EXHIBIT A
LIMITED PARTNERSHIP AGREEMENT
▇▇▇▇▇-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
TABLE OF CONTENTS
Page
Preliminary Statement ................................................................................... A-3
Article I - Defined Terms ........................................................................... A-3
Article II - Name; Purpose; Term and Certificate .................................................. A-10
Section 2.1 Name; Formation ...................................................................... A-10
Section 2.2 Place of Registered Office ............................................................ A-10
Section 2.3 Purpose ............................................................................... A-10
Section 2.4 Term ................................................................................... A-10
Section 2.5 Recording of Certificate .............................................................. A-10
Article III - Partners; Capital .................................................................... A-10
Section 3.1 General Partners; Assignor Limited Partner; Subordinated Limited Partners ......... ................ A-10
Section 3.2 Unitholders ................................................................................... A-11
Section 3.3 Partnership Capital .................................................................. A-11
Section.3.4 Liability of Partners and Unitholders .............................................. A-12
Article IV - Allocations, Distributions and Applicable Rules ..................................... A-12
Section 4.1 Allocation of Profit or Loss from a Sale ........................................... A-12
Section 4.2 Distribution of Net Proceeds from a Refinancing or Sale ................... A-13
Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss from
Operations ................................................................................... A-13
Section 4.4 Liquidation or Dissolution .......................................................... A-14
Section 4.5 General and Special Rules ........................................................... A-14
Article V - Rights, Powers and Duties of Partners ............................................... A-17
Section 5.1 Management and Control of the Partnership; Tax Matters Partner .................A-17
Section 5.2 Authority of General Partners .............................................................. A-18
Section 5.3 Authority of Limited Partners ..................................................... A-21
Section 5.4 Restrictions on Authority .......................................................... A-21
Section 5.5 Authority of Partners and Affiliated Persons to Deal with Partnership ................................A-22
Section 5.6 Duties and Obligations of the General Partners ........................................... A-23
Section 5.7 Compensation of General Partners ................................................. A-24
Section 5.8 Other Businesses of Partners ...................................................... A-24
Section 5.9 Liability of General Partners and Affiliates to Limited Partners or
Unitholders ............................................................................... A-24
Section 5.10 Indemnification ................................................................ A-25
Article VI - Transferability of a General Partner's Interest .............................. A-25
Section 6.1 Removal, Voluntary Retirement or Withdrawal of a General Partner;
Transfer of Interests .................................................................... A-25
Section 6.2 Election and Admission of Successor or Additional General Partners ....................................A-26
Section 6.3 Events of Withdrawal of a General Partner ..................................... A-26
Section 6.4 Liability of a Withdrawn General Partner ...................................... A-27
Section 6.5 Valuation of Partnership Interest of a General Part .................... A-27
Article VII - Assignment of Assignee Units to Unitholders; Transferability of Limited
Partner Interests and Units ............................................................... A-27
Section 7.1 Assignments of the Assignee Units to Unitholders .............................. A-27
Section 7.2 Transferability of Units ....................................................... A-29
Section 7.3 Death Bankruptcy or Adjudication of Incompetence of a Unitholder or a
Limited Partner ......................................................................... A-29
Section 7.4 Effective Date .................................................................. A-30
Section 7.5 Substitute Limited Partners ................................................... A-30
Section 7.6 Retirement or Withdrawal of a Limited Partner ............................... A-30
Article VIII - Dissolution, Liquidation and Termination of the Partnership ............... ▇-▇▇
▇-▇
Section 8.1 Events Causing Dissolution ............................................................. A-30
Section 8.2 Liquidation ............................................................................ A-31
Section 8.3 Capital Contribution Upon Dissolution ................................................ A-31
Article IX - Certain Payments to the General Partners and Affiliates ............................ A-32
Section 9.1 Reimbursement of Certain Costs and Expenses of the General Partners and
Affiliates ....................................................................................... A-32
Section 9.2 Fees ................................................................................... A-33
Article X - Books and Records; Bank Accounts; Reports .............................................. ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Books and Records ..................................................................... A-33
Section 10.2 Bank Accounts ......................................................................... A-34
Section 10.3 Reports ............................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇ Tax Elections ................................................................ A-35
Article XI - Meetings of Unitholders ............................................................... A-36
Section 11.1 Calling Meetings ...................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇; Procedure .................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Right to Vote ........................................................................ A-36
Section 11.4 Proxies; Rules ....................................................................... A-36
Article XII - General Provisions ................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇ of Administrative General Partner as Attorney-in-Fact ............................ ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇ of Partition ................................................................ A-37
Section 12.3 Notification ......................................................................... A-37
Section 12.4 Word Meanings ........................................................................ A-37
Section 12.5 Binding Provisions ................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Applicable Law ......................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ...........:................. ........................ ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ Separability of Provisions ........................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇▇▇ Titles ...................................................................... A-38
Section 12.10 Entire Agreement ..................................................................... A-38
Section 12.11 Amendments ........................................................................... A-38
Signatures .............................................................................................. A-39
Schedule A .............................................................................................. A-41
▇▇▇▇▇-BENCHMARK PROPERTIES LIMITED PARTNERSHIP
AGREEMENT OF LIMITED PARTNERSHIP
PRELIMINARY STATEMENT
THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of June
1, 1987, is by and among ▇▇▇▇▇-Benchmark AGP, Inc., a
Maryland corporation, as the Administrative General
Partner, Benchmark Equities, Inc., an Ohio corporation, as
the Development General Partner, Realty Associates 1987
Limited Partnership, a Maryland limited partnership, and
Benchmark Communities, Inc., an Ohio corporation, as
Subordinated Limited Partners, and ▇▇▇▇▇-Benchmark Holding
Co., Inc., a Maryland corporation, as the Assignor Limited
Partner.
WHEREAS, the General Partners, the Subordinated Limited
Partners, and the Assignor Limited Partner desire to form
▇▇▇▇▇-Benchmark Properties Limited Partnership (the
"Partnership"), purse- ant to the Delaware Revised Uniform
Limited Partnership Act.
NOW, THEREFORE, in consideration of the mutual promises
made herein, the parties hereto, intending to be legally
bound hereby agree as follows:
ARTICLE I
DEFINED TERMS
The defined terms used in this Agreement shall, unless
the context otherwise requires, have the meanings specified
in this Article I.
"Accountants" means such nationally recognized firm of
independent certified public accountants as shall be
engaged from time to time by the General Partners on behalf
of the Partnership.
"Acquisition Expenses" means expenses, including, but
not limited to, legal fees and expenses, travel and
communications expenses, costs of appraisals,
non-refundable option payments on property not acquired,
accounting fees and expenses, title insurance, and
miscellaneous expenses related to selection and acquisition
of investments, whether or not acquired.
"Acquisition Fees" means the total of all fees and
commissions paid by any party in connection with the
selection, purchase or development of, or investment in,
any Property by the Partnership, including, without
limitation, any real estate commission, selection fee,
non-recurring management fee, development fee, or any fee
of a similar nature, however designated.
"Act" means the Delaware Revised Uniform Limited
Partnership Act (6 DEL.C.ss.17-101 et. seq.)
as amended or modified from time to time.
"Additional General Partner" means any Person who is
admitted as an Additional General Partner of the
Partnership, under the provisions of Article VI, after the
date of this Agreement.
"Adjusted Capital Balance" of a Partner or a Unitholder
means the Capital Contribution of the Partner or the
Assignor Limited Partner made on behalf of a Unitholder,
less any Net Proceeds of Sale or Refinancing actually
distributed to the Partner or Unitholder (other than that
portion, if any, which is payment of an unpaid Cumulative
Return), as provided in Article IV herein, at the time of
reference thereto.
"Administrative General Partner" means ▇▇▇▇▇-Benchmark
AGP, Inc., a Maryland corporation, or any Person who is
designated as an Administrative General Partner in the
Schedule at the time in question.
"Affiliate" or "Affiliated Person" means, when used
with reference to a specified Person (i) any Person who,
directly or indirectly, through one or more intermediaries,
controls, or is controlled by, or is under common control
with, the specified Person, (ii) any Person who is an
officer, partner, or trustee of, or serves in a similar
capacity with respect to, the specified Person, or any
Person of which the specified Person is an officer, partner
or trustee, or with respect to which the specified Person
serves in a similar capacity, (iii) any Person who,
directly or indirectly, is the beneficial owner of 5% or
more of any class of equity securities of, or otherwise has
a substantial beneficial interest in, the
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specified Person, or any Person of which the specified
Person is directly or indirectly the owner of 5% or more
of any class of equity securities or in which the
specified Person has a substantial beneficial interest,
and (iv) any Family Member of the specified Person.
"Agreement" means this Limited Partnership Agreement
as originally executed and as amended from time to time,
as the context requires. Words such as "herein,"
"hereinafter," "hereof," "hereto," "hereby" and
"hereunder," when used with reference to this Agreement,
refer to this Agreement as a whole unless the context
otherwise requires.
"Assigned Limited Partnership Interest" means a
Partnership Interest which is credited to the Assignor
Limited Partner on the books and records of the
Partnership in respect of a purchase of one Unit by a
Unitholder. Each Assigned Limited Partnership Interest
represents a contribution to the capital of the
Partnership equal to $25.
"Assignee Units" means the ownership interests of a
Unitholder in the Partnership at any particular time,
including the right of such Unitholder to any and all
benefits to which a Unitholder may be entitled as provided
in this Agreement. The ownership interests of the
Unitholders in the Partnership are sometimes referred to
herein as "Units".
"Assignor Limited Partner" means ▇▇▇▇▇-Benchmark
Holding Co., Inc. which will (i) own any Assigned Limited
Partnership Interests issued pursuant to Sections 3.2 and
7.1 hereof, and (ii) transfer and assign to those Persons
who acquire Units all of its rights and interest in
Assigned Limited Partnership Interests in accordance with
Sections 3.2 and 7.1 hereof.
"Benchmark Homes, Inc." means an Affiliate of the
Development General Partner that will perform certain
services for the Partnership pursuant to the Development
Agreements, as more fully described in the Prospectus.
"Capital Account" means (i) the separate account
maintained and adjusted on the books and records of the
Partnership for each Partner and (ii) the separate
subaccount of the Capital Account of the Assignor Limited
Partner maintained and adjusted for each Unitholder. Each
Partner's and Unitholder's Capital Account is credited
with his Capital Contributions and his distributive share
of Partnership Profit (including tax-exempt income and
gain (or item thereof)). Each Partner's or Unitholder's
Capital Account is debited with the cash and the fair
market value of any property distributed to him (net of
liabilities assumed by such Partner or Unitholder and
liabilities to which such distributed property is
subject), his distributive share of Partnership Loss (and
deduction (or item thereof)), and his distributive share
of Partnership expenditures described in Section
705(a)(2)(B) of the Code (including losses disallowed
under Section 267(a)(1) or 707(b) of the Code, and Section
709(a) syndication expenditures applied to reduce the
Capital Accounts of the Partners or Unitholders to whom
such expenditures are allocable at the time such
expenditures are paid or incurred). Each Partner's and
Unitholder's Capital Account shall also be adjusted
pursuant to Sections 4.4 and 4.5 hereof and as required by
the Income Tax Regulations for Section 704 of the Code.
Any questions concerning a Partner's or Unitholder's
Capital Account shall be resolved by the General Partners
in their reasonably exercised discretion, applying
principles consistent with this Agreement and the
regulations promulgated under Section 704 of the Code in
order to assure that all allocations herein will have
substantial economic effect or will otherwise be respected
for income tax purposes. For purposes of this paragraph, a
Partner or Unitholder who has more than one Partnership
Interest or Unit, as the case may be, shall have a single
Capital Account that reflects all of his Partnership
Interests and Units, regardless of the class of Interests
owned (e.g., general or limited) and regardless of the
time or manner in which the Partnership Interests and
Units were acquired.
"Capital Contribution" means the total amount of cash
and the fair market value of any other assets contributed
to the Partnership by a Partner (net of liabilities
assumed by the Partnership and liabilities to which any
such contributed assets are subject) and, with respect to
a Unitholder, the Capital Contribution of the Assignor
Limited Partner made on behalf of such Unitholder
(assuming no volume purchase reduction of selling
commissions). Any reference in this Agreement to the
Capital Contribution of a then-Partner or Unitholder shall
include a Capital Contribution previously made by any
prior Partner or Unitholder for the Interest or Unit of
such then-Partner or then-
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Unitholder, except to the extent that all or a portion of
the Interest or Unit of any prior Partner or Unitholder
shall have been terminated and the portion so terminated
not transferred to a successor Partner or Unitholder.
"Cash Flow Deficit Guaranty Agreement" means that
certain agreement to be entered into by the Partnership
pursuant to which Benchmark Communities, Inc.and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ will agree to fund any Partnership Operating
Deficits under the following terms and conditions: (a) the
Cash Flow Deficit Guaranty Agreement will cover Operating
Deficits until a period ending two years after the date of
final completion of development of the last phase of the
last Property to be developed; (b) the funding obligation
will be limited to $750,000, in the aggregate at any one
time; and (c) any payments made under the Cash Flow
Deficit Guaranty Agreement will be deemed a non-interest
bearing loan to the Partnership, which will be repaid as
provided in Article IV.
"Certificate" means the Certificate of Limited
Partnership establishing the Partnership, as filed with
the office of the Secretary of State of the State of
Delaware on or about the date of this Agreement, as it may
be amended from time to time in accordance with the terms
of this Agreement and the Act.
"Code" means the Internal Revenue Code of 1986, as
amended (or any corresponding provision of succeeding
law).
"Consent of the Unitholders" shall mean the
affirmative vote of Unitholders owning more than 50% (or
such greater percentage if required by law) of the
outstanding Units.
"Controlling Person" of any General Partner or
Affiliate thereof means any person who (a) performs
functions for a General Partner or Affiliate similar to
those of (i) a Chairman or member of the Board of
Directors, (ii) executive management, such as a President,
or a Vice-President, Secretary or Treasurer, or (iii)
senior management; or (b) holds a 5% or more equity
interest in the General Partner or Affiliate, or has the
power to direct or cause the direction of the General
Partner, or Affiliate, whether through the ownership of
voting securities, by contract or otherwise.
"Cumulative Return" means the cumulative,
non-compounded annual return equal to 10% of the Adjusted
Capital Balance of each Unitholder commencing on the
closing date of the sale of the Units to such Unitholder.
The Cumulative Return shall be determined on an annual
basis, according to the fiscal year of the Partnership. At
the time of a Sale or Refinancing, if any portion of the
Cumulative Return of a Unitholder has not been paid from
Net Cash Flow, such unpaid portion will be added to the
Unitholder's priority distribution from the Net Proceeds
of Sale or Refinancing, all as more fully set forth in
Article IV.
"Deferred Land Payment" means the $200,000 payment
with respect to the acquisition of the land for each of
Property I and Property II as more fully set forth in the
Prospectus (and compound interest accruing thereon at a
per annum rate of 9.5%) that has been deferred under the
Land Acquisition Agreements pertaining to Property I and
Property II and which will be paid to Bench- ▇▇▇▇ Homes,
Inc. from the Net Proceeds of Sale or Refinancing, all as
more fully set forth in Article IV.
"Development Agreements" means those certain
agreements entered into by the Partnership and Benchmark
Homes, Inc. pursuant to which Benchmark Homes, Inc. will
construct the Properties for and on behalf of the
Partnership.
"Development General Partner" means Benchmark
Equities, Inc., or any Person who is designated as a
Development General Partner in the Schedule at the time of
reference thereto.
"Entity" means any general partnership, limited
partnership, corporation, joint venture, trust, estate,
business trust, cooperative, association or other legal
form of organization.
"Escrow Agent" means Mercantile-Safe Deposit & Trust
Company, or such other escrow agent chosen by the General
Partners to hold funds from Persons who have subscribed to
become Unitholders pending the assignment of Assignee
Interests to them.
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"Family Member" means, with respect to any
individual, his spouse, brothers, sisters, ancestors, and
descendants.
