties of the General Partner, as the case may be, by, in the case of a merger, reorganization or consolidation, the surviving corporation or by operation of law. 17. CERTAIN TRANSACTIONS. The General Partner, any Limited Partner, any Affiliate, any shareholder, officer, director, manager, partner or employee thereof, or any person owning a legal or beneficial interest therein, may engage in or possess an interest in any other business or venture of every nature and description, independently or with others including, but not limited to, the ownership, financing, leasing, operation, management, brokerage and development of real property. Subject to their fiduciary duties to the Partnership, neither the General Partner nor any Affiliate of the General Partner shall be obligated to present any particular investment opportunity to the Partnership, even if such opportunity is of a character which, if presented to the Partnership, could be taken by the Partnership and each of them shall have the right to make for its own account (individually or as trustee) or to recommend to others any such particular investment opportunity. 18. TERMINATION AND DISSOLUTION OF THE PARTNERSHIP. 18.1 Terminating Events. The Partnership shall be terminated and dissolved upon the earliest to occur of the following: 18.1.1 the withdrawal, removal, adjudication of bankruptcy, insolvency, dissolution or other cessation of existence as a legal entity of the General Partner unless, within 90 days of the date of such event, the Limited Partners by Majority Vote elect to continue the business of the Partnership, in a reconstituted form if necessary, and elect a successor General Partner effective as of the date of such event; 18.1.2 a Majority Vote (which may, but need not be solicited by the General Partner) in favor of dissolution and termination of the Partnership; 18.1.3 the expiration of the term of the Partnership; 18.1.4 the disposition of all of the assets held by the Partnership and receipt of final payment with respect to all investments, unless the Partnership is reconstituted by the General Partner within 90 days following the disposition of the final Partnership asset; -38- 18.1.5 the election by the General Partner, pursuant to Section 14.2.19, without the consent of any Limited Partner, in the event that either (i) the Partnership's assets constitute "plan assets," as such term is defined for purposes of ERISA, or (ii) the transactions contemplated under this Agreement constitute "prohibited transactions" under ERISA and an exemption for such transactions could not be obtained from the United States Department of Labor or the General Partner determines not to seek such an exemption; or 18.1.6 the entry of a decree of judicial dissolution by a court of competent jurisdiction. 18.2 Liquidation and Distribution of Assets. Upon a dissolution and termination of the Partnership for any reason, the General Partner shall take full account of the Partnership's assets and liabilities, shall liquidate the assets as promptly as is consistent with obtaining the fair value thereof, and shall apply and distribute the proceeds therefrom in the following order: 18.2.1 first, to the payment of creditors of the Partnership, including Partners but excluding secured creditors whose obligations will be assumed or otherwise transferred on the liquidation of Partnership assets; and 18.2.2 second, after allowance for the expenses of liquidation and the setting up of any reserves for contingencies which the General Partner considers necessary, to the Partners in accordance with the positive balances in their capital accounts after Net Income arising from a Disposition or sale or refinancing of a Partnership Fixed Asset and Net Loss has been allocated in accordance with Article 10 hereof. 18.2.3 Notwithstanding anything to the contrary, the General Partner has the right to defer liquidation if, in the opinion of the General Partner, the sale of Partnership assets in liquidation would result in a material under realization on the Partnership's assets. 19. SPECIAL POWER OF ATTORNEY. 19.1 Grant of Power of Attorney. By completing and signing the Partnership's subscription form or any transfer form, each Limited Partner grants to the General Partner a special power of attorney irrevocably making, constituting and appointing the General Partner, with full power of substitution, as the attorney-in-fact for such Limited Partner, with power and authority to act in such Limited Partner's name and on such Limited Partner's behalf to execute, acknowledge and swear to in the execution, acknowledgement and filing of documents, which shall include, by way of illustration but not of limitation, the following: 19.1.1 this Agreement, any separate Certificate of Limited Partnership, as well as any amendment to or restatement of the foregoing which, under the laws of the State of Delaware or the laws of any other state, are required to be filed or which the General Partner deems to be advisable to file; 19.1.2 any other instrument or document which may be required to be filed by the Partnership under the laws of any state or by any governmental agency, or which the General Partner deems advisable to file; and -39- 19.1.3 any instrument or document which may be required to effect the continuation of the Partnership, the admission of any additional or substituted Limited Partner, or the dissolution and termination of the Partnership (provided such continuation, admission or dissolution and termination are in accordance with the terms of this Agreement), or to reflect any reduction in amount of contributions of Partners. 