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EXHIBIT 10.4
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LIMITED PARTNERSHIP AGREEMENT
OF
CARDINAL PROPERTIES L.P.
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TABLE OF CONTENTS
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PAGE
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DEFINITIONS
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ARTICLE ONE
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FORMATION OF THE PARTNERSHIP........................................3
ARTICLE TWO
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NAME................................................................3
ARTICLE THREE
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PLACE OF BUSINESS; AGENT FOR SERVICE OF PROCESS.....................3
ARTICLE FOUR
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PURPOSES AND POWERS OF THE PARTNERSHIP..............................4
ARTICLE FIVE
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TERM OF THE PARTNERSHIP.............................................9
ARTICLE SIX
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NAMES AND ADDRESSES OF PARTNERS; CAPITAL
CONTRIBUTIONS; PERCENTAGE INTERESTS.................................9
ARTICLE SEVEN
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ALLOCATIONS OF NET PROFITS AND LOSSES; TAX ITEMS;
CAPITAL ACCOUNTS...................................................10
ARTICLE EIGHT
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DISTRIBUTIONS......................................................10
ARTICLE NINE
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PARTNERSHIP MATTERS................................................11
ARTICLE TEN
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MANAGEMENT; DUTIES AND RESTRICTIONS................................12
ARTICLE ELEVEN
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TRANSFER OF LIMITED PARTNERSHIP INTERESTS..........................14
ARTICLE TWELVE
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TRANSFER OF GENERAL PARTNER'S INTEREST.............................15
(i)
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ARTICLE THIRTEEN
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LIQUIDATION, DISSOLUTION, DEATH, LEGAL INCAPACITY,
INSOLVENCY OR REMOVAL OF A GENERAL PARTNER.........................15
ARTICLE FOURTEEN
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DISSOLUTION OF THE PARTNERSHIP.....................................16
ARTICLE FIFTEEN
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TAX MATTERS........................................................18
ARTICLE SIXTEEN
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NOTICE; CONSENT....................................................19
ARTICLE SEVENTEEN
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POWER OF ATTORNEY..................................................19
ARTICLE EIGHTEEN
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MISCELLANEOUS......................................................20
EXHIBIT A CAPITAL ACCOUNTS; DEFINITIONS; SPECIAL
--------- ALLOCATIONS & TAX ALLOCATIONS............................A-1
EXHIBIT B ROSTER OF PARTNERS.......................................B-1
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EXHIBIT C ORIGINAL CONTRIBUTION OF PROPERTIES......................C-1
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EXHIBIT D SUBSEQUENT CONTRIBUTION OF PROPERTIES....................D-1
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(ii)
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LIMITED PARTNERSHIP AGREEMENT
OF
CARDINAL PROPERTIES L.P.
This Limited Partnership Agreement is made as of the ___ day of
___________, 1997 among Lexreit Properties, Inc. ("Lexreit"), an Ohio
corporation, as General Partner and Cardinal Realty Services, Inc. ("CRSI"), an
Ohio corporation, as Limited Partner.
In consideration of the mutual covenants herein contained and intending
to be legally bound, the parties hereto form a limited partnership under the
laws of the State of Ohio, upon the following terms and conditions:
DEFINITIONS
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Words and phrases used in this Agreement, unless the context clearly
indicates otherwise, have the following meanings:
(i) The term "Act" means the Ohio Limited Partnership Act, Chapter 1782 of
the Ohio Revised Code, as of the date of this Agreement.
(ii) The term "Agreement" means this Limited Partnership Agreement, as
amended from time to time.
(iii) The term "Capital Account" has the meaning set forth in Exhibit A.
(iv) The term "Capital Contribution" means the total amount of cash or
property contributed to the Partnership by each Partner pursuant to the terms of
this Agreement. Any reference to the Capital Contribution of a Partner shall
include the Capital Contribution made by a predecessor holder of the interest of
such Partner.
(v) The term "Certificate" means the valid Certificate of Limited
Partnership of the Partnership, duly filed and amended.
(vi) The term "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(vii) The term "Distributable Funds from Partnership Operations" means (i)
net income (loss) (computed in accordance with generally accepted accounting
principles), excluding gains (losses) from transactions generating Sale and
Refinancing Proceeds, plus (ii) real estate related depreciation and
amortization, reduced by (iii) principal payments on debt service requirements
and capital expenditures and Reserves for the Properties, plus (iv) Sale and
Refinancing Proceeds, plus (v) major maintenance and capital expenditures funded
from deferred escrows.
(viii) The term "General Partner" means Lexreit and any successor general
partners or additional general partners admitted in accordance with Article
Twelve or Article Thirteen.
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(ix) The term "Investment Entity" means any Person listed on Exhibits C or
D in which the Partnership holds an equity interest.
(x) The term "Limited Partner" means CRSI, and any person who becomes a
limited partner pursuant to the terms of this Agreement.
(xi) The term "Limited Partnership Interest" means the interest of a
Limited Partner.
(xii) The terms "Net Profits" and "Net Losses" have the meanings set forth
in Exhibit A.
(xiii) The term "Partners" means the General Partner and the Limited
Partner; the term "Partner" means any General Partner or Limited Partner
individually.
(xiv) The term "Partnership" means Cardinal Properties L.P.
(xv) The term "Percentage Interest" means the interest of a Partner in the
Net Profits, Net Losses and certain cash flow distributions of the Partnership,
as set forth in Exhibit B.
(xvi) The term "Person" means any individual, partnership (whether general
or limited), limited liability company, corporation, trust, estate, association,
nominee or other entity.
(xvii) The term "Properties" means (a) interests in the Investment
Entities listed on Exhibits C and D hereto as of the date of formation and as
amended from time to time by the General Partner due to (i) purchases and sales
of interests in such Investment Entities, and (ii) contributions by the Partners
of additional interests in Investment Entities, and (b) other interests in real
property acquired from time to time.
(xviii) The term "Reserves" means reasonable amounts set aside to fund
Partnership expenses, debt payments, capital improvements, replacements, and
contingencies, as determined by the General Partner, in its sole discretion.
(xix) The term "Exhibit A" means Exhibit A to this Agreement.
(xx) The term "Exhibit B" means Exhibit B to this Agreement.
(xxi) The term "Exhibit C" means Exhibit C to this Agreement.
(xxii) The term "Exhibit D" means Exhibit D to this Agreement.
(xxiii) The term "Sale or Refinancing Proceeds" means funds (net of
expenses and debt repayment) generated from the sale of or the refinancing of
property (including furniture and equipment) of the Partnership; or, to the
extent distributed to the Partnership, of property (including furniture and
equipment) of any Investment Entity.
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(xxiv) The term "Substitute Limited Partner" means a person admitted as a
Limited Partner in the Partnership in accordance with Article Eleven of this
Agreement with all the rights of, and in the place of, a Limited Partner.
ARTICLE ONE
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FORMATION OF THE PARTNERSHIP
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The parties agree to form the Partnership as a limited partnership
under the Act on the terms and conditions set forth in this Agreement. The
rights and liabilities of the Partners will be as provided in the Act, except as
otherwise expressly provided in this Agreement. The General Partner will from
time to time execute or cause to be executed all such certificates (including
limited partnership and fictitious name certificates) or other documents and
cause to be done all such filings, recordings, publishings, or other acts as may
be necessary or appropriate to comply with the requirements for the formation
and operation of a limited partnership under the laws of the State of Ohio and
under the laws of any other jurisdiction in which the Partnership conducts
business.
ARTICLE TWO
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NAME
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The name of the Partnership is Cardinal Properties L.P. The business of
the Partnership may, however, be conducted under any other name or names
selected by the General Partner.
ARTICLE THREE
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PLACE OF BUSINESS; AGENT FOR SERVICE OF PROCESS
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3.1 PLACE OF BUSINESS. The principal office of the Partnership will be
located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or at such
other place as the General Partner may direct. As required by the Act, records
pertaining to the Partnership will be kept at the Partnership's principal
office. The Partnership may maintain additional offices at any other place or
places as the General Partner may deem advisable.
3.2 AGENT FOR SERVICE OF PROCESS. The agent for service of process as
required by the Act is ACFB Incorporated, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. The General Partner may remove and change
the agent by amending the Certificate.