"Front-End Fees" means fees and expenses paid by any
Person for any services rendered during the organization
or acquisition phase of the Partnership, including the
Organization and Start-Up Fee, the Offering and
Promotional Expenses Reimbursement Allowance, the Selling
Commissions, the Acquisition Expenses, the Acquisition
Fees, fees paid to the General Partners and Affiliates in
connection with refinancing, and any other similar fees.
"General Partner" means any Person designated as a
General Partner in the Schedule and any Person who becomes
a Successor or Additional General Partner as provided
herein, in each such Person's capacity as a General
Partner of the Partnership.
"Gross Proceeds of the Offering" means the aggregate
of the proceeds from the sale of Units in the Offering,
which amount is equal to the total of all Capital
Contributions of the Unitholders.
"Guaranties of Timely and Lien-Free Completion" means
those certain agreements to be entered into by the
Partnership pursuant to which Benchmark Communities, Inc.
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will guaranty the timely and
lien-free completion of the development of each Property
under the applicable Development Agreement.
"Interest" or "Partnership Interest" means the entire
ownership interest (which may be segmented into and/or
expressed as a percentage of various rights and/or
liabilities) of a Partner in the Partnership at any
particular time, including the right of such Partner to
any and all benefits to which a Partner may be entitled as
provided in the Agreement and in the Act, together with
the obligations of such Partner to comply with all the
terms and provisions of this Agreement and of the Act.
"Interest Income" means interest income under the
Purchase Money Financing with respect to an installment or
other deferred Sale.
"Interest Income Cash" means Net Proceeds from a Sale
attributable to an installment or other deferred Sale.
"Interim Investments" means the short-term
investments made with the Net Proceeds of the Offering
until such Net Proceeds of the Offering are disbursed for
acquisition and development of the Properties.
"Land Acquisition Agreements" means those certain
agreements to be entered into by the Partnership and
Benchmark Homes, Inc., pursuant to which the Partnership
will acquire from Benchmark Homes, Inc. the parcels of
land upon which will be constructed the Properties.
"Limited Partner" means any Person who is designated
as a Limited Partner on the books and records of the
Partnership at the time of reference thereto, in each such
Person's capacity as a Limited Partner of the Partnership.
"Limited Partnership Interest" means the ownership of
the Assignor Limited Partner and all other Limited
Partners in the Partnership.
"Limited Partnership Interest Percentage" in respect
of any Unitholder means the percentage obtained by
converting to a percentage the fraction having the number
of Assignee Units owned by such Unitholder as its
numerator and having the number of Assignee Units owned by
all Unitholders at the time of reference thereto as its
denominator.
"Majority Vote of the Unitholders" shall mean the
affirmative vote of Unitholders owning more than 50% (or
such greater percentage if required by law) of the
outstanding Units.
"Marketing Expenses" means the amount reimbursed to
the Property Manager for costs and expenses incurred in
marketing the Properties to prospective tenants, which
amount shall not exceed $100,000 for any Property.
"Maximum Offering Amount" means the total amount of
$12,500,000 in Gross Proceeds of the Offering.
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"Minimum Gain" means with respect to each nonrecourse
liability of the Partnership and subject to certain
adjustments pursuant to Income Tax Reg.
ss.1.704-1(b)(4)(iv)(c), the amount of gain (of whatever
character), if any, that would be realized by the
Partnership, if the Partnership disposed of (in a taxable
transaction) any of the Properties subject to such
liability in full satisfaction of the liability. For this
purpose, only the portion of the Property's adjusted basis
allocated to nonrecourse liabilities of the Partnership
shall be taken into account.
"Minimum Offering Amount" means the amount of
$8,000,000 in Gross Proceeds of the Offering.
"Net Cash Flow" means, with respect to any fiscal
period, the excess, if any, of (i) all cash funds derived
from the operations of the Partnership during such period,
including the yield from the Interim Investments and
excess cash reserves deemed distributable by the General
Partners pursuant to Section 3.3E hereof, over (ii) all
cash disbursed in the operations of the Partnership during
such period, including cash used to pay, or establish
reasonable reserves for, operating expenses, fees,
commissions, debt service and loan repayments (except for
repayment of advances under the Cash Flow Deficit Guaranty
Agreement), improvements, repairs, replacements,
contingencies and anticipated obligations, but without
regard to amortization and depreciation. Net Cash Flow
shall not include amounts distributed under Sections 4.1
or 4.2 hereof.
"Net Proceeds of the Offering" means the Gross
Proceeds of the Offering less the Selling Commis-
sions, the Organization and Start-Up Fee, and the
Offering and Promotional Expenses Reimbursement Allowance.
"Net Proceeds from a Refinancing" means the gross
proceeds to the Partnership of any Refinancing, less any
amounts deemed necessary by the General Partners to be
allocated to the establishment of reserves, the payment of
any debts and liabilities of the Partnership to creditors
(except for repayment of advances under the Cash Flow
Deficit Guaranty Agreement and payment of the Deferred
Land Payments), and the payment of any reasonable expenses
or costs associated with the Refinancing, including but
not limited to, fees, points, or commissions paid to any
unaffiliated Persons.
"Net Proceeds from a Sale" means the gross proceeds to
the Partnership of any Sale, less any amounts deemed
necessary by the General Partners to be allocated to the
establishment of reserves, the payment of any debts and
liabilities of the Partnership to creditors (except for
repayment of advances under the Cash Flow Deficit Guaranty
Agreement and payment of the Deferred Land Payments), and
the payment of any reasonable expenses or costs associated
with the Sale, including but not limited to, fees or real
estate brokerage commissions paid to any unaffiliated
Persons.
"Net Proceeds of Sale or Refinancing" means the Net
Proceeds from a Sale or Net Proceeds from a Refinancing,
as the case may be.
"Notification" means a writing, containing the
information required by this Agreement to be communicated
to any Person, sent or delivered to such Person in
accordance with the provisions of Section 12.3 of this
Agreement.
"Offering" means the offering and sale of Units for a
minimum of $8,000,000 and a maximum of $12,500,000, as more
fully described in the Prospectus.
"Offering and Promotional Expenses Reimbursement
Allowance" means the allowance paid to the Administrative
General Partner equal to 2.5% of the Gross Proceeds of the
Offering, payable at the time the Unitholders are
recognized as such on the books of the Partnership.
"Operating Deficit" means, with respect to any fiscal
period, the excess, if any, of (i) all cash disbursed in
the operations of the Partnership during such period,
including cash used to pay, or establish reasonable
reserves for, operating expenses, fees, commissions, debt
service and loan repayments, improvements, repairs,
replacements, contingencies and anticipated obligations,
but without regard to amortization and depreciation over
(ii) all cash funds derived from the operations of the
Partnership during such period, including the yield from
the Interim Investments and excess cash
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reserves deemed distributable by the General Partners
pursuant to Section 3.3E hereof, but excluding Net Proceeds
of Sale or Refinancing.
"Organization and Start-Up Fee" means the fee equal to
5.0% of Gross Proceeds of the Offering paid to the
Administrative General Partner for services to the
Partnership in preparing the structure of the Partnership,
consulting with various professionals regarding the
organization of the Partnership, and supervising and
reviewing the preparation of all documents, filings and
other instruments related to the Partnership; payable at
the time the Unitholders are recognized as such on the
books of the Partnership.
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed in
accordance with this Agreement by the parties hereto, as
said limited partnership may from time to time be
constituted.
"Partnership Property" means all or any portion of the
assets owned or to be owned by the Partnership, including
the Properties and all incidental personal property.
"Person" means any individual or Entity.
"Profit" and "Loss" means taxable income and taxable
loss of the Partnership for federal income tax purposes,
determined as of the close of the Partnership's tax year,
including, where the context requires, related federal
income tax items such as capital gain or loss, tax
preferences, investment interest, depreciation, cost
recovery, depreciation recapture, and cost recovery
recapture. Except as otherwise provided herein, each item
of income, gain, loss, deduction, preference or recapture
entering into the computation of Profit or Loss hereunder
shall be allocated to each Partner in the same proportion
as Profit and Loss are allocated.
"Properties" mean the apartment projects in Ohio, as
described in the Prospectus, which are to be acquired,
developed, owned and operated by the Partnership, including
all replacements thereto and all personal property which is
used in connection therewith. One of the Properties may
herein be referred to as a "Property".
"Property Manager" means Benchmark Properties, Inc. or
any Person who is designated by the
General Partners as Property Manager.
"Property Management Agreements" means those certain
agreements to be entered into by the Partnership and the
Property Manager pursuant to which the Property Manager
shall manage each of the Properties for a fee of 4.5% of
the monthly gross operating revenues of the Properties,
such fee to commence on the date following achievement of
break even operations for a Property on an accrual basis
(after giving effect to the management fee, debt service
and other expenses of the Partnership) for a period of
three consecutive months.
"Prospectus" means the Partnership's Prospectus
contained in the Registration Statement filed on Form S-11
with the Securities and Exchange Commission for the
registration of the Units under the Securities Act of 1933,
in the final form in which it is filed with the Securities
and Exchange Commission and as thereafter supplemented
pursuant to Rule 424 under the Securities Act of 1933. Any
reference herein to date of the Prospectus shall be deemed
to refer to the "date of the Prospectus" in the form filed
pursuant to Rule 424(b) of the Securities Act of 1933.
"Purchase Money Financing" means a purchase money note
or other form of installment sale obligation received by
the Partnership pursuant to a Sale.
"Refinancing" means any refinancing of an indebtedness
of the Partnership secured by a Property.
"Sale" means any transaction entered into by the
Partnership resulting in the receipt of cash or other
consideration (other than the receipt of Capital
Contributions) not in the ordinary course of its business,
including, without limitation, sales or exchanges or other
dispositions of real or personal Partnership property,
condemnations, recoveries of damage awards and insurance
proceeds (other
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than business or rental interruption insurance proceeds),
but excepting any borrowing or mortgage financings or
refinancings.
"Schedule" means Schedule A annexed hereto as amended
from time to time and as so amended at the time of
reference thereto.
"Selling Agent" means Alex. ▇▇▇▇▇ Realty Securities,
Inc., an Affiliate of the Administrative General Partner,
which will offer the Units on a best efforts basis
pursuant to the Selling Agent Agreement.
"Selling Agent Agreement" means that certain
agreement to be entered into by the Partnership,
Alex. ▇▇▇▇▇ Realty Securities, Inc., the Administrative
General Partner, and the DevelopmentGeneral Partner,
pursuant to which Alex. ▇▇▇▇▇ Realty Securities, Inc. will
offer and sell the Units on a best efforts basis.
"Selling Commissions" means the maximum total (or any
portion thereof) of 7.0% of the Gross Proceeds of the
Offering paid to the Selling Agent or reallowed other
soliciting dealers for their efforts in offering the
Units. The 7.0% maximum Selling Commissions will be
reduced for volume purchases as specified in the
Prospectus.
"Sponsor" means any Person directly or indirectly
instrumental in organizing, wholly or in part, the
Partnership or who will manage or participate in the
management of the Partnership, and any Affiliate of such
Person, but does not include (a) any Person whose only
relationship with the Partnership or the General Partner
is that of an independent property manager whose only
compensation from the Partnership is in the form of fees
for the performance of property management services, or
(b) wholly-independent third parties such as attorneys,
accountants and broker-dealers whose only compensation
from the Partnership is for professional services rendered
in connection with the Offering or the operations of the
Partnership.
"Subordinated Limited Partner" means any Person who
is designated as a Subordinated Limited Partner on the
books and records of the Partnership.
"Substitute Limited Partner" means any Unitholder who
has elected to convert from a Unitholder to a Limited
Partner pursuant to Section 7.5 of this Agreement.
"Successor General Partner" means any Person who is
admitted as a Successor General Partner to the Partnership
under the provisions of Article VI after the date of this
Agreement.
"Tax Matters Partner" means the Administrative
General Partner designated in Section 5.1 as the tax
matters partner, as defined in Section 6231(a)(7) of the
Code.
"Termination Date of the Offering" means the date
upon which the Offering will terminate, which, if not
sooner terminated by the General Partners, will be one
year from the date of the Prospectus.
"Unit" means (i) an Assignee Unit representing the
assignment by the Assignor Limited Partner of one Assigned
Limited Partnership Interest, and (ii) the Partnership
Interest attributable to one Unit of any Unitholder who
has become a Substitute Limited Partner pursuant to
Section 7.5 hereof.
"Unitholder" means (i) any Person who holds an
Assignee Unit and is reflected as a Unitholder on the
books and records of the Partnership, and (ii) any
Unitholder who has been admitted to the Partnership as a
Substitute Limited Partner pursuant to Section 7.5 hereof.
"U.S. Person" means a Person who is (i) an individual
who is either a United States citizen or a resident of the
United States for federal income tax purposes, (ii) a
corporation, partnership, or other legal entity created or
organized in or under the laws of the United States or any
political subdivision thereof, (iii) a corporation that is
not created or organized in or under the laws of the
United States or any political subdivision thereof but
which has made an election under either Section 897(i) or
Section 897(k) of the Code to be treated as a domestic
corporation for certain purposes of federal income
taxation, or (iv) an estate or trust whose income from
sources without the United States is
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includable in its gross income for federal income tax
purposes regardless of its connection with a trade or
business carried on in the United States.
"Working Capital Reserves" means, initially, the
portion of the Net Proceeds of the Offering set aside as
working capital reserves pursuant to Section 3.3E, as
increased or decreased from time to time at the discretion
of the General Partners.
ARTICLE II
NAME; PURPOSE; TERM AND CERTIFICATE
Section 2.1 Name; Formation
The Partners hereby form the limited partnership to be
known as "▇▇▇▇▇-Benchmark Properties Limited Partnership",
and such name shall be used at all times in connection with
the Partnership's business and affairs; provided, however,
that the Partnership may use trade names in its business
operations. The Partnership shall be governed by the Act.
Section 2.2 Place of Registered Office
The address of the registered office in the State of
Delaware of the Partnership is Corporation Trust Center,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; the name of
the registered agent for service of process on the
Partnership in the State of Delaware at that address is The
Corporation Trust Company. The Partnership's principal
place of business is c/o Benchmark Equities, Inc., ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or such other place(s) as
the General Partners may hereafter determine. Notification
of any change in the location of the principal office shall
be given to the Partners and Unitholders on or before the
date of any such change.
Section 2.3 Purpose
The purpose of the Partnership is to acquire, own,
develop, maintain, finance, encumber, operate as a
business, lease, sell, dispose of and otherwise deal with
the Partnership Property, and to do all things necessary,
convenient or incidental to the achievement of the
foregoing.
Section 2.4 Term
The Partnership shall continue until December 31,
2037, unless the Partnership is sooner dissolved in
accordance with the provisions of this Agreement.
Section 2.5 Recording of Certificate
The General Partners shall take all necessary action
to maintain the Partnership in good standing as a limited
partnership under the Act, including, without limitation,
the filing of the Certificate and such amendments and
further certificates as may be necessary under the Act and
necessary to qualify the Partnership to do business in such
states as the Partnership owns property. The General
Partners shall not be required to send a copy of the
Partnership's filed Certificate to each Partner and
Unitholder.
ARTICLE III
PARTNERS; CAPITAL
Section 3.1 General Partners; Assignor Limited Partner;
Subordinated Limited Partners
The name, address and Capital Contribution of each
General Partner, the Assignor Limited
Partner and the Subordinated Limited Partners are set forth
on the Schedule. Upon the dissolution and termination of
the Partnership, each General Partner, within 90 days after
the fiscal year in which the dissolution of the Partnership
occurs, shall make a Capital Contribution to the
Partnership in an amount equal to the lesser of (i) the
deficit balance, if any, in its Capital Account or (ii) its
proportionate share of the excess of 2.02% of the Capital
Contributions of the Unitholders and
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Limited Partners (excluding the Assignor Limited Partner)
over the Capital Contributions previously contributed by
the General Partners.
Section 3.2 Unitholders
A. The General Partners are authorized to accept
orders for Units pursuant to the Offering if, after the
acceptance of such orders, the Capital Contributions of the
Unitholders are not less than the Minimum Offering Amount
and not more than the Maximum Offering Amount; provided,
however, that no order for Units sold as part of the
Offering shall be accepted after the Termination Date of
the Offering.
