PARTNERSHIP
AGREEMENT-LIMITED
______________________,
LTD.
THIS
AGREEMENT OF LIMITED PARTNERSHIP (the Agreement) is made this ______ day of
_________________________, by and between the persons named in Exhibit A
attached hereto to form a Limited Partnership (the Partnership) under the
provisions of _____________________ (State
Statute) for the purposes and upon the terms and conditions
hereinafter set forth.
1. Name. The name of the partnership is
_____________________________, Ltd.
2. Purpose. The purpose of the partnership is to
____________________________, paying taxes, utilities and other costs relating
to the operation of business of the partnership, to borrow money secured by
mortgages on partnership property, and to do any and all things which may be
necessary, incidental or convenient to carry on the partnership business as
contemplated under this Agreement, including the making of incidental
investments of cash in savings accounts or interest bearing securities. The partnership shall not engage in any
business or activity unrelated to the operation or management of the
partnership business without the specific written consent of all the limited
partnership interests.
3. Place
of Business. The principal
place of business of the partnership shall be
__________________________________________________
(Location and Address),
but
until then at such other substituted or additional places of business as may be
designated by the General Partners. _________________________________________ (Name and Address) shall serve as the
registered agent and his office at:
__________________________________________________
(Location and Address),
shall
serve as the registered office of the partnership.
4. Term. The term of the partnership shall expire on
____________________ unless earlier dissolved by operation of law or pursuant
to any other provision of this Agreement.
5. Capital
Contributions and Interests in Assets.
(a) The
General Partners have contributed to the partnership cash, services, or other
valuable properties for which they shall each be issued partnership units
representing in the aggregate a ______ percent interest in the assets of the
partnership.
(b) The
Limited Partners have each contributed to the partnership cash in the amount
set forth opposite their names in Exhibit A for which they shall each be issued
partnership units representing in the aggregate a _________ percent interest in
the assets of the partnership.
(c) Any
amounts held by the partnership and not required for the purposes of its
business, including reasonable reserves for contingencies, may, in the sole
discretion of the General Partners, be distributed among the Partners pursuant
to the terms hereof. No Partner shall
be entitled to make withdrawals from his individual account or have returned to
him his capital contribution except in accordance with the terms of this
Agreement. No Partner shall have the
right to require that a distribution to him be made other than in cash.
(d) No
interest shall be paid on the capital contribution of any Partner.
6. Cash
Distributions, Profits and Losses.
(a) Computation
of Current Distributions. Current
Distributions shall be computed each calendar year and allocated as of the last
day of each year. "Current
Distributions" shall include cash receipts from
_________________________________________ for the year and other cash funds
provided from operations for the year determined by the General Partner in
accordance with generally accepted accounting principles, by adding back to the
net income (or loss) of the partnership those expenses not requiring current cash
outlays and by excluding from the net income (or loss) any proceeds from the
sale, refinancing or other disposition of the Project in whole or in part, or
any other partnership property or investment, but in both cases after deducting
mortgage payments representing reductions in mortgage principal balances and
after deducting (or restoring) such amounts of lease payments and cash funds
provided from operations for the year (or from a prior year) as are determined
in the sole discretion of the General Partners to be reasonably necessary (or
no longer necessary) to be expended or held as reserves for the conduct of the
partnership business, including future payment of anticipated obligations and
contingent liabilities of the partnership.
(b) Distribution
of Current Distributions. Except as
otherwise provided by this Agreement or required by law, Current Distributions
shall be distributed to the Partners in the following order or priority:
1. First to the Limited Partners in the
aggregate an amount equal to the applicable percentage rate times their
original cash investment less any current distributions previously made under
Subparagraph (2) hereof. The applicable
rate for the year ______ shall be _______ percent. Thereafter, the applicable rate for any year shall increase or
decrease by the same percentage as the percentage change from any year in the
U.S. Department of Labor's Consumer Price Index, provided, however, that the
maximum change for any year shall not exceed
_______ percent. Any current
distributions under this Subparagraph not paid in the year determined shall be
paid in a later year before any other current distributions are made.
