Exhibit 15(i)
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LIMITED PARTNERSHIP AGREEMENT
XYZ [insert name] Limited Partnership
THIS LIMITED PARTNERSHIP AGREEMENT is dated the xxth day of xxxx,
2001.
BETWEEN:
SYNREAL VENTURE XYZ MANAGEMENT CORPORATION, a company incorporated under
the laws of the Province of British Columbia, with an office at 600 - 000
Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "General Partner")
AND:
SYNREAL HOLDING CORPORATION, a company incorporated under the laws of the
Province of British Columbia, with an office at 600 - 000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Initial Limited Partner")
WHEREAS the General Partner and the Initial Limited Partner wish to form a
limited partnership upon the terms and conditions herein contained;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual
covenants hereinafter contained and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
hereto covenant and agree as follows:
1. INTERPRETATION
1.1 Definitions. In this agreement, the following terms shall
have the following meanings:
"Act" means The Partnership Act (British Columbia) as
currently enacted and as the same may, from time to time, be
modified, amended or re-enacted and any regulations passed
thereunder;
"Adjusted Total Capital Investment" means at any given time
the aggregate amount of capital funds paid to the Limited
Partnership for Units subscribed for by the Limited
Partners, less the aggregate amount of funds distributed to
the Limited Partners from Available Net Proceeds before
that time;
"Affiliate" means an affiliate as defined for the purposes
of the Securities Act (British Columbia) in force as at the
date of this Agreement;
"Agreement" means this agreement and any and all schedules
thereto, as the same may be amended, modified or
supplemented from time to time pursuant to the terms hereof;
"Appraised Value of a Unit owned by a Departing Limited
Partner" has the meaning given by section 12.4;
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"Associate" means an associate as defined for the purposes
of the Securities Act (British Columbia) in force as at the
date of this Agreement;
"Available Net Cash Flow" has the meaning given by section
8.1;
"Available Net Proceeds" has the meaning given by section
9.1;
"Business" means the business to be carried on by the
Limited Partnership as described in Section 2.4;
"Capital Account" of any Partner means the individual
capital account maintained in respect of such Partner
pursuant to the provisions of Section 3.5 hereof;
"Certificate" means the certificate filed under Part 3 of
the Act in respect of the Limited Partnership and any
amendments filed with respect thereto from time to time;
"Departing Limited Partner" has the meaning given by section
12.1(a);
"Exercise Period" has the meaning given by section 12.1(b);
"Extended Exercise Period" has the meaning given by section
12.2(a);
"Extraordinary Resolution" means (i) any resolution duly
passed at a meeting of the Limited Partners by the
affirmative vote of not less than a three-fourths majority
of the votes cast, or (ii) any written resolution submitted
to all the Limited Partners and signed in one or more
counterparts by the holders of not less than three-fourths
of the Units then issued;
"Fair Market Value of the Property" has the meaning given by
section 12.4(a);
"Fiscal Year" means the fiscal year of the Limited
Partnership;
"General Partner" means "Synreal Venture XYZ Royal
Management Corporation" or any Person who is admitted to the
Limited Partnership as a replacement or successor General
Partner in accordance with this Agreement;
"Gross Income" for a Fiscal Year of the Limited Partnership,
means the gross rental income and any income ancillary
thereto of the Limited Partnership for the period computed
in accordance with Canadian generally accepted accounting
principles applied consistently from year to year, modified
to the extent necessary or permissible to comply with
applicable provisions of the Income Tax Act (Canada);
"Initial Interest" means the interest in the capital of the
Limited Partnership held as at the date hereof by the
Initial Limited Partner and includes any Unit issued to
evidence that interest;
"Initial Limited Partner" means "Synreal Holding
Corporation";
"Limited Partners" means those Persons (other than the
Initial Limited Partner) who are admitted or entitled to be
admitted to the Limited Partnership as limited partner in
accordance with this Agreement;
"Limited Partnership" means the limited partnership formed
under the Act and pursuant to the terms of this Agreement;
"Net Income" or "Net Loss" for a Fiscal Year of the Limited
Partnership, means the income or loss of the Limited
Partnership for the period computed in accordance with
Canadian generally accepted accounting principles applied
consistently from year to year, modified to the extent
necessary or permissible to comply with applicable
provisions of the Income Tax Act (Canada);
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"Ordinary Resolution" means (i) any resolution duly passed
at a meeting of the Limited Partners by the affirmative vote
of more than half of the votes cast, or (ii) any written
resolution submitted to all the Limited Partners and signed
in one or more counterparts by the holders of more than half
of the Units then issued;
"Partners" at any time means the General Partner and the
Limited Partners of the Limited Partnership at that time;
"Person" means an individual, corporation, body corporate,
partnership, joint venture, association, syndicate, trust,
unincorporated organization or any trustee, executor,
administrator or other legal representative;
"Property" means the property described in Schedule A
hereto;
"Purchasing Remaining Limited Partners" has the meaning
given by section 12.2(b)(ii)(B);
"Put Notice" has the meaning given by section 12.1(a);
"Put Right" has the meaning given by section 12.1;
"Put Units" has the meaning given by section 12.2(b)(i);
"Register of Limited Partners" means the register of
Partners maintained at the registered office of the General
Partner and containing the information prescribed by the
Act;
"Remaining Limited Partners" has the meaning given by
section 12.2(b);
"Special Resolution" means (i) any resolution duly passed at
a meeting of the Limited Partners by the affirmative vote of
not less than a two-thirds majority of the votes cast, or
(ii) any written resolution submitted to all Limited
Partners and signed in one or more counterparts by the
holders of not less than two-thirds of the Units then
issued;
"Unanimous Resolution" means (i) any resolution duly passed
at a meeting of the Limited Partners by the affirmative vote
of all of the votes cast, or (ii) any written resolution
signed in one or more counterparts by the holders of all of
the Units;
"Unit" means an equal and undivided equity interest of a
Limited Partner in the Limited Partnership as set out in
this Agreement;
1.2 Currency. Unless otherwise expressly stated herein, all
references to dollar amounts in this Agreement shall mean
dollar amounts in lawful money of Canada.
1.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Province of
British Columbia and the federal laws of Canada applicable
therein.
1.4 Headings. The table of contents and headings preceding the
text, articles and sections hereof have been inserted for
convenience of reference only and shall not be construed to
affect the meaning, construction or effect of this
Agreement.
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1.5 Gender. Whenever the context of this Agreement so
requires, the masculine gender includes the feminine or
neuter, and any singular number includes the plural.