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ARTICLE FOUR
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PURPOSES AND POWERS OF THE PARTNERSHIP
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4.1 PURPOSES AND POWERS OF THE PARTNERSHIP. The Partnership has been
formed pursuant to the Act for the purposes of (i) owning, operating,
maintaining, administering, developing, holding, improving, rehabilitating,
redeveloping, renovating, expanding, leasing, mortgaging, selling, exchanging,
disposing of, and generally dealing in and with, the Properties and any other
property owned by the Partnership, (ii) financing or refinancing for any of the
foregoing purposes, or for any other purpose in furtherance of, or necessary,
convenient, or incidental to the business or requirements of the Partnership,
(iii) seeking to acquire, acquiring, obtaining options or other rights to
acquire (pursuant to a purchase for cash and/or other consideration, exchange,
merger, contribution to the capital of the Partnership, or otherwise) interests
in, or in Persons owning, or owning an interest or interests in property or
properties in anticipation of developing same, or any other property as shall be
specifically, in all such cases, designated from time to time by the General
Partner, (iv) holding an interest as a partner (general and/or limited), member
or shareholder in a management leasing, development, administrative or other
service company, including interests incidental to such interests, and (v)
engaging in any other activities (including the ownership of property) that are
in furtherance of or necessary or incidental or related to any of the foregoing.
In furtherance of its purposes, but subject to the provisions of this
Agreement, the Partnership has the power and is hereby authorized to, directly
or indirectly:
(i) retain, own, hold, do business with, acquire (pursuant to a
purchase for cash and/or other consideration, exchange, merger,
contribution to the capital of the Partnership, or otherwise),
renovate, rehabilitate, improve, expand, lease, operate, maintain, and
administer and sell, convey, assign, exchange, mortgage, finance,
refinance, or demolish, or deal in any manner with, any Property and
any real or personal property used in connection therewith or which
may be in furtherance of, or necessary, convenient, or incidental to
the accomplishment of, the purposes of the Partnership;
(ii) borrow, including, without limitation, borrowing to obtain
funds to acquire, own, obtain an option or other right to acquire,
develop, and/or improve (including, without limitation, to renovate,
rehabilitate, expand, lease, operate, maintain, and administer) an
opportunity, and make capital improvements and/or investments in one or
more Properties, and refinance any indebtedness or borrowing in
furtherance of, or necessary, convenient, or incidental to the
accomplishment of, any purposes or requirements of the Partnership,
issue evidences of indebtedness to evidence such borrowings which may
be convertible in whole or in part into Partnership Interests to be
issued and which may be unsecured or secured by a mortgage, deed of
trust, assignment, pledge, or other lien on a Property or any other
asset(s) of the Partnership and/or a Property, and enter into guaranty
agreements and/or indemnity agreements in connection
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with any such borrowings or in connection with a borrowing by or
indebtedness of any other Person in which the Partnership holds an
interest;
(iii) contribute to the capital of, or lend to, a Property,
acquire, own, obtain an option or other right to acquire (pursuant to a
purchase for cash and/or other consideration, exchange, merger,
contribution to the capital of the Partnership, or otherwise), develop,
renovate, rehabilitate, improve, expand, lease, make capital
improvements to, satisfy obligations of, or operate an opportunity to
be held as a Property;
(iv) seek and/or locate opportunities that are or are intended to
be in furtherance of, or necessary, convenient or incidental to the
accomplishment of, any purposes of the Partnership;
(v) perform and/or engage others to perform studies and/or
investigation or analysis of any sort in respect of a possible or
proposed opportunity;
(vi) acquire and/or obtain options or other rights to acquire
(pursuant to a purchase for cash and/or other consideration, exchange,
merger, contribution to the capital of the Partnership, or otherwise)
interests in real property or other opportunities that are or are
intended to be in furtherance of, or necessary, convenient, or
incidental to the accomplishment of, the purposes of the Partnership,
as shall be specifically, from time to time, designated by the General
Partner, and enter into and perform any and all agreements, execute any
and all instruments and documents, and take any and all actions with
respect thereto;
(vii) accept, in exchange for a Partnership Interest and, if
desired, admission as a Partner in the Partnership, and as a
contribution to the capital of the Partnership, or through the
liquidation of a corporation or other entity, or otherwise, or
interests in real estate investments;
(viii) take any action reasonably anticipated to enhance, protect,
defend and/or preserve, the value of a Property;
(ix) act as one of the general and/or limited partners of, or a
member of, or act as the sole general or limited partner of a Property,
and exercise all the powers and authorities given to the Partnership by
the partnership agreement, operating agreement or other governing
document covering such Property, or otherwise own all or any part or
portion of a Property;
(x) enter into, consent to, and enter into amendments of, any
partnership agreement, operating agreement or other governing document
covering a Property or any other agreement to which the Partnership or
a Property is or is to be a party;
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(xi) enter into ground leases, as a tenant or landlord, in respect
of all or any part or portion of the Partnership's real property;
(xii) convert a Property, or a part thereof, to condominium or
cooperative status;
(xiii) prepay in whole or in part, and refinance, recast,
increase, modify, amend, extend, or assign any loan, secured or
unsecured, and in connection therewith, execute any extensions,
renewals, or modifications of any mortgage or deed of trust or lien
securing any such loan;
(xiv) act as one of the general and/or limited partners, or
shareholders of, or member of, or act as the sole general or limited
partner or shareholder of or member of, or otherwise employ, a
management, leasing, development, or other service company, to perform
or engage others to perform all activities and services in respect of a
Property or to perform administrative services for the Partnership and
the General Partner, and pay compensation for such services;
(xv) enter into, perform, and carry out contracts or agreements of
any kind, including, without limitation, contracts or agreements with a
Partner or an affiliate thereof, in furtherance of, or necessary,
convenient, or incidental to the accomplishment of, the purposes of the
Partnership, including, without limitation, the execution and delivery
of all agreements, certificates, instruments, or documents required by
lenders or in connection with any mortgage, deed of trust, or
assignment;
(xvi) place record ownership to a Property (or any part thereof),
or any other Partnership property in the name or names of a nominee or
nominees, or establish a trust ("nominee" or otherwise) to own or hold
a Property, or any other Partnership property, including to direct,
select, and remove the trustee(s) thereof and amend or terminate such
trust, all for the purpose of financing or any other convenience;
(xvii) execute contracts with governmental agencies, including,
without limitation, any documents required in connection with any debt;
(xviii) execute any lease or leases (without limit as to the term
thereof (including beyond the term of the Partnership), whether or not
the space so leased is to be occupied by the lessee or, in turn,
sub-leased in whole or in part to others) with respect to all or any
part of a Property;
(xix) obtain, through contract or otherwise, goods and services;
(xx) maintain insurance;
(xxi) invest in, reinvest, and oversee the investment of, cash and
cashlike assets;
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(xxii) make or revoke any election permitted the Partnership by
any taxing or other authority;
(xxiii) foreclose upon any property;
(xxiv) admit a Person as a Partner to the Partnership, or increase
or decrease the interest of a Partner in the Partnership, pursuant to
the terms of this Agreement;
(xxv) sell, exchange, or otherwise dispose of, upon any terms, all
or any part or portion of Partnership property or the property of a
Property;
(xxvi) enter into, perform, and carry out contracts which may be
lawfully carried out or performed by a partnership under applicable
laws including, without limitation, agreements with respect to
management of real property, including agreements with persons
affiliated with a Partner;
(xxvii) enter into an agreement to merge with or into another
partnership, limited liability company or corporation, having similar
purposes as the Partnership and having the Partnership or such other
partnership, limited liability company or corporation as the surviving
entity;
(xxviii) retain legal counsel, accountants, appraisers, and any
other professionals in connection with the business of the Partnership
or of a Property;
(xxix) execute or deliver any assignment for the benefit of
creditors of the Partnership or of a Property;
(xxx) negotiate with, defend, and resolve all matters with any
person;
(xxxi) ▇▇▇ on, defend, pursue, or compromise any and all claims or
liabilities in favor of or against the Partnership or a Property,
submit any or all such claims or liabilities to arbitration, and
confess a judgment against the Partnership or a Property in connection
with litigation in which the Partnership or a Property may be involved;
(xxxii) take any action and exercise any right (including the
assignment or disposition of same) under any contract or agreement to
which the Partnership or a Property is a party;
(xxxiii) terminate, dissolve, and liquidate any Person, including,
without limitation, a Property, and retain and deal in and with the
assets (subject to liabilities and obligations) received as a result of
any such liquidation;
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(xxxiv) amend, modify, or terminate and deal in any manner with
any instrument, including, without limitation, any trust instrument,
corporate document, partnership agreement, or joint venture agreement
covering or in respect of a Property;
(xxxv) indemnify the General Partner and satisfy such
indemnifications from the assets of the Partnership; and
(xxxvi) in addition to the foregoing, take or omit to take any
action as may be necessary, convenient, or desirable to further the
purposes or intent of the Partnership, and have and exercise all of the
powers and rights conferred upon limited partnerships formed pursuant
to the Act.