19.2 Character of Power of Attorney. The special power of attorney granted by each Limited Partner: 19.2.1 is a special power of attorney coupled with an interest, is irrevocable, shall survive the death or legal incapacity of the granting Limited Partner, and is limited to those matters herein set forth; 19.2.2 may be exercised by the General Partner acting alone for each Limited Partner by a facsimile signature of the General Partner or by one of its officers, or by listing all of the Limited Partners executing any instrument with a signature of the General Partner or one of its officers acting as its attorney-in-fact; and 19.2.3 shall survive an assignment by a Limited Partner of all or any portion of such Limited Partner's Units except that, where the assignee of the Units owned by a Limited Partner has requested admission to the Partnership as a substituted Limited Partner, the special power of attorney shall survive assignment for the sole purpose of enabling the General Partner to execute, acknowledge and file any instrument or document necessary to effect such substitution. 20. INDEMNIFICATION 20.1 Agreement to Indemnify. No Indemnified Person shall have any liability to the Partnership or to any Partner for any loss suffered by the Partnership which arises out of any action or inaction of the Indemnified Person if the Indemnified Person in good faith determined that such course of conduct was in the best interest of the Partnership, and such course of conduct did not constitute gross negligence, fraud or willful or wanton misconduct of the Indemnified Person. The Partnership, its receiver or its trustee shall, to the maximum extent permitted by law, indemnify, save harmless and pay all judgments and claims against each of the Indemnified Persons from any liability, loss or damage incurred by the Indemnified Person or by the Partnership by reason of any act performed or omitted to be performed by, any Indemnified Person, including costs and reasonable attorneys' fees and any amount expended in the settlement of any claim of liability, loss or damage; provided that (a) the General Partner must have determined, in good faith, that such course of conduct was in the best interests of the Partnership, and (b) such course of conduct did not constitute gross negligence, fraud or willful or wanton misconduct by the Indemnified Person and (c) any such indemnification shall be recoverable only from the assets of the Partnership and not from the assets of the Limited Partners. All judgments against the Partnership and the Indemnified Persons, wherein the Indemnified Persons are entitled to indemnification, must first be satisfied from Partnership assets before the Indemnified Persons are responsible for such obligations. The Partnership shall not pay for any insurance covering liability of the Indemnified Persons for actions or omissions for which indemnification is not permitted hereunder; provided, however, that nothing contained herein shall preclude the Partnership from purchasing and paying for such types of insurance, including extended -40- coverage liability and casualty and workers' compensation, as would be customary for any person owning comparable assets and engaged in a similar business, or from naming the Indemnified Persons as additional insured parties thereunder, provided that such addition does not add to the premiums payable by the Partnership. Nothing contained herein shall constitute a waiver by any Limited Partner of any right which such Limited Partner may have against any party under federal or state securities laws. 20.2 Limitations. Notwithstanding Section 20.1, the Indemnified Persons and any person acting as a broker dealer shall not be indemnified or saved harmless pursuant to Section 20.1 from any liability, loss or damage incurred by it in connection with (i) any claim or settlement involving allegations that federal or state securities laws were violated by the Indemnified Persons unless: (a) there has been a successful adjudication on the merits on each count involving alleged securities law violations and the court determines that indemnification of litigation costs should be made, (b) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction and the court determines that indemnification of litigation costs should be made or (c) a court of competent jurisdiction approves a settlement of the claims and determines that indemnification of the settlement and related costs should be made, after having been advised as to the current position of the Securities and Exchange Commission and all applicable state securities authorities regarding indemnification for violations of securities law or (ii) any liability imposed by law, including liability for gross negligence, fraud or willful or wanton misconduct. 