2. The balance, if any, _______ percent to
the Limited Partners and _______ percent to the General Partners.
Current
Distributions to be distributed to the General Partners as a group and to the
Limited Partners as a group shall be allocated to each holder of a Unit in the
same ratio that the number of Units held by such holder bears to the number of
Units held by all holders of Units.
(c) Distributions
at Liquidation. When the partnership
liquidates or when the interest of any Partner is liquidated, the partnership
shall distribute its cash and/or assets among the Partners (or to the Partner
whose interest is being liquidated), in accordance with capital account
balances (see Section 7(a)). In the
event a Partner has a negative capital account balance at the time his interest
is being liquidated or at the time the partnership is being liquidated, said Partner
shall make a cash contribution to the partnership of any amount sufficient to
bring his capital account to zero.
(d) Profits
and Losses.
1. "Profits and Losses" shall mean,
for both partnership accounting and tax purposes, the profits and losses
determined for purposes of preparing the partnership's information return for
federal income tax purposes, provided, however, that depreciation shall be
allocated _______ percent to the
Limited Partners and _______
percent to the General Partners. For tax purposes, except as specifically
provided to the contrary herein, all items of gain, loss, deduction or credit
shall be allocated to and among the Partners in the same percentages in which
the Partners share net profits and net losses.
2. Profits and Losses for any period shall be
allocated among the Partners in the following percentages: _______ percent to
the Limited Partners and _______
percent to the General Partners.
Profits and Losses to be allocated to the General Partners as a group and
to the Limited Partners as a group pursuant to this Section shall be allocated
to each holder of a Unit in the ratio that the number of Units held by such
holder bears to the number of Units held by all holders of Units.
3. Profits arising from the sale or other
disposition of the partnership business, in whole or in part, or any other
partnership properties or investments, shall be allocated to each Partner
having a negative balance in his respective capital account, in the proportions
that such negative balances bear to each other, in an amount sufficient to
bring his capital account to zero, and thereafter shall be allocated among the
Partners as provided in Section 6(d)(2).
4. Losses arising from the sale or other
disposition of the partnership business, in whole or in part, or any other
partnership properties or investments, shall be allocated among the Partners as
provided in Section 6(d)(2).
7. Partnership
Accounts.
(a) Capital
Accounts. Separate capital accounts
shall be maintained for each Partner.
Each Partner's capital account shall be increased by: (1) cash contributions made by him, (2) the fair market value of property
contributed by him minus liabilities secured by the property assumed by the
partnership, or to which the property remains subject in the partnership's
hands, (3) allocations to the Partner of partnership income and gain; and shall
be decreased by (4) cash distributions made to the Partner, (5) the fair market
value of property distributed by the partnership to the Partner minus
liabilities secured by the property assumed by the Partner, or to which the
property remains subject in the Partner's hands, (6) allocations to the Partner
of partnership expenditures that are
neither
deductible nor capitalizable, (7) allocations to the Partner of partnership
losses and deductions.
It
is the intent of the Partners to meet the requirements of Treasury Regulations
Section 1.704-1(b) to qualify partnership allocations as having economic
effect. Accordingly, the Partners
hereby agree to maintain Partner capital accounts as described above and in all
respects in accordance with the requirements of said Treasury Regulations.
(b) Except
as otherwise provided herein, no Limited Partner shall be required to make any
future contributions to the capital of the partnership, to restore a loss
charged
to
his capital account as a Limited Partner, or to discharge any liability of the
partnership.
(c) No
Limited Partner shall be personally liable for any liabilities or obligations
of the partnership or the General Partners.
Any such loss shall be carried as a charge against his capital account,
and his share of subsequent net profits of the partnership shall be applied to
restore the capital account of such Limited Partner before any current
distributions are made to him.
8. Books
of Account and Reports.