1.6 Schedules. The following schedules are attached hereto and
form part of this Agreement:
Schedule A - Description of Property
Schedule B - Form of Subscription for Units
Schedule C - Property Purchase Agreement
2. THE LIMITED PARTNERSHIP
2.1 Formation. The parties hereto hereby form, with effect
from the time of filing of the Certificate, a limited
partnership pursuant to the provisions of the Act and
pursuant to the terms of this Agreement. The rights and
liabilities of the Partners shall be as provided in the Act
except as herein otherwise expressly provided.
2.2 Name. The Business of the Limited Partnership shall be
conducted under the name "XYZ Limited Partnership" and/or
such other name or names as the General Partner shall
hereafter determine.
2.3 Subscription by Limited Partners. A Person wishing to
become a Limited Partner may subscribe for Units by
executing and delivering to the General Partner a
subscription form in the form attached as Schedule B hereto
and paying the subscription price as required thereunder.
Upon such Person's subscription form being accepted and
that Person paying the subscription price such Person will,
without any further act or formality, become a Limited
Partner holding that number of Units delineated on the
subscription form as though such Person had become a
signatory hereto.
2.4 Business. The business and purposes of the Limited
Partnership shall be to purchase, own, lease, rent,
finance, refinance, repair, maintain, improve and dispose
of the Property and any business or purpose which is
incidental or related thereto or carried on in connection
therewith. The Limited Partnership shall engage in no other
business unless authorized by Extraordinary Resolution.
2.5 Registered Office. The registered office of the Limited
Partnership shall at all times be the registered office of
the General Partner and may be changed from time to time to
another location in British Columbia by the General Partner
giving notice of such change to all Limited Partners and
the Registrar of Companies in accordance with the Act. The
Business shall be conducted at such place or places as may
from time to time be selected or approved by the General
Partner.
2.6 Names and Addresses of Partners. The address of the
registered office of the General Partner is: [use address
of legal counsel]. The names and addresses of the Limited
Partners will be as set forth in the Register of Limited
Partners.
2.7 Term. The Limited Partnership will be formed on the date
on which the initial Certificate respecting the Limited
Partnership is filed under the Act and shall continue until
terminated in accordance with the provisions of this
Agreement.
2.8 Fiscal Year. The fiscal year of the Limited Partnership
shall end on December 31 in each year or as the General
Partner may otherwise determine.
2.9 Filing of Certificate. As soon as practicable following
the execution hereof by the parties hereto, the General
Partner shall execute and cause to be filed the Certificate
required to establish the Limited Partnership as a limited
partnership under the Act.
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2.10 Register of Limited Partners. As soon as practicable
following the execution hereof by the parties hereto, the
General Partner shall prepare the Register of Limited
Partners in accordance with the Act and shall cause such
register to be maintained at its registered office and to
be available for inspection and copying during normal
business hours in accordance with the Act. The General
Partner shall keep the Register of Limited Partners current
and shall amend such register to reflect the admission,
removal and substitution of Limited Partners.
2.11 Banking Arrangements.
(a) The Limited Partnership's banking shall be conducted
at such bank or banks or trust company or trust
companies either within or outside the Province of
British Columbia as the General Partner shall from
time to time designate (the "Partnership Bank").
(b) All moneys received from time to time in connection
with the Limited Partnership shall be paid as soon as
practicable into the Partnership Bank in the same
drafts, cheques, bills or cash in which they are
received.
(c) Each disbursement made in connection with the Limited
Partnership shall (unless such disbursement must
necessarily be made in cash) be made by cheque or
cheques drawn on the Partnership Bank.
(d) All cheques, drafts and other orders to pay money
drawn upon or directed to the Partnership Bank shall
be signed by the General Partner or such other Person
or Persons as the General Partner shall from time to
time designate.
2.12 Other Activities of Partners. Any Partner or its
Affiliates or Associates may engage in or hold any interest
in any other business, venture, investment or activity
whether or not similar to or competitive with the Business
and will not be liable to account therefor to the Limited
Partnership or any Partner nor will the Limited Partnership
or any Partner have any right in or to any such other
business, venture, investment or activity or to the income,
proceeds or profits derived therefrom, and the pursuit of
such other businesses, ventures, investments or activities,
even if in competition with the Business, will not be
wrongful or improper.
3. CAPITAL AND CAPITAL CONTRIBUTIONS
3.1 Capital. The capital of the Limited Partnership shall
initially be the aggregate amount of the capital
contributions of the Partners.
3.2 Capital Contributions. Upon the formation of the Limited
Partnership, the Initial Limited Partner shall contribute
to the capital of the Limited Partnership all of its right,
title and interest in and to the Property and under that
certain Offer to Purchase Real Estate made the xxth day of
xxx, 2001 a copy of which along with amendments is attached
as Schedule C (and which shall have a deemed value of $1.00
after reimbursement of any deposits paid by the Initial
Limited Partner thereunder) and the Initial Limited Partner
shall receive a Unit for the same and the General Partner
shall contribute $1.00 to the capital of the Limited
Partnership. A Limited Partner may make a contribution to
the capital of the Limited Partnership through the purchase
of two or more Units for an amount per Unit determined by
the General Partner. A Limited Partner who has purchased a
Unit is not required to make any further contribution to
the capital of the Limited Partnership.
3.3 Nature of a Unit. The interest of the Limited Partners in
the Limited Partnership shall be divided into and
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represented by Units. Except as otherwise expressly
provided herein, Units shall have equal voting,
distribution, liquidation and other rights and shall have
no preference, conversion, exchange, pre-emptive or
redemption rights. Fractional Units shall not be issued.
3.4 Redemption of Initial Interest. The Initial Interest shall
be redeemed by the General Partner upon closing of the
purchase of the Property by the Limited Partnership for the
sum of $1.00 and concurrently therewith the Limited
Partnership shall reimburse any deposits paid by the
Initial Limited Partner on account of the Property
purchase. The Initial Limited Partner shall not sell,
assign or transfer the Initial Interest except in
accordance with the aforesaid redemption.
3.5 Individual Capital Accounts of the Partners.
(a) The General Partner will maintain a separate Capital
Account for each Partner which shall initially be
credited with the amount of such Partner's capital
contribution to the Limited Partnership. No Partner
shall be entitled to withdraw any part of such
Partner's Capital Account or to receive any
distribution except as provided in this Agreement.
The interest of any Partner in the Limited
Partnership shall not terminate solely by reason of
there being a negative or a zero balance in his
Capital Account, nor shall a Partner be liable to
repay an amount of any negative balance in his
Capital Account except from future allocations of Net
Income.
(b) As at the end of each Fiscal Year there shall be
credited to each Partner's Capital Account the
portion of the Net Income (if any) for such Fiscal
Year to which such Partner was entitled.
(c) As at the end of each Fiscal Year, there shall be
debited to each Partner's Capital Account:
(i) the portion of the Net Loss (if any) in such
Fiscal Year which is to be borne by such
Partner, plus
(ii) the amount of the distributions (if any) made
during such Fiscal Year to such Partner
pursuant to this Agreement.
