EXHIBIT 10.12
LIMITED PARTNERSHIP AGREEMENT
OF
CAC LIMITED PARTNERSHIP
This LIMITED PARTNERSHIP AGREEMENT (the "Partnership Agreement") is
made as of November 29, 2000 by and between CAC Special General, Inc., a
Virginia corporation, the general partner ("General Partner"), and CAC Special
Limited, Inc., a Virginia corporation, the limited partner ("Limited Partner").
INTRODUCTION
A. The General Partner and the Limited Partner (collectively, the
"Partners") have formed a limited partnership (the "Partnership") pursuant to
the provisions of the Virginia Revised Uniform Limited Partnership Act (the
"Act"), effective November 29, 2000. The General Partner and the Limited Partner
are each wholly-owned subsidiaries of Cornerstone Acquisition Company, a
Virginia corporation ("CAC-REIT").
B. The rights, duties and obligations of the Partners shall be
governed by the Act except as otherwise provided in this Partnership Agreement.
The term "Person," as used herein, means an individual or an entity.
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 NAME. The name of the Partnership is CAC Limited Partnership.
The Partnership may trade or transact business under such other names as may be
selected by the General Partner.
1.2 PURPOSE. The Notwithstanding any provision hereof to the
contrary, the following shall govern: The nature of the Partnership's business,
and of the purposes to be conducted and promoted by the Partnership, are limited
solely to the following activities:
(a) To own, hold, sell, assign, transfer, operate, lease,
mortgage, pledge and otherwise deal with those certain parcels of real property
listed on Exhibit A hereto, together with all improvements located thereon
(collectively, the "Properties");
(b) To exercise all powers that are enumerated in the Act
and are necessary or convenient to the conduct, promotion or attainment of the
business or purposes of the Partnership as set forth herein.
The Partnership's activities shall be limited and conducted as
necessary to ensure that CAC-REIT will qualify at all times as a real estate
investment trust ("REIT") under sections 856 through 860 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.3 FILINGS.
(a) The Partnership has filed a certificate of limited
partnership with the State Corporation Commission of Virginia pursuant to
Section 50-73.11 of the Code of Virginia (the "Certificate").
(b) The Certificate designates ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as the office where records of the Partnership are kept
(the "Principal Office"). The Certificate designates ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Esquire, as the registered agent at the following registered office: c/o
McGuireWoods LLP, One ▇▇▇▇▇ Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
ARTICLE II
MANAGEMENT, PROHIBITED ACTIVITIES AND SEPARATENESS COVENANTS
2.1 THE GENERAL PARTNER. The General Partner shall have the sole
and exclusive right, duty and power to manage the business of the Partnership,
including, without limitation, the right and power to:
(a) acquire, hold, sell, maintain, encumber, improve,
develop or lease the Partnership's property, whether real or personal, and any
interest therein on such terms and conditions as the General Partner deems
advisable.
(b) borrow money on behalf of the Partnership, secure any
such borrowings with assets of the Partnership, and repay the same at any time
or from time to time;
(c) establish investment accounts for the Partnership and
deposit and withdraw funds in or from such accounts;
(d) assign, compromise or release any claim of, or debt
due to, the Partnership;
(e) institute and defend actions at law or in equity on
behalf of the Partnership and consent to arbitrate any disputes or controversies
of the Partnership;
(f) engage and retain accountants, lawyers and other
professionals to perform services for the Partnership, and purchase such goods
and other services as may be required to conduct the business of the
Partnership; and
(g) enter into such contracts and perform such other acts
as may be necessary to further the business of the Partnership.
2.2 LIMITATIONS ON POWER AND AUTHORITY. Notwithstanding anything
to the contrary in this Partnership Agreement, the General Partner's rights,
authority and power are subject to and limited by certain provisions of the
Bylaws of CAC-REIT (including, without limitation, Article XIII thereof), and
actions described in such Bylaws may only be undertaken in compliance with such
provisions (including, without limitation, those provisions of Article XIII
relating to consents that are required to be obtained).