4.2 PARTNERSHIP ONLY FOR PURPOSES SPECIFIED. The Partnership shall be a
partnership only for the purposes specified in Section 4.1 hereof, and this
Agreement shall not be deemed to create a partnership among the Partners with
respect to any activities whatsoever other than the activities within the
purposes of the Partnership as specified in Section 4.1 hereof. Except as
otherwise provided in this Agreement, no Partner shall have any authority to act
for, bind, commit, or assume any obligation or responsibility on behalf of the
Partnership, its properties, or any other Partner. No Partner, in its capacity
as a Partner under this Agreement, shall be responsible or liable for any
indebtedness or obligation of another Partner, nor shall the Partnership be
responsible or liable for any indebtedness or obligation of any Partner incurred
either before or after the execution and delivery of this Agreement by such
Partner, except as to those responsibilities, liabilities, indebtedness, or
obligations incurred pursuant to and as limited by the terms of this Agreement
or incurred pursuant to the Act.
4.3 REAL ESTATE INVESTMENT TRUST REQUIREMENTS. Notwithstanding anything
to the contrary contained in this Agreement, for so long as the General Partner
is a Partner, the Partnership shall operate in such a manner and the Partnership
shall take or omit to take all actions as may be necessary (including making
appropriate distributions from time to time), so as to permit the General
Partner (i) to continue to qualify as a Real Estate Investment Trust under
Sections 856 through 860 of the Code so long as such requirements exist and as
such provisions may be amended from time to time, or corresponding provisions of
succeeding law (the "REIT REQUIREMENTS"), and (ii) to minimize its exposure to
the imposition of an excise tax under Section 4981(a) of the Code or a tax under
Section 857(b)(5) of the Code, so long as such taxes may be imposed and as such
provisions may be amended from time to time, or corresponding provisions of
succeeding law, each of (i) and (ii) to at all times be determined (a) as if the
General Partner's sole asset is its Partnership Interest, and (b) without regard
to the action or inaction of the General Partner with respect to distributions
(by way of dividends or otherwise) and the timing thereof.
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ARTICLE FIVE
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TERM OF THE PARTNERSHIP
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The term of the Partnership will begin on the date that the Certificate
of Limited Partnership is filed with the Secretary of State of Ohio and will
continue in existence until December 31, 2037, unless earlier terminated as
provided in Article Fourteen.
ARTICLE SIX
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NAMES AND ADDRESSES OF PARTNERS;
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CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS
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6.1 NAMES AND ADDRESSES. The full names and addresses of the Partners
are set forth in Exhibit B to this Agreement.
6.2 CAPITAL CONTRIBUTIONS. The Capital Contributions of each of the
Partners is set forth in Exhibit B to this Agreement. The Capital Contributions
credited to Cardinal Realty Services, Inc.'s ("Cardinal") Capital Account were
made by certain subsidiaries of Cardinal who directed the Partnership to issue
the Partnership interests to be received in exchange therefor to Cardinal.
6.3 PERCENTAGE INTERESTS. The Percentage Interest of each of the
Partners is set forth in Exhibit B to this Agreement.
6.4 EXHIBIT B. The Percentage Interests of the Partners shall be
adjusted upon the event of a sale, transfer, assignment or redemption of an
interest in the Partnership. The General Partner will amend Exhibit B to reflect
any adjustments to the Percentage Interests of the Partners. In addition, the
General Partner will (a) amend Exhibit B to reflect additional capital
contributions by Partners, (b) add to Exhibit B the name and addresses of any
new Partners admitted to the Partnership in accordance with the terms of this
Agreement and (c) delete from Exhibit B the names and addresses of any Partners
who withdraw from the Partnership.
6.5 ADDITIONAL CAPITAL CONTRIBUTIONS. No Limited Partner will be
permitted to make additional capital contributions to the Partnership without
the consent of the General Partner. No Limited Partner will at any time be
required to make any additional contributions to the capital of the Partnership.
Any capital contributions made after those referenced in Section 6.2 hereof
shall be listed on Exhibit D hereof.
6.6 NO RETURN OF CAPITAL CONTRIBUTIONS; NO INTEREST ON CAPITAL
CONTRIBUTIONS. No Partner will be entitled to demand or receive the return of
his Capital Contribution, except as otherwise specifically provided in this
Agreement. No interest will be paid on Capital Contributions to the Partnership.
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ARTICLE SEVEN
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ALLOCATIONS OF NET PROFITS AND LOSSES;
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TAX ITEMS; CAPITAL ACCOUNTS
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7.1 NET PROFITS, NET LOSSES AND TAX ITEMS. The Net Profits and Net
Losses of the Partnership, and tax items of the Partnership, will be allocated
among the Partners as set forth in Exhibit A.
7.2 CAPITAL ACCOUNT. There shall be maintained a Capital Account for
each Partner in the manner set forth in Exhibit A.
ARTICLE EIGHT
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DISTRIBUTIONS
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8.1 DISTRIBUTIONS OF DISTRIBUTABLE FUNDS FROM PARTNERSHIP OPERATIONS.
Distributions of Distributable Funds from Partnership Operations shall be made
no less frequently than quarterly, in the following proportions:
(a) First, to the extent of the net income of the Partnership,
as determined under United States generally accepted accounting
principles, excluding gains (losses) from a transaction which generates
Sale or Refinancing Proceeds ("Modified Net Income"), distributions
shall be made to the Partners in proportion to their Percentage
Interests (which distributions shall be funded, to the extent possible,
from Distributable Funds from Partnership Operations other than Sale or
Refinancing Proceeds);
(b) Next, to the extent that Distributable Funds from
Partnership Operations exceed the Modified Net Income of the
Partnership (the "Excess Distributable Funds"), distributions of such
Excess Distributable Funds shall be made:
(i) to the General Partner, to the extent that such
Excess Distributable Funds are not Sale or Refinancing
Proceeds; provided, however, to the extent that distributions
are made to the General Partner as a result of the proviso in
Section 8.1(b)(ii) below, an equivalent amount of
distributions shall be made to the Limited Partner pursuant
to this Section 8.1(b)(i) prior to any distributions being
made to the General Partner pursuant to this Section
8.1(b)(i), and
(ii) to the Partners in proportion to, and to the extent
of, their relative positive Capital Account balances (after
taking into account all Capital Account adjustments through
the date of the event giving rise to such Sale or Refinancing
Proceeds) to the extent that such Excess Distributable Funds
are Sale or Refinancing Proceeds until no Partner has a
positive Capital Account balance, and thereafter to the
Partners in proportion to their Percentage Interests;
provided, however, in no event shall the Sale or Refinancing
Proceeds to be distributed to the General Partner pursuant to
this Section 8.1(b)(ii) be less than the lesser of (x) the
amount of taxable gain allocable to the General Partner as a
result of the event giving rise to such Sale or Refinancing
Proceeds (y) the amount necessary for the General Partner to
meet its minimum distribution requirements under Sections 857
and 4981 of the Code, as determined by the General Partner in
its reasonable discretion and taking into account any other
distributions made to the General Partner pursuant to this
Article Eight, as well as the capacity of the General Partner
to borrow funds to satisfy such distribution requirements.
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8.2 DISTRIBUTIONS IN LIQUIDATION. Notwithstanding any provision of this
Agreement to the contrary, all distributions in liquidation shall be made in
accordance with Article Fourteen of this Agreement.
8.3 COVENANTS OF LEXREIT AND CRSI.
(a) Lexreit covenants that as General Partner of this
Partnership, Lexreit will not unreasonably cause the Partnership to
withhold or refrain from distributing Distributable Funds from
Partnership Operations; provided, however, that establishment of
reasonable Reserves shall not constitute an unreasonable withholding or
refraining from distributing Distributable Funds from Partnership
Operations.
(b) CRSI covenants that as general partner or manager, as the
case may be, of the Investment Entities, CRSI will not unreasonably
cause the Investment Entities to withhold or refrain from distributing
Distributable Funds from Partnership Operations.
ARTICLE NINE
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PARTNERSHIP MATTERS
-------------------
9.1 EXPENSES. All expenses of the Partnership including, but not
limited to, expenses incurred by or on behalf of the Partnership in connection
with the formation of the Partnership will be paid by the Partnership. The
Partnership may borrow funds if the General Partner determines that the
Partnership needs additional funds to pay its expenses.
9.2 BANK ACCOUNTS. All Partnership income will be deposited in such
bank accounts as the General Partner determines and funds deposited therein will
be used only for the business and purposes of the Partnership. All withdrawals
from bank accounts will be made by checks or other documents signed by the
General Partner, or a person who may be designated in writing from time to time
by the General Partner. The General Partner will not commingle Partnership funds
with those of any other Person.
9.3 BOOKS OF ACCOUNT. Proper and usual books of account for the
Partnership will be maintained by the Partnership using the method of accounting
determined by the accountants for the Partnership. The books of account will at
all times be retained at the principal office of the Partnership, unless
otherwise determined by the General Partner, and will be available at all
reasonable times for examination and inspection by any Partner or any Partner's
representative, subject to reasonable conditions to protect the confidentiality
of such information.