(d) As at the end of each Fiscal Year, there shall be
credited or debited to each Partner's Capital
Account, any other amounts as may be required by
Canadian generally accepted accounting principles
applied consistently from year to year.
3.6 Interest on Capital Contributions. No Partner shall be
entitled to interest on the amount of such Partner's
capital contribution to the Limited Partnership.
3.7 Borrowing from Outside Sources. The General Partner may
borrow money from any Affiliate or Associate of the General
Partner, any Limited Partner, or any Affiliate or Associate
of a Limited Partner or from outside sources, from time to
time for the purposes of the Business, and may give
security for such borrowing on or over the assets of the
Limited Partnership and may seek and obtain guarantees from
any Person in respect of any such borrowing and may pay an
amount that the General Partner acting bona fide feels is
reasonable in the circumstances to any Person for giving
such a guarantee.
3.8 Registrar and Transfer Agent. The General Partner shall
act as registrar and transfer agent for the Limited
Partnership and shall maintain such books, including but
not limited to the Register of Limited Partners, as are
necessary and appropriate to record the names and addresses
of the Limited Partners, the number of Units held by each
Partner, the particulars of assignments of Units and the
Capital Account of each Partner.
3.9 Non-Recognition of Trust or Equity. The General Partner
shall not be bound to see to the execution of any trust
(whether express, implied or constructive), charge, pledge
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or equity to which any Unit or any interest therein is
subject, nor to ascertain or inquire whether any transfer
or assignment of any Unit or any interest therein by any
Limited Partner is authorized by such trust, charge, pledge
or equity nor to recognize any Person as having an interest
in any Unit except for the Person shown on the Register of
Limited Partners as the holder of such Unit. The receipt
by the Person in whose name any Unit is recorded on the
Register of Limited Partners shall be a sufficient
discharge for all monies, securities and other property
payable, issuable or deliverable in respect of such Unit
and from all liability therefor. The Limited Partnership
and the General Partner are entitled to treat the Person in
whose name a Unit is registered as the absolute owner
thereof.
3.10 Joint Unit Holders. In the case of joint registered
holders of a Unit, the vote of the senior who exercises a
vote, whether in person, by proxyholder or by written
resolution, shall be accepted to the exclusion of the votes
of the other joint registered holders; and for this purpose
seniority shall be determined by the order in which the
names stand in the Register of Limited Partners, the Person
whose name stands first being senior to the Person whose
name stands second, and so on.
3.11 Pledge of a Unit. The Limited Partnership has a lien on any
Unit held by a Partner for any debt or capital contribution
owing by that Limited Partner to the Limited Partnership
and each Limited Partner hereby hypothecates and covenants
and agrees that he will pledge his Units to the General
Partner as security for any such debt or capital
contribution owing to the Limited Partnership. Subject to
the foregoing, a Limited Partner may not pledge or
hypothecate a Unit held by him.
3.12 Return of Capital Contribution. The General Partner is
not personally liable for the return of any capital
contribution made by a Limited Partner to the Limited
Partnership.
4. THE LIMITED PARTNERS
4.1 Status of Each Limited Partner. Each Limited Partner
represents and warrants to each other Limited Partner and
to the General Partner that such Limited Partner:
(a) is not a "non-resident" of Canada within the meaning
of the Income Tax Act (Canada) or a "non-Canadian"
for the purposes of the Investments Canada Act
(Canada);
(b) if an individual, is of the age of majority and has
the capacity and competence to enter into and be
bound by this Agreement;
(c) if a corporation, possesses the corporate power and
authority to enter into and be bound by this
Agreement;
(d) if the trustee of a trust, has the power and
authority to act for and bind such trust and to enter
into and be bound by this Agreement;
(e) is not, and no interest in the Limited Partner is, a
"tax shelter investment" as defined for the purposes
of the Income Tax Act (Canada).
Each Limited Partner covenants and agrees that he will not
permit his representations and warranties under this section
to become untrue at any time, nor transfer nor purport
to transfer his Units to any Person if such change, transfer
or purported transfer: (i) does not comply with the
provisions article 15, (ii) will have the effect of altering
the status of the Limited Partnership in relation to the
Income Tax Act (Canada) or any similar statute affecting
such status or, (iii) does not comply with applicable
securities laws. Each Limited Partner covenants and agrees
that he will promptly provide evidence to the General
Partner upon request that his representations and warranties
under this section 4.1 remain true or of any other matter
which affects or may from time to time affect the Limited
Partnership or the General Partner.
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4.2 Limitation of Authority of Limited Partners. Except to the
extent permitted by law, no Limited Partner will as such:
(a) take part in the control or management of the
Business or exercise any power in connection
therewith;
(b) execute any document that binds or purports to bind
any other Partner or the Limited Partnership;
(c) hold himself out as having the power or authority to
bind any other Partner or the Limited Partnership; or
(d) have any authority or power to act for or undertake
any obligation or responsibility on behalf of any
other Partner or the Limited Partnership.
4.3 Limited Liability. Except as provided by: (i) the Act, or
(ii) any written guarantee actually given by such Limited
Partner with respect to Limited Partnership debt
obligations, or (iii) any specific written assumption of
liability entered into by such Limited Partner, no Limited
Partner is liable for the debts, liabilities or obligations
of the Limited Partnership, nor shall any Limited Partner
be required under any circumstances to make any
contribution of capital or loan to the Partnership except
as may be expressly provided for herein.
4.4 Binding Effect of Agreement. Any Person admitted to the
Limited Partnership as a Limited Partner shall be subject
to and bound by all the provisions of this Agreement as if
originally a party to this Agreement.
4.5 Liens. No Limited Partner shall register any lien or
charge against any property or asset of the Limited
Partnership or permit any lien or charge to be recorded or
remain undischarged against any property or asset of the
Limited Partnership.
4.6 Partition or Sale. No Limited Partner shall be entitled to
bring any action for partition or sale in connection with
any interest in any property or asset of the Limited
Partnership.
5. MEETINGS OF THE LIMITED PARTNERSHIP
5.1 Calling of Meetings. The General Partner may call meetings
of the Partners when and if required from time to time in
the best interests of the Limited Partnership. In
addition, a meeting of the Partners shall be called by the
General Partner within 21 days after receipt by the General
Partner of the written request of one or more Limited
Partners (the "Requisitioning Partners") holding in the
aggregate not less than one-third of the outstanding Units,
such request specifying the purpose or purposes for which
such meeting is to be called. Any such meeting shall be
held at such time as may be designated by the General
Partner at the registered office of the General Partner or
at such place in British Columbia as the General Partner
reasonably designates or by telephone conference call. A
meeting held at a place may include those who participate
at that meeting by telephone conference call and such
participants shall be deemed to be in attendance at that
meeting.