2.3. CERTAIN PROHIBITED ACTIVITIES. Notwithstanding any provision
hereof to the contrary, the following shall govern:
(a) The indebtedness of the Partnership shall consist
only of a first lien mortgage on the Properties arising from financing by First
Union National Bank (the "Mortgage"), any other indebtedness permitted under the
Mortgage, and normal trade accounts payable in the ordinary course of business.
For so long as any obligation secured by the Mortgage remains outstanding and
not paid in full, the Partnership shall not incur, assume, or guaranty any
indebtedness not permitted hereunder.
(b) The Partnership shall not consolidate or merge with
or into any other entity, or convey or transfer its properties and assets
substantially as an entirety to any entity, unless:
(i) the entity that is formed upon such
consolidation, that survives such merger (if other than the Partnership), or
that acquires by conveyance or transfer the properties and assets of the
Partnership substantially as an entirety, shall: (A) be organized and existing
under the laws of the United States of America or any State or the District of
Columbia, (B) include in its organizational documents the same limitations set
forth in this Article II and in Section 2.4 hereof (Separateness Covenants), and
(C) expressly assume the due and timely performance of the Partnership's
obligations; and
(ii) immediately after giving effect to such
transaction, no default or event of default will have occurred under any
agreement to which the Partnership is a party.
(c) For so long as any obligation secured by the Mortgage
remains outstanding and not paid in full, the Partnership shall not voluntarily
commence a case with respect to itself, as debtor, under the Federal Bankruptcy
Code or any similar federal or state statute without the unanimous consent of
the Partners. For so long as any obligation secured by the Mortgage remains
outstanding and not paid in full, no material amendment to this Partnership
Agreement may be made without the prior approval of the mortgagee holding the
Mortgage.
2.4 SEPARATENESS COVENANTS. Notwithstanding any provision hereof
to the contrary, the following shall govern: For so long as any obligation
secured by the Mortgage remains outstanding and not paid in full, in order to
preserve and ensure the Partnership's separate and distinct identity, in
addition to the other provisions set forth in this Partnership Agreement, the
Partnership shall conduct its affairs in accordance with the following
provisions:
(a) It shall establish and maintain an office through
which its business shall be conducted separate and apart from those of its
Partners and any affiliate and it shall allocate fairly and reasonably any
overhead for shared office space.
(b) It shall maintain separate records and books of
account from those of its Partners and any affiliate.
(c) All actions by the Partnership shall be authorized by
the General Partner, who shall observe all necessary formalities in connection
with such authorization.
(d) It shall not commingle assets with those of its
Partners or any affiliate.
(e) It shall conduct its own business in its own name.
(f) It shall maintain financial statements separate from
its Partners and any affiliate.
(g) It shall pay any liabilities out of its own funds,
including salaries of any employees, not funds of its Partners or any affiliate.
(h) It shall maintain an arm's length relationship with
its Partners and any affiliate.
(i) It shall not guarantee or become obligated for the
debts of any other person or entity (including, without limitation, its Partners
or any affiliate) and shall not hold out its credit as being available to
satisfy the obligations of others.
(j) It shall use stationery, invoices and checks separate
from its Partners and any affiliate.
(k) It shall not pledge its assets for the benefit of any
other person or entity (including, without limitation, its Partners or any
affiliate).
(l) It shall hold itself out as an entity separate from
its Partners and any affiliate.
(m) It shall not make any loans or advances to any third
party (including, without limitation, any affiliate).
(n) It shall comply with its obligations under the
agreements and instruments evidencing the Mortgage.
2.5 DEFINITIONS. For purpose of this Article II, the following
terms shall have the indicated meanings:
(a) "affiliate" means, with respect to a specified person
or entity:
(i) any person or entity directly or indirectly
owning, controlling or holding with power to vote ten percent (10%) or more of
the outstanding voting securities or interests of the specified entity;
(ii) any person or entity ten percent (10%) or
more of whose outstanding voting securities or interests are directly or
indirectly owned, controlled or held with power to vote by the specified person
or entity;
(iii) any person or entity directly or indirectly
controlling, controlled by or under common control with the specified person or
entity;
(iv) any officer, director or partner of the
specified person or entity;
(v) if the specified person or entity is an
officer, director or partner, any company for which the specified person or
entity acts in any such capacity; and
(vi) any close relative or spouse of the
specified person.