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ARTICLE TEN
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MANAGEMENT; DUTIES AND RESTRICTIONS
-----------------------------------
10.1 MANAGEMENT AND CONTROL OF THE PARTNERSHIP. The General Partner
will have exclusive authority to manage the operations and affairs of the
Partnership. Except to the extent that the consent of any Partner is required by
this Agreement, the General Partner will have the exclusive management and
control of the business and affairs of the Partnership and will devote such time
as the General Partner, in its reasonable discretion, deems necessary to conduct
the business and affairs of the Partnership.
10.2 AUTHORITY OF THE GENERAL PARTNER. Without limiting the generality
of the authority granted to the General Partner, and subject to the other
provisions of this Article Ten, the General Partner, on behalf of the
Partnership, will have the sole and exclusive authority to make all decisions
necessary to manage the Partnership business, to enter into contracts in respect
of the Partnership business, to select and dismiss employees, attorneys,
accountants, brokers and consultants, and to determine terms and conditions of
hiring with respect to the services provided by such persons, notwithstanding
that any Partner, or a firm or corporation of which the General or a Limited
Partner is a member, officer, director or stockholder, be such employee,
attorney, accountant, broker or consultant.
10.3 BORROWINGS AND LIMITATIONS ON BORROWINGS. The General Partner may
incur debt on behalf of the Partnership for any purpose consistent with Section
4.1 hereof without the consent of the Limited Partners.
10.4 INSTRUMENTS AND DOCUMENTS. Any instrument or document signed by
the General Partner will conclusively be deemed to be binding on the
Partnership.
10.5 COMPENSATION. The General Partner shall not be entitled to receive
compensation for services provided to the Partnership in its capacity as General
Partner.
10.6 NO MANAGEMENT POWER BY LIMITED PARTNERS. Except as set forth in
Section 10.7 hereof, the Limited Partners may not take part in the management,
conduct, or control of the Partnership business nor do the Limited Partners have
the right or authority to act for or bind the Partnership. The exercise of any
of the rights or powers of the Limited Partners pursuant to the terms of this
Agreement will not be deemed to be taking part in the day-to-day affairs of the
Partnership or the exercise of control over Partnership affairs.
10.7 LIMITATIONS ON POWERS. Notwithstanding anything in this Agreement
to the contrary, the General Partner may not, without the consent of a majority,
measured by Percentage Interests, of the Limited Partners: (i) issue additional
Limited Partner Interests; (ii) change the General Partner, including a change
resulting from a voluntary withdrawal, or a transfer or assignment by the
General Partner of its general partner interest, and as further limited in
Section 12.1 hereof; (iii) execute or deliver a general assignment for the
benefit of creditors of the Partnership, or appoint or acquiesce in the
appointment of a custodian, receiver or trustee;
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(iv) institute any proceeding for bankruptcy; (v) agree to or consummate the
merger or consolidation of the Partnership with any other entity; (vi) take
title to property other than in the name of the Partnership; or (vii) dissolve
the Partnership. Further, except as provided in Section 18.11 hereof, amendments
to this Agreement require the consent of a majority of the Limited Partners,
measured by Percentage Interests, specifically including any amendment to
Article Four. Provided further, consent of any Partner adversely affected (other
than as the result of the issuance of additional Limited Partner Interests) by
an amendment to Articles Seven, Eight, Eleven and Section 10.8 is required.
10.8 INDEMNIFICATION OF A GENERAL PARTNER. No General Partner will have
any liability to the Partnership or any of the Partners for any mistakes or
errors in judgment or for any acts or omissions believed by it in good faith to
be within the scope of authority conferred upon it by this Agreement and will
have liability only for acts or omissions performed or omitted fraudulently or
in bad faith or as a result of gross negligence or intentional wrongdoing. The
fact that a General Partner has obtained the advice of legal counsel for the
Partnership that any act or omission by such General Partner is within the scope
of authority conferred upon it by this Agreement will be conclusive evidence
that such General Partner believed in good faith such act or omission to be
within the scope of authority conferred upon such General Partner by this
Agreement, but such General Partner will not be required to procure such advice
to be entitled to the benefit of the preceding sentence. The Partnership will
indemnify and save harmless any General Partner (including any General Partner's
officers, directors, shareholders, agents and employees) against and from any
personal loss, liability, or damage incurred by it or any of them as a result of
any act or omission with respect to which the General Partner is protected under
the provisions of this Section to the fullest extent allowable by law.
10.9 MANAGEMENT AGREEMENTS. Each of the Investment Entities and either
CRSI or an affiliate thereof have entered into agreements whereby CRSI or an
affiliate thereof shall provide specified services to one or more of such
Investment Entities for a specified term of years, usually five, and which renew
for successive one-year terms (the "Management Agreements"). In the event of the
termination of any Management Agreement prior to expiration of the stated term,
other than due to the sale of substantially all of the assets of such Investment
Entity, CRSI (or the appropriate affiliate) will be entitled to liquidated
damages in an amount equal to the annual compensation payable under such
terminated Management Agreement, based on the prior twelve months' fees, times
five (the "Damages"). Upon termination of a Management Agreement, the
Partnership shall pay any Damages due to CRSI (or the appropriate affiliate),
subject to a credit for any amount paid by such Investment Entity for Damages.
Damages may be collected by CRSI through payment directly by the Partnership,
or may be withheld by CRSI (to the appropriate affiliate) as general partner
or manager of an Investment Entity from amounts otherwise due to the
Partnership from such Investment Entity.
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ARTICLE ELEVEN
--------------
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
-----------------------------------------
11.1 TRANSFER OF LIMITED PARTNERSHIP INTEREST. The sale, assignment,
transfer, or pledge of a Limited Partnership Interest by a Limited Partner is
prohibited unless the Partnership causes such Limited Partnership Interest to be
registered under the Securities Act of 1933, as amended, or counsel satisfactory
to the General Partner has rendered to the Partnership an opinion, in form and
substance satisfactory to the General Partner, that an exemption from
registration is available and that such transfer will not otherwise violate
federal or state securities law. Subject to this restriction, a Limited Partner
may, by written notice to the Partnership, sell, assign, transfer, pledge, or
otherwise encumber its Limited Partnership Interest (including the right to
receive distributions of cash flow and capital) to any person other than a
person under the age of 18 years or a person theretofore declared insane,
incompetent, or bankrupt; provided, however, that once a Limited Partnership
Interest has been sold, assigned, transferred, pledged, or otherwise encumbered,
neither the Limited Partner nor his assignee, transferee, pledgee, or otherwise
(hereafter, the "Assignee") may exercise any voting rights with respect to such
Limited Partnership Interest unless the Assignee becomes a Substitute Limited
Partner in accordance with this Article Eleven.
11.2 DEFERRAL OF EFFECTIVENESS OF TRANSFER. Notwithstanding anything in
this Article Eleven to the contrary, if necessary to avoid a termination of the
Partnership for federal income tax purposes, the effectiveness of any transfer
or assignment of a Limited Partnership Interest or any part of a Limited
Partnership Interest will be deferred if it will result in fifty percent (50%)
or more of the total interest in Partnership capital and profits having been
transferred within a twelve (12) month period. The assignor will be notified in
such event and any deferred transfers will be effected (in chronological order
to the extent practicable) as soon as practicable after such transfers can be
effected without a termination of the Partnership for tax purposes. In the event
transfers are suspended for the foregoing reason, the General Partner will give
written notice of such suspension as soon as practicable to the Limited
Partners.
11.3 SUBSTITUTE LIMITED PARTNER. No Assignee may become a Substitute
Limited Partner except with the written consent of the General Partner, which
consent may be withheld by the General Partner in its sole and unreviewable
discretion, with or without cause. If the General Partner consents, the
Assignee will be admitted as a Substitute Limited Partner upon compliance with
the following conditions:
(a) The Assignee delivers to the Partnership an executed
counterpart of the instrument of assignment, satisfactory in substance
and form to the General Partner, containing a statement of the
assignor's desire that the Assignee be admitted as a Substitute Limited
Partner.
(b) The General Partner consents in writing to the admission
of the Assignee as a Substitute Limited Partner.
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(c) The assignor and the Assignee execute and acknowledge such
instruments as the General Partner may deem necessary or desirable to
effect such admission and the Assignee agrees to pay all expenses in
connection with such admission, including, but not limited to, the cost
of preparing and filing an amendment to the Partnership's Certificate.