5.2 Quorum. Subject to this Agreement, a quorum at any meeting
of Partners will consist of 2 or more Persons present in
person (including those participating by way of a telephone
conference call) who collectively hold or represent by
proxy not less than 50% of the Units and if, within half an
hour after the time fixed for the holding of that meeting,
a quorum is not present, the meeting:
(a) if called by the Requisitioning Partners will be
dissolved, and
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(b) if called by the General Partner, will be adjourned
to be held at the same time and place and upon a date
not less than 15 days nor more than 30 days
thereafter and the General Partner will give not less
than 7 days' notice to all Limited Partners of the
date of the reconvening of the adjourned meeting, and
at that reconvened meeting the quorum will consist of
the Limited Partners then present in person or
represented by proxy or participating by conference
call.
5.3 Notice. At least 14 days' notice of all meetings of the
Partners, stating the time, place and purpose of the
meeting, shall be given by the General Partner to each
Limited Partner. Any accidental omission to give notice of
a meeting to, or the non-receipt of notice of a meeting by,
any Limited Partner, will not invalidate the proceedings at
that meeting.
5.4 Voting. Except as otherwise provided for herein, every
question submitted to a meeting shall be decided by
Ordinary Resolution where each Partner shall have one vote
for each Unit held by such Partner. In the case of an
equality of votes, the chairman of the meeting shall not
have a casting vote. Votes may be given in person or by
proxy and a Person appointed by proxy need not be a
Partner. No Person other than the holder of a Unit or a
Person appointed by proxy is entitled to vote at a meeting
of the Partners. At any meeting of the Partners on a
matter voted upon for which no poll is required or
requested, a declaration made by the chairman of the
meeting as to the voting on any particular resolution shall
be conclusive evidence thereof.
Except as otherwise set out in this Agreement, the Limited
Partners may only by Extraordinary Resolution:
(a) amend the Limited Partnership, subject to the
exceptions set out in article 17;
(b) dissolve the Limited Partnership;
(c) waive any default on the part of the General Partner
on such terms as the Limited Partners may determine;
(d) continue the Limited Partnership in the event that
the Limited Partnership is terminated by operation of
law;
(e) agree to any compromise or arrangement by the Limited
Partnership with any creditor, creditors, or class or
classes of creditors or with the holders of any
shares or securities of the General Partner;
(f) require the General Partner on behalf of the Limited
Partnership to enforce any obligation or covenant on
the part of any Limited Partner provided for in this
Agreement;
(g) authorize the sale of all or substantially all of the
assets and undertaking of the Limited Partnership;
(h) authorize the issuance of additional Units after the
acquisition of the Property; and
(i) amend, modify, alter or repeal an Extraordinary
Resolution previously passed by the Partners.
5.5 Proxies. At any meeting of the Partners, any Partner
entitled to vote thereat may vote by proxy. A proxy shall
contain the date thereof and the appointment and name of
the nominee and may contain restrictions, limitations or
instructions as to the manner in which the Units in respect
of which the proxy is given are to be voted. A proxy shall
be revoked if the Partner who executed such proxy attends
in person (or by telephone conference call) at the meeting
of the Partners at which the proxy is to be used. A proxy
may also be revoked by an instrument in writing executed by
the Partner and deposited with the chairman of the meeting
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prior to the meeting at which the proxy is to be used. A
proxy purporting to be executed by or on behalf of a
Partner shall be deemed valid unless challenged at or prior
to its exercise, and the Person challenging will have the
burden of proving to the satisfaction of the chairman of
the meeting that the proxy is invalid and any decision of
the chairman concerning the validity of a proxy will be
final.
5.6 Form of Proxy. Every proxy will be substantially in the
form that follows or any other form that may be approved by
the General Partner or be satisfactory to the chairman of
the meeting at which it is sought to be exercised:
"I, [ ], of [ ]
in the Province of [ ],
being a Limited Partner of [
] Limited Partnership, hereby appoint [
] of [ ] in the Province of [
] as my proxy with full power of substitution
to vote for me and on my behalf at the
meeting of Limited Partners to be held on the
[ ] day of [ ], 20[
], and every adjournment thereof and every
poll that may take place in consequence
thereof. As witness my hand this [ ]
day of [ ], 20[ ]."
5.7 Corporations. A Limited Partner that is a corporation
may appoint an officer, director, or other authorized
person as its representative to attend, vote, and act in
its behalf at a meeting of the Limited Partners.
5.8 Chairman. The General Partner may nominate one of its
directors, officers or employees, who need not be a Limited
Partner, to be chairman of a meeting of the Partners and
the person so nominated by the General Partner will be
chairman of that meeting unless the Limited Partners elect
a different chairman by Ordinary Resolution.
5.9 Additional Rules and Procedures. To the extent that the
rules and procedures for the conduct of a meeting of the
Partners are not prescribed in this Agreement, such rules
and procedures shall be determined by the chairman.
5.10 Authorized Attendance. The General Partner shall have the
right to authorize the presence of any Persons, in addition
to proxies, who are not Partners, at any meeting of the
Partners. Any proxy and, with the approval of the General
Partner, any other person shall be entitled to address the
meeting.
5.11 Minutes. The General Partner will cause minutes to be kept
of all proceedings and resolutions at every meeting, and
any consent resolution of the Limited Partners to be made
and entered in books to be kept for that purpose and any
minutes, if signed by the chairman of the meeting or by the
chairman of the next succeeding meeting, will be deemed to
be evidence as to the matters set out therein and as to the
due convening and holding of the meeting and the passage of
each resolution thereat convened and held and all
resolutions and proceedings shown in them will be deemed to
have been duly passed and taken.
5.12 Consent Resolutions. All powers that may be exercised by
the Partners at any meeting may also be exercised by
written resolution signed in one or more counterparts by
the requisite percentage of the holders of the Units.
6. THE GENERAL PARTNER
6.1 Status of General Partner. The General Partner represents,
warrants and covenants that the General Partner:
(a) is a corporation duly incorporated and in good
standing under the laws of the Province of British
Columbia; and
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(b) has the capacity and corporate authority to act as
General Partner and to perform its obligations under
this Agreement, and such obligations do not and will
not conflict with or breach its articles, bylaws, or
any agreement by which it is bound.