(a) The
General Partners, at the expense of the partnership, shall at all times keep
and maintain complete and accurate books, records and accounts of the
partnership, in accordance with generally accepted accounting principles and
procedures applied in a consistent manner.
(b) The
books, records and accounts shall be kept at the principal office of the
partnership.
(c) The
books shall be kept on a cash basis.
The fiscal year of the partnership shall be the calendar year. The General Partners shall furnish progress
reports at least annually to the Limited Partners with respect to the operation
of the partnership; and shall furnish to the Limited Partners at the end of
each fiscal year a balance sheet and report of the receipts, disbursements, net
profits and cash flow of the partnership, and the share of the net profits and
losses and cash flow of each Partner for the fiscal year, together with a
schedule of unpaid liabilities. The
cost of such financial reports shall be at the expense of the partnership.
(d) The
funds of the partnership shall be deposited in the name of the partnership in
insured accounts at financial institutions selected by the General Partners.
9. Powers,
Duties, and Liabilities of General Partners.
(a) Subject
to the limitations contained in Paragraph 10 of this Agreement, the General
Partners, in their full and exclusive discretion, shall manage, control and
make all decisions affecting or relating to the business, assets, and
operations of the partnership, including but not limited to the power to:
(1) To invest the capital of the partnership in
the exercise of any rights or powers possessed by the General Partners
hereunder;
(2) To acquire interests in property.
(3) To employ, on behalf of the
partnership, legal, financial,
accounting, real estate and operational agents, consultants, and employees, as
well as initial and nonrecurring professional evaluations, advice, and
recommendations concerning and with respect to proposed investments.
(4) To execute, sign, and deliver in
furtherance of any or all of the purposes of the partnership, any and all
agreements, contracts, documents, certifications, leases, subscriptions and
other instruments necessary or convenient in connection with the business of
the partnership; all of which may contain such terms, provisions and conditions
as the General Partners, in their sole and absolute discretion, shall deem
appropriate.
(5) To exercise all voting and other rights
incident to the ownership of property by the partnership.
(6) To sell, lease, dispose of, trade,
exchange, convey, quitclaim, surrender, release or abandon, upon such terms and
conditions as the General Partners may deem advisable, appropriate or
convenient, the interests in property owned by the partnership;
(7) To pay or reimburse any and all actual
fees, costs and expenses incurred in the organization of the partnership.
(b) The
General Partners shall manage the affairs of the partnership or cause the
affairs of the partnership to be managed in a prudent and businesslike manner,
and shall devote such part of their time to the partnership affairs as is
reasonably necessary for the conduct of such affairs; provided, however, that
it is expressly understood and agreed that the General Partners shall not be
required to devote their entire time or attention to the business of the
partnership, nor shall the General Partners be restricted in any manner from
participating in other businesses or activities, despite the fact that the same
may be competitive with the business of the partnership.
(c) In
carrying out their obligations, the General Partners shall:
(1) Render
periodic progress reports to the Limited Partners with respect to operations of
the partnership;
(2) Furnish,
on an annual basis, financial statements, reviewed by a recognized firm of
independent public accountants;
(3) Obtain
and maintain such public liability and other insurance as may be available and
as may be deemed necessary or appropriate by the General Partners.
(4) Maintain
complete and accurate records of all properties owned or leased by the
partnership and complete and accurate books of account (containing such
information as shall be necessary to record allocations and distributions), and
make such records and books of account available for inspection and audit by
any Partner or his duly authorized representative (at the expense of such
Partner) during regular business hours and at the principal office of the
partnership;
(5)
Cause to be filed such certificates and do such other acts as may be required
by law to qualify and maintain the partnership as a Limited partnership.
(d) Without
obtaining the consent of all the Limited Partners, the General Partners shall
not do any of the following:
(1) Act
in contravention to this agreement;
(2) Do
any act which would make it impossible to carry on the ordinary business of the
partnership;
(3) Confess
a judgment against the partnership;
(4) Admit
a person or entity as a General Partner or as a Limited Partner except as
provided herein;
(5) Possess
partnership property or sell, transfer, assign, pledge or subject to mortgage
or security interest any partnership property for any other than a partnership
purpose;
(6) Amend
this agreement.