11.4 SUCCESSORS TO LIMITED PARTNERS. The Partnership will not terminate
or dissolve upon the liquidation, insolvency, bankruptcy or withdrawal of a
Limited Partner. If a Limited Partner dissolves or is declared insolvent or
bankrupt, it will cease to be a Limited Partner and its successor or estate
will immediately succeed to the interest of the former Limited Partner in the
Net Profits, Net Losses and distributable cash of the Partnership.
The successor or estate will be subject to all of the restrictions
specified in this Article Eleven applicable to the Assignee of a Limited
Partnership Interest and will not become a Substitute Limited Partner except
upon compliance with the conditions specified in Section 11.3 above. The
successor or estate will be entitled to receive all sums payable with respect to
such Limited Partnership Interest.
ARTICLE TWELVE
--------------
TRANSFER OF GENERAL PARTNER'S INTEREST
--------------------------------------
12.1 RESTRICTION ON ASSIGNMENT OF GENERAL PARTNER'S INTEREST. A General
Partner may not sell, transfer, encumber or withdraw its interest in the
Partnership, in whole or in part, without the written consent of a majority,
measured by Percentage Interest, of the Limited Partners.
12.2 ADDITIONAL GENERAL PARTNER. Additional General Partners may be
admitted to the Partnership only upon the written consent of each Partner.
ARTICLE THIRTEEN
----------------
LIQUIDATION, DISSOLUTION, DEATH, LEGAL INCAPACITY,
--------------------------------------------------
INSOLVENCY OR REMOVAL OF A GENERAL PARTNER
------------------------------------------
In the event of the liquidation, dissolution, death or declaration of
legal incompetency of a General Partner, or the withdrawal of a General Partner,
or if a General Partner does or experiences one of the acts of insolvency
specified in the Act, such General Partner (in any of the foregoing cases, the
"Removed General Partner") will thereupon cease to be a General Partner and the
General Partner interest of the Removed General Partner will be deemed to be
converted to that of a Limited Partner with the result that the Removed General
Partner may no longer take part in the management or control of the Partnership
business (except to the extent that a Limited Partner may do so under the
express terms of this Agreement), and will continue to have the same Capital
Account and will be entitled to the proportionate share of allocations and
distributions that it had or was entitled to as a General Partner. In such
event, the Partnership will terminate unless
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there is at least one other General Partner, or if within ninety (90) days after
such event, a majority of the Limited Partners (measured by Percentage
Interests) consent to continue the business of the Partnership and to the
appointment of one or more additional General Partners. The Removed General
Partner will remain liable, to the extent provided by law, for all obligations
and liabilities incurred by it while a General Partner of the Partnership. The
Removed General Partner will not be liable for any Partnership obligation
incurred after its removal is effected by the appropriate filing of an amendment
to the Partnership's Certificate reflecting its removal as a General Partner.
ARTICLE FOURTEEN
----------------
DISSOLUTION OF THE PARTNERSHIP
------------------------------
14.1 TERMINATION OF PARTNERSHIP. The Partnership will dissolve upon the
first to occur of the following:
(a) December 31, 2027;
(b) The sale or exchange of all of the Partnership's assets;
(c) The written agreement of all the Partners;
(d) The ninetieth (90th) day following receipt of notice of
the dissolution, liquidation, insolvency, bankruptcy, death or
withdrawal of a General Partner unless there is another General
Partner, or unless a majority of the Limited Partners (measured by
Percentage Interests) consent within such time period to the
continuance of the Partnership and the appointment of a new General
Partner;
(e) The redemption of all of the Interests of the Partners in
the Partnership; or
(f) as otherwise provided by law.
14.2 DISTRIBUTION UPON LIQUIDATION. Upon the dissolution of the
Partnership, the General Partner or, if none, a remaining Limited Partner may
proceed to liquidate and wind up the Partnership (the "Liquidating Partner").
Upon fifteen (15) days' prior written notice to all of the Partners identifying
the assets to be sold, the Liquidating Partner may sell the Partnership assets
at public or private sale, for whatever price and upon whatever terms and
conditions the Liquidating Partner deems appropriate, and the Liquidating
Partner may retain such assets as the Liquidating Partner deems appropriate, for
distribution in-kind. The Partnership assets, and the net proceeds of any
liquidation sale, will be applied and distributed in the following order of
priority:
(i) To the payment of all debts and liabilities of the
Partnership (including those owing to Partners for loans and interest
accrued thereon) and all expenses of liquidation.
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(ii) To the setting up of such reserves as the Liquidating
Partner may deem necessary for any contingent or unforeseen liabilities
or obligations of the Partnership.
(iii) To Partners, in liquidation of their Partnership interests,
in accordance with the respective positive Capital Account balances of
the Partners, as determined after taking into account all Capital
Account adjustments as provided in Article Seven and Exhibit A for the
Partnership's taxable year during which such liquidation occurs.
Distributions must be made pursuant to this section by the end of the
Partnership's taxable year during which such liquidation occurs (or, if
later, within ninety (90) days after the date of such liquidation).
In the event a Partner's Partnership interest is liquidated other than
in connection with the dissolution and liquidation of the Partnership, the
liquidating distribution is to be made in accordance with his positive Capital
Account balance, as determined after taking into account all Capital Account
adjustments as provided in Article Seven and Exhibit A for the Partnership's
taxable year during which such liquidation occurs. Any such liquidating
distribution must be made by the end of the Partnership's taxable year during
which such liquidation occurs (or, if later, within ninety (90) days after the
date of such liquidation).
14.3 LIQUIDATING PARTNER. The Liquidating Partner will be allowed a
reasonable time and, if the Liquidating Partner is not the General Partner, be
paid a reasonable fee for the orderly liquidation of the Partnership. As soon as
practicable after the liquidation, each of the Partners will be furnished with a
statement of the Partnership's financial condition on the date of liquidation,
prepared by the Partnership's accountants, showing the Partnership assets and
liabilities in reasonable detail.
14.4 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. If the
Partnership is "liquidated" within the meaning of Regulations Sections
1.704-1(b)(2)(ii)(g): (a) distributions shall be made pursuant to this Article
Fourteen to the General Partner and Limited Partners who have positive Capital
Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2); and (b)
if a General Partner's Capital Account has a deficit balance (after giving
effect to all contributions, distributions and allocations for all taxable
years, including the year during which such liquidation occurs), such General
Partner shall contribute to the capital of the Partnership the amount necessary
to restore such deficit balance to zero in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(3). If the Limited Partner has a deficit balance in its
Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Limited Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other person for any purpose whatsoever. In the discretion of the General
Partner, a pro rata portion of the distributions that would otherwise be made to
the General Partner and Limited Partner pursuant to this Article Fourteen may
be:
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(a) distributed to a trust established for the benefit of the
General Partner and Limited Partner for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the General Partners arising out of or in connection
with the Partnership. The assets of any such trust shall be distributed
to the General Partner and Limited Partner from time to time, in the
discretion of the General Partner, in the same proportion as the amount
distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partner pursuant to this
Agreement; or
(b) withheld to provide a reserve for Partnership liabilities
(contingent or otherwise) and to reflect the unrealized portion of any
installment obligations owed to the Partnership, provided that such
withheld amounts shall be distributed to the General Partner and
Limited Partner as soon as reasonably practicable.
14.5 DEEMED DISTRIBUTION AND RECONTRIBUTION. Notwithstanding any other
provision of this Article Fourteen, if the Partnership is liquidated within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), but no event specified in
Section 14.1 has occurred, then the Partnership shall not be liquidated, the
Partnership's liabilities shall not be paid or discharged, and the Partnership's
affairs shall not be wound up. Instead, the Partnership shall be deemed to have
distributed its property in kind to the General Partner and Limited Partner, who
shall be deemed to have assumed and taken subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partner shall be deemed
to have recontributed such property in kind to the Partnership, which shall be
deemed to have assumed and taken subject to all such liabilities.
ARTICLE FIFTEEN
---------------
TAX MATTERS
-----------
The General Partner is designated as the "Tax Matters Partner" of the
Partnership for purposes of Section 6221 ET SEQ. of the Code.
The Tax Matters Partner may, in its sole discretion, make or revoke the
election referred to in Section 754 of the Code or any similar provision enacted
in lieu thereof. Each of the Partners will, upon request, supply the information
necessary to give proper effect to such an election, if made. All other
elections required or permitted to be made by the Partnership under federal or
any other tax laws may be made, and once made may be revoked, at the sole
discretion of the Tax Matters Partner. With respect to any Partner whose
interest in the Partnership has been affected by an election pursuant to
Sections 754 or 732(d) of the Code, appropriate adjustments will be made with
respect to the determination of Net Profits, Net Losses, distributions and
Capital Accounts as provided in Sections 732, 734, and 743 of the Code and
in Regulations Section 1.704-1(b)(2)(iv)(m).
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The Tax Matters Partner shall be reimbursed by the Partnership for all
reasonable expenses incurred by it in performing its duties as Tax Matters
Partner.