6.2 Management of the Limited Partnership. The General Partner
shall be the sole general partner of the Limited
Partnership and shall have exclusive authority to manage,
control, administer and operate the Business and affairs of
the Limited Partnership and, subject to section 6.6, to
make all decisions regarding the Business. Pursuant to the
foregoing, the General Partner shall have all of the rights
and powers of a general partner as provided in the Act and
as otherwise provided by law (and without limited the
generality of the foregoing shall have the right, power,
and authority to grant mortgages and other security
interests over the Property to lenders of the Limited
Partnership), and any action taken by the General Partner
shall constitute the act of and serve to bind the Limited
Partnership. In dealing with the General Partner acting on
behalf of the Limited Partnership, no Person shall be
required to inquire into the authority of the General
Partner to bind the Limited Partnership. Persons dealing
with the Limited Partnership are entitled to rely
conclusively on the power and authority of the General
Partner as set forth in this Agreement. Notwithstanding
anything in this Agreement to the contrary, the General
Partner shall not be responsible for providing property
management services of the type ordinarily provided by a
property management company for properties similar to the
Property and it is acknowledged that these duties will be
provided for by a fee-for-service property manager engaged
by the General Partner on behalf of the Limited
Partnership.
6.3 Authority of General Partner. It is acknowledged and
agreed that the General Partner is authorized to do on
behalf of the Limited Partnership all things which, in its
sole judgement, are necessary, proper or desirable to carry
on the Business.
6.4 Limitation of Liability. Neither the General Partner nor
any of its officers, directors, agents or employees shall
be liable, responsible or accountable in damages or
otherwise to the Limited Partnership or any Limited Partner
for any action taken or failure to act on behalf of the
Limited Partnership within the scope of the authority
conferred on the General Partner by this Agreement or by
law unless such action or omission was performed or omitted
fraudulently or in bad faith or constituted wanton or
wilful misconduct or gross negligence.
6.5 Indemnification. The Limited Partnership will indemnify
the General Partner, its officers, directors, shareholders,
employees, or agents from and against losses, expenses or
damages by reason of any act, omission or alleged act or
omission, arising out of the activities of the General
Partner on behalf of the Limited Partnership or in
furtherance of the interests of the Limited Partnership,
but only if the actual or alleged act or omission on which
the actual or threatened action, proceeding, or claim is
based was done in good faith and not fraudulently or in bad
faith or as a result of wanton or willful misconduct or
gross negligence of the General Partner or any of its
officers, directors, shareholders, employees, or agents.
6.6 Restrictions upon the General Partner. Subject to any
express terms in this Agreement to the contrary, the
General Partner will not:
(a) cause the Limited Partnership to sell all or
substantially all of its assets without the prior
approval of the Limited Partners expressed by
Extraordinary Resolution;
(b) commingle the funds of the Limited Partnership with
the funds of the General Partner or any other Person;
(c) cause the Limited Partnership to guarantee any
obligation or liability of or make any loan to the
General Partner or any of its Affiliates or
Associates; or
40
(d) be paid or cause any of its Affiliates or Associates
to be paid for providing any goods or services to the
Limited Partnership in addition to those provided for
under the terms of this Agreement unless the charges
of the General Partner or any of its Affiliates or
Associates to the Limited Partnership therefor are no
more than the prevailing industry rate(s) for goods
or services of comparable quality.
6.7 Exercise of Duties. The General Partner will:
(a) exercise the powers and discharge its duties under
this Agreement and the Act honestly, in good faith
and in the best interests of the Limited Partners;
(b) exercise the care, diligence, and skill of a
reasonably prudent person; and
(c) maintain the confidentiality of all financial and
other information and data in respect of each Limited
Partner that it may obtain through or on behalf of
the Partnership, the disclosure of which could
adversely affect the interests of the Limited
Partnership or a Limited Partner, except to the
extent that disclosure is required by law or is in
the best interests of the Limited Partnership.
6.8 Expenses. All expenses incurred by the General Partner in
managing and conducting the Business, including the cost of
such professional, technical, administrative and other
services and advice as it shall deem necessary, shall be
paid by the Limited Partnership.
6.9 Employment of an Affiliate or Associate. The General
Partner may employ or retain any Affiliate or Associate on
behalf of the Limited Partnership to provide goods or
services to the Limited Partnership subject to the
provisions of section 6.6(d).
6.10 Unlimited Liability of General Partner. The General
Partner shall have unlimited liability for the debts,
liabilities and obligations of the Limited Partnership.
6.11 Title to Assets.
(a) The General Partner or its nominee shall act as
agent, nominee and bare trustee for the purpose of
facilitating the holding of title to the Property and
any or all other property and assets of the Limited
Partnership for the sole benefit of the Limited
Partnership.
(b) Property and assets contributed to or acquired by the
Limited Partnership from time to time may be held and
registered in the name of the General Partner or its
nominee as agent, nominee or bare trustee for the
Limited Partnership or in the name of the Limited
Partnership.
(c) Despite the fact that the General Partner may hold
title to property and assets of the Limited
Partnership in its own name as agent, nominee or bare
trustee as aforesaid, the Limited Partnership will
have all of the rights attached to legal and
beneficial ownership of the assets of the Limited
Partnership subject to the rights and obligations set
out in this Agreement.
(d) The General Partner shall execute and deliver, and
shall cause its agents, nominees and trustees to
execute and deliver, such declarations of bare trust
and the like in favour of the Limited Partnership as
it may be requested to do from time to time by
Ordinary Resolution.
(e) The General Partner shall from time to time when
directed by Special Resolution convey all or any of
the property and assets held by it as bare trustee,
agent or nominee for the Limited Partnership to the
Limited Partnership or such other Person as the
Limited Partners by Special Resolution may direct.
41
6.12 Safekeeping of Assets. The General Partner is responsible
for the safekeeping and use of all funds and assets of the
Limited Partnership whether or not in its immediate
possession or control and will not employ or permit another
to employ the funds or assets except for the exclusive
benefit of the Limited Partnership.
6.13 Asset Management Fee. As a fee for asset management duties
performed in connection with this Agreement, the Limited
Partnership shall pay to the General Partner (unless and
until such time it resigns or is removed as general partner
pursuant to this article 6) an annual asset management fee
in the amount of [1.5 to 3.0%] of Gross Income (pro rated
for partial years), excluding any income arising on the
disposition of any of the Property. The General Partner may
direct and delegate the aforenoted duties to an Affiliate
or Associate (and enter into all necessary agreements in
this regard on behalf of the Limited Partnership) and in
that instance that Affiliate or Associate shall be entitled
to charge the aforesaid asset management fee, provided that
the General Partner will guarantee the due performance of
those services being undertaken by its Affiliate or
Associate.
6.14 Investment Arrangement Fee and Financial Arrangement Fee.
As a fee for sourcing the Property and establishing the
Limited Partnership, the Limited Partnership shall pay to
Synreal Services Corporation, within one month following
the acquisition of the Property, an investment arrangement
fee in the amount of $xx [6-8% of property purchase price].
