Limited partnership to acquire, hold, manage, improve and sell certain real estate.

This agreement is made and entered into by and between _________, a _________ corporation, referred to as "general partner," and the persons whose names are subscribed referred to as "limited partners."

In consideration of these mutual covenants and conditions, it is agreed by and between the parties as follows:

1. Formation and Name.

The parties form a limited partnership under the limited partnership provisions of the _________ corporation code. The name of the partnership shall be _________ and the principal place of business shall be _________.

2. Certificate.

The parties shall, concurrently with the execution of this agreement, sign and acknowledge a certificate of limited partnership pursuant to the provisions of section _________ of the corporation code. This certificate shall be filed in the office of the recorder of the county where the principal place of business of the partnership is situated. A copy of the certificate shall also be recorded in the office of the recorder of each county in which the partnership has a place of business.

3. Term.

The partnership shall commence as of _________, 19__, and shall continue for a period of _________ years unless terminated sooner as provided, or unless extended for a longer term as may be determined by the election of the limited partners entitled to _________ percent or more of the profits of the partnership allocable to the limited partners.

4. Purpose.

The purpose of the partnership shall be to acquire, hold, operate, improve, lease, sell and otherwise manage the real property described in Exhibit I. The real property is referred to as the "subject property."

5. Capital Contributions.

(a). The general partner shall transfer to the partnership the right to purchase the subject property for a purchase price not to exceed _________ dollars upon the terms and conditions set forth in Exhibit II attached. The general partner shall assign to the partnership all of its rights under those certain agreements entitled "Management Contract" and "Agreement to Reimburse for Operating Expenses" which are a part of Exhibit II attached.

The partnership agrees to accept the assignment of rights under the above described agreements and further agrees to assume and discharge each and every obligation of the assignor.

The general partner shall not be required to make any additional contributions to capital other than its rights under the agreements referred to above.

(b). The names of each limited partner, the total cash contribution to be made by each limited partner and the percentage of profit of each limited partner in the partnership (both before and after participation by the general partner) are set forth in Exhibit III attached.

(c). Contributions of capital by the limited partners shall be in accordance with the following:

(1). _________ units (each unit representing _____% interest in the partnership before participation by general partner, and _________ interest in the partnership after participation by the general partner) will be available for purchase by the limited partners.

(2). As initial payment for each full unit a limited partner shall contribute to the partnership the sum of _________ dollars in cash on or before _________, 19__.

(3). Further, as the balance of the purchase price for each full unit a limited partner shall execute a series of promissory notes (noninterest bearing before maturity) in the amount of _________ dollars each. Each note represents additional annual contributions of capital to be invested by each limited partner in the partnership during the next _________ calendar years following the year of the close of escrow. Each promissory note shall provide a maturity date of _________ 1st of each calendar year, subject, however, to the limitation that the general partner shall only have the right to require payment of these notes or a portion as shall be necessary in order that the partnership complete the purchase of the subject property and discharge the obligations of the limited partners under this agreement. In the event that the general partner does not require full payment of all notes by all limited partners, then to the extent that payment is required, it shall be made on a pro rata basis by all limited partners in accordance with their respective profit percentage interests in the partnership.

(4). Each promissory note shall provide that if the balance due is not paid within _________ days after maturity (_________ 1st), the balance due shall bear interest at the rate of _________ percent per annum commencing _________ days after maturity and continuing until actual payment or until such time as the interest of the limited partner not paid for is sold in accordance with paragraph 17 below. The general partner shall have the right to offset the amount of interest accruing under a note against any distributions due a limited partner.

(5). In those instances where a limited partner purchases a one-half unit or more than one unit, the initial cash payment and the balances due under the promissory notes shall be divided or multiplied accordingly. No fraction of a unit other than one-half will be allowed.