ARTICLE SIXTEEN
---------------
NOTICE; CONSENT
---------------
Any notice, communication, document, election, demand, consent, or
dissent required or permitted under this Agreement is to be in writing and will
be deemed served when delivered personally or deposited in the United States
mail, postage prepaid, addressed to the Partner for whom it is intended at his
last address disclosed by the records of the Partnership, and if intended for
the Partnership, addressed to the office thereof. Any notice intended for the
personal representative of a deceased or insane Partner must be served on his
duly appointed personal representative, executor, or administrator, if any, or
if no such person has been appointed, on the surviving or living spouse, or if
there be none, on a member of the immediate family of such Partner, in the same
manner as provided above, and addressed to the person upon whom such notice is
intended to be served at the last address of the Partner disclosed on the
records of the Partnership. Any Partner may designate a different place for
service of notice upon him or his personal representative or successors by
written notice given in accordance with the provisions of this Article.
ARTICLE SEVENTEEN
-----------------
POWER OF ATTORNEY
-----------------
17.1 APPOINTMENT. The Limited Partner, by its execution of this
Agreement, and any Substitute Limited Partner, irrevocably constitute and
appoint the General Partner and any successor, with full power of substitution,
their true and lawful Attorney-in-Fact, in their name, place, and ▇▇▇▇▇ to
make, execute, sign, acknowledge, record, and file, on behalf of them and on
behalf of the Partnership, the following:
(a) a Certificate of Limited Partnership, a Report of Use of
Fictitious Name, and all other certificates or instruments, and any
amendments thereof, which the General Partner deems appropriate to
form, qualify or continue the Partnership as a limited partnership in
the State of Ohio and to qualify the Partnership to do business in the
State of Ohio and such other states as the General Partner deems
appropriate;
(b) a Certificate of Cancellation of the Partnership and such
other instruments or documents as may be deemed necessary or desirable
upon the termination of the Partnership business;
(c) any and all amendments to the Certificate of Limited
Partnership and this Agreement adopted in accordance with their terms
and all instruments which the General
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Partner deems appropriate to effect a change or modification of the
Partnership in accordance with the terms of this Agreement;
(d) any and all amendments to the Certificate of Limited
Partnership or this Agreement admitting or substituting holders of
Limited Partnership Interests as Limited Partners or reflecting the
return to Limited Partners of any portion of their Capital
Contributions;
(e) any and all such other instruments as may be deemed
necessary or desirable by the General Partner to carry out fully the
provisions of this Agreement in accordance with its terms.
17.2 POWER COUPLED WITH AN INTEREST; FACSIMILE SIGNATURES; SURVIVAL.
The foregoing grant of authority: (i) is an irrevocable special power of
attorney coupled with an interest and will survive the disability or incapacity
of any person giving such power; (ii) may be exercised by a facsimile signature
of the person giving the power or by listing the name of such person together
with the names of all other persons for whom such attorney is so acting, and
executing the Partnership Agreement and such other certificates, instruments,
and documents with the single signature of the General Partner or of the
President, Vice President or Secretary of the General Partner as such
Attorney-in-Fact acting for all the Persons whose names are so listed; and (iii)
will survive the delivery of any assignment by a Limited Partner of his Limited
Partnership Interest.
ARTICLE EIGHTEEN
----------------
MISCELLANEOUS
-------------
18.1 VOTING. The General Partner may at any time call a meeting of the
Limited Partners to vote on matters on which the Limited Partners are entitled
to vote, or call for such vote without a meeting, and the General Partner will
call for such a meeting or call for such vote immediately following receipt of a
written request by the Limited Partners. The General Partner will notify Limited
Partners by certified mail as to the time and place of any meeting called by the
General Partner, and the general nature of the business to be conducted at the
meeting, or, if a vote without a meeting has been called, the matter or matters
to be voted on and the date by which the vote of the Limited Partners must be
received. The date of such meeting, or the date by which a vote must be received
if no meeting is called, will be no less than ten (10) or more than sixty (60)
days following mailing of the notice by the General Partner. All expenses of the
voting and such notification will be borne by the Partnership. A Limited Partner
who is entitled to vote shall be entitled to cast the number of votes equal to
the Percentage Interest which he owns: (i) at a meeting, in person, by written
proxy or by a signed writing directing the manner in which he desires that his
vote be cast, which writing must be received by the General Partner prior to
such meeting; (ii) without a meeting, by a signed writing directing the manner
in which he desires that his vote be cast.
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18.2 VALIDITY. Each Article and Section of this Agreement is deemed
severable and if for any reason any Article or Articles, Section or Sections,
are invalid or contrary to any existing or future law, such invalidity will not
affect the applicability or validity of any other provision of this Agreement.
18.3 CONSTRUCTION. This Agreement for all purposes is to be construed
under and governed by the laws of the State of Ohio and, except as otherwise
provided, the Partnership and this Agreement and the rights and liabilities of
the Partners under this Agreement will be governed by the Act, as it may from
time to time be amended.
18.4 SPECIFIC PERFORMANCE. In addition to all other remedies provided
for in this Agreement or by law, the Partnership will have the right to enforce
any obligation of any Partner by an action for specific performance.
18.5 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which will have the force and effect of an original.
18.6 WAIVER. Failure to enforce any term or condition of this Agreement
will not be deemed a waiver of that term or condition for the future, nor will
any specific waiver of a term or condition at one time be deemed a waiver of
such term or condition for the future.
18.7 PARTNERS DEALING WITH THE PARTNERSHIP. Nothing in this Agreement
will prohibit the Partners, or persons related to or employed by the Partners,
from dealing with the Partnership; provided, however, that all prices, terms and
conditions applicable to any such transactions may not be less favorable than
those customarily charged by non-affiliated persons for similar goods, property
or services in the same area.
18.8 BINDING EFFECT. Except as otherwise provided in this Agreement,
this Agreement will inure to the benefit of and be binding upon the heirs,
personal representatives, successors and assigns of the parties.
18.9 WAIVER OF PARTITION. Each of the Partners irrevocably waives any
right that he may have to maintain an action for partition with respect to any
of the property of the Partnership.
18.10 NO THIRD-PARTY BENEFICIARIES. Nothing express or implied in this
Agreement is intended or will be construed to confer upon or to give to any
person, other than the parties or their successors in interest in accordance
with the provisions of this Agreement, any rights or remedies under this
Agreement or by reason of this Agreement. Without limiting the generality of the
foregoing, this Agreement is not intended and may not be construed to confer
upon or to give to any creditors of the Partnership, or of its Partners, any
rights to or interest in the assets of the Partnership.
18.11 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement among the parties with respect to the transactions contemplated in
this Agreement and supersedes
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all prior negotiations, representations, warranties, commitments, offers,
discussions, and writings. This Agreement may be amended (a) by the General
Partner without the approval of any other Partner if such amendment is solely
for the purpose of clarification and does not change the substance hereof; (b)
by the General Partner without the approval of any other Partner if such
amendment is for the purpose of admitting Limited Partners or Substitute Limited
Partners in accordance with the terms of this Agreement; (c) by the General
Partner without the approval of any other Partner if such amendment is, in the
opinion of counsel for the Partnership, necessary or appropriate to satisfy
requirements of the Code (or any rules or regulations promulgated in connection
therewith) with respect to partnerships or of any federal or state securities
laws or regulations. Any other amendment shall require the consent of a
majority of the Limited Partners, measured by Percentage Interests,
specifically including any amendment to Article Four; provided, however, the
consent of any Partner adversely affected (other than as a result of the
issuance of additional Limited Partner Interests) by an amendment to Articles
Seven, Eight, Eleven and Section 10.8 is required. Any amendment made pursuant
to this paragraph may be made effective as of the date of this Agreement.
Except as otherwise specifically provided in this Section 18.11,
amendments to this Agreement shall require the approval of the General Partner
and the approval of a majority (measured by Percentage Interest) of the Limited
Partners.
18.12 GENDER. Except when otherwise indicated by the context, any
masculine terminology used in this Agreement includes the feminine and neuter,
and the neuter includes the masculine and feminine, and the definition of any
term as the singular also includes the plural.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
____ day of __________, 1997.
GENERAL PARTNER: LIMITED PARTNER:
LEXREIT PROPERTIES, INC. CARDINAL REALTY SERVICES, INC.