As a fee for its financial services in arranging mortgage
financing for the Limited Partnership, the Limited
Partnership shall pay to Synreal Services Corporation,
within one month following the acquisition of the Property,
a financial arrangement fee in the amount of $xx [1-2% of
mortgage amount]. The General Partner is authorized to
enter into an agreement with Synreal Services Corporation
on behalf of the Limited Partnership to give effect to this
section 6.14.
6.15 Initial Expenses. The Limited Partnership will reimburse
the General Partner all reasonable expenses incurred by the
General Partner to acquire the Property, to obtain
accounting and tax advice for the Limited Partnership, to
establish the Limited Partnership, and to obtain
subscriptions for the Units; provided however that if the
Property is not acquired as contemplated by this Agreement,
the maximum amount each Limited Partner will be responsible
for under this provision will be limited to [$xx] per Unit.
If requested by the Limited Partnership, the General
Partner, in a timely manner, shall provide the Limited
Partners an accounting for such expenses in reasonable
detail.
6.16 Ownership by Principals of General Partner. The Limited
Partners acknowledge that the principals of the General
Partner and/or their Associates may own, directly or
indirectly, one or more Units as a Limited Partner, that
one or more of the Limited Partners may directly or
indirectly have a financial interest in the General Partner
and that the monies earned by such Limited Partners, by
virtue of their direct or indirect financial interest in
the General Partner, shall be in addition to what monies
the Limited Partners earn by virtue of their being a
Limited Partner hereunder and shall not render those
Limited Partners liable as general partners for the debts
and liabilities of the Limited Partnership.
6.17 Execution of Documents. Any and all powers of the General
Partner may be exercised by the execution and delivery by
the General Partner (or an agent or employee designated by
it) for and on behalf of and in the name of the Limited
Partnership, under seal or otherwise, of instruments,
deeds, agreements or documents in such forms as the General
Partner (or an agent or employee designated by it) may deem
sufficient.
6.18 Transactions Involving Affiliates. Subject to contrary
specific provisions of this Agreement, the validity of a
transaction, agreement or payment involving the Limited
Partnership and an Affiliate or Associate is not affected
42
by reason of the relationship between the General Partner
and the Affiliate or Associate or by reason of the approval
or lack thereof of the transaction, agreement, or payment
by the directors of the General Partner, all of whom may be
officers or directors of or otherwise interested in or
related to the Affiliate or Associate.
6.19 Resignation or Transfer. The General Partner shall not
resign as the general partner of the Limited Partnership
and shall not sell, assign or otherwise dispose of its
interest as the general partner in the Limited Partnership
except with the approval of the Limited Partners expressed
by Ordinary Resolution.
6.20 Replacement of General Partner. The Limited Partners, may
by Ordinary Resolution, remove the General Partner and
concurrently substitute another Person as General Partner
in its stead upon 45 days notice to the General Partner,
provided however no notice will be required to be given to
the General Partner upon the occurrence of any of the
following:
(a) adjudication of the General Partner as bankrupt or
the appointment of a receiver of the assets and
undertaking of the General Partner;
(b) General Partner making an assignment for the benefit
of creditors;
(c) dissolution, winding up, or liquidation of the
General Partner; or
(d) default by the General Partner under any provision of
this Agreement that remains unremedied for more than
10 days after the Limited Partners give notice to the
General Partner by Ordinary Resolution to remedy the
default.
6.21 Repayment Obligation. Prior to the removal of the General
Partner, the Limited Partnership must repay, or cause to be
repaid, any amounts advanced to the Limited Partnership by
the General Partner.
6.22 Transfer of Management. Upon the appointment of any
replacement general partner, the General Partner shall do
all things and shall take all steps to immediately and
effectively transfer the management and operation, assets,
books, records and accounts of the Limited Partnership to
the new general partner including the execution of all
registrations, bills of sale, Certificates and other
documents whatsoever which may be necessary to effect such
change and to convey all the assets of the Limited
Partnership to the replacement general partner of the
Limited Partnership. All costs of such transfer shall be
for the account of the Limited Partnership.
6.23 Release. On the resignation or removal of a General
Partner as general partner of the Limited Partnership, the
Limited Partnership will release and hold harmless the
General Partner from any cost, damages, liability or
expense suffered or incurred by the General Partner as a
result of or arising out of any event that occurs in
relation to the Limited Partnership after such resignation
or removal, except if the actual or alleged event on which
the cost, damages, liability or expense is based was caused
by an act of fraud, bad faith, wanton or willful
misconduct, or gross negligence of the General Partner or
any of its officers, directors, shareholders, employees, or
agents.
6.24 Successor. Any Person appointed as a replacement general
partner of the Limited Partnership will, prior to assuming
its responsibilities execute:
(a) such documents required to give effect to the
assumption; and
(b) this Agreement;
and shall from that time forward, for all purposes and in
all ways, assume the powers, duties and obligations of the
General Partner under this Agreement and shall be entitled
to all benefits accruing to the General Partner hereunder
and shall be subject to the terms of this Agreement.
43
7. RECORDS, REPORTS AND REPORTING
7.1 Records and Books of Account. Proper and complete records
and books of account shall be kept by the General Partner
in which shall be entered fully and accurately all
transactions and other matters relevant to the Business as
are usually entered into records and books of account
maintained by persons engaged in business of a like
character. The Limited Partnership's financial statements,
books and records shall be prepared in accordance with
Canadian generally accepted accounting principles,
consistently applied. The books and records shall at all
times be maintained at the registered office of the Limited
Partnership and shall be open for the reasonable
inspection, examination, and copying by the Limited
Partners or their duly authorized representatives during
reasonable business hours.
7.2 Accountant. The General Partner shall, on behalf of the
Limited Partnership, retain a chartered accountant to act
as the accountant for the Limited Partnership. The General
Partner shall cause an audit to be undertaken of the
Limited Partnership's financial records upon the passage of
an Ordinary Resolution to that effect.
7.3 Annual Report. The General Partner will send or cause to
be sent to each Limited Partner no later than 75 days after
the end of each Fiscal Year an annual report containing the
unaudited financial statements of the Limited Partnership
for the Fiscal Year just ended, including:
(a) a balance sheet;
(b) an income or loss statement;
(c) a statement of changes in financial position;
(d) a statement of changes in capital;
(e) the accountant's report on the financial statements;
(f) a report of the activities of the Limited
Partnership;
(g) a report on allocations and distributions, if any, to
the Partners; and
(h) any other information that, in the reasonable opinion
of the General Partner, is material to the operations
of the Limited Partnership.
7.4 Income Tax Information. The General Partner will send or
cause to be sent to each Limited Partner within 75 days
after the end of each Fiscal Year (or by such earlier time
as may be required to comply with requirements of
governmental authorities), all information concerning the
Limited Partnership necessary for the Limited Partners to
prepare their income tax returns. It is acknowledged that
it is the responsibility of each Limited Partner to prepare
his own respective income tax return.