(6). If a limited partner elects to prepay all or any portion of the balance of his or her capital contributions due for the year 19__ and following years and provided that prepayment is made at least _________ days prior to the maturity date of the promissory note or notes representing the particular payment made, the unpaid balance of the limited partner shall be reduced by the amount derived by increasing the prepaid capital contribution by _________ percent compounded annually computed from the date of prepayment to the date or dates on which the prepaid capital contribution was otherwise payable.

6. Rights, Duties and Obligations of the General Partner.

(a). The partnership business shall be administered by the general partner. In addition to those powers granted to the general partner by law, the general partner shall have the power to execute leases, management contracts, incur obligations on behalf of the partnership in connection with the business, and execute on behalf of the partnership any and all instruments necessary to carry out the purposes of the partnership, including the power to dispose of the real property or other assets of the partnership for full and adequate consideration. However, the general partner may not sell or pledge more than _________ percent of the assets of the partnership owned at time of sale or pledge in one or a series of transactions without the affirmative vote of limited partners entitled to _________ percent or more of the profits of the partnership. The general partner shall devote such time to the business of the partnership as shall be necessary to accomplish the purposes set forth.

(b). Administrative and Brokerage Fees.

In addition to its rights under paragraphs 11 and 12 below, the general partner shall receive and be entitled to the following fees:

(1). At time of closing (acquisition of subject property) the sum of _________ dollars for extraordinary services rendered by the general partner (separate and apart from any services as a real estate broker) in organizing the limited partnership.

(2). An annual minimum administrative fee in the amount of _________ dollars payable on _________ of each year commencing _________, 19__, for services to be rendered in administering the partnership business.

(3). Further, the general partner shall be entitled to an additional incentive administrative fee equal to _________ percent of the operating cash flow (as defined) in excess of _________ dollars of operating cash flow received by the partnership each calendar year. The incentive administrative fee, if any, shall be paid to the general partner within _________ days after the close of each calendar year.

(4). Subject to the affirmative vote of limited partners entitled to _________ percent or more of the profits allocable to the limited partners, the general partner may obtain the financing or refinancing for the partnership property on behalf of the partnership and if successful, the general partner shall be entitled to a mortgage fee not to exceed _________ percent of the total amount of each loan.

(5). The general partner shall also be entitled to reimbursement upon presentation of vouchers for all reasonable out-of-pocket expenses incurred by it in the administration of the partnership business.

7. Addition of Limited Partners.

Except in those circumstances where default has occurred in the payment of capital contributions by a limited partner, the general partner shall not have the right to admit additional limited partners without the consent of limited partners entitled to _________ percent of the partnership profits allocable to the limited partners, and then only upon those terms as may be agreed upon by the limited partners at the time of the proposed admission of additional limited partners.

8. Withdrawal of Capital.

No limited partner may withdraw his or her capital contribution to the partnership without the consent of the general partner. Upon withdrawal, the schedule of partnership assets shall be amended, and the certificate of limited partnership shall be amended as required by section _________ of the corporation code of _________.

9. Rights, Duties, Obligations of the Limited Partners.

(a). Except as otherwise expressly provided, no limited partner shall participate in the management of the partnership business.

(b). A limited partner shall have the right to withdraw his or her capital account upon the termination of the partnership as provided except that no part of the capital account of any limited partner shall be withdrawn unless all partnership liabilities, other than liabilities to partners on account of their contributions, have been paid, or unless the partnership has assets sufficient to pay them, and provided that, in the event of any withdrawal, no limited partner shall have the right to demand or receive property other than cash in return for his or her contribution.

(c). No limited partner shall have priority over any other limited partner, either as to contributions to capital or as to distribution of partnership profits, or operating cash flow.

(d). No partner, general or limited, shall receive any salary or any other compensation for services rendered on behalf of the partnership other than as expressly set forth in this agreement. No partner shall be entitled to receive interest on his or her capital contribution to the partnership.

10. Partners Accounts.

Capital accounts shall be maintained for the limited partners, which accounts shall be credited with their capital contributions and their respective shares of partnership profits and charged with their withdrawals and their respective shares of partnership losses.