(b) "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person or entity, whether through ownership of voting securities,
by contract or otherwise.
(c) "person or entity" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization,
government or any agency or political subdivision thereof.
ARTICLE III
LIMITED PARTNERS
3.1 PARTICIPATION IN MANAGEMENT. The Limited Partner shall not
participate in the management or control of the business of the Partnership, and
shall have no power to sign for or bind the Partnership.
ARTICLE IV
CAPITAL; PROFITS AND LOSSES; DISTRIBUTIONS
4.1 CAPITAL CONTRIBUTIONS. Each of the Partners has contributed to
the capital of the Partnership the property set forth on Exhibit B hereto. The
Partners shall not be required to make any additional capital contributions
except as required by law, but the Partners may make such additional
contributions of cash or property as they may mutually agree. No Partner shall
have any right to require the return of all or any part of its capital, or to
receive interest with respect thereto.
4.2 CAPITAL ACCOUNTS. A separate capital account ("Capital
Account") shall be maintained for each Partner. The value of each Capital
Account shall be the sum of the cash contributions to the account, the agreed
upon value of contributions of property to the account and the share of
Partnership profits allocated to the account, less all distributions made from
the account and the share of Partnership losses allocated to the account.
4.3 PROFITS AND LOSSES. The net profits and net losses of the
Partnership for any period (except for the profits and losses upon dissolution)
shall be credited or charged to the Capital Accounts of the Partners in the
percentages set forth on Exhibit B under the heading "Partners Percentages," as
the same may be amended from time to time (the "Partners Percentages").
4.4 DISTRIBUTIONS. Any cash which, in the opinion of the General
Partner, is not reasonably required for the operation of the business of the
Partnership or for Partnership reserves (other than amounts distributed upon
dissolution) shall be distributed to the Partners in accordance with the
Partners Percentages not less frequently than each calendar quarter. Other
distributions of assets may be made form time to time in the same manner.
4.5 REIT DISTRIBUTIONS. Notwithstanding anything to the contrary
in this Partnership Agreement, the General Partner shall cause the Partnership
to distribute amounts sufficient to enable CAC-REIT to pay dividends to
shareholders so that CAC-REIT will (a) meet the distribution requirements for
qualification as a REIT as set forth in Section 857(a)(i) of the Code; and (b)
avoid any Federal income or excise tax liability imposed by the Code.
4.6 LOANS. A loan by a Partner to the Partnership shall not be
considered a capital contribution and shall be repaid as debt of the
Partnership.
ARTICLE V
INDEMNIFICATION
5.1 REQUIREMENT. The Partnership shall indemnify each Partner, and
each director and officer of a Partner (an "Indemnified Person"), against any
and all liabilities and expenses (including but not limited to reasonable legal
fees and costs) arising directly or indirectly from any action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, and whether formal or informal, that is brought or threatened
against an Indemnified Person solely because such Indemnified Person served as a
Partner or as a director or officer of a Partner, or served at the request of
the Partnership as a fiduciary for an employee benefit plan or other plan
related to the business of the Partnership. Notwithstanding the foregoing, the
Partnership shall not be required to indemnify a Partner, or a director or
officer of a Partner, against any liabilities or expenses arising from any
breach of this Partnership Agreement, willful misconduct or knowing violation of
law.
5.2 RELATED ACTIONS. The Partnership shall promptly make advances
or reimbursements for reasonable expenses (including but not limited to
reasonable legal fees and costs) incurred by a Partner, or a director or officer
of a Partner, claiming indemnification under
this Article unless it has been determined that such Partner, director or
officer is not entitled to indemnification. Advances or reimbursements made
prior to such determination shall be conditioned upon the Partnership's receipt
of a written undertaking by the Partner, director or officer claiming
indemnification to repay the amount of such advances or reimbursements if it is
ultimately determined that such Partner, director or officer is not entitled to
indemnification.
5.3 MANDATORY SUBORDINATION. Notwithstanding any provision hereof
to the contrary, the following shall govern: Any indemnification shall be fully
subordinated to any obligations respecting the Properties and shall not
constitute a claim against the Partnership in the event that cash flow is
insufficient to pay such obligations.