By: By:
---------------------------- --------------------------
____________________, President _________________________, President
Date:___________________________ Date: ________________________________
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EXHIBIT A
---------
CAPITAL ACCOUNTS; DEFINITIONS; SPECIAL
ALLOCATIONS & TAX ALLOCATIONS
1.1 A Capital Account shall be maintained for each Partner (regardless
of the time or manner in which such Partner's interest was acquired) in
accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations
("Regulations"). Each Partner's Capital Account shall be:
(a) increased by (i) the amount of money contributed by the
Partner to the Partnership, including the amount of any Partnership
liabilities that are assumed by such Partner (other than in connection
with the distribution of Partnership property as described in
Regulations Section 1.704-1(b)(2)(iv)(b) and (c)), (ii) the fair market
value of property contributed by the Partner to the Partnership (net of
liabilities secured by such contributed property that the Partnership
is considered to assume or take subject to under Section 752 of the
Internal Revenue Code of 1986, as amended ("Code")), and (iii)
allocations to the Partner of Partnership Net Profits (or items
thereof) under the Agreement;
(b) decreased by (i) the amount of money distributed by the
Partnership to the Partner, including the amount of such Partner's
individual liabilities that are assumed by the Partnership (other than
in connection with contributions of property to the Partnership as
described in Regulations Section 1.704-1(b)(2)(iv)(b) and (c)), (ii)
the fair market value of property distributed by the Partnership to the
Partner (net of liabilities secured by such distributed property that
such Partner is considered to assume or take subject to under Section
752 of the Code), (iii) allocations to the Partner of expenditures of
the Partnership not deductible in computing the Partnership's taxable
income and not properly chargeable to capital account (within the
meaning of Section 705(a)(2)(B) of the Code), and (iv) allocations to
the Partner of Partnership Net Losses (or items thereof) under the
Agreement;
(c) increased by any items in the nature of income or gain
which are specially allocated pursuant to Sections 1.5 and 1.6, and
decreased by any items in the nature of expenses or losses which are
specially allocated pursuant to Sections 1.5 and 1.6;
(d) if property is to be distributed to a Partner in kind,
adjusted (prior to such distribution) to reflect the manner in which
the unrealized income, gain, loss and deduction inherent in such
property (that has not been reflected in the Partners' Capital Accounts
previously) would be allocated to the Partners if there were a taxable
disposition of such property for its fair market value (taking Section
7701(g) of the Code into account) as of the date of the distribution;
and
(e) except as provided in Regulations Section
1.704-1(b)(2)(iv)(m), computed without regard to any adjustments to the
adjusted tax basis of Partnership property pursuant to an election
under Section 754 of the Code which may be made by the Partner.
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If there is a transfer of all or a part of an interest in the
Partnership by a Partner, the Capital Account of the transferor Partner
that is attributable to the transferred interest shall carry over to
the transferee of such Partner as provided in Regulations Section
1.704-1(b)(iv)(1).
In the event of additional capital contributions by new or
existing Partners, or a withdrawal of a Partner from the Partnership,
the Capital Accounts of the Partners shall be revalued in accordance
with Regulations Section 1.704-1(b)(2)(iv)(f). The General Partner
shall determine the fair market value of the assets of the Partnership
for purposes of Regulations Section 1.704-1(b)(2)(iv)(f).
1.2 The following terms shall have the following meanings:
(a) The term "Adjusted Capital Account Deficit" means, with
respect to any Limited Partner, the deficit balance, if any, in such
Limited Partner's Capital Account as of the end of the relevant fiscal
year, after giving effect to the following adjustments:
(i) Credit to such Capital Account any amounts which
such Limited Partner is obligated to restore pursuant to any
provision of the Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(l) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described
in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith.
(b) The term "Agreed Value" means with respect to all property
contributed to or revalued by the Partnership, the fair market value of
such property on the date of such contribution or revaluation as
determined by the General Partner.
(c) The term "Capital Account Depreciation" shall mean, for
each fiscal year or other period, an amount equal to the Federal income
tax depreciation, amortization, or other cost recovery deduction
allowable with respect to any Partnership asset for such year or other
period, except that, if the Agreed Value of any asset as adjusted for
any Capital Account Depreciation taken with respect thereto differs
from its adjusted basis for Federal income tax purposes at the
beginning of such year or other period, Capital Account Depreciation
shall be an amount which bears the same ratio to such beginning
adjusted Agreed Value as Federal income tax depreciation, amortization,
or other cost recovery deduction for such year or other period bears to
such beginning adjusted tax basis.
▇-▇
▇▇
(▇) The terms "Net Profits" and "Net Losses" shall mean the
taxable income and loss, respectively, of the Partnership, as
determined for Federal income tax purposes, except that
(i) any income of the Partnership that is exempt from
Federal income tax and not otherwise taken into account in
computing taxable income or loss shall be added to such
taxable income or loss, and any related expenses not allowed
as a deduction under Section 265 of the Code shall be
subtracted from such taxable income or loss;
(ii) items of income, gain, loss and deduction relating
to property contributed to the Partnership or which may be
revalued pursuant to Regulations Section 1.704-1(b)(2)(iv)(f)
shall be computed as if the basis of the property to the
Partnership at the time of contribution or revaluation was
equal to its fair market value at that time, and in lieu of
the depreciation, amortization and other cost recovery
deductions taken into account with respect to such property,
there shall be taken into account Capital Account Depreciation
for such period;
Net Profits and Net Losses shall include, 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; and
(iii) any items which are specially allocated pursuant to
Sections 1.5 and 1.6 hereof shall not be taken into account.
Net Profits or Net Losses (or items thereof) shall be
considered to have been earned or accrued ratably over the
period of the fiscal year of the Partnership, except that, if
permitted under the applicable provisions of the Code, Net
Profits or Net Losses (or items thereof) arising from the
disposition of assets shall be taken into account as of the
date thereof.
(e) The term "Nonrecourse Deductions" has the meaning set
forth in Section 1.704-2(b)(l) of the Regulations. The amount of
Nonrecourse Deductions for a Partnership fiscal year equals the excess,
if any, of the net increase, if any, in the amount of Partnership
Minimum Gain during that fiscal year over the aggregate amount of any
distributions during that fiscal year of proceeds of a Nonrecourse
Liability that are allocable to an increase in Partnership Minimum
Gain, determined according to the provisions of Sections 1.704-2(c) and
(d) of the Regulations.
(f) The term "Nonrecourse Liability" has the meaning set forth
in Section 1.704-2(b)(3) of the Regulations.
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29
(g) The term "Partner Nonrecourse Debt Minimum Gain" means an
amount, with respect to each Partner Nonrecourse Debt, equal to the
Partnership Minimum Gain that would result if such Partner Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in accordance
with Section 1.704-2(i)(3) of the Regulations.
(h) The term "Partner Nonrecourse Debt" has the meaning set
forth in Section 1.704-2(b)(4) of the Regulations.
(i) The term "Partner Nonrecourse Deductions" has the meaning
set forth in Section 1.704-2(i)(1) of the Regulations. The amount of
Partner Nonrecourse Deductions with respect to a Partner Nonrecourse
Debt for a Partnership fiscal year equals the excess, if any, of the
net increase, if any, in the amount of Partner Nonrecourse Debt Minimum
Gain attributable to such Partner Nonrecourse Debt during that fiscal
year over the aggregate amount of any distributions during that fiscal
year to the Partner that bears the economic risk of loss for such
Partner Nonrecourse Debt to the extent such distributions are from the
proceeds of such Partner Nonrecourse Debt and are allocable to an
increase in Partner Nonrecourse Debt Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Sections
1.704-2(i)(2) and (3) of the Regulations.
(j) The term "Partnership Minimum Gain" has the meaning set
forth in Sections 1.704-2(b)(2) of the Regulations.
1.3 ALLOCATION OF NET PROFITS AND NET LOSSES. Except as provided in
Section 1.4, and after giving effect to Sections 1.5 and 1.6, Net Profits and
Net Losses of the Partnership for a taxable year shall be allocated among the
Partners in accordance with their Percentage Interests in the Partnership.
1.4 LIMITATION ON ALLOCATION OF NET LOSSES. Notwithstanding anything to
the contrary herein, Net Losses of the Partnership shall not be allocated to a
Limited Partner if such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit. Any such allocation of Net Losses shall be
reallocated to the General Partner.
1.5 SPECIAL ALLOCATIONS. The following special allocations shall be
made in the following order:
(a) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 1.5, and subject to the exceptions set forth
in Regulations Section 1.704-2(f)(2), (3), (4) and (5), if there is a
net decrease in Partnership Minimum Gain during any Partnership fiscal
year, each Partner shall be specially allocated items of Partnership
income and gain for such year (and, if necessary, subsequent years) in
an amount equal to the portion of such Partner's share of the net
decrease in Partnership Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be
A-4
30
determined in accordance with Section 1.704-2(f) of the Regulations.
This Section 1.5(a) is intended to comply with the minimum gain
chargeback requirement in such Section of the Regulations and shall be
interpreted consistently therewith.
(b) PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK.