B. All orders for Units shall be received by the
Partnership in trust and deposited in an escrow account
with the Escrow Agent until the Minimum Offering Amount is
received, at which time the Escrow Agent shall release the
funds to the Assignor Limited Partner which shall
immediately transmit such funds to the Partnership. Orders
for Units prior to the receipt of the Minimum Offering
Amount shall be accepted or rejected by the General
Partners within 30 days after their receipt by the Escrow
Agent. Upon accepting an order for a Unit by a Unitholder
and release of a Unitholder's funds to the Partnership, an
Assigned Limited Partnership Interest shall be credited to
the Assignor Limited Partner on the books and records of
the Partnership in respect of such Unit and the Assignor
Limited Partner shall assign all of its rights with respect
to such Assigned Limited Partnership Interest to the
Unitholder to the extent permitted by, and in accordance
with, the Agreement and applicable law. The Assignor
Limited Partner hereby agrees to exercise any and all
rights with respect to such Assigned Limited Partnership
Interest as directed by the Unitholder. At such times as
the General Partners deem practicable and as required by
the Act, the Certificate and this Agreement shall be
amended to reflect the ownership by the Assignor Limited
Partner of Assigned Limited Partnership Interests in the
amount of such purchased Units. Any interest earned on
moneys paid by Unitholders during the period such moneys
are held in escrow shall be paid to the Partnership
following the release of orders and shall be distributed in
accordance with Section 4.5A hereof. Persons whose orders
for Units are rejected by the General Partners shall be
returned their moneys (and interest earned thereon)
forthwith after such rejection. If the Escrow Agent does
not receive orders that are accepted by the General
Partners equal to the Minimum Offering Amount on or before
the Termination Date of the Offering, the Escrow Agent
shall promptly return all moneys deposited by subscribers
together with any interest earned on such moneys.
Section 3.3 Partnership Capital
A. Each Partner's and Unitholder's Capital
Contribution shall be paid in cash on or prior to the date
of such Partner's admission to the Partnership or the date
of the recognition of the Unitholder on the books and
records of the Partnership.
B. Except to the extent of any interest income earned
on a Unitholder's Capital Contribution while it is held in
escrow, and later distributed to such Unitholder pursuant
to Section 4.5A, no Partner or Unitholder shall be paid
interest on any Capital Contribution.
C. Except as otherwise provided in this Agreement, no
Partner or Unitholder shall have the right to withdraw, or
receive any return of, his Capital Contribution prior to
December 31, 2037.
D. Under circumstances requiring a return of any
Capital Contribution, no Partner shall have the right to
receive property other than cash.
E. The Partnership shall initially set aside Working
Capital Reserves for normal repairs, replacements, and
contingencies in an amount equal to at least 4.0% of the
Gross Proceeds of the Offering. If in any fiscal quarter,
the General Partners determine that the Working Capital
Reserves of the Partnership are in excess of the amount
deemed sufficient in connection with the Partnership's
operations and that such Working Capital Reserves may be
reduced, the amount of such reduction may be distributed to
the Partners and Unitholders as a portion of the
Partnership's Net Cash Flow. If in any fiscal quarter, the
General Partners determine that the Working Capital
Reserves are insufficient in connection with the
Partnership's operations and that such Working Capital
Reserves
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shall be increased, the amount of such increase shall
reduce Net Cash Flow. Upon the Sale or disposition of a
Property, any Working Capital Reserves maintained for such
Property may be distributed to Partners and Unitholders or
applied as Working Capital Reserves for other Properties.
Section 3.4 Liability of Partners and Unitholders
A. Except as provided in the Act, no Limited Partner
or Unitholder will be personally liable for the debts,
liabilities, contracts, or other obligations of the
Partnership. Except as provided in the Act, no Limited
Partner or Unitholder will have any liability in excess of
the capital contributions made to the Partnership, and his
share of the Partnership's assets and undistributed
profits. In accordance with Section 17-608 of the Act, (i)
if a Limited Partner or a Unitholder has received the
return of any part of his Capital Contribution in
violation of the Agreement or the Act, he shall be liable
to the Partnership for a period of six years thereafter
for the amount of the Capital Contribution wrongfully
returned, (ii) if without violating this Agreement, a
Limited Partner or a Unitholder receives a return of any
part of his Capital Contribution, then he shall be liable
to the Partnership for a period of one year thereafter for
the amount of the returned contribution, but only to the
extent necessary to discharge liabilities to creditors who
extended credit to the Partnership during the period the
Capital Contribution was held by the Partnership and (iii)
a Limited Partner or Unitholder receives a return of his
Capital Contribution to the extent that a distribution to
him reduces his share of the fair market value of the
assets of the Partnership below the agreed value of his
Capital Contribution that has not been distributed to him.
B. Except as set forth in 3.4A, no Limited Partner or
Unitholder shall be required to lend any funds to the
Partnership or, after his Capital Contribution has been
fully paid, to make any further capital contribution to
the Partnership, nor shall any Limited Partner or
Unitholder be liable for or have any obligation to restore
any negative balance in his Capital Account.
C. Subject to the provisions of Section 5.9 of this
Agreement, no General Partner shall have any personal
liability for the repayment of the Capital Contribution or
the Cumulative Return of any Limited Partner or Unitholder
or be required to repay to the Partnership all or any
portion of any negative balance of the Capital Accounts of
the Limited Partners or the Unitholders.
D. Neither the payments made by Benchmark Communities, Inc. or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ under the Cash Flow Deficit Guaranty Agreement nor the Deferred Land
Payments ultimately to be received by Benchmark Homes, Inc. shall constitute a
Capital Contribution of the Development General Partner or be credited to the
Capital Account of the Development General Partner.
ARTICLE IV
ALLOCATIONS, DISTRIBUTIONS AND APPLICABLE RULES
Section 4.1 Allocation of Profit or Loss from a Sale
A. Profit from any Sale (and Profit from any deemed
Sale pursuant to Sections 4.4 or 4.5) shall be allocated
in the following order of priority:
(i) First, if one or more Partners or Unitholders
has a negative balance in his Capital Account, to such
Partners and Unitholders, in proportion to their
negative Capital Accounts, until all such Capital
Accounts have zero balances.
(ii) Second, any Profit not allocated pursuant to
Section 4.1A(l) shall be allocated to the Unitholders
until the Capital Account of each Unitholder is equal
to the sum of his Adjusted Capital Balance plus his
unpaid Cumulative Return, if any.
(iii) Third, any remaining Profit shall be
allocated 80% to the Unitholders, 14% to Bench- ▇▇▇▇
Communities, Inc., 4% to Realty Associates 1987
Limited Partnership, 1% to the Development General
Partner and 1% to the Administrative General Partner.
B. Loss from any Sale (and Loss from any deemed Sale
pursuant to Sections 4.4 and 4.5) shall be
allocated in the following order of priority:
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(i) First, if one or more Partners or Unitholders
has a positive Capital Account, to such Partners or
Unitholders, in proportion to their positive Capital
Accounts, until all such positive Capital Accounts have
zero balances.
(ii) Any remaining Loss shall be allocated as
follows: 80% to the Unitholders, 14% to Benchmark
Communities, Inc., 4% to Realty Associates 1987 Limited
Partnership, 1% to the Development General Partner and 1%
to the Administrative General Partner.
Section 4.2 Distribution of Net Proceeds of Sale or Refinancing
A. Upon the Refinancing of any Property or portion
thereof, and upon a Sale that does not constitute a Sale of
all or substantially all of the Properties, Net Proceeds from
a Refinancing or Net Proceeds from a Sale, as the case may be,
shall be distributed, credited and applied in the following
order of priority:
(i) First, to Benchmark Homes, Inc. to pay the Deferred
Land Payment with respect to the
Property or Properties sold or refinanced.
(ii) Second, to Benchmark Communities, Inc. or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to repay any advances
under the Cash Flow Deficit Guaranty Agreement.
(iii) Third, to the Unitholders until each
Unitholder has received an amount equal to the sum of his
Adjusted Capital Balance plus his unpaid Cumulative
Return, if any.
(iv) Fourth, any remaining Net Proceeds of Sale or
Refinancing shall be distributed 80% to the Unitholders,
14% to Benchmark Communities, Inc., 4% to Realty
Associates 1987 Limited Partnership, 1% to the
Development General Partner and 1% to the Administrative
General Partner. B. Upon the Sale of all or substantially
all of the
Properties, Net Proceeds from such Sale, if any, shall be
distributed, credited and applied in the following order of
priority:
(i) First, to Benchmark Homes, Inc. to pay the
Deferred Land Payments.
(ii) Second, to Benchmark Communities, Inc. or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to repay any advances
under the Cash Flow Deficit Guaranty Agreement.
(iii) Third, to the Partners and Unitholders in
proportion to their positive Capital Accounts, after the
allocation of Profit and Loss pursuant to Sections 4.1A
and 4.1B, until all such Capital Accounts have been
reduced to zero.
Section 4.3 Distribution of Net Cash Flow and Allocation of
Profit and Loss from Operations A. Net Cash Flow, if any,
for each year shall be distributed and applied by the
Partnership in the
following order of priority:
(i) First, 98% to the Unitholders, 1% to the
Development General Partner, and 1% to the Administrative
General Partner, until each Unitholder has received an
amount equal to 10% of his Adjusted Capital Balance.
(ii) Second, to Benchmark Communities, Inc. or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to repay any advances
under the Cash Flow Deficit Guaranty Agreement.
(iii) Third, 98% to the Unitholders, 1% to the
Development General Partner and 1% to the Administrative
General Partner. To the extent feasible, the General
Partners will endeavor to distribute any Net Cash Flow on
a quarterly basis.
B. For each taxable year, Profit and Loss (other than
Profit or Loss from a Sale) of the Partnership shall be
allocated 98% to the Unitholders, 1% to the Administrative
General Partner and 1% to the Development General Partner.
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Section 4.4 Liquidation or Dissolution
A. If the Partnership is liquidated or dissolved,
the net proceeds from such liquidation, as provided in
Article VIII, shall be distributed first to creditors,
including Partners who are creditors, to the extent
otherwise permitted by law (whether by payment or by
establishment of reserves), other than liabilities for
distributions to Partners and Unitholders, and any
remaining net proceeds shall be distributed in
proportion to the Capital Accounts of the Partners and
Unitholders, determined after the allocations in
Sections ▇.▇▇ and ▇.▇▇, unless applicable law shall
otherwise require, in which event the allocations set
forth in Sections ▇.▇▇ and 4.1B shall be modified to
the extent necessary, but only to the extent necessary,
to comply with such applicable law.
B. If the election is made, pursuant to Section
8.2C, to distribute any of the Partnership Property to
the Partners in kind such Partnership Property shall be
applied, based upon fair market value, in the order of
priority set forth in Section 4.4A, unless applicable
law shall otherwise require, in which event the order
of priority set forth in Section 4.4A shall be modified
to the extent necessary, but only to the extent
necessary, to comply with such applicable law. In this
regard, all unsold Partnership Property shall first be
valued, as provided in Section 4.5B, to determine the
Profit or Loss that would have resulted from a Sale of
such property, and, subject to the special rules of
Section 4.5, such Profit or Loss shall be allocated as
provided in Section 4.1A and shall be properly credited
or charged to the Capital Accounts of the Partners.
C. All distributions under this Section 4.4 shall
be made by the end of the taxable year of liquidation
of the Partnership or, within 90 days of the date of
liquidation, whichever is later.
Section 4.5 General and Special Rules
A. Except as otherwise provided herein, the timing
and amount of all distributions shall be determined by
the General Partners. No Partner shall have the right
to demand and receive any distribution of property
other than cash. Notwithstanding any other provision of
this Agreement, the General Partners shall have
authority to make the following distributions to
certain of the Unitholders: First, if the Partnership
has realized a savings on Selling Commissions payable
by the Partnership with respect to the purchase of
Units by a Unitholder of 4,000 or more Units (as more
fully set forth in the Prospectus), the General
Partners shall make a distribution to such Unitholder
equal to the amount of such savings realized by the
Partnership. Second, if any interest is earned on a
Unitholder's Capital Contribution while it is held in
escrow pending recognition as a Unitholder under
Article VII, such interest shall be paid by the
Partnership to such Unitholder and Profit attributable
to such interest shall be allocated in the same manner.
B. Subject to all of the special rules of this
Section 4.5, if any Partnership property is distributed
to the Partners in kind, such Partnership Property
first shall be valued on the basis of the fair market
value thereof to determine the Profit or Loss that
would have resulted if such Partnership property had
been sold, and then such Profit or Loss shall be
allocated as provided in Section 4.1A, and shall be
properly credited or charged to the Capital Accounts of
the Partners in accordance with Treas. Reg.
ss.1.704-1(b)(2)(iv)(e) or any successor provision
thereto. Any Partner entitled to any interest in such
assets shall receive such interest as a
tenant-in-common with all other Partners so entitled.
The fair market value of such assets shall be
determined by an independent appraiser who shall be
selected by the General Partners.
C. Notwithstanding Sections 4.1 and 4.3 hereof, if
an allocation of Loss (or item thereof) to a Unitholder
or Partner would cause or increase a deficit balance in
his or its Capital Account in excess of: (i) in the
case of a Unitholder or Partner other than a General
Partner, his proportionate share of Minimum Gain, or
(ii) in the case of a General Partner, the sum of the
amount which it is obligated to restore to the
Partnership pursuant to Section 3.1 hereof and its
proportionate share of Minimum Gain (in each case, such
excess being referred to hereafter as the "Excess
Deficit Balance"), then the allocation shall not be
made to such Unitholder or Partner. Instead, such Loss
(or deduction or item thereof) shall be allocated first
to the Partners and Unitholders having positive Capital
Accounts, in proportion to such positive Capital
Accounts, until all such positive Capital Accounts have
been reduced to zero, and any additional Loss (or
deduction or item thereof) shall be allocated to the
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Partners and Unitholders in accordance with the sharing
arrangements set forth in this Article IV. The Partner or
Partners having negative Capital Account balances resulting in
whole or in part from allocations of Loss (or deduction or
item thereto) attributable to nonrecourse debt that is secured
by Partnership Property shall, to the extent possible, be
allocated Profit (income, gain or item thereof) in an amount
no less than the excess of the sum of such negative Capital
Account balances over the Minimum Gain at a time no later than
the time at which the Minimum Gain is reduced below the sum of
such negative Capital Account balances. For purposes of making
the determination set forth above, each Unitholder's and each
Partner's Capital Account balance shall be reduced by
reasonably expected allocations or adjustments of loss (or
item thereof) including Loss from a Sale under Income Tax
Regulation ss.ss.1.704-1(b)(2)(ii)(d)(4) and (5), and by
reasonably expected distributions to the extent not offset by
reasonably expected Capital Account increases ("Account
Reduction Items"). For purposes of calculating reasonably
expected Capital Account increases, the value of the
Partnership's assets shall be presumed to be equal to their
adjusted basis for federal income tax purposes.
D. Notwithstanding Sections 4.1 and 4.3 hereof, (i) if,
in any fiscal year of the Partnership, an Account Reduction
Item unexpectedly causes or increases a Unitholder's or
Partner's Excess Deficit Balance, or (ii) if there is a net
decrease in Minimum Gain during a taxable year, then all
Unitholders or Partners with an Excess Deficit Balance at the
end of such year shall be specially allocated Profit and, to
the extent necessary, gross income (as defined in Section 61
of the Code) to the extent of such Excess Deficit Balances, in
proportion to the Excess Deficit Balance of each Unitholder or
Partner. Any remaining Profit or Loss, after adjustment has
been made for allocation of income or gain pursuant to this
Section 4.5D, shall be allocated in accordance with Sections
4.1, 4.2 and 4.3 hereof. This Section 4.5D is intended to be a
"qualified income offset" provision within the meaning of
Income Tax Regulation ss.1.704-1(b)(2)(ii)(d), and the General
Partners shall be authorized to interpret and apply this
Section 4.5D so as to satisfy the requirement of the
regulations and any successor provision.