(e) The
General Partners may charge the partnership for all reasonable expenses
actually incurred by them in connection with the partnership's business and all
allocable portions of expenses incurred in connection with both partnership and
other activities, such allocation to be determined on any basis selected by the
General Partners consistent with generally accepted accounting practices. Such expenses shall include payment of fees
and expenses to attorneys, accountants, special consultants and others in the
operation of the partnership business.
(f) In
carrying out their duties hereunder, the General Partners shall not be liable
to the partnership or to any other Partner for any actions taken in good faith
and reasonably believed to be in the best interests of the partnership, or for
errors of judgment, but shall only be liable for willful misconduct, gross
negligence, breach of his obligations under the Agreement or other breach of
his fiduciary duties.
10. Rights
and Prohibitions of Limited Partners.
(a) The
Limited Partner shall not be prohibited from or restricted in engaging or
owning an interest in any other business venture of any nature including any
venture which might be competitive with the business of the partnership.
(b)
The Limited Partner shall be entitled to:
(1) Have
the partnership books kept at the principal place of business of the
partnership, and at all times, during reasonable business hours, inspect and
copy any of them;
(2) Have
on demand true and full information of all things affecting the partnership
affairs whenever circumstances render it just and reasonable; and
(3) Have
dissolution and winding up of the partnership by decrees of Court.
(c) The
Limited Partners shall be entitled to vote on all matters with respect to which
Limited Partners are given the right to vote pursuant to law or to this
Agreement.
(d) No
Limited Partner shall have any right to:
(1) Take
part in the control, operation or management of the business of the partnership
or to sign for or to bind the partnership, such power being vested solely in
the General Partners;
(2) Require
partition of partnership property or to compel any sale of partnership assets
or of a deceased Partner's interest therein, notwithstanding any other
provision of law to the contrary; or
(3) To
sell or assign his interest in the partnership or to constitute the vendee or
assignee hereunder a substituted Limited Partner, except as provided in
Paragraph 12 hereof.
11. Contracts
of Agents. The partnership
or the General Partners on its behalf may from time to time engage, employ or
transact any business with any Partner or other persons or entities, whether or
not affiliated, associated or connected with the General Partners or any
Limited Partner, for the sale of the Units and for the development,
construction, rental, operation, management, supervision, maintenance, sale or
refinancing of the Project or the management of the partnership, or for any
other purpose (including, without limitation, managing agents and consultants,
accountants, attorneys and the general contractor for the Project) on such
terms and for such consideration as the General Partners shall reasonably
determine.
12. Transfer
of Interests of Partners.
(a) The
interest of a General Partner, as such, shall not be transferable, except by a
General Partner to an existing General Partner. Any other attempted assignment shall be null and void and
ineffective to transfer any such interest.
(b) The
interest of a Limited Partner in the profits, losses and current distributions
of the partnership shall be assignable but the assignee shall not become a
substituted Limited Partners, except as provided herein below. An assignee who does not become a substituted
Limited Partner is entitled to receive the share of profits, losses, current
distributions and the return of the contribution to which his assignor would
otherwise be entitled in respect of the interest assigned, but has no right to
vote or approve amendments, to require any information or accounting of the
partnership transactions or to inspect the partnership books. No such assignment shall be effective until
a copy of an instrument of assignment executed by the assignor and the
assignee, in form satisfactory to the General Partners, shall have been
received by the General Partners.
(c) The
assignee of an interest of a Limited Partner may become a Limited Partner or a
substitute Limited Partner upon the occurrence of the following conditions:
(1) The
partnership's counsel advises that the
assignment is not a violation of the Limited partnership laws in effect
in the State of ________________________ and that the assignment may be
effected without registration under federal securities laws and would not
violate applicable state securities laws.