8. SHARE AND DISTRIBUTION OF CASH FLOW FROM OPERATIONS
8.1 Distribution Formula of Cash Flow from Operations. In each
Fiscal Year of the Limited Partnership, all cash flow from
operations (not including proceeds from the sale or
refinancing of the Property or insurance settlement) earned
by the Limited Partnership in such year after payment of
all current obligations of the Limited Partnership,
including debt service payments under the mortgage
financing and other borrowings, less such reasonable
reserve as determined by the General Partner (the
"Available Net Cash Flow") shall be distributed to the
Limited Partners. There shall be no distribution of
Available Net Cash Flow to the General Partner.
44
8.2 Distribution of Available Net Cash Flow Among the Limited
Partners. Distribution of Available Net Cash Flow among the
Limited Partners will be made according to the number of
Units held by each Limited Partner at the time of
distribution as a proportion of the total number of Units
outstanding.
8.3 Distribution Frequency. The General Partner will distribute
Available Net Cash Flow to the Limited Partners on a
quarterly basis not later than 30 days after each calendar
quarter in each year.
9. SHARE AND DISTRIBUTION OF NET PROCEEDS FROM SALE,
REFINANCING OR INSURANCE SETTLEMENTS
9.1 Distribution Formula of Net Proceeds. All net proceeds
earned by the Limited Partnership from the sale or
refinancing of, or receipt of insurance payments (to the
extent same have not been applied to the Property to repair
or rebuild any damage or destruction thereof) related to,
the Property, less such reasonable reserve as determined by
the General Partner ("Available Net Proceeds") shall be
distributed on the following basis:
(a) first, to repay all current obligations of the
Limited Partnership, including, without limitation,
any loans advanced by General Partner or any of the
Limited Partners;
(b) second, to repay the Limited Partners their
outstanding Adjusted Total Capital Investment;
(c) last, the balance of Available Net Proceeds shall be
distributed to the Limited Partners.
There shall be no distribution of Available Net Proceeds to
the General Partner.
9.2 Distribution of Available Net Proceeds Among the Limited
Partners. Distribution of Available Net Proceeds among the
Limited Partners will be made according to the number of
Units held by each Limited Partner at the time of
distribution as a proportion of the total number of Units
outstanding.
9.3 Distribution Frequency. The General Partner will distribute
Available Net Proceeds to the Limited Partners within 60
days after receipt thereof by the General Partner or such
later date as may be approved by Ordinary Resolution.
9.4 Repayments. If, as determined by the accountant of the
Limited Partnership, it appears that any Limited Partner
has received from the Limited Partnership an amount
(whether on account of article 8 or 9) which is in excess
of such Limited Partner's entitlement, such Limited Partner
shall forthwith reimburse the Limited Partnership to the
extent of such excess upon notice by the General Partner.
10. ALLOCATION OF NET INCOME AND NET LOSS
10.1 Allocation of Net Income and Net Loss. The Net Income or
Net Loss, as the case may be, for a Fiscal Year will be
allocated as follows:
(a) 0.001% to the General Partner; and
(b) 99.999% rateably to the Limited Partners at the end
of the Fiscal Year.
10.2 Capital Cost Allowance. In connection with the
determination of the Net Income for income tax purposes for
each Fiscal Year, the Limited Partnership shall deduct
capital cost allowance, if any, and other discretionary
deductions as may be available to the Limited Partnership
for that Fiscal Year under applicable income tax
legislation to the maximum extent permitted.
45
11. POWER OF ATTORNEY
11.1 Power of Attorney. Each of the Limited Partners and the
Initial Limited Partner, by his execution hereof or a
counterpart hereof, by his attorney or otherwise, hereby
irrevocably constitutes and appoints the General Partner,
with full power of substitution, his true and lawful
attorney and agent, with full power and authority, in his
name, place and stead, and for his use and benefit, to:
(a) execute, swear to, record and file in the appropriate
public offices any and all of the following:
(i) all Certificates and other instruments
necessary to form, qualify, continue and keep
in good standing the Limited Partnership as a
valid and subsisting limited partnership under
the laws of the Province of British Columbia
and in all jurisdictions where it carries on
its Business;
(ii) all instruments necessary to reflect any
amendment to this Agreement, if such amendment
is authorized pursuant to this Agreement;
(iii) all instruments necessary to reflect the
dissolution and termination of the Limited
Partnership, if such dissolution and
termination is authorized pursuant to this
Agreement; and
(iv) any elections under the Income Tax Act (Canada)
and under any analogous legislation on behalf
of the Limited Partnership as the General
Partner may in its sole discretion deem
necessary or advisable in connection with the
affairs of the Limited Partnership, including
its dissolution;
(b) execute this Agreement and any duly authorized
amendment hereto;
(c) execute and file with any governmental authority any
documents necessary to be filed in connection with
the Business, property, assets or undertaking of the
Limited Partnership;
(d) execute and deliver such documents on behalf of and
in the name of the Limited Partnership and for the
Limited Partners and the Initial Limited Partner as
may be necessary to give effect to the Business and
the provisions of this Agreement; and
(e) execute and deliver such documents, conveyances and
other instruments as may be necessary in the
discretion of the General Partner to give effect to
the terms and conditions of the dissolution of the
Limited Partnership pursuant to this Agreement,
including, without limiting the generality of the
foregoing, any documentation setting forth the terms
and conditions to govern the relationship between the
Limited Partners and the Initial Limited Partner with
respect to their respective interests in the property
of the Limited Partnership subsequent to a
dissolution of the Limited Partnership as recommended
by the General Partner pursuant to this Agreement;
the authority granted to the General Partner pursuant
to this section 11.1(e) shall not merge on the
dissolution of the Limited Partnership, but shall
continue in full force and effect thereafter.
11.2 Irrevocability. The grant of authority contained in
section 11.1:
(a) is coupled with an interest, is irrevocable and shall
survive the death or incapacity of the Limited
Partner or the Initial Limited Partner granting the
power;
(b) may be exercised by the General Partner on behalf of
each Limited Partner or the Initial Limited Partner
46
by a facsimile signature or by listing all of the
Limited Partners and/or the Initial Limited Partner
executing any instrument with a single signature as
attorney and agent for all of them;
(c) subject to this section 11.2, shall survive the
transfer by a Limited Partner of the whole or any
portion of his Units; and
(d) shall extend to and be binding upon the heirs,
executors, administrators, legal personal
representatives, successors and assigns of the
Limited Partners and the Initial Limited Partner.