Notwithstanding any other provision of this Section 1.5, except Section
1.5(a), and subject to the exception in Regulations Section
1.704-2(i)(4), if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to Partner Nonrecourse Debt during any
Partnership fiscal year, each Partner who has a share of the Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with Section 1.704-2(i)(5), shall be
specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to the portion
of such Partner's share of the net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to such Partner Nonrecourse Debt, determined
in accordance with Regulations Section 1.704-2(i)(5). Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in accordance
with Section 1.704-2(i)(4) of the Regulations. This Section 1.5(b) is
intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently
therewith.
(c) QUALIFIED INCOME OFFSET. In the event any Limited Partner
unexpectedly receives any adjustments, allocations, or distributions
described in Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
or 1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Partnership
income and gain shall be specially allocated to each such Limited
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of
such Limited Partner as quickly as possible, provided that an
allocation pursuant to this Section 1.5(c) shall be made only if and to
the extent that such Limited Partner would have an Adjusted Capital
Account Deficit after all other allocations provided for in this
Section 1.5 have been tentatively made as if this Section 1.5(c) were
not in the Agreement.
(d) GROSS INCOME ALLOCATION. In the event any Limited Partner
has a deficit Capital Account at the end of any Partnership fiscal year
which is in excess of the sum of (i) the amount such Limited Partner is
obligated to restore pursuant to any provision of the Agreement and
(ii) the amount such Limited Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Limited Partner shall be
specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible, provided that an allocation
pursuant to this Section 1.5(d) shall be made only if and to the extent
that such Limited Partner would have a deficit Capital Account in
excess of such sum after all other allocations provided for in Section
1.5 have been made as if Section 1.5(c) hereof and this Section 1.5(d)
were not in the Agreement.
A-5
31
(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
fiscal year or other period shall be specially allocated to the
Partners in accordance with their Percentage Interests.
(f) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
Deductions for any fiscal year or other period shall be specially
allocated to the Partner who bears the economic risk of loss with
respect to the Partner Nonrecourse Debt to which such Partner
Nonrecourse Deductions are attributable in accordance with Regulations
Section 1.704-2(i).
(g) SECTION 754 ADJUSTMENTS. To the extent the adjusted tax
basis of any Partnership asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital
Accounts, the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the General Partner and
Limited Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section
of the Regulations.
1.6 CURATIVE ALLOCATIONS.
(a) The "Regulatory Allocations" consist of the "Basic
Regulatory Allocations," as defined in Section 1.6(b) hereof, the
"Nonrecourse Regulatory Allocations," as defined in Section 1.6(c)
hereof, and the "Partner Nonrecourse Regulatory Allocations", as
defined in Section 1.6(d) hereof.
(b) The "Basic Regulatory Allocations" consist of (i)
allocations pursuant to the last sentence of Section 1.4 and (ii)
allocations pursuant to Sections 1.5(c), 1.5(d), and 1.5(g) hereof.
Notwithstanding any other provision of this Agreement, other than the
Regulatory Allocations, the Basic Regulatory Allocations shall be taken
into account in allocating items of income, gain, loss, and deduction
among the General Partner and Limited Partners so that, to the extent
possible, the net amount of such allocations of other items and the
Basic Regulatory Allocations to the General Partner and each Limited
Partner shall be equal to the net amount that would have been allocated
to the General Partner and each such Limited Partner if the Basic
Regulatory Allocations had not occurred. For purposes of applying the
foregoing sentence, allocations pursuant to this Section 1.6(b) shall
only be made with respect to allocations pursuant to Section 1.5(g)
hereof to the extent the General Partner reasonably determines that
such allocations will otherwise be inconsistent with the economic
agreement among the parties to this Agreement.
(c) The "Nonrecourse Regulatory Allocations" consist of all
allocations pursuant to Sections 1.5(a) and 1.5(e) hereof.
Notwithstanding any other provision of this
A-6
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Agreement, other than the Regulatory Allocations, the Nonrecourse
Regulatory Allocations shall be taken into account in allocating items
of income, gain, loss, and deduction among the General Partner and
Limited Partners so that, to the extent possible, the net amount of
such allocations of other items and the Nonrecourse Regulatory
Allocations to the General Partner and each Limited Partner shall be
equal to the net amount that would have been allocated to the General
Partner and each such Limited Partner if the Nonrecourse Regulatory
Allocations had not occurred. For purposes of applying the foregoing
sentence (i) no allocations pursuant to Section 1.6(c) shall be made
prior to the Partnership fiscal year during which there is a net
decrease in Partnership Minimum Gain, and then only to the extent
necessary to avoid any potential economic distortions caused by such
net decrease in Partnership Minimum Gain, and (ii) allocations pursuant
to this Section 1.6(c) shall be deferred with respect to allocations
pursuant to Section 1.5(e) hereof to the extent the General Partner
reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 1.5(a) hereof.
(d) The "Partner Nonrecourse Regulatory Allocations" consist
of all allocations pursuant to Sections 1.5(b) and 1.5(f) hereof.
Notwithstanding any other provision of this Agreement, other than the
Regulatory Allocations, the Partner Nonrecourse Regulatory Allocations
shall be taken into account in allocating items of income, gain, loss
and deduction among the General Partner and Limited Partners so that,
to the extent possible, the net amount of such allocations of other
items and the Partner Nonrecourse Regulatory Allocations to the General
Partner and each Limited Partner shall be equal to the net amount that
would have been allocated to the General Partner and each such Limited
Partner if the Partner Nonrecourse Regulatory Allocations had not
occurred. For purposes of applying the foregoing sentence (i) no
allocations pursuant to this Section 1.6(d) shall be made with respect
to allocations pursuant to Section 1.5(f) relating to a particular
Partner Nonrecourse Debt prior to the Partnership fiscal year during
which there is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, and then only to the
extent necessary to avoid any potential economic distortions caused by
such net decrease in Partner Nonrecourse Debt Minimum Gain, and (ii)
allocations pursuant to this Section 1.6(d) shall be deferred with
respect to allocations pursuant to Section 1.5(f) hereof relating to a
particular Partner Nonrecourse Debt to the extent the General Partner
reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to Section 1.5(b) hereof.
(e) The General Partner shall have reasonable discretion, with
respect to each Partnership fiscal year, to (i) apply the provisions of
Sections 1.6(b), 1.6(c), and 1.6(d) hereof in whatever order is likely
to minimize the economic distortions that might otherwise result from
the Regulatory Allocations, and (ii) divide all allocations pursuant to
Sections 1.6(b), 1.6(c), and 1.6(d) hereof among the General Partners
and Limited Partners in a manner that is likely to minimize such
economic distortions.
A-7
33
1.7 TAX ALLOCATIONS. Items of income, gain, loss or deduction for
Federal income tax purposes will be allocated among the Partners in the same
manner as such items were allocated to the Partners' Capital Accounts pursuant
to Sections 1.2, 1.3, 1.4, 1.5 and 1.6 hereof. In accordance with Code Section
704(c) and the Regulations thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the Partnership shall,
solely for tax purposes, be allocated among the General Partner and Limited
Partners so as to take account of any variation between the adjusted basis of
such property to the Partnership for Federal income tax purposes and its Agreed
Value.
In the event the Agreed Value of any Partnership asset is adjusted, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
Federal income tax purposes and its Agreed Value in the same manner as under
Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be made by
the General Partner in any manner that reasonably reflects the purpose and
intention of the Agreement. Allocations pursuant to this Section 1.7 are solely
for purposes of federal, state, and local taxes and shall not affect, or in any
way be taken into account in computing any Partner's Capital Account or share of
Net Profits, Net Losses, other items, or distributions pursuant to any provision
of the Agreement.
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34
EXHIBIT B
---------
ROSTER OF PARTNERS
GENERAL PARTNER CAPITAL CONTRIBUTION PERCENTAGE INTEREST
--------------- -------------------- -------------------
LEXREIT PROPERTIES, INC. Interests in the 60%
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ Properties listed on
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Exhibit C hereto, with
an agreed aggregate
value of $__________.
LIMITED PARTNERS CAPITAL CONTRIBUTION PERCENTAGE INTEREST
---------------- -------------------- -------------------
CARDINAL REALTY SERVICES, INC. Interests in the 40%
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Properties listed on
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Exhibit C hereto, with
an agreed aggregate
value of $__________.
B-1
35
EXHIBIT C
---------
ORIGINAL CONTRIBUTION OF PROPERTIES
INVESTMENT ENTITY PERCENTAGE INTEREST
----------------- -------------------
C-1
36
EXHIBIT D
---------
SUBSEQUENT CONTRIBUTION OF PROPERTIES
INVESTMENT ENTITY PERCENTAGE INTEREST
----------------- -------------------
D-1
37
LIMITED PARTNERSHIP AGREEMENT
OF CARDINAL PROPERTIES L.P.