E. Any special allocations of Profit, Loss or gross
income under Section 4.5D shall be taken into account in
computing subsequent allocations of Profit or Loss, so that to
the extent possible, the aggregate amounts of Profit or Loss
allocated to each Partner or Unitholder will be equal to the
aggregate amounts that would have been allocated to them in
the absence of the unexpected Account Reduction Items.
F. For each fiscal year, all Profit and Loss allocated
pursuant to Section 4.3 hereof to the Unitholders shall be
allocated among the Persons that are recognized as Unitholders
during such year by determining the Profit and Loss
attributable to each month during such year and by allocating
the amount of such Profit and Loss among Persons who are
recognized as Unitholders on the books of the Partnership on
the first business day of such month. The Profit or Loss
attributable to each month of the fiscal year shall be
determined by dividing the Profit or Loss for such year by
365, and then multiplying such per diem amount by the number
of days in each month.
G. All Net Cash Flow distributable to the Unitholders
attributable to each month of a fiscal quarter, if any,
pursuant to Section 4.3 hereof, shall be distributed among the
Persons recognized as Unitholders on the books of the
Partnership on the first business day of such month during the
fiscal quarter. The Net Cash Flow attributable to each month
of the fiscal quarter shall be determined by dividing the
amount of Net Cash Flow for such quarter by the number of days
in the quarter, and then multiplying such per diem amount by
the number of days in each month.
H. Generally, all Profit and Loss (other than Profit and
Loss from a Sale) shall be allocated, and Net Cash Flow shall
be distributed, as the case may be, to the Persons recognized
as Unitholders on the books of the Partnership on the first
business day of the month, subject to the special rules set
forth in this Section 4.5H. The Partnership shall adopt the
"interim closing of the books" method of allocating
Partnership Profit and Loss, in accordance with a
"semi-monthly convention" with respect to the recognition of
persons who become Unitholders pursuant to a closing of the
sale of the Units under the Offering on or before the
Termination Date of the Offering. Accordingly, if there is
more than one closing of the sale of the Units under the
Offering and pursuant to such closing(s), Unitholders are
recognized on the books of the Partnership (i) prior to the
sixteenth day of a calendar
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month, the Partnership will close its books as of the end
of the last day of the month prior to the month of
recognition, and such Unitholders shall be treated as a
Unitholder on the books of the Partnership on the first
business day of the month of recognition; or (ii) on or
after the sixteenth day of a calendar month, the
Partnership will close its books as of the end of the
fifteenth day of the month of recognition, and such
Unitholders shall be treated as a Unitholder on the
books of the Partnership on the sixteenth day of such
month and thus be allocated Profit, Loss and Net Cash
Flow with respect to the second half of such month.
I.. Except as provided in Section 4.5M, for each
taxable year, all Profit or Loss allocated pursuant to
Section 4.1 hereof and all Net Proceeds of Sale or
Refinancing, allocable or distributable with respect to
any Unit which is transferred during a taxable year of
the Partnership, shall be allocated or distributed, as
the case may be, to the Persons recognized (in
accordance with Section 7.4 hereof) as Unitholders as of
the first business day of the month that includes the
date on which the Sale or Refinancing occurs; provided,
however, that all such Profit or Loss which is
attributable to, and all Sale proceeds which represent,
Net Proceeds from a Sale received by the Partnership as
a result of an installment or other deferred Sale, shall
be allocated or distributed, as the case may be, to the
Persons recognized (in accordance with Section 7.4
hereof) as Unitholders as of the first business day of
the month that includes the date on which the deferred
Net Proceeds from a Sale are received by the
Partnership, and the allocable cash basis items shall be
allocated as required under Section 706(d) of the Code
and the Income Tax Regulations thereunder.
J. In the event that any Unitholder fails to
furnish to the General Partners evidence, in form and
substance satisfactory to the General Partners,
establishing that the General Partners have no obliga- t
under Section 1445 of the Code with respect to such
Unitholder to withhold and pay over an amount to the
Internal Revenue Service, the General Partners may, in
their sole discretion, withhold with respect to such
Unitholder the amount they would be required to withhold
pursuant to Section 1445 of the Code if such Unitholder
were not a U.S. Person, and any amount so withheld shall
be treated as a distribution under Sections 4.1, 4.2 or
4.3 of this Agreement, as the case may be, and shall
reduce the amount otherwise distributable to such
Unitholder thereunder. Alternatively, the General
Partners may at their option loan the Unitholder an
amount equal to the tax to be withheld (at an interest
rate of 12%), such loan to be repaid by retaining such
Unitholder's distributions.
K. Notwithstanding anything to the contrary that
may be expressed or implied in this Agreement, if at any
time the allocation provisions of this Article IV do not
result in the allocation to the General Partners of an
aggregate of at least 1% of the Profits or Loss being
allocated, the General Partners in the aggregate, shall
be allocated 1% thereof.
L. It is the intent of the General Partners that
each Unitholder's and Partner's distributive share of
Profit and Loss shall be determined and allocated in
accordance with this Article IV to the fullest extent
permitted by Sections 704(b) and 706 of the Code.
Therefore, if the Partnership is advised that the
allocations provided in Article IV of this Agreement are
unlikely to be respected for federal income tax
purposes, the General Partners have been granted the
power in Section 12.2.B hereof to amend the allocation
provisions of this Agreement, on advice of the
Accountants and the Partner- ship's legal counsel, to
the minimum extent necessary to conform to Sections
704(b) and 706 of the Code the plan of allocations and
distributions of Profit and Loss, Net Cash Flow and Net
Proceeds of Sale or Refinancing provided in this
Agreement.
M. Notwithstanding any other provisions of this
Agreement other than Section 4.5K to the contrary,
"Interest Income" shall be allocated for federal income
tax purposes, and "Interest Income Cash" shall be
distributed, among the Unitholders and Partners as
follows:
(1) Profit or Loss from the Sale to which the
Interest Income relates shall be calculated as if
the Partnership had made an election out of
installment sale treatment under Section 453 of the
Code, and such Profit or Loss shall be
hypothetically allocated among the Unitholders and
the Partners and hypothetically credited or charged
to their Capital Accounts as provided in Section
4.1. The Capital Accounts of the Unitholders and
the Partners, as hypothetically adjusted, shall be
referred to as the "Hypothetical Capital Accounts."
The Hypothetical Capital Accounts shall be
decreased from time to time by distributions to the
Unitholders and the Partners and shall be
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adjusted from time to time as a result of any adjustment
in the principal amount of the Purchase Money Financing
(e.g., as a result of purchase price adjustments) to
which the Interest Income relates. The Hypothetical
Capital Accounts as so adjusted shall be referred to as
the "Adjusted Hypothetical Capital Accounts."
(2) Interest Income shall be allocated among the
Unitholders and the Partners for federal income tax
purposes in proportion to their Adjusted Hypothetical
Capital Accounts and the Capital Accounts of the
Unitholders and the Partners shall be increased
accordingly.
(3) Interest Income Cash shall be distributed among
the Unitholders and the Partners in the same proportion
that Interest Income was allocated above for federal
income tax purposes. Such distributions shall decrease
the Capital Accounts of the Unitholders and the Partners
accordingly.
(4) The foregoing allocations and distributions
shall be made as of the last day of each taxable year of
the Partnership during which the Partnership has
Purchase Money Financing, based upon the per diem
weighted average Adjusted Hypothetical Capital Accounts
of the Unitholders and the Partners during each such
taxable year. N. Notwithstanding any other provision of
this Agreement, the General Partners may, after
giving 90 days' prior Notification to the Unitholders, (i)
adopt any other method for determining, in the event of
transfers of Units, the Unitholders entitled to distributions
of Net Cash Flow or Net Proceeds of Sale or Refinancing that
the General Partners, in their sole discretion, determine is
reasonable, and (ii) allocate Profit or Loss among the
Unitholders during the taxable year in any other manner that
the General Partners, in their sole discretion, determine
satisfies the requirements of Section 706 of the Code. The
taking of any action by the General Partners pursuant to this
Section 4.5N shall be deemed to effect an amendment to this
Agreement and shall not require the consent of any
Unitholder.
O. Allocations and distributions to Unitholders as a
class shall be made to each Unitholder entitled to such
allocation or distribution based upon the ratio of the number
of Units owned by each such Unitholder to the number of Units
owned by all Unitholders entitled to such allocation or
distribution.
ARTICLE V
RIGHTS, POWERS AND DUTIES OF PARTNERS
Section 5.1 Management and Control of the Partnership; Tax
Matters Partner
A. Subject to the Consent of the Unitholders when
required by this Agreement, the General
Partners shall have the exclusive right to manage and control
the business of the Partnership. Except as otherwise provided
herein, decisions to be made by the General Partners shall be
made by the joint agreement of the Administrative General
Partner and the Development General Partner.
B. Except as otherwise provided herein, the Partnership
shall be bound by the signature of any General Partner.
C. No Limited Partner or Unitholder (except one who may
also be a General Partner, and then only in his capacity as
General Partner) shall have the right to participate in the
control of the business of the Partnership, or have any
authority or right to act for or bind the Partnership.
D. The Administrative General Partner is hereby
designated to serve as the Partnership's Tax Matters Partner
and shall have all of the powers and responsibilities of such
position as provided in Sections 6221 et seq. of the Code.
All third party costs and expenses incurred by the
Administrative General Partner in performing its duties as
Tax Matters Partner shall be borne by the Partnership, as
shall all expenses incurred by the Partnership and/or the Tax
Matters Partner in connection with any tax audit or tax
related administrative or judicial proceeding. Each Partner
and Unitholder shall be responsible for all costs incurred by
such Partner or Unitholder with respect to any tax audit or
tax related administrative or judicial proceeding in
connection with such Partner's or Unitholder's tax
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returns and all costs incurred by any such Partner or
Unitholder who participates in any tax audit or
tax-related administrative or judicial proceeding of or
against the Partnership or any Partner. Each Partner and
Unitholder hereby (i) expressly authorizes the Tax
Matters Partner to enter into any settlement with the
Internal Revenue Service with respect to any tax matter,
tax item, tax issue, tax audit, or judicial proceeding,
which settlement shall be binding on all Partners and
Unitholders; (ii) waives the right to participate in any
administrative or judicial proceeding in which the tax
treatment of any Partnership item is to be determined;
and (iii) agrees to execute such consents, waivers or
other documents as the Tax Matters Partner may determine
are necessary to accomplish the provisions of this
Section 5.1D. The Tax Matters Partner shall have no
liability to any Partner or Unitholder or the
Partnership, and shall be indemnified by the Partnership
to the full extent provided by law, for any act or
omission performed or omitted by it within the scope of
the authority conferred on it by this Agreement, except
for acts of negligence or for damages arising from any
misrepresentation or breach of any other agreement with
the Partnership. The liability and indemnification of
the Tax Matters Partner shall be determined in the same
manner as is provided in Sections 5.9 and 5.10 hereof.
E. Anything herein to the contrary notwithstanding,
if any of the following events of default shall occur at
any time during the term hereof, then, until such time
as any such events shall have been cured within any
applicable cure period, all decisions to be made by the
General Partners shall be made solely by the
Administrative General Partner, provided that such event
of default shall not have been caused solely by any act
or omission of the Administrative General Partner:
(i) a material event of default shall have
occurred under any of the documents or instruments
evidencing or securing the financing relating to
the acquisition and development of the Properties
and such default shall not have been cured within
any applicable cure period;
(ii) Benchmark Homes, Inc. shall be in material
default under any of the Land Acquisition
Agreements or Development Agreements, and such
default shall not have been cured within any
applicable cure period;
(iii) Benchmark Communities, Inc. or ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall be in default under any of (a)
the Cash Flow Deficit Guaranty Agreement or (b) an0
Guaranty of Timely and Lien-Free
Completion and such default shall not have been
cured within any applicable cure period; or
(iv) the Development General Partner or any of
its Affiliates shall be in material default under
any other agreement between or among the
Development General Partner and/or any such
Affiliate and the Partnership, and such default
shall not have been cured within any applicable
cure period.
If an event of default described above shall not have
been cured within the cure period applicable thereto,
then (i) for a period of 45 days the Administrative
General Partner shall have the option to purchase the
Partnership Interests of the Development General Partner
and Benchmark Communities, Inc. at a price equal to
their initial Capital Contributions as set forth on the
Schedule, payable in cash and (ii) Benchmark
Communities, Inc. will cause the Partnership's
obligations to make the Deferred Land Payments to be
forgiven by Benchmark Homes, Inc.
Section 5.2 Authority of General Partners
A. Except to the extent otherwise provided herein,
including, without limitation, Sections 5.2C, 5.3A, 5.4
and 5.5, the General Partners for, and in the name of,
and on behalf of, the Partnership are hereby authorized:
(i) to enter into any kind of activity and to
perform and carry out contracts of any kind
necessary to, or in connection with, or incidental
to the accomplishment of the purposes of the
Partnership, so long as said activities and
contracts may be lawfully carried on or performed
by a limited partnership under applicable laws and
regulations;
(ii) to engage Persons, including the Sponsors,
to provide services or goods to the Partnership,
upon such terms as the General Partners deem fair
and reasonable and in the best interest of the
Partnership, provided, however, that, as to
services or goods provided by a Sponsor, (a) the
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compensation for such services or goods must be
comparable and competitive with that of any other Person
who provides comparable services or goods and shall be
on competitive terms, and, as to services under the
Development Agreements and with regard to obtaining
Refinancing, will not exceed 90% of the competitive
price that would be charged by non-affiliated persons or
entities rendering similar services in the same or
comparable geographic locations; (b) the compensation
and other terms of such contracts shall be fully
disclosed to the Unitholders in the reports of the
Partnership, (c) the Sponsor must have been previously
engaged in the business of providing such services or
goods, independent of the Partnership and as an ongoing
business, (d) all such transactions shall be embodied in
a written contract that describes the services or goods
to be provided and the compensation to be paid, which
contract may only be modified by the Majority Vote of
the Unitholders, and which contract shall permit
termination without penalty on sixty (60) days notice,
and (e) except for those services to be provided under
agreements referred to in this Agreement or the
Prospectus, any services provided by a Sponsor will be
provided only under extraordinary circumstances where
services are not available elsewhere;
(iii) to acquire by lease or purchase, develop, own,
sell, convey, finance, improve, assign, mortgage, lease
or exchange incident to a tax-free swap any real estate
and any personal property necessary, convenient or
incidental to the accomplishment of the purposes of the
Partnership;
(iv) to develop, construct, maintain, finance,
improve, own, grant options with respect to, sell,
convey, assign, mortgage or lease any Partnership
Property or any other real estate or personal property
necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership;
(v) to execute any and all agreements, contracts,
documents, certifications and instruments necessary or
convenient in connection with the development,
construction, management, maintenance and operation of
any Partnership property, including without limitation,
necessary easements to public or quasi-public bodies or
public utilities;
(vi) to borrow money and issue evidences of
indebtedness in furtherance of any or all of the
purposes of the Partnership, and to secure the same by
deed of trust, mortgage, security interest, pledge or
other lien or encumbrance on any Property or any other
assets of the Partnership and to borrow money on the
general credit of the Partnership for use in the
business of the Partnership and to take any action and
enter into any agreement necessary or advisable in
connection with such borrowing;
(vii) to repay in whole or in part, negotiate,
refinance, recast, increase, renew, modify or extend any
secured, or other indebtedness affecting any Partnership
Property and in connection therewith to execute any
extensions, renewals or modifications of any evidences
of indebtedness secured by deeds of trust, mortgages,
security interests, pledges or other encumbrances
covering any Partnership Property;
(viii) to engage a real estate agent (including a
Sponsor) to sell any Partnership Property or portions
thereof upon such terms and conditions as are deemed
fair and reasonable by the General Partners and to be in
the best interest of the Partnership, and to pay
reasonable compensation for such services; provided,
however, that any real estate commission paid shall not
exceed six percent (6%) of the contract price for the
Sale of any Partnership Property, and, in addition, if a
Sponsor provides substantial services in such regard,
the Sponsor may receive up to one-half of such real
estate commission, not to exceed one and one-half
percent (1.5%), the payment of which real estate
commission to the Sponsor shall be subordinated to the
payment to Unitholders of their Adjusted Capital Balance
plus the unpaid portion, if any, of their Cumulative
Return.