The power of attorney shall terminate on any transfer by the
Limited Partner of his Units in the Limited Partnership
except with respect to such actions as are necessary to
effect substitution of the transferee as a Limited Partner
in the Limited Partnership. Each of the Limited Partners
and the Initial Limited Partner agrees to be bound by any
representations and actions made or taken in good faith by
the General Partner pursuant to the power of attorney in
accordance with the terms thereof and hereby waives any and
all defences which may be available to him to contest,
negate or disaffirm the actions of the General Partner taken
in good faith under the power of attorney.
11.3 Exercise of Power of Attorney. Any act within the scope of
a power of attorney granted pursuant to section 11.1 that
is done by the General Partner on behalf of a Limited
Partner or the Initial Limited Partner will be deemed
conclusively to have been a valid exercise of the power of
attorney if expressly done by the General Partner on behalf
of the Limited Partnership or in its capacity as general
partner of the Limited Partnership, or in any other form or
manner that may be appropriate to the circumstances, and
any instrument that could legally be executed by the
General Partner pursuant to a power of attorney granted
hereby and is executed by the General Partner as the
general partner of the Limited Partnership will be binding
as if executed by the Limited Partner or the Initial
Limited Partner who granted the power.
12. PUT RIGHT
12.1 Exercise of Put Right. Each Limited Partner shall have the
right (the "Put Right"), subject to section 12.2(d)(i), to
require those Limited Partners who do not exercise their
Put Rights in accordance with article 12 to acquire all,
but not less than all, of the Units held by the Limited
Partner in accordance with the following rules:
(a) subject to section 12.2(a), the Put Right will be
exercisable by written notice (the "Put Notice"),
delivered to the General Partner within the time
limits set out in section 12.1(b), stating that the
Limited Partner (a "Departing Limited Partner")
wishes to exercise the Departing Limited Partner's
Put Right; and
(b) the Departing Limited Partner must deliver the Put
Notice to the General Partner in the month of July,
20xx [year to be five years following acquisition],
or in any third July thereafter (each such July, an
"Exercise Period"), subject to extension in
accordance with section 12.2(a).
12.2 Rules Applicable to Put Right. The following rules will
apply in respect of the exercise of one or more Put Rights
in accordance with section 12.1:
(a) the General Partner will, not later than 10 business
days after the expiry of an Exercise Period, deliver
a copy of each Put Notice delivered to the General
Partner within the Exercise Period to each Limited
Partner who did not exercise a Put Right within the
Exercise Period, and each such Limited Partner may
exercise the Limited Partner's Put Right for a
further period (the "Extended Exercise Period")
ending at the close of business on the 10th business
day after the date of such delivery by the General
Partner, but otherwise in accordance with section
12.1;
47
(b) the General Partner will, not later than 5 business
days after the expiry of an Extended Exercise Period,
deliver written notice to each Limited Partner who
did not exercise a Put Right (each a "Remaining
Limited Partner"):
(i) advising the Remaining Limited Partners of the
total number of Units (the "Put Units") that
are capable of being repurchased by all
Remaining Limited Partners, and
(ii) convening a meeting of the Remaining Limited
Partners, to be held at the office of the
General Partner not earlier than 10 business
days and not later than 15 business days after
the delivery of the written notice, to:
(A) determine whether some or all of the
Remaining Limited Partners will agree to
purchase the Put Units, and
(B) if so, allocate the Put Units to be
purchased among the Remaining Limited
Partners who desire to purchase the Put
Units (the "Purchasing Remaining Limited
Partners"), in accordance with section
12.2(c);
(c) for the purposes of section 12.2(b)(ii)(B), the Put
Units shall be allocated among such one or more of
the Purchasing Remaining Limited Partners in such
proportions as they may unanimously agree and,
failing such unanimous agreement, then by the General
Partner pro rata among them in proportion to the
number of Units then held by each of them (in the
aforesaid allocation of Put Units, the General
Partner shall be authorized to make such adjustments
as it deems reasonable to avoid the issuance of
fractional Units);
(d) if the Purchasing Remaining Limited Partners:
(i) do not agree to acquire all of the Put Units,
then the Departing Limited Partners will be
deemed not to have exercised their Put Rights
and the Purchasing Remaining Limited Partners
shall thereafter have no obligation pursuant to
any Put Right to acquire all or any of the Put
Units, and the General Partner will thereupon
be authorized to, and will, proceed to sell the
Property in accordance with article 13 and wind
up the affairs of the Limited Partnership, and
(ii) do agree to acquire all of the Put Units, then
the Departing Limited Partners will sell their
respective Put Units to the Purchasing
Remaining Limited Partners in accordance with
the allocation of Put Units pursuant to section
12.2(c) to the Purchasing Remaining Limited
Partners, at one or more simultaneous sales in
accordance with section 12.3;
(e) the General Partner shall within 2 business days
after the conclusion of the meeting of the Remaining
Limited Partners deliver written notice to the
Departing Limited Partners advising them whether one
or more of the Remaining Limited Partners have agreed
to purchase all of the Put Units and:
(i) if so, the allocation of Put Units among the
Purchasing Remaining Limited Partners, and
(ii) if not, that the General Partner will proceed
to sell the Property and wind up the affairs of
the Limited Partnership in accordance with
article 13;
(f) at the conclusion of the aforesaid meeting of the
Remaining Limited Partners, the General Partner will
require that all Purchasing Remaining Limited
Partners sign a counterpart agreement confirming
that:
48
(i) they are the Purchasing Remaining Limited
Partners of the Put Units; and
(ii) the identity of the Departing Limited Partners
from whom, and the number of Put Units that,
each Purchasing Remaining Limited Partner will
be required to acquire pursuant to the terms of
this Agreement; and
(g) for greater certainty, a Remaining Limited Partner
who is not a Purchasing Remaining Limited Partner
shall be under no obligation to acquire any Put
Units.
12.3 Terms of Sales. The following terms will apply to every
sale of a Departing Limited Partner's Units to one or more
Purchasing Remaining Limited Partners pursuant to section
12.2(d)(ii):
(a) each Purchasing Remaining Limited Partner will
purchase from such Departing Limited Partner, and
each such Departing Limited Partner will sell to the
Purchasing Remaining Limited Partner, that number of
Units that has been allocated to the Purchasing
Remaining Limited Partner in accordance with section
12.2, free and clear of all encumbrances, charges or
adverse claims of any nature or kind for a purchase
price per Unit equal to the Appraised Value of a Unit
owned by the Departing Limited Partner, subject to
adjustment pursuant to section 12.3(e);
(b) it shall be a condition of closing that all of the
Units owned by each Departing Limited Partner are
purchased by one or more Purchasing Remaining Limited
Partners in accordance with this section 12,3, and
that the Purchasing Remaining Limited Partners will
have secured the release of every guarantee, if any,
granted by a Departing Limited to a lender to the
Limited Partnership on account of borrowings by, or
assumed by, the Limited Partnership;
(c) at the closing, each Departing Limited