11. Profit, Losses and Distributions.

(a). Profit. The net profit of the partnership shall be equal to the taxable income of the partnership as shown in the partnership tax information tax return filed in accordance with the requirements of the Internal Revenue Code.

Except as provided in paragraph 12 below, profits shall be divided as follows:

(1). _________ percent to the account of the general partner.

(2). _________ percent to the accounts of the limited partners in accordance with the percentages set forth in Exhibit III attached hereto.

(b). Losses. All losses of the partnership shall be allocated entirely to the limited partners in proportion to their capital contributions, subject, however, to the limitation of liability of each limited partner to the amount of his or her individual investment in the partnership.

(c). Distributions. Subject to the provisions of paragraph 12 below, in the event of the sale of assets of the partnership, or the liquidation of the partnership, the net proceeds realized from the sale (including the net proceeds derived from the sale or satisfaction of any purchase money deed of trust), or the proceeds of liquidation, as the case may be, shall be distributed as follows:

(1). _________ percent to the general partner.

(2). _________ percent to the limited partners in accordance with the percentages set forth in Exhibit III.

(d). Definition of Operating Cash Flow. The term "operating cash flow" as used, shall mean the profits of the partnership from the operation of the partnership business (excluding profits derived by any sale or refinancing of partnership assets) ascertained by the use of generally accepted cash basis accounting principles, except that:

(1). Depreciation shall not be deducted.

(2). Amortization of obligations secured by lien or liens on the real property shall be deducted.

(3). Amounts expended by the partnership in the discretion of the general partner for capital improvements to the property shall be deducted.

(4). To the extent determined by the general partner, reasonable reserves for working capital needs, for improvements to the property, and for contingent liabilities of the partnership shall be deducted.

(5). Amounts paid to the general partner for real estate and loan commissions, administrative fees and expenses shall be deducted.

(e). Distribution of Operating Cash Flow. Operating cash flow shall be distributed among the limited partners in accordance with percentages set forth in Exhibit III with distributions to be made by the general partner at convenient intervals but not less frequently than annually.

12. Limitation on Allocations and Distributions to General Partner. [Check applicable existing tax law.]

13. Banking.

Funds of the partnership shall be deposited in the bank or banks as the general partner may select. All withdrawals shall be made upon checks signed by the general partner, or its authorized agent.

14. Books and Records.

The partnership shall maintain full and accurate books at its principal office, or in such offices as shall be designated for such purpose by the general partner. All books of account, together with a certified copy of the certificate of limited partnership and any amendments shall be during regular working hours and upon reasonable notice open to the inspection and examination of the limited partners. At the end of each calendar year, the general partner shall cause to be made a certified audit of the books and affairs of the partnership by a certified public accountant chosen by the general partner, and shall cause to be distributed to the limited partners a full and detailed statement showing the operations of the partnership business during such year.

15. Assignment of Partners' Interests.

(a). General Partner. The general partner shall not assign, mortgage, encumber or sell its interest as general partner in the partnership or enter into any agreement as a result of which any firm, person or corporation shall become interested with it in the partnership; provided, however, that the restrictions contained here shall be inoperative after the dissolution of the partnership.

(b). Limited Partners' Right To Receive Income. The right of a limited partner to receive any income from the partnership shall not be transferred, sold or assigned without the prior written consent of the general partner. The general partner shall not unreasonably withhold such consent.