(2) The
assignee shall have become a party to this Agreement; and
(3) The
assignor and the assignee shall have executed such certificates or instruments
as are required by law and the General Partners.
(d) Notwithstanding
the provisions herein above set forth, a Partner's interest or any portion
thereof shall not be assigned or transferred to any person who is insane,
incompetent, or has not attained his twenty-first (21st) birthday or to a
person or entity not lawfully empowered to own such interest. Any assignment or transfer directly to a
person or entity under any such disability shall be disregarded by the General
Partners and partnership and shall be ineffective to transfer such interest.
13. Withdrawal
of a Partner.
(a) In
the event of the death, bankruptcy or adjudication of insanity or incompetency
of an individual General Partner, his interest shall be converted to that of a
Limited Partner as of such event, provided however, if such individual was the
sole General Partner, the partnership shall terminate unless within one hundred
eighty (180) days after such event, the Limited Partners by unanimous vote
elect to continue the business of the partnership and designate from among
themselves a new individual General Partner or General Partners who consent to
and accept such designation as of the date of such event.
(b) A
Limited Partner may not withdraw voluntarily from the partnership. If a Limited Partner shall die, or be
adjudicated insane or incompetent, the partnership shall not terminate but his
executor, administrator or guardian shall become the assignee of the interest
of such Partner.
14. Termination
of the Partnership.
(a) Upon
the expiration of the term or earlier termination of the partnership, pursuant
to the provisions of this Agreement, General Partners shall proceed with the
winding up of the business of the partnership, the dissolution of the
partnership and the application and distribution of the assets of the
partnership as hereinafter provided.
(1) The
assets shall first be applied to the payment of all the debts of the
partnership (other than any loans or advances that may have been made to the
partnership by Partners) including the expenses of winding up partnership's
business, liquidation and dissolution of the partnership. A reasonable time shall be allowed for the
orderly liquidation of the assets of the partnership and the discharge of
liabilities to creditors so as to enable the then General Partners to minimize
the normal losses attendant upon a liquidation.
(2) The
assets shall next be applied to retain such amount as the General Partners may
deem reasonably necessary as a reserve for any contingent liabilities or
obligations of the partnership. Such
amount may, in the discretion of the General Partners, be paid over to a
financial institution with trust
authority in *, North Carolina, by it for the discharge of liabilities of the
partnership and the distribution of the balance, if any, as hereinafter
provided.
(3) The
assets shall next be applied to the repayment of any loans or advances made by
Partners to the partnership.
(4) The
assets shall next be applied to the payment of any unpaid accumulated current
distributions under Section 6(b)(1).
(5) The
remaining assets shall then be divided among all the Partners as provided in
Section 6(c).
(b) Each
of the Partners shall be furnished with a statement which shall set forth the
assets and liabilities of the partnership as of the date of the complete
liquidation of the partnership. Upon
the General Partners complying with the foregoing distribution plan, the
Limited Partner shall cease to be such, and the General Partners as the sole
remaining Partners of the partnership, shall execute and cause to be filed a
Certificate of Cancellation of the partnership and any and all other documents
necessary with respect to termination and cancellation of the partnership.
15. Amendment.
(a) All
amendments to this Agreement shall be made only with the approval of the Limited
Partners in accordance with this Section.
No amendment shall be made which would adversely affect the Federal
Income Tax treatment to be afforded the Limited Partners, adversely affect the
liabilities of the Limited Partners, or change the method of allocation of
profit and loss of current distributions, without disclosure of such fact to
the Limited Partners and the unanimous approval of all Limited Partners
entitled to vote on such matters under the terms of this Agreement.
16. Power of
Attorney.