(ix) to recognize transferees of Units as
Unitholders and to admit substitute Limited Partners in
accordance with the terms described in the Prospectus
and Article VII of this Agreement;
(x) to invest Working Capital Reserves and, pending
the investment of the Partnership's assets in
Properties, to invest the Partnership's assets
(excluding Working Capital Reserves), in
interest-bearing accounts and short-term investments,
including obligations of federal, state and
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local governments and their agencies, mutual funds,
regulated investment companies, commercial paper
and certificates of deposit of federally-insured
commercial banks, savings banks or savings and loan
associations; provided, however, that such
investments are short-term, highly-liquid and
provide appropriate safety of principal;
(xi) to purchase, cancel or otherwise retire
or dispose of the Partnership Interests or Units of
any Partner or Unitholder according to the
provisions of this Agreement;
(xii) to execute and deliver all documents
necessary or appropriate for the sale of Units,
including the Prospectus and filings under the
Securities Act of 1933 and any other federal and
state laws relating to the sale of securities;
(xiii) to require Unitholders to become
Limited Partners (in which case the General
Partners shall have the power to amend this
Agreement without the Consent of the Unitholders)
and to take such other action with respect to the
manner in which Units are being or may be
transferred or traded as may be necessary or
appropriate to preserve the tax status of the
Partnership as a partnership for federal income tax
purposes and the tax treatment of the Unitholders
as Partners;
(xiv) to take such steps (including amendment
of this Agreement) as the General Partners
determine are advisable or necessary and will not
result in any material adverse effect on the
economic position of a majority in interest of the
Unitholders with respect to the Partnership in
order to preserve the tax status of the Partnership
as a partnership for federal income tax purposes,
including, without limitation, removing the Units
from public trading markets and imposing
restrictions on transfers of Units or Interests
(provided such restrictions on transfers do not
cause the Partnership's assets to be deemed "plan
assets" within the meaning of ERISA);
(xv) to establish and maintain the Working
Capital Reserves described in Section 3.3E;
(xvi) to pay or reimburse any reasonable
out-of-pocket expenses incurred by any
Affiliate of
the General Partners in connection with any report
pursuant to Section 10.3. No fee shall be paid
to any Affiliate in connection with any such
report; and
(xvii) after obtaining the Consent of the
Unitholders to the matters set forth in Sections
5.4A(xvii), 5.4A(xviii) or 5.4A(xix), to take any
actions which they deem appropriate to facilitate
the purposes described in such sections, including,
without limitation, amendments to this Agreement to
change the dates upon which transfers of Units will
be recognized, and the General Partners shall give
prior written notice to the Unitholders of any such
amendment. B. Any person dealing with the
Partnership or the General Partners may rely upon a
certificate signed by any General Partner, as to:
(i) the identity of any General Partner or any
Limited Partner;
(ii) the existence or non-existence of any
fact or facts that constitute conditions precedent
to acts by the General Partners or in any other
manner are germane to the affairs of the
Partnership;
(iii) the Persons who are authorized to
execute and deliver any instrument or document of
the Partnership; or
(iv) any act or failure to act by the
Partnership or as to any other matter whatsoever
involving the Partnership or any Partner.
C. The Administrative General Partner shall have
the sole authority and power, on behalf of the
Partnership, subject to Section 5.3, to review,
approve, terminate, modify, enforce, continue or
otherwise deal, in good faith, with the Property
Management Agreements, the Cash Flow Deficit Guaranty
Agreement, the Guarantees of Timely and Lien-Free
Completion, the Land Acquisition Agreements, the
Development Agreements or any other agreements now or
hereafter made between the Partnership and the
Development General Partner or any Affiliate thereof.
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Section 5.3 Authority of Limited Partners
A. By the Majority Vote of the Unitholders, the
Unitholders, without the consent of the GeneralPartners,
may:
(i) amend the Partnership Agreement; provided that
such amendment (a) shall not in any manner allow the
Unitholders to take part in the control of the
Partnership's business in a manner which would subject
them to liability as general partners under the Act or
any other applicable law, and (b) shall not, without the
consent of any General Partner affected, alter the
rights, powers, or duties of the affected General
Partner or its interest in Profit and Loss, Net Cash
Flow, Net Proceeds of Sale or Refinancing, or alter any
of the provisions of Section 8.2 hereof,
(ii) dissolve or terminate the Partnership prior to
the expiration of its term; (iii) remove a General
Partner and elect a new General Partner; (iv)
approve or disapprove of the Sale of all or
substantially all of the Partnership's Proper-
ties; or
(v) terminate, upon 60 days notice, any contract
between the Partnership and any General
Partner or any Affiliate thereof.
B. Any action taken pursuant to Section 5.3A hereof
shall be void if any Unitholder, within 45 days
after such action is taken, obtains a temporary restraining
order, preliminary injunction or declaratory judgment from a
court of competent jurisdiction or an opinion of counsel
selected by the Majority Vote of the Unitholders on grounds
that such action, if given effect, would have the prohibited
effect referred to in Section 5.3A(i)(a) hereof.
Section 5.4 Restrictions on Authority
A. With respect to the Partnership and Partnership
Property, the General Partners shall have no authority to
perform any act in violation of any applicable laws or
regulations thereunder, nor shall the General Partners as
such, without the Consent of the Unitholders, have any
authority:
(i) to voluntarily dissolve or terminate the
Partnership prior to the expiration of its term,
except for the acts listed in Section 8.1 hereof,
(ii) to purchase or acquire property other than
personal property used in connection with the Properties
or undertake construction of any properties other than
the Properties (except as provided in the Prospectus);
(iii) except as permitted in this Agreement, to do
any act required to be approved by the
Unitholders under the Act;
(iv) to reinvest any Net Proceeds of Sale or
Refinancing, except in short-term securities
pursuant to Section 10.2B;
(v) except with respect to the Interim Investments,
to invest in or underwrite securities of any type or
kind for any purpose, or make investments other than in
the Properties and the operations related and incidental
thereto;
(vi) to do any act in contravention of this Agreement;
(vii) to do any act that would make it impossible to
carry on the ordinary business of the Partnership;
(viii) to confess a judgment against the Partnership;
(ix) to offer Interests or Units in exchange for property;
(x) to possess the Properties or any Partnership
Property related thereto, or assign the Partnership's
rights in same, for other than the exclusive use of the
Partnership;
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(xi) to operate in such a manner as to be classified
as an "investment company" under the
meaning of the Investment Company Act of 1940;
(xii) to purchase or lease any property from
or sell or lease property to the General Partners
or their Affiliates;
(xiii) to admit a Person as a General Partner,
except as provided in this Agreement; (xiv) to
admit a Person as a Unitholder or Limited
Partner, except as provided in this
Agreement;
(xv) to sell all or substantially all of the
Properties;
(xvi) to create or suffer to exist any lien,
security interest or other charge or encumbrance
upon or with respect to any portion of the
Properties if the sum of the principal amount of
such debt and the principal amount of all other
debts of the Partnership which are secured by all
or part of the Partnership Property, would exceed
60% of the fair market value of all of the
Partnership Property, as determined by an
independent appraisal; provided, however, that the
General Partners shall have the authority to create
or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to
the Partnership Property with a debt in excess of
such limitation, but not in excess of 75% of the
fair market value of the Partnership Property, as
determined by an independent appraiser, if the
total Gross Proceeds upon the Termination Date
exceeds the Minimum Offering Amount but are less
than the Maximum Offering Amount;
(xvii) to cause or facilitate the merger or
consolidation of the Partnership with other
partnerships, including, but not limited to,
mergers or consolidations in which the Unitholders
receive in exchange for their Units interests in
the surviving entity, with the objective of listing
the interests of the surviving entity on a national
or regional securities exchange or NASDAQ;
(xviii) to list the Units on a securities
exchange or enable the Units to be traded in the
over-the-counter market, or otherwise facilitate
the establishment of a market for the trading of
Units, or (except as set forth in Section
5.2A(xiv)) to withdraw the Units from such listing;
(xix) to take such steps as the General
Partners determine are advisable or necessary to
restructure the Partnership and its activities in
order to enable the Partnership to qualify as a real
estate investment trust for federal income tax purposes.
B. The General Partners shall not take any action which,
for federal tax purposes, shall cause the
Partnership to terminate or to be treated as an
association taxable as a corporation.
Section 5.5 Authority of Partners and Affiliated Persons
to Deal with Partnership
A. The General Partners may, for, in the name of,
and on behalf of, the Partnership, acquire
property from, borrow money from, enter into agreements,
contracts or the like (in addition to those set forth
herein) with, or reimburse for reasonable out-of-pocket
expenses incurred in connection with the preparation of
reports by, any Sponsor in an independent capacity, as
distinguished from such capacity (if any) as a Sponsor,
as if such Sponsor were an independent contractor;
provided, however, that any such agreement shall be
subject to the conditions set forth in Section 5.2A(ii)
herein.
B. Neither the General Partners nor any Affiliate
thereof shall have the authority:
(i) to cause the Partnership to invest in any
program, partnership or other venture not
enumerated herein;
(ii) to receive any compensation, fee or
expense not otherwise permitted to be paid to it
under the terms of this Agreement or the Prospectus;
(iii) to cause the Partnership to develop any
Property without first having obtained an appraisal
with respect to the value thereof on an "as-built"
basis, rendered by an independent appraiser who is
a member of a nationally recognized society of
appraisers, in which the "as-
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built" appraised value equals or exceeds the purchase
price of the Property paid with respect to such Property
by the Partnership;
(iv) to commingle the Partnership funds with those
of any other person or entity, or to invest any of the
Net Proceeds of the Offering in junior mortgages, junior
deeds of trust or other similar obligations, except that
funds of the Partnership may be temporarily retained by
agents of the Partnership pursuant to contracts for the
rendering of services to the Partnership by such agents
or held in accounts established and maintained for the
purpose of making the Interim Investments and/or
computerized disbursements;
(v) to cause the Partnership to lend money or other
assets to the General Partners or any Affiliates thereof;
(vi) to grant to the General Partners or any
Affiliates thereof an exclusive listing for the Sale of
Partnership assets, including the Properties; or
(vii) to receive any rebate or give-up, or to
participate in any reciprocal business arrangement with
any General Partner or an Affiliate thereof.
Section 5.6 Duties and Obligations of the General Partners
A. The General Partners shall take all action that may be
necessary or appropriate (i) for the continuation of the
Partnership's existence as a limited partnership under the Act
(and under the laws of each other jurisdiction in which such
existence is necessary to protect the limited liability of the
Unitholders and the Limited Partners or to enable the
Partnership to conduct the business in which it is engaged),
and (ii) for the acquisition, development, maintenance,
preservation and operation of the Properties in accordance
with the provisions of this Agreement and applicable laws and
regulations (it being understood and agreed, however, that the
provision of day-to-day property management services for
specific Properties is not an obligation of the General
Partners as general partners of the Partnership). The General
Partners shall devote to the Partnership such time as may be
necessary for the proper performance of their duties
hereunder, but neither the General Partners nor any of their
Affiliates shall be expected to devote their full time to the
performance of such duties. The General Partners or their
Affiliates may act as general or managing partners for other
partnerships engaged in businesses similar to that conducted
by the Partnership. Nothing herein shall limit the General
Partners or their Affiliates from engaging in any such
business activities, or any other activities which may be
competitive with the Partnership, and the General Partners or
their Affiliates shall not incur any obligation, fiduciary or
otherwise, to disclose or offer any interest in such
activities to any party hereto.
B. The General Partners shall at all times conduct their
affairs, the affairs of all their Affiliates and the affairs
of the Partnership in such a manner that no Limited Partner or
Unitholder (except a Limited Partner or Unitholder who is also
a General Partner) will have any personal liability for
Partnership debts except as otherwise set forth herein and in
the Prospectus.
C. The General Partners from time to time shall prepare
and file such certificates (or amendments thereto) and other
similar documents as are required by the Act, and in the
proper office or offices in each other jurisdiction in which
the Partnership is formed or qualified, any certificates and
other documents required by the applicable statutes, rules or
regulations of any such jurisdiction.
D. The General Partners shall prepare or cause to be
prepared, and shall file, on or before the due date (or any
extension thereof), any federal, state or local tax returns
required to be filed by the Partnership. The General Partners
shall cause the Partnership to pay any taxes payable by the
Partnership to the extent same are not payable by any other
party.
E. The General Partners shall obtain and keep in force,
or cause to be obtained and kept in force during the term
hereof, fire and extended coverage, workmen's compensation,
and public liability insurance in favor of the Partnership
with such insurers and in such amounts as the General Partners
deem advisable, but in amounts not less (and with deductible
amounts not greater) than those customarily maintained with
respect to apartment complexes comparable to the Properties.
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F. The General Partners shall be under a fiduciary
duty to conduct the affairs of the Partnership in the
best interests of the Partnership, including the
safekeeping and use of all Partnership funds and assets,
whether or not in the General Partners' possession or
control, and the use thereof for the benefit of the
Partnership. The General Partners shall not enter into
any contract or agreement relieving them of their common
law fiduciary duty. The General Partners shall at all
times act in good faith and exercise due diligence in
all activities relating to the conduct of the business
of the Partnership. The General Partners shall treat the
Unitholders as a group and shall not favor the interests
of any particular Unitholder.
G. The General Partners shall cause the Partnership
to commit a percentage of the Gross Proceeds of the
Offering to investment in Properties which is equal to
the greater of: (i) 89.625% of the Gross Proceeds of the
Offering reduced by.1625% for each 1% of financing of
Properties owned by the Partnership; or (ii) 76.625% of
the Gross Proceeds of the Offering. For the purpose of
this Section 5.6G, the percent of financing of
Properties owned by the Partnership shall be determined
by dividing the amount of financing of the Properties by
the purchase price of the Properties, excluding
Front-End Fees. The proceeds of the Offering will be
invested in Properties within two years of the
Termination Date of the Offering.
H. Except for payment of the Selling Commissions,
the General Partners shall not directly or indirectly
pay or award any commission or other compensation to any
Person engaged by a potential Unitholder for investment
advice as an inducement to such advisor to advise the
purchase of Units.
I. On loans made available to the Partnership by a
General Partner, the General Partner may not receive
interest or similar charges or fees in excess of the
amount which would be charged by unrelated lending
institutions on comparable loans for the same purpose,
in the same locality of the property if the loan is made
in connection with a particular property. No prepayment
charge or penalty shall be required by the General
Partner on a loan to the Partnership secured by either a
first or a junior or all-inclusive trust deed, mortgage
or encumbrance on the property, except to the extent
that such prepayment charge or penalty is attributable
to the underlying encumbrance.
J. The General Partners shall not reinvest Net Cash
Flow or Net Proceeds of Sale or Refinancing.
Section 5.7 Compensation of General Partners
Except as expressly provided in Articles IV and IX
herein, the General Partners shall receive no fees,
salaries, profits, distributions, reimbursement or other
compensation for serving as General Partners.
Section 5.8 Other Businesses of Partners
Neither the Partnership nor any Partner or
Unitholder shall have any rights or obligations, by
virtue of this Agreement, in or to any independent
ventures of any nature or description, or the income or
profits derived therefrom, in which a Partner or
Unitholder may engage, including, without limitation,
the ownership, operation, management, syndication and
development of other real estate projects, even if in
competition with the Properties.
Section 5.9 Liability of General Partners and Affiliates
to Limited Partners or Unitholders
The General Partners and the Affiliates of the
General Partners performing certain services on
behalf the Partnership shall not be liable, responsible,
or accountable, in liabilities, damages or otherwise, to
any Unitholder, Limited Partner or the Partnership for
any loss, judgment, liability, expense or amount paid in
settlement of any claims sustained which arise out of
any act or omission performed or omitted by them within
the scope of the authority conferred on them by this
Agreement, provided that the General Partners determine,
in good faith, that such act or omission was in the best
interests of the Partnership, except for acts of
negligence or misconduct or for damages arising from any
misrepresentation or breach of an agreement with the
Partnership. The Partnership shall not incur the cost of
that portion of any liability insurance which insures a
General Partner or the Affiliates of the General
Partners performing certain services on behalf of the
Partnership against
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any liability as to which a General Partner or Affiliate
may not be indemnified under Section 5.10 herein.