(c). Transfer of Capital Interest—Limited Partner. The capital interest of a limited partner may not be transferred, sold or assigned by a limited partner except in accordance with the following provisions:

A limited partner who desires to sell or transfer his or her capital interest in the partnership shall serve written notice on the general partner which shall contain the name and address of the proposed transferee and the total consideration to be paid by the proposed transferee. If the general partner, within _________ days following receipt of notice, in good faith determines that the purchase price offered by the proposed transferee is less than the fair market value of the interest to be transferred, the general partner shall have the option to notify the proposed transferor within the _________ day period, that the transferor cannot effect a transfer of the interest unless he or she first offers the interest to the remaining limited partners. If the proposed transferor desires them to proceed with the transfer, he or she shall notify the general partner in writing of that intent, and for a period of _________ days from and after receipt of the notice, the remaining limited partners shall have the option to purchase the interest of the proposed transferor for cash, based upon the fair market value of the interest, as previously determined by the general partner. If the limited partners elect to exercise the option to purchase, payment of the purchase price in full shall be made to the transferor within _________ days after exercise of the option. The remaining limited partners shall purchase the offered interest on a pro rata basis determined by the proportion that each has in the profits of the partnership (excluding the profit interest of the proposed transferor).

In the event that (i) the general partner does not exercise its option, or (ii) the remaining limited partners do not elect to purchase the entire interest of the proposed transferor, the transferor may effect the transfer of this interest to the proposed transferee except that as a condition precedent to the admission of the proposed transferee, this person shall execute and acknowledge any instruments the general partner deems necessary or desirable to effect admission and to confirm the agreement of the person being admitted to be bound by all of the terms and provisions of this agreement as they have been amended. The transferee shall pay all reasonable expenses (including legal fees) in connection with admission as a substituted limited partner. [A definitive permit from the state of _________ must be obtained prior to the sale or transfer of an interest.]

16. Death or Insanity of Limited Partner.

If any limited partner dies, his or her executors or administrators (or if adjudged insane or incompetent, the guardian or conservator) shall have the same rights as if the limited partner had not died or become insane or incompetent, and the share of the limited partner in the assets of the partnership shall be subject to the terms, provisions and conditions of this agreement as if the limited partner had not died or become insane or incompetent.

17. Default by Limited Partner.

In the event that a limited partner fails to pay all or any portion of the balance of the capital contribution owed to the partnership within _________ days after the due date, the general partner shall notify each limited partner by mail of default. Upon notice the limited partners shall have a period of _________ days in which to elect to purchase that portion of the defaulting limited partner's interest not paid for. If more than one (1) limited partner wishes to purchase, the interest shall be purchased on a pro rata basis among all those who wish to purchase. Upon election to purchase, the purchasing limited partners shall (within _________ days following election) make the cash payment owed by the defaulting limited partner and shall execute promissory notes for the balance of the payment due in succeeding years. If the existing limited partners elect not to purchase in full the balance of the interest of the defaulting partner, then the general partner shall have the right to:

(a) Sell to third persons the balance of the defaulting limited partner's interest to be purchased; or

(b) Invest as a limited partner by making the cash payment and executing the promissory notes required.

Upon the sale of the defaulting limited partner's remaining interest under any of the above methods, the general partner and all limited partners, including the defaulting limited partner and new limited partners, shall execute an amendment to the certificate of limited partnership and the new limited partners shall execute the limited partnership agreement.

18. Termination.

Notwithstanding anything to the contrary, the partnership shall terminate upon any of the following events:

(a). A disposition of the partnership of its entire interest in the subject property.

(b). The adjudication of bankruptcy of the general partner or otherwise as provided by the Uniform Limited Partnership Act, unless the business is continued by a general partner elected in place.

(c). A determination by the election of limited partners entitled to _________ percent or more of the profits of the partnership allocable to the limited partners that the partnership shall terminate.

(d). The removal of the general partner by the vote of limited partners entitled to _________ percent or more of the profits of the partnership allocable to the limited partners. In that event there shall be a distribution of assets in accordance with the provisions of paragraph 19 below, unless the limited partners, by an affirmative vote of limited partners owning _________ percent of the profits in the partnership allocable to the limited partners elect to form a new partnership to continue the partnership business.

In the event of the removal of the general partner, the determination of the value of the interest of the general partner shall be submitted to arbitration under the rules of the American Arbitration Association within _________ days after removal. Within _________ days after determination of the value of the interest, the general partner shall receive it in cash together with interest at the rate of _________ percent per annum computed from date of removal. The costs of arbitration shall be borne equally between the general partner and the limited partners.