(a) The Limited Partners irrevocably constitute
and appoint the General Partners, his true and lawful attorneys in his name,
place and stead to make, execute, swear to, acknowledge, deliver and file:
(1) Any
certificates or other instruments which may be required to be filed by the
partnership under the laws of the State of _____________________ or of any
other State or jurisdiction in which the partnership shall transact business or
in which the General Partners shall deem it advisable to file;
(2) Any
documents, certificates or other instruments described in the preceding
subdivision which may be required or deemed desirable by the General Partners
to effectuate the provisions of any part of this Agreement and, by way of
extension and not in limitation, to do all such other things as shall be
necessary to continue and to carry on the business of the partnership,
including, to the extent permitted by law, the power to ratify the execution
and delivery of notes or instruments authorizing the confession of judgment
against the partnership; and
(3) All
documents, certificates or other instruments which may be required to
effectuate the dissolution and termination of the partnership or the
organization of any new Limited partnership occasioned by the death,
retirement, adjudication or insanity or incompetence or bankruptcy of a General
Partner as thereinbefore provided.
(b) The
Power of Attorney granted hereby shall not constitute a waiver of or be
utilized to avoid the rights of the Limited Partners to approve amendments to
the Agreement nor used in any other manner inconsistent with the status of the
partnership as a Limited partnership.
(c) It
is expressly intended by the Limited Partners that the foregoing Power of
Attorney is coupled with an interest, is irrevocable and shall survive the
death, incompetence or adjudication or insanity of the Limited Partners. The foregoing Power of Attorney shall
survive the delivery of an assignment by any of the Limited Partners of the
whole or any portion of his interest in the partnership, except that where an
assignee of such whole interest has become a substituted Limited Partner, this
power shall survive the delivery of such assignment for the sole purpose of
enabling the General Partners to execute, acknowledge and file any and all
instruments necessary to effectuate such substitution.
17. General
Provisions.
(a) Any
and all notices or other communications required or permitted by this Agreement
or by law to be served on or given to any party hereto by the other party
hereto shall be in writing and shall be deemed duly served and given when
personally delivered to any member of the party to whom it is directed, or in
lieu of such personal service, when deposited in the United States mail, first
class, postage prepaid, addressed to the General Partners and to the Limited
Partners at the addresses set forth in Exhibit A. Any of the General Partners or the Limited Partners may change
their addresses for the purpose of this Paragraph. The address of the partnership shall be at its registered office.
(b) This
Agreement and all amendments hereof shall be governed by the laws of the State
of ________________________.
(c) The
headings of the Sections of this Agreement are inserted for convenience only
and shall not be deemed to constitute a part of this Agreement.
(d) This
Agreement may be executed in numerous counterparts each of which shall
constitute an original and which taken together shall constitute one single
Agreement.
(e) This
Agreement shall be binding upon and inure to the benefit of the executors,
administrators, successors and permitted assigns of the respective
Partners.
(f) The
waiver of any breach, item, provision, term, covenant, and/or condition of this
Agreement by the General Partners shall not constitute a continuing waiver or a
waiver of any subsequent breach either of the same or of any other additional
or different provision, term, covenant, or condition.
(g) This
Agreement is intended to be performed in accordance with, and only to the
extent permitted by, all applicable laws, ordinances, rules and regulations of
the jurisdictions in which the partnership does business. If any provisions of this Agreement, or the
application thereof to any person or circumstances, shall, for any reason and
to any extent, be invalid or unenforceable, the remainder of this Agreement and
the application of such provisions to the other persons or circumstances shall
not be affected thereby but rather shall be enforced to the greatest extent
permitted by law.
(h) This
Agreement contains the entire understanding among the parties and supersedes
any prior understanding and agreements between them respecting the within
subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between and among the parties hereto relating to the subject matter of this
Agreement which are not fully expressed herein.
EXHIBIT
A
_________________________ ______________ __________
General
Partner Contribution Percentage
_________________________ ______________ __________
General
Partner Contribution Percentage
_________________________ ______________ __________
Limited
Partner Contribution Percentage
_________________________ ______________ __________
Limited
Partner Contribution Percentage
EXHIBIT
B
Legal
Description: ____________________________________________________
___________________________________________________________________
___________________________________________________________________