20.3 Definition of Indemnified Persons. For purposes of this Article 20, the term "Indemnified Persons" shall include (a) the General Partner and (b) any person acting within the scope of the General Partner's authority who performs services on behalf of the Partnership and who or which (i) directly or indirectly controls, or is controlled by, or is under common control with the General Partner, (ii) owns or controls 10% or more of the outstanding voting securities of the General Partner, (iii) is an officer, director, manager, partner or trustee of the General Partner or (iv) is an entity in which a General Partner acts as an officer, director, manager, partner or trustee. 21. MISCELLANEOUS 21.1 Counterparts. This Agreement may be executed in several counterparts and all so executed shall constitute one Agreement, binding on all of the parties hereto, notwithstanding that all of the parties are not signatories to the original or the same counterpart. 21.2 Binding Provisions. The terms and provisions of this Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the respective Partners. 21.3 Severability. In the event any sentence or paragraph of this Agreement is declared by a court of competent jurisdiction to be void, such sentence or paragraph shall be deemed severed from the remainder of the Agreement and the balance of the Agreement shall remain in effect. 21.4 Notice. All notices under this Agreement shall be in writing and shall be given to the party entitled thereto by personal service or by mail, posted to the address maintained by the Partnership for such Person or at such other address as such Person may specify in writing. -41- 21.5 Headings. Paragraph titles or captions contained in this Agreement are inserted only as a matter of convenience and reference and in no way define, limit, extend or describe the scope of this Agreement nor the intent of any provision hereof. 21.6 Meanings. Whenever required by the context hereof, the singular shall include the plural, and vice-versa; and the masculine gender shall include the feminine and neuter genders, and vice-versa. 21.7 List of Partners. The names, addresses and contributions to capital of the Partners are set forth on Exhibit I attached hereto, which exhibit shall be maintained at the principal place of business of the Partnership. 21.8 Governing Law. Notwithstanding the place where this Agreement may be executed by any of the parties hereto, the parties expressly agree that all the terms and provisions hereof shall be construed under the laws of the State of Delaware and that the Partnership Act as now adopted and as hereafter amended from time to time shall govern the limited partnership aspects of this Agreement. 21.9 Other Jurisdictions. In the event the business of the Partnership is carried on or conducted in states in addition to the State of Delaware, then the parties agree that this Partnership shall qualify to do business under the laws of each state in which business is actually conducted by the Partnership, and they severally agree to execute such other and further documents as may be required or requested in order that the General Partner legally may qualify this Partnership to do business in such states. The power of attorney granted to the General Partner in Article 19 shall constitute the authority of the General Partner to perform the ministerial duty of qualifying the Partnership to do business under the laws of any state in which it is necessary to file documents or instruments of qualification. A Partnership office or principal place of business in any state may be designated from time to time by the General Partner. 21.10 Power to Reconstitute. In the event that the State of Delaware amends the Partnership Act in any manner which precludes the Partnership, at any time, from obtaining an opinion of tax counsel to the effect that the Partnership will be treated as a pass-through entity for federal income tax purposes and not as an association taxable as a corporation, then the General Partner may, in its sole discretion, reconstitute the Partnership under the laws of another state. IN WITNESS WHEREOF, the parties hereto have executed this Second Amended and Restated Agreement of Limited Partnership as of the date first above written. GENERAL PARTNER: LIMITED PARTNERS: MAXUM LLC By: Maxum LLC, as Attorney-In-Fact By: /s/ Ben Farahi By:/s/ Ben Farahi -------------- -------------- Name: Ben Farahi Name: Ben Farahi Title: Manager Title: Manager -42- -----END PRIVACY-ENHANCED MESSAGE-----