19. Distribution on Termination.

Upon termination of the partnership, the books of the partnership shall be closed and appropriate credits and debits to the accounts of the general and limited partners shall be made. The partnership shall engage in no further business other than that necessary to wind up and distribute the assets. The general partner shall liquidate the assets of the partnership and the proceeds of liquidation shall be applied and distributed as follows:

(a). Expenses of liquidation and debts of the partnership shall be paid.

(b). Subject to the limitations contained in paragraph 12, the balance of assets shall be divided and distributed to the general partner and limited partners in accordance with the provisions of paragraph 11 above.

(c). Upon completion of the liquidation, the partnership shall be deemed completely terminated and dissolved.

20. Continuation Beyond Term.

In the event that the partnership has not been terminated nor dissolved, nor the term of the partnership extended, prior to the expiration date of the term set forth with respect to the assets of the partnership the partners shall become tenants in common together with all other partners if they are living, or their heirs or successors, if they are deceased.

21. Life Insurance.

The general and limited partners recognize that _________, general partner, has extensive and unique experience in the operation and development of real estate and that the death of _________ could result in serious economic harm to the partnership. In order to have sufficient capital to replace _________ in the event of his death with a qualified manager or managers, on a vote of _________ percent or more of the limited partners, the partnership may elect to obtain a policy of term insurance on the life of _________ in the face amount of _________ dollars. All premiums on the policy shall be paid by the partnership and the partnership shall be the owner and beneficiary of such policy.

22. Expenses of Acquisition.

All expenses required for the acquisition of the real property described in Exhibit I and the formation of the partnership referred to including but not limited to closing costs, legal fees, tax consultation fees, title expenses, survey fees, accounting fees, printing and stenographic costs and the filing, recording and publishing of partnership papers shall be borne entirely by general partner.

23. Real Estate Broker.

The limited partners acknowledge that the general partner is a licensed real estate broker in the state of _________ and was active as such in the acquisition of the subject property. The limited partners further acknowledge and agree that the general partner shall be entitled to receive at time of closing a net real estate commission in the amount equal to _________ percent of the purchase price of the subject property.

24. Power of Attorney.

Each of the limited partners does hereby constitute and appoint _________, general partner, as his or her true and lawful attorney for that limited partner, and in the name and place of each limited partner to make, execute, sign and acknowledge a certificate of limited partnership and a certificate of doing business under a fictitious name, including the execution, acknowledgment and filing of any amendments and to execute other instruments as may be required by the laws of the state of _________.

25. Notices.

All notices and requests provided for shall be directed by registered or certified mail to the parties at the addresses set forth in Exhibit IV.

26. Agreement Binding Upon Successors and Assigns.

Except as otherwise provided this agreement shall inure to the benefit of and shall be binding upon the heirs, executors, administrators, or other representatives, successors and assigns of the respective parties.

27. Applicable Law.

This agreement and the rights of the parties shall be interpreted in accordance with the laws of the state of _________.

28. Approval by State.

The sale of the limited partnership interests which are the subject of this agreement has not been qualified with the state of _________ and the issuance of limited partnership interests or payment or receipt of any part of the consideration prior to qualification is unlawful. The rights of all parties to this agreement are expressly conditioned upon qualification being obtained. The issuance of a definitive permit by the state with respect to the sale of the limited partnership interests referred to shall be deemed to be a qualification for the purposes of this paragraph whether the permit is issued for the benefit of named persons or for issues described by class.

29. Amendment.

This agreement may be amended subject to the approval of limited partners _________ percent or more of the profits allocable to the limited partners.

30. Counterparts.

This agreement may be executed in counterparts, each of which shall constitute an original.

In witness, the parties have executed this agreement this _________ day of _________, 19__.

Limited Partners:	General Partner:
[Signatures]	[Signature]

 

[Acknowledgement]