Section 5.10 Indemnification
A. The General Partners and the Affiliates of the
General Partners performing certain services on behalf the
Partnership shall be indemnified to the full extent
provided by law for any loss, judgment, liability, expense
or amount paid in settlement of any claims sustained by
them which arise out of any act or omission performed or
omitted by any or all of them within the scope of the
authority conferred on them by this Agreement, if the
General Partners determine, in good faith, that such act
or omission was in the best interests of the Partnership
and that such act or omission did not constitute
negligence or misconduct or breach of any other agreement
with the Partnership, provided that any indemnity under
this Section shall be provided out of and to the extent of
Partnership assets only, and no Unitholder or Limited
Partner shall have any personal liability on account
thereof.
B. Notwithstanding Section 5.10A, the General
Partners and the Affiliates of the General Partners
performing certain services on behalf the Partnership and
any person acting as a Broker-Dealer shall not be
indemnified by the Partnership for any liability, loss or
damage incurred by any or all of them in connection with
(i) any claim or settlement arising under federal or state
securities laws unless (a) there has been a successful
adjudication on the merits of each count involving such
securities laws violations as to the particular
indemnities and the court approves indemnification of the
litigation costs, (b) such claims have been dismissed with
prejudice on the merits by a court of competent
jurisdiction as to the particular indemnities and the
court approves indemnification of the litigation costs, or
(c) a court of competent jurisdiction approves a
settlement of the claims and finds that indemnification of
the settlement and related costs should be made, after
being advised as to the current position of the Securities
and Exchange Commission, the Massachusetts Securities
Division, the California Commissioner of Corporations, the
Pennsylvania Securities Commission, the Tennes- see
Securities Commission and such other state securities
administrators, as shall be required by such court,
regarding indemnification for violations of securities
law; or (ii) any liability imposed by law, including
liability for negligence or misconduct.
C. For purposes of Sections 5.9 and 5.10, the term
"Affiliates" shall mean any person performing services on
behalf of the Partnership who (i) directly or indirectly
controls, is controlled by, or is under common control
with a General Partner; or (ii) owns or controls 10% or
more of the outstanding voting securities of a General
Partner; or (iii) is an officer, director, partner or
trustee of a General Partner; or (iv) if a General Partner
is an officer, director, partner or trustee, is any
company for which the General Partner acts in any such
capacity.
ARTICLE VI
TRANSFERABILITY OF A GENERAL PARTNER'S INTEREST
Section 6.1 Removal, Voluntary Retirement or Withdrawal of
a General Partner; Transfer of Interests
A. A General Partner may be removed in the manner
specified in Section 5.3A herein.
B. No General Partner may voluntarily withdraw or
retire from its position as a General Partner
of the Partnership unless another General Partner
(including any Additional or Successor General Partner
admitted pursuant to Section 6.2) remains, and unless (i)
counsel for the Partnership is of the opinion that such
voluntary retirement or withdrawal from the Partnership
will not cause the Partnership: (a) to be dissolved under
the Act; (b) to be classified other than as a partnership
for federal income tax purposes; or (c) to terminate for
federal income tax purposes; and (ii) the approval of the
remaining General Partner(s) and the Consent of the
Unitholders to such voluntary retirement or withdrawal is
obtained.
C. A General Partner who voluntarily retires or
withdraws from the Partnership in violation of this
Section 6.1 shall be and remain liable to the Partnership
and the Partners for damages resulting from the General
Partner's breach of this Agreement, and, without
limitation of remedies, the
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Partnership may offset such damages against the amounts
otherwise distributable to the retiring or withdrawing
General Partner.
D. No General Partner shall have the right to sell,
exchange, or otherwise dispose of all or any portion of its
Interest unless the proposed assignee or transferee of all
or a portion of the Interest of such General Partner is
admitted as a Successor or Additional General Partner to
the Partnership pursuant to the provisions of Section 6.2
prior to any such sale, exchange or other disposition.
E. The voluntary retirement or withdrawal of a General
Partner shall become effective only upon (i) receipt by the
Partnership of the opinions of counsel referred to in
Section 6.1(B)(i); (ii) receipt by the Partnership of the
approval and consent referred to in Section 6.1B(ii); and
(iii) the amendment of the Partnership's Certificate to
reflect such withdrawal or retirement and its filing for
recordation.
Section 6.2 Election and Admission of Successor or
Additional General Partners
A. By the Majority Vote of the Unitholders, a
Successor General Partner may be elected to
replace a General Partner removed in the manner described
in Section 5.3A herein.
B. Except as otherwise expressly provided herein, no
Person shall be admitted as a Successor or
Additional General Partner unless (i) counsel for the
Partnership is of the opinion that the admission of such
Successor or Additional General Partner will not cause the
Partnership to be classified other than as a partnership
for federal income tax purposes or cause the Partnership to
terminate for federal income tax purposes; (ii) the consent
of the then existing General Partner(s) is obtained; and
(iii) the Consent of the Unitholders to such admission has
been obtained.
C. The admission of such Successor or Additional
General Partner shall become effective upon (i) receipt by
the Partnership of the opinion referred to in Section
6.2B(i); (ii) receipt by the Partnership of the consents
referred to in Section 6.2B(ii) and (iii), if applicable;
and (iii) the amendment of the Certificate to reflect the
admission of the Successor or Additional General Partner
and its filing for recordation.
Section 6.3 Events of Withdrawal of a General Partner
A. In addition to a voluntary withdrawal of a General
Partner pursuant to Section 6.1E, a General Partner shall
be deemed to withdraw (i) if the General Partner assigns
all of his Interest in the Partnership, (ii) if the General
Partner is removed pursuant to Section 5.3A; and (iii) upon
the following acts or events: (a) if a natural person, upon
his death or the entry by a court of competent jurisdiction
that such General Partner is incompetent to manage his
person or his property; (b) if a corporation, the filing of
a certificate of dissolution, or its equivalent, for the
corporation or the revocation of its charter; and (c) if a
partnership, the dissolution and commencement of winding up
of the General Partner. To the maximum extent permitted by
the Act, no other act or event shall be deemed an event of
withdrawal of a General Partner or serve to convert a
General Partner to a Limited Partner.
B. In the event of the withdrawal of a General Partner
who is not then the sole General Partner, the remaining
General Partner or General Partners may elect to continue
the Partnership, and if such election is made, shall
promptly give Notification of such event and shall make and
file such amendments to the Certificate as are required by
the Act to reflect the fact that the withdrawn General
Partner has ceased to be a General Partner of the
Partnership.
C. In the event of the withdrawal of a General Partner
and the remaining General Partner does not elect to
continue the Partnership or in the event of the withdrawal
of a sole General Partner, the withdrawn General Partner,
or its successors, representatives, heirs or assigns shall
promptly give Notification of such withdrawal to all
remaining Partners and Unitholders. In such event, the
Partnership shall be dissolved unless, within 90 days after
the withdrawal of the General Partner, the Unitholders, by
the Majority Vote of the Unitholders agree in writing to
continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal of the
sole General Partner, of one or more Additional General
Partners. If the Unitholders elect to reconstitute the
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Partnership and agree to admit a substitute General
Partner, the relationship of the Unitholders and of
substitute General Partner in the Partnership shall be
governed by this Agreement.
Section 6.4 Liability of a Withdrawn General Partner
A. Any General Partner who withdraws from the
Partnership shall be, and remain, liable for all
obligations and liabilities incurred by it as General
Partner prior to the time such withdrawal becomes
effective. In addition, a General Partner who voluntarily
withdraws in violation of this Agreement shall be subject
to the liability described in Section ▇.▇▇.
B. Upon the withdrawal of a General Partner, such
General Partner shall immediately cease to be a General
Partner, and, unless a Successor General Partner has
acquired the Interest of the withdrawing General Partner
pursuant to Section 6.5, the withdrawn General Partner's
Interest shall be converted to a limited partner Interest
of a new class. Such conversion shall not affect any rights
or liabilities of the withdrawn General Partner, except
that such General Partner shall no longer participate in
the management of the Partnership.
C. The personal representatives, heirs, successors or
assigns of any General Partner who withdraws from the
Partnership shall be, and remain, liable for all
obligations and liabilities incurred by the General Partner
prior to, or in connection with, its withdrawal.
Section 6.5. Valuation of Partnership Interest of General
Partner.
Upon the voluntary or involuntary withdrawal of a
General Partner, the Partnership or a Successor General
Partner may purchase the Partnership Interest of the
withdrawn General Partner at any time subsequent to
withdrawal. The price of the withdrawn General Partner's
Interest shall be determined by two (2) independent
appraisers, one selected by the withdrawn General Partner
and one selected by the remaining General Partner, or if
none is remaining, by the Unitholders. If the two
appraisers are unable to agree on the value of the General
Partner's Interest, they shall jointly appoint a third
independent appraiser whose determination shall be final
and binding. The Partnership shall then pay the withdrawn
General Partner the price of its Interest as a General
Partner as so determined. If the withdrawal is involuntary,
payment shall be made by delivery of a promissory note
bearing interest payable semiannually at a floating rate of
interest equal to the lowest rate permitted under the Code
to avoid the imputation of interest income to the withdrawn
General Partner, payable in five equal annual installments,
the first installment to be paid as soon as practicable
after the appraisal, and prepayable at any time. If the
withdrawal is voluntary, payment shall be made by delivery
of a promissory note bearing no interest, with principal
payable only from distributions which the withdrawn General
Partner would have received under this Agreement had the
General Partner not withdrawn. Immediately upon receiving
the note, the withdrawn General Partner shall cease to be a
Partner of the Partnership for all purposes, except that
the withdrawn General Partner shall continue to be subject
to Section 6.4 hereunder. All amounts received pursuant to
this Section 6.5 shall constitute complete and full
discharge for all amounts owing to the withdrawn General
Partner on account of its Interest in the Partnership.
ARTICLE VII
ASSIGNMENT OF ASSIGNEE UNITS TO UNITHOLDERS;
TRANSFERABILITY OF LIMITED PARTNER INTERESTS AND UNITS
Section 7.1. Assignment of the Assignee Units to Unitholders.
A. Pursuant to Sections 3.2 and 7.1C hereof, the
Assignor Limited Partner shall assign to each Unitholder
Assignee Units equal to the number of Units purchased by
each Unitholder in the Offering.
B. Except as provided in Section 7.1.A above, the
Assignor Limited Partner may not transfer or assign a
Limited Partnership Interest without the prior written
consent of the Administrative General Partner. The Assignor
Limited Partner shall have no right to vote or consent with
respect to Units owned by the Assignor Limited Partner for
its own account and such Units shall not be considered
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outstanding Units for purposes of determining whether the
Majority Vote of the Unitholders or the Consent of the
Unitholders has occurred. The Assignor Limited Partner,
by the execution of this Agreement, acknowledges and
agrees that the Assignor Limited Partner's management
will have fiduciary responsibility for the safekeeping
and use of all funds and assets of the Unitholders,
whether or not in the Assignor Limited Partner
management's possession or control, and that the
management of the Assignor Limited Partner will not
employ, or permit another to employ such funds or assets
in any manner except for the exclusive benefit of the
Unitholder. The Assignor Limited Partner agrees not to
contract away the fiduciary duty owed to the Unitholders
by the Assignor Limited Partner's management under the
common law of agency.
C. Except as set forth in Section 7.1G, the Assignor
Limited Partner, by the execution of this Agreement,
irrevocably transfers and assigns to the Unitholders all
of the Assignor Limited Partner's rights and interest in
and to the Assigned Limited Partnership Interests, as of
the time that payment for such Assigned Limited
Partnership Interests is received by the Partnership and
such Assigned Limited Partnership Interests are credited
to the Assignor Limited Partner on the books and records
of the Partnership. The rights and interest so
transferred and assigned shall include, without
limitation, the following:
(i) all rights to receive distributions of
uninvested Capital Contributions pursuant to Sections 3.2
and 3.3;
(ii) all rights to receive cash distributions
pursuant to Article IV; (iii) all rights in
respect to allocations of Profit and Loss
pursuant to Article IV; (iv) all other rights in
respect of determinations of allocations and
distributions pursuant to
Article IV;
(v) all rights to consent to the admission of
successor or additional General Partners pursu-
ant to Sections 6.1 and 6.2;
(vi) all rights to receive any proceeds of
liquidation of the Partnership pursuant to Section 8.2;
(vii) all rights to inspect books and records
and to receive reports pursuant to Article X;
(viii) all voting rights, rights to attend or
call meetings and other such rights; and (ix)
all rights which the Limited Partners have, or
may have in the future, under the Act.
D. The General Partners, by the execution of this
Agreement, irrevocably consent to and acknowledge that
(i) the foregoing transfer and assignment pursuant to
Section 7.1 by the Assignor Limited Partner to the
Unitholders of the Assignor Limited Partner's rights and
interest in the Assigned Limited Partnership Interests is
effective, and (ii) the Unitholders are intended to be
and shall be third party beneficiaries of all rights and
privileges of the Assignor Limited Partner in respect of
the Assigned Limited Partnership Interests. The General
Partner covenants and agrees that, in accordance with the
foregoing transfer and assignment, all the Assignor
Limited Partner's rights and privileges in respect of
Assigned Limited Partnership Interests may be exercised
by the Unitholders including, without limitation, those
cited in Section 7.1.
E. In accordance with the transfer and assignment
described in Section 7.1, Unitholders shall have the same
rights that the Limited Partners have under this
Agreement and under the Act.
F. The General Partners shall amend the Certificate
to reflect the crediting of the Assignor Limited Partner
with the Capital Contributions made by Unitholders on a
monthly basis or at such other intervals as may be
required by the Act.
G. Notwithstanding the assignment of the Assigned
Limited Partnership Interests referred to in this Section
7.1, the Assignor Limited Partner shall retain legal
title to and be and remain a Limited Partner of the
Partnership.
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Section 7.2. Transferability of Units.
A. Units shall be freely transferable, except that the
General Partners may prohibit any transfer which does not
comply with Section 7.2B.
B. Prior to the listing of the Units on a securities
exchange or on NASDAQ, a transfer of a Unit
shall be prohibited if any one of the following transfer
restrictions applies:
(i) No sale or exchange of any Units shall be
made if the Units sought to be sold or exchanged, when
added to the total of all other Units sold or
exchanged within a period of 12 consecutive months
prior thereto, would, in the opinion of counsel for
the Partnership, result in the Partnership being
considered to have terminated within the meaning of
Section 708 of the Code. The General Partners shall
give Notification to all Unitholders in the event that
sales or exchanges should be suspended for this
reason. All deferred sales or exchanges shall be made
(in chronological order to the extent practicable) as
of the first day of the fiscal year beginning after
the end of any such 12-month period, subject to the
provisions of this Article VII.
(ii) No transfer or assignment of any Unit shall
be made if a counsel for the Partnership is of the
opinion that the particular transfer or assignment
would be in violation of any federal or state
securities laws (including any investment suitability
standards) applicable to the Partnership or would
cause the Partnership to be classified other than as a
partnership for federal income tax purposes.
(iii) No transfer or assignment of Units shall be
made after which any transferor or trans- feree would
hold (a) less than 200 Units, unless such transferor
would own zero Units or (b) a number of Units not
evenly divisible by four.
(iv) No transfer or assignment of any Unit shall
be made if it would result in the assets of the
Partnership being treated as "plan assets" or the
transactions contemplated hereunder to be prohibited
transactions under ERISA or the Code.
(v) No transfer or assignment of a Unit shall be
made to a non-resident alien or a minor or incompetent
(unless such transfer or assignment shall be made to a
legal guardian on such person's behalf).
C. In order to record a trade on its books and records,
the Partnership may require such
evidence of transfer or assignment and authority of the
transferor or assignor (including signature guarantees),
an opinion of counsel to the effect that there has been no
violation of federal or state securities laws in the
assignment or transfer, and evidence of the transferee's
suitability under state securities laws, as the General
Partners may determine. The Administrative General Partner
may charge a transfer fee (not to exceed $100) sufficient
to cover all reasonable expenses connected with such
transfer.