ARTICLE VI
EVENTS OF DISSOLUTION
6.1 EVENTS OF DISSOLUTION. The Partnership shall only be
dissolved:
(a) upon the election of the General Partner;
(b) at such time as there is no General Partner serving
unless, within ninety (90) days, the Limited Partner consents to continue the
business of the Partnership and appoints one or more General Partners;
(c) upon automatic cancellation of the certificate of
limited partnership for failure to pay annual registration fees, unless steps
are taken promptly to obtain reinstatement; or
(d) by judicial decree.
ARTICLE VII
DISSOLUTION, WINDING UP AND TERMINATION
7.1 GENERAL. Upon dissolution without continuation, the business
of the Partnership shall be wound up by the General Partner or, if there is no
General Partner, by a representative designated by the Limited Partner (either
of which or whom is hereinafter referred to as the "Liquidating
Representative"). The Liquidating Representative shall proceed with reasonable
promptness to liquidate the business and assets of the Partnership and may
determine whether, and to which Partners, properties should be distributed in
kind. Partnership assets shall be distributed in the following order:
(a) to creditors of the Partnership, including Partners
who are creditors, in the order of priority provided by law or contract;
(b) to the creation of such reserves for contingencies as
the Liquidating Representative may deem necessary or advisable;
(c) to the Limited Partner to the extent of its
contribution to capital;
(d) to the General Partner to the extent of its
contribution to capital;
(e) to the Partners, General and Limited, according to
their Capital Account balances, after all adjustments.
ARTICLE VIII
MISCELLANEOUS
8.1 BOOKS OF ACCOUNT AND RECORDS. The Partnership shall keep
complete books of account at the Principal Office and such books shall be open
to examination by the Partners, CAC-REIT and the authorized representatives of
each of them during normal business hours. The books shall be kept on a cash or
accrual basis, as determined by the General Partner.
8.2 TAX COMPLIANCE. Notwithstanding anything to the contrary
contained in this Partnership Agreement, all actions taken in the conduct of the
business of the Partnership, or on its dissolution, shall comply with the
provisions of Section 704 of the Code and the Regulations thereunder. The
General Partner shall be the "Tax Matters Partner" required by the Code.
8.3 POWER OF ATTORNEY. The Limited Partner hereby appoints the
General Partner as its attorney-in-fact, or agent, to execute, acknowledge,
deliver and file in its name any document required by law to be filed by the
Partnership or the Limited Partner with any governmental body or agency. Any
such appointment is a special power, coupled with an interest, and shall remain
in effect as long as the Partner granting it has any interest in the Partnership
or remains responsible for any obligations under this Partnership Agreement.
8.4 COUNTERPARTS. This Partnership Agreement may be executed in
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
8.5 AMENDMENTS. This Partnership Agreement may be amended only
with the written consent of the General Partner and the Limited Partner.
8.6 THIRD PARTIES; SUCCESSORS AND ASSIGNS. The agreements
contained herein are for the benefit of the parties hereto and their permitted
successors and assigns and are not for the benefit of any third parties, such
as, without limitation, creditors of the Partnership.
8.7 HEADINGS. The section headings in this Partnership Agreement
are included for convenience only and shall not affect the interpretation of
this Partnership Agreement.
8.8 INTERPRETATION. This Partnership Agreement is executed and
delivered in the Commonwealth of Virginia and shall be construed and enforced in
accordance with its laws, without regard to any choice of law rules to the
contrary.
WITNESS the following signatures:
GENERAL PARTNER: CAC Special General, Inc.
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By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Vice President
LIMITED PARTNER: CAC Special Limited, Inc.
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By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
Vice President
Exhibit A
(List of Properties)
The Properties consist of those real properties, together with all improvements
thereon, that are located at the following addresses:
The Arbors on Forest Ridge
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Brandywine Park (Cutter's Point)
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Eagle Crest
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Remington Hills at Las Colinas
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sierra Ridge
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Timberglen
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Toscana
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Exhibit B
(Capital Contributions)
Name and Capital Partners
Business Address Contributions Percentages
---------------- ------------- -----------
General Partner: CAC Special General, Inc. $1.00 1%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Limited Partner: CAC Special Limited, Inc. $99.00 99%
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