D. In no event shall a Unitholder be permitted to
transfer a fraction of a Unit. Notwithstanding any other
provision to the contrary, a Unitholder may not transfer a
Unit to any Person treated as a foreign person under the
Code.
Section 7.3. Death, Bankruptcy or Adjudication of
Incompetence of a Unitholder or a Limited Partner.
Upon the death of a Unitholder or a Limited Partner,
his executor, administrator, or trustee, or, if he is
adjudicated incompetent or insane, his committee,
guardian, or conservator, or, if he becomes bankrupt, the
trustee or receiver of his estate, shall have all the
rights of a Unitholder or a Limited Partner for the
purpose of settling or managing his estate and shall have
whatever power the deceased or incompetent Unitholder or
Limited Partner possessed to assign all or any part of his
Units or Interest. The death, dissolution, adjudication of
incompetence, or bankruptcy of a Unitholder or a Limited
Partner shall not dissolve the Partnership.
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Section 7.4. Effective Date.
The Partnership shall recognize the transferee of a
Unit as a Unitholder on the Partnership's books and records
on the first business day of the next calendar month after
the month in which the Partnership receives all necessary
documentation required to effect the transfer of his Units.
Section 7.5. Substitute Limited Partners.
Any Unitholder may elect to become a Substitute Limited
Partner upon (i) signing a counterpart of this Agreement
and any other instrument or instruments deemed necessary by
General Partners, including a Power of Attorney in favor of
the General Partners as described in Section 12. l.A
hereof, and (ii) paying all reasonable legal fees and
filing costs in connection with his substitution as a
Limited Partner. The Administrative General Partner may
charge a conversion fee of $150. Unitholders who elect to
become Substitute Limited Partners will receive one Limited
Partnership Interest for each Unit they convert and will
not be able to re-exchange their Limited Partnership
Interests for Units. The Capital Account of the former
Unitholder attributable to transferred Units shall be
credited to the Capital Account of the Substitute Limited
Partner.
Section 7.6 Retirement or Withdrawal of a Unitholder
A. No Unitholder shall have the right to voluntarily
retire or withdraw from the Partnership unless the General
Partners shall have consented to such voluntary retirement
or withdrawal by a Unitholder. Upon the retirement or
withdrawal of a Unitholder: (i) the Interest of such
retiring or withdrawing Unitholder shall thereafter belong
to the Partnership; (ii) such retiring or withdrawing
Unitholder shall not be entitled to receive distributions
with respect to any periods after the time of such
retirement of withdrawal; and (iii) such retiring or
withdrawing Unitholder shall not be entitled to receive any
amount for the fair value of his Units as of the date of
his retirement or withdrawal, other than as agreed to by
the General Partners and the withdrawing Unitholder. The
General Partners shall not consent to the voluntary
retirement or withdrawal of a Unitholder if the General
Partners receive an opinion of counsel to the Partnership
that such retirement or withdrawal would cause the
Partnership to be classified other than as a partnership
for federal income tax purposes, or cause the Partnership
to terminate for federal income tax purposes.
B. At any time after the Termination Date of the
Offering, the Partnership may, in response to the request
of a Unitholder, repurchase any or all of the Units of such
Unitholder upon mutually agreeable terms, provided that
such repurchase does not materially impair the capital or
operation of the Partnership. The determination to
repurchase Units will be made in the sole discretion of the
General Partners. The determination of the value of the
repurchased Units will be based upon, among other factors,
the current fair market value of the Properties and the
Partnership Property, less all Partnership debts and
obligations. The Partnership will not repurchase Units
prior to the Termina- t Date of the Offering and is not
obligated to repurchase Units at any time. Units acquired
by the General Partners and their Affiliates or by the
Assignor Limited Partner will not be eligible for
repurchase by the Partnership. Units purchased by the
Partnership during any month shall be deemed cancelled
effective as of the first day of the month following the
effective date of such purchase.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE PARTNERSHIP
Section 8.1 Events Causing Dissolution
A. The Partnership shall dissolve and its affairs shall
be wound up upon the first to occur of the following events:
(i) the expiration of its term;
(ii) the withdrawal of a General Partner, unless
the Partnership is continued pursuant to
Sections 6.3B or 6.3C;
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(iii) the Sale of all or substantially all
Partnership Property (excepting (a) a disposition
thereof which, in the opinion of counsel to the
Partnership, qualifies, in whole or in part, under
Section 1031 or Section 1033 of the Code or (b) a Sale
in which the Partnership receives Purchase Money
Financing, in which case the Partnership shall
dissolve upon receipt of the final payment
thereunder);
(iv) the election by the General Partners, with
the Consent of the Unitholders, to dissolve
the Partnership;
(v) by the Majority Vote of the Unitholders
pursuant to Section 5.3A to dissolve the
Partnership; or
(vi) the happening of any other event causing the
dissolution of the Partnership under
applicable law.
B. Dissolution of the Partnership shall be effective
on the day on which the event occurs giving rise to the
dissolution. A certificate of cancellation shall be filed
under the Act upon the dissolution and the commencement of
winding up of the Partnership; provided, however, that the
Partnership shall not terminate until the Partnership
Property has been distributed as provided in Section 8.2.
Notwithstanding the dissolution of the Partnership, prior
to the termination of the Partnership, the business of the
Partnership and the affairs of the Partners, as such, shall
continue to be governed by this Agreement.
Section 8.2 Liquidation
A. As soon as practical after the dissolution of the
Partnership, the General Partners, or if there are no
General Partners, any Limited Partner or the liquidating
trustee under the Act, as the case may be, shall give
Notification to all the Limited Partners and Unitholders of
such fact and shall prepare a plan as to whether and in
what manner the Partnership Property shall be liquidated.
By the Majority Vote of the Unitholders, the assets of the
Partnership, subject to its liabilities (and the
establishment of reserves, if necessary, for such
liabilities), may be transferred to a successor Entity,
upon such terms and conditions as are then agreed upon.
B. Unless the Unitholders agree to transfer the assets
of the Partnership, subject to its liabilities, to a
successor Entity pursuant to Section 8.2A, upon dissolution
of the Partnership, the General Partners, any Limited
Partner or the liquidating trustee under the Act, as the
case may be, shall liquidate the Partnership Property, and
apply and distribute the proceeds thereof in accordance
with Section 4.4. A Partner or an Affiliate of a Partner
may purchase such assets with the Consent of the
Unitholders.
C. Notwithstanding the provisions of Section 8.2B. in
the event the General Partners, any Limited Partner, or the
liquidating trustee under the Act, as the case may be,
shall determine that an immediate sale of all or a portion
of the Partnership Property would cause undue loss to the
Partners and Unitholders, the General Partners, any Limited
Partner, or the liquidating trusee under the Act, as the
case may be, in order to avoid such loss, may, after having
given Notification to all the Unitholders and Limited
Partners, either defer liquidation of, and withhold from
distribution for a reasonable time, any assets of the
Partnership, or distribute the assets in kind to a
liquidating trust to be held for the benefit of the
Unitholders and Partners.
Section 8.3. Capital Contribution Upon Dissolution
Subject to the provisions of Section 5.9 of this
Agreement, each Unitholder and Partner shall look solely to
the assets of the Partnership for all distributions with
respect to the Partnership and his Capital Contribution and
shall have no recourse (upon dissolution or otherwise)
against any Partner or Unitholder; provided, however, that
upon the dissolution and termination of the Partnership,
the General Partners will make the Capital Contributions
referred to in Section 3.1. All amounts so contributed by
the General Partners shall be distributed first to the
Partnership's creditors entitled thereto, and the balance
to the Unitholders and Partners in proportion to the
positive balances in their Capital Accounts at the time of
dissolution and termination of the Partnership.
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ARTICLE IX
CERTAIN PAYMENTS TO THE GENERAL PARTNERS AND AFFILIATES
Section 9.1 Reimbursement of Certain Costs and Expenses of
the General Partners and Affiliates
A. Subject to the provisions of Article V hereof, the
Partnership shall be permitted to reimburse
the General Partners for the actual cost to the General
Partners or any of their Affiliates of the Partnership's
operating expenses. In determining the actual cost to a
General Partner or an Affiliate of a General Partner of
goods and materials and administrative services, actual
cost means the actual cost to a General Partner or an
Affiliate of a General Partner of goods and materials used
for or by the Partnership and obtained from entities not
affiliated with a General Partner, and actual cost of
administrative services means the pro rata cost of
personnel as if such persons were employees of the
Partnership. The cost for administrative services to be
reimbursed to a General Partner or an Affiliate shall be
at the lower of the General Partner's or Affiliate's
actual cost or the amount the Partnership would be
required to pay to independent parties for comparable
administrative services in the same geographic location.
The General Partners shall use their best efforts to cause
all of the Partnership's expenses to be billed directly to
and paid by the Partnership to the extent practicable.
B. Subject to the foregoing, the Partnership shall
pay all expenses (which expenses shall be billed directly
to the Partnership) of the Partnership which may include
but are not limited to: (a) all costs of personnel
(excluding rent or depreciation, utilities, capital
equipment, and other administrative items) employed
full-or part-time by the Partnership and involved in the
business of the Partnership and allocated pro rata to
their administrative services performed on behalf of the
Partnership, including Persons who may also be officers or
employees of the General Partners or their Affiliates
(other than Controlling Persons); (b) all costs of
borrowed money, taxes and assessments on Properties and
other taxes applicable to the Partnership; (c) legal,
audit, accounting, brokerage and other fees; (d) 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 or Unit or in connection with the
business of the Partnership; (e) fees and expenses paid to
independent contractors, mortgage bankers, brokers and
servicers, leasing agents, consultants, on-site property
managers and other property management personnel (other
than Controlling Persons and other officers of the General
Partners or their Affiliates), real estate brokers,
insurance brokers and other agents; (f) expenses in
connection with the disposition, replacement, alteration,
repair, remodeling, refurbishment, leasing, refinancing
and operating of the Properties (including the costs and
expenses of foreclosures, insurance premiums, real estate
brokerage and leasing commissions and of maintenance of
such Properties); (g) expenses of organizing, revising,
amending, converting, modifying or terminating the
Partnership; (h) expenses in connection with distributions
made by the Partnership to, and communications and
bookkeeping and clerical work necessary in maintaining
relations with Limited Partners and Unitholders, including
the costs of printing and mailing to such Persons
evidences of ownership of Interests or Units and reports
of meetings of the Partnership, and of preparation of
proxy statements and solicitations of proxies in
connection therewith; (i) expenses in connection with
preparing and mailing reports required to be furnished to
Limited Partners and
Unitholders for investor tax reporting or other purposes,
or which reports the General Partners deem the furnishing
thereof to Limited Partners or Unitholders to be in the
best interests of the Partnership; (j) accounting,
computer, statistical or bookkeeping costs necessary for
the maintenance of the books and records of the
Partnership; and (k) the cost of preparation and
dissemination of the informational material and
documentation relating to potential sale, or other
disposition of Properties or in connection with any
meetings or votes if the Unitholders.
C. The Partnership shall reimburse the Property
Manager for all Marketing Expenses incurred
by the Property Manager, subject to a maximum of $100,000
per Property.
D. Notwithstanding any other provision of this
Agreement, no reimbursement shall be permit-
▇▇▇ for services for which the General Partners are
entitled to compensation by way of a separate fee.
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Section 9.2 Fees and Other Payments
A. The Partnership shall make the following payments
and pay the following fees to the General Partners
and/or their Affiliates:
(i) to the Selling Agent, the Selling Commissions.
(ii) to the Administrative General Partner, the
Offering and Promotional Expenses Reimbursement
Allowance.
(iii) to the Administrative General Partner, the
Organization and Start-Up Fee.
(iv) to Benchmark Homes, Inc., payments pursuant
to the Land Acquisition Agreements and the Development
Agreements.
(v) to the Property Manager, payments under the
Property Management Agreements, provided that such
payments do not exceed the lesser of (a) the fees
which are competitive for similar services in the
geographic area of the Property or (b) 5% of the gross
revenues from the Property to which the Property
Management Agreement relates, including leasing,
re-leasing and leasing related services, and that
included in the Property Management Fee are
bookkeeping services and fees paid to non-related
persons.
(vi) to the Administrative General Partner, the
Development General Partner and/or their Affiliates, a
fee for securing Refinancing, payable at the closing
of any such financing, provided that the Development
General Partner, the Administrative General Partner
and/or their Affiliates actually render such services.
Any fee paid will be reasonable and competitive with
the services provided, and is not expected to exceed a
total of 1% of the principal amount of the debt
incurred. If both General Partners render services to
secure Refinancing, the fee will be divided between
them commensurate with actual services rendered.
(vii) to the Development General Partner, the
Administrative General Partner and/or their
Affiliates, real estate brokerage commissions, payable
upon the Sale of any Property, provided that the
Development General Partner, the Administrative
General Partner and/or their Affiliates actually
render real estate brokerage services in connection
with such Sale. Any commissions paid to the General
Partners or their Affiliates will be limited to a
maximum of 1.5% of the contract price for the Sale of
the Property, and will be subordinated to the payment
to Unitholders of their Adjusted Capital Balance plus
the unpaid portion, if any, of their Cumulative
Return.
If more than one of the General Partners or their
Affiliates is involved in rendering real estate brokerage
services to the Partnership, the commission will be divided
between them commensurate with actual services rendered.
B. The total of the fees owed to the General Partners
and their Affiliates, as set forth in subsection A. (i),
(ii) and (iii) above, shall in no event exceed 14.5% of the
Gross Proceeds of the Offering.
ARTICLE X
BOOKS AND RECORDS; BANK ACCOUNTS; REPORTS
Section 10.1 Books and Records
A. Unless otherwise directed by the Administrative
General Partner, the books and records of the Partnership
shall be maintained by the General Partners at the
Partnership's principal place of business. In all cases,
said books and records shall be available for examination
and copying by any Limited Partner, Unitholder or his duly
authorized representatives, for any purpose related to the
Limited Partner's or Unitholder's interest as a Limited
Partner or Unitholder, at the expense of such Limited
Partner or Unitholder, at any and all reasonable times. The
Partnership shall keep at its principal place of business,
without limitation, the following records: true and full
information regarding the status of the business and
financial condition of the Partnership; promptly after
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becoming available, a copy of the Partnership's federal,
state and local income tax returns for each year; a
current list of the names and last known business,
residence or mailing addresses of each Partner and
Unitholder; a copy of this Agreement and the Certificate
and all amendments thereto; and other information
regarding the affairs of the Partnership as is just and
reasonable.
B. The Partnership shall keep its books and records
in accordance with the accounting methods followed for
federal income tax purposes, which shall reflect all
Partnership transactions and shall be appropriate and
adequate for the Partnership's business. The Partnership's
taxable year shall be a calendar year.
Section 10.2 Bank Accounts
A. The General Partners shall have fiduciary
responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in their
immediate possession or control. The General Partners
shall not employ, or permit any other Person to employ,
such funds in any manner except for the benefit of the
Partnership.
B. The bank accounts of the Partnership shall be
maintained in such banking institutions as the General
Partners shall determine, and withdrawals shall be made
only in the regular course of Partnership business on the
signature of a General Partner or such other signature or
signatures as the General Partners may determine. All
deposits and other funds may be deposited in interest
bearing or non-interest bearing accounts guaranteed by
federal authorities, invested in short-term United States
Government or municipal obligations, or deposited with a
banking institution selected by the General Partners.
Section 10.3 Reports
A. No later than 75 days after the end of each
calendar year, the General Partners will furnish each
Person who was a Unitholder or Limited Partner at any time
during the fiscal year with all tax information relating
to the Partnership's performance for the preceding
calendar year that is required to be set forth in the
Unitholder's and Limited Partner's federal and state
income tax return.
B. Within 60 days after the end of each of the first
three fiscal quarters of each fiscal year of the
Partnership, the General Partner will furnish to each
Person who was a Unitholder or Limited Partner at any time
during the fiscal quarter then ended, a report setting
forth information with respect to the progress of the
Partnership's business, which report shall include:
(i) an unaudited balance sheet of the
Partnership; (ii) an unaudited statement of
income for the quarter; (iii) an unaudited cash
flow statement for the quarter; (iv) an unaudited
statement setting forth in
detail the services rendered to, and fees received
from, the Partnership by any Sponsor; and
(v) other pertinent information concerning the
Partnership and its activities during the quarter.
The various reports required pursuant to this Section
10.3.B may be sent earlier than or sepa-
rately from any of the other reports required pursuant to
this Section 10.3.B, and the information required to be
contained in any of the reports required pursuant to this
Section 10.3.B may be contained in more than one report.
C. Within 120 days after the end of each fiscal year,
the General Partners will furnish an annual report to each
Person who was a Limited Partner or a Unitholder as of the
last business day of the fiscal year then ended. Such
annual report will include:
(i) a balance sheet as of the end of the
Partnership's fiscal year, statements of income,
Partners' equity and changes in financial position,
which shall be prepared in accordance with
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generally accepted accounting principles and
accompanied by an auditor's report containing an
opinion of an independent certified public accountant;
(ii) the breakdown of any Partnership costs
reimbursed to a Sponsor and a statement setting forth
in detail the services rendered to, and fees received
from, the Partnership by any Sponsor;
(iii) a cash flow statement; and
(iv) a report of the activities of the
Partnership during the fiscal year.
The annual report shall also set forth distributions
to the Unitholders for the period covered thereby and
shall separately identify distributions from (a) Net Cash
Flow during the period, (b) Net Cash Flow during a prior
period which had been held as reserves, (c) Net Proceeds of
Sale or Refinancing, and (d) Working Capital Reserves.
D. Within 45 days after the end of each fiscal quarter
in which a Sale or Refinancing occurs, the General Partners
shall send to each Person who was a Unitholder as of the
close of business on the first business day of the month
that includes the date of occurrence of the Sale or
Refinancing, a report as to the nature of the Sale or
Refinancing and as to the Profit or Loss arising from the
Sale or Refinancing.
E. The General Partners will prepare and timely file
with appropriate federal and state regulatory authorities
all reports required to be filed with such entities under
then-applicable laws, rules and regulations. Such reports
shall be prepared on the accounting or reporting basis
required by such regulatory authorities. Upon request,
copies of such reports will be furnished to any Unitholder
or Limited Partner for any purpose reasonably related to
the Unitholder's or Limited Partner's interest as a
Unitholder or a Limited Partner. In the event that any
regulatory authority promulgates rules or amendments
thereto that would permit a reduction in any of the
reporting requirements to which the Partnership is subject
under this Agreement at the time of the execution hereof,
the Partnership may cease to prepare and file any such
reports in accordance with such rules or amendments.
F. The General Partner will maintain, (i) for a period
of at least four (4) years, a record of the information
obtained to indicate that a Unitholder has met the
suitability standards set forth in the Prospectus; and (ii)
for a period of at least five (5) years, records of the
appraisals made of the Properties, which appraisal records
shall be available for inspection and copying by any
Unitholder or Limited Partner for any purpose reasonably
related to the Unitholder's or Limited Partner's interest
as a Unitholder or a Limited Partner.
Section 10.4. Federal Tax Elections
The Partnership, in the sole discretion of the General
Partners, may make elections for federal tax purposes as
follows:
(i) In case of a transfer of a Unit, the
Partnership, in the sole discretion of the General
Partners, may timely elect pursuant to Section 754 of
the Code (or corresponding provisions of future law)
and pursuant to similar provisions of applicable state
or local income tax laws, to adjust the basis of the
assets of the Partnership. In such event, any basis
adjustment attributable to such election shall be
allocated solely to the transferee of the Unit.
(ii) The General Partners may elect accelerated
depreciation methods under the Code, or may elect
straight-line depreciation over a period as long as 45
years if, in their sole discretion, the determination
of the percentage of tax-exempt Unitholders becomes
too cumbersome.
(iii) All other elections required or permitted
to be made by the Partnership under the Code shall be
made by the General Partners in such manner as will,
in their sole opinion, be most advantageous to a
majority of the Unitholders. The Partnership shall, to
the extent permitted by applicable law and
regulations, elect to treat as an expense for federal
income tax purposes all amounts incurred by it for
real estate taxes, interest and other charges which
may, in accordance with applicable law and
regulations, be considered as expenses.
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ARTICLE XI
MEETINGS OF UNITHOLDERS
Section 11.1. Calling Meetings
Meetings of the Unitholders for any purpose may be
called by any General Partner and shall be called by the
General Partners upon receipt of a request in writing
signed by Unitholders having in the aggregate more than
10% of the outstanding Units. Notice of any meeting shall
be sent to the Unitholders within 10 days after receipt of
such a request. The request shall state the purpose of the
proposed meeting and the matters proposed to be acted
upon. The meeting shall be held at the principal office of
the Partnership, or at such other place in the continental
United States as the General Partners shall designate.
Section 11.2 Notice; Procedure
Notice of any meeting shall be given either personally
or by certified mail, not less than 15 days nor more than
60 days before the date of the meeting, to each Unitholder
at his record mailing address. The notice shall be in
writing, and shall state the place, date, hour, and
purpose of the meeting, and shall indicate that it is
being issued at or by the direction of the Partners or
Unitholders calling the meeting. If a meeting is adjourned
to another time or place, and if any announcement of the
adjournment of time or place is made at the meeting, it
shall not be necessary to give notice of the adjourned
meeting. The presence in person or by proxy of the holders
of more than 50% of the outstanding Units shall constitute
a quorum at all meetings of the Unitholders; provided,
however, that if there is no quorum present, holders of a
majority in interest of the Unitholders present or
represented may adjourn the meeting from time to time
without further notice until a quorum is obtained. No
notice of the time, place or purpose of any meeting of
Unitholders need be given to any Unitholder who attends in
person or is present by proxy (except when a Unitholder
attends 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 Unitholder entitled to
notice who, in a writing executed and filed with the
records of the meeting, either before or after the time of
the meeting, waives the notice requirement.
Section 11.3 Right to Vote
For the purpose of determining the Unitholders
entitled to vote at any meeting of the Partnership, any
General Partner or the Unitholders requesting the meeting
may fix a date, in advance, as the record date for the
determination of Unitholders entitled to vote. This date
shall be not more than 50 days nor less than 10 days
before any meeting.
Section 11.4 Proxies; Rules
Each Unitholder may authorize any person or persons to
act for him by proxy in all matters in which a Unitholder
is entitled to participate, whether by waiving notice of
any meeting, or voting or participating at a meeting.
Every proxy must be signed by the Unitholder or his
attorney-in-fact. No proxy shall be valid after the
expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be
recoverable at the pleasure of the Unitholder executing
it. At each meeting of Unitholders, the General Partners
shall appoint officers and adopt rules as they deem
appropriate for the conduct of the meeting.
ARTICLE XII
GENERAL PROVISIONS
Section 12.1 Appointment of Administrative General Partner
as Attorney-in-Fact
A. Each Limited Partner and Unitholder hereunder
hereby irrevocably appoints and empowers the
Administrative General Partner his attorney-in-fact to
consent to or ratify any act listed in Subsections 5.4A(i)
through (xix) of this Agreement after the Consent of the
Unitholders thereto has been obtained, and to execute,
acknowledge, swear to and deliver all agreements and
instruments and
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file all documents requisite to carrying out the intentions
and purposes contemplated in this Agreement, including,
without limitation, the execution and delivery of this
Agreement and all amendments hereto, the filing of all
business certificates and necessary certificates of limited
partnership and amendments thereto from time to time in
accordance with all applicable laws and any certificates of
cancellation. This power of attorney shall be deemed coupled
with an interest, and shall not be affected by the subsequent
disability or incapacity of the principal.
B. The appointment by all Limited Partners and Unitholders
of the Administrative General Partner as attorney-in-fact
shall be deemed to be a power coupled with an interest and
shall survive the assignment by any Limited Partners or
Unitholders of the whole or any part of his Interests or Units
in the Partnership.
C. The power of attorney granted by this Section 12.1
shall be governed by the laws of the State
of Delaware.
Section 12.2 Waiver of Partition
Each Partner and Unitholder, on behalf of himself, his
successors, representatives, heirs and assigns hereby waives
any right of partition or any right to take any other action
which otherwise might be available to him for the purpose of
severing his relationship with the Partnership or his interest
in the assets held by the Partnership from the interest of the
other Partners or Unitholders.
Section 12.3 Notification
Any Notification, in order to be effective, shall be sent
by registered or certified mail, postage prepaid, if to a
Partner or Unitholder, to the address of the Partner or
Unitholder set forth in the books and records of the
Partnership, and if to the Partnership, to the principal place
of business of the Partnership set forth in Section 2.2
(unless Notification of a change of the principal office is
given), the date of registry thereof or the date of the
certification thereof being deemed the date of receipt of
Notification; provided, however, that any written
communication sent to a Partner or Unitholder or to the
Partnership and actually received by such Person shall
constitute Notification for all purposes of this Agreement.
Section 12.4 Word Meanings
In this Agreement, the singular shall include the plural
and the masculine gender shall include the feminine and neuter
and vice versa, unless the context otherwise requires.
Section 12.5 Binding Provisions
The covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, the heirs, personal
representatives, successors and assigns of the respective
parties hereto.
Section 12.6 Applicable Law
This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without
regard to principles of conflict of laws.
Section 12.7 Counterparts
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all
of which shall together constitute one and the same
instrument. This Agreement shall become binding upon the date
hereof. Each Additional or Successor General Partner shall
become a signatory hereof by signing such number of
counterparts of this Agreement and such other instrument or
instruments, and in such manner as the General Partners shall
determine, and by so signing, shall be deemed to have adopted
and to have agreed to be bound by all the provisions of this
Agreement; provided, however, that no such counterpart shall
be binding until it shall have been signed by the
Administrative General Partner.
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Section 12.8 Separability of Provisions
Each provision of this Agreement shall be
considered separable, and if for any reason any
provision or provisions hereof are determined to be
invalid or contrary to any existing or future law,
such invalidly shall not impair the operation of or
affect those portions of this Agreement which are
valid.
Section 12.9 Paragraph Titles
Paragraph titles are for descriptive purposes
only and shall not control or alter the meaning of
this Agreement as set forth in the text.
Section 12.10 Entire Agreement
This Agreement and the exhibits and documents
referred to herein constitute the entire
understanding and agreement among the parties hereto
with respect to the subject matter hereof, and
supersede all prior and contemporaneous agreements
and understandings, inducements or conditions,
express or implied, oral or written, except as herein
contained. This Agreement may not be modified or
amended other than by an agreement in writing.
Section 12.11 Amendments
A. In addition to the amendments otherwise
authorized herein, amendments may be made to this
Agreement from time to time by the General Partners
with the Consent of the Unitholders; provided,
however, that without the consent of the Partners or
Unitholders to be adversely affected by the
amendment, this Agreement may not be amended so as to
(i) convert a Unitholder's interest into a General
Partner's interest; (ii) modify the limited liability
of a Unitholder; (iii) alter the interest of a
Partner or Unitholder in Net Cash Flow, Profit or
Loss, or Net Proceeds of Sale or Refinancing; (iv)
increase the amount of the Capital Contributions
required to be paid by the Unitholders; or (v) extend
the termination date specified in Section 2.4, except
as provided in Section 12.11B.
B. In addition to the amendments otherwise
authorized herein, amendments may be made to this
Agreement from time to time by the General Partners,
without the consent of any of the Unitholders, (i) to
add to the duties or obligations of the General
Partners or surrender any right or power granted to
the General Partners herein, for the benefit of the
Unitholders; (ii) to cure any ambiguity, to correct
or supplement any provision herein which may be
inconsistent with any other provision herein, or to
make any other provisions with respect to matters or
questions arising under this Agreement which will not
be inconsistent with the provisions of this
Agreement; (iii) to delete or add any provision of
this Agreement required to be deleted or added by the
Staff of the Securities and Exchange Commission or
other federal agency or by a state securities
commissioner or similar official and deemed by the
commission, agency, commissioner, or official to be
for the benefit or protection of the Unitholders;
(iv) to take any actions necessary to cause the
assets of the Partnership to come within the
exclusion from the definition of plan assets
contained in Section 2550.40lb-1 of Title 29 of the
Code of Federal Regulations; and (v) to give effect
to any action permitted pursuant to Section 5.2;
provided, however, that no amendment shall be adopted
pursuant to this Section 12.2.B unless its adoption
(1) is for the benefit of or not adverse to the
interests of the Unitholders; (2) is consistent with
Section 5.2; (3) does not affect the distribution of
Net Cash Flow or Net Proceeds of Sale or Refinancing
or the allocation of Profit or Loss among the
Unitholders as a class and the General Partners as a
class, except as provided in clause (y) below; and
(4) does not affect the limited liability of the
Unitholders or the status of the Partnership as a
partnership for federal income tax purposes. In
addition to the amendments otherwise authorized
herein, amendments may be made to this Agreement (x)
prior to or in connection with the initial closing of
the sale of Units pursuant to the Offering, so long
as purchasers are given notice of the amendment prior
to the closing, and (y) to amend provisions of
Article IV of this Agreement relating to the
allocations of Profit or Loss and to distributions of
Net Cash Flow or Net Proceeds of Sale or Refinancing
among the Partners and Unitholders if the Partnership
is advised at any time by the Partnership's
Accountants and counsel that the allocations provided
in Article IV of this Agreement are unlikely to be
respected for federal income tax purposes. The
General Partners are empowered to amend the
distribution and allocation
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provisions of Article IV pursuant to Section 12.2B(y) to the
minimum extent necessary in accordance with the advice of the
Partnership's Accountants and counsel to effect the plan of
distribution of Net Cash Flow and Net Proceeds of Sale or
Refinancing, and, consistent therewith, the allocations of
Profit and Loss provided in this Agreement. New allocations
made by the General Partners in reliance upon the advice of
the Partnership's Accountants and counsel shall be deemed to
be made pursuant to the fiduciary obligation of the General
Partners to the Partnership and the Unitholders, and no such
new allocations shall give rise to any claim or cause of
action by any Unitholder. This Section 12.11 shall be subject
to the provisions of Section 5.9 of this Agreement.
C. If this Agreement is amended as a result of adding or
substituting a Limited Partner or increasing the investment of
a Limited Partner, the amendment shall be signed by the
General Partners and by the Person to be substituted or added,
or the Limited Partner increasing his investment in the
Partnership, and, if a Limited Partner is to be substituted,
by the assigning Limited Partner. If this Agreement is amended
to reflect the designation of an additional General Partner,
the amendment shall be signed by the other General Partner or
General Partners and by the additional General Partner. If
this Agreement is amended to reflect the withdrawal of a
General Partner when the business of the Partnership is being
continued, the amendment shall be signed by the withdrawing
General Partner and by the remaining or successor General
Partner or General Partners.
D. In making any amendments, there shall be prepared and
filed for recordation by the General Partners all documents
and certificates required to be prepared and filed under the
Act and under the laws of the other jurisdictions under the
laws of which the Partnership is then formed or qualified.
IN WITNESS WHEREOF, parties hereto have executed this
Agreement as of the 1st day of June, 1987.
GENERAL PARTNERS
ATTEST: BENCHMARK EQUITIES, INC.,
the Development General Partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: ▇▇▇▇▇-BENCHMARK AGP, INC.,
the Administrative General Partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
Assistant Secretary ▇▇▇▇ ▇. ▇▇▇▇▇, President
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SUBORDINATED LIMITED PARTNERS
ATTEST: BENCHMARK COMMUNITIES, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
WITNESS: REALTY ASSOCIATES 1987
LIMITED PARTNERSHIP
By: RESIDUAL INVESTMENT
ASSOCIATES, A MARYLAND
LIMITED PARTNERSHIP,
\ General Partner
By: A.B. RESIDUAL, INC., General Partner
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Treasurer
ASSIGNOR LIMITED PARTNER
ATTEST: ▇▇▇▇▇-BENCHMARK
HOLDING CO., INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ (SEAL)
Assistant Secretary ▇▇▇▇ ▇. ▇▇▇▇▇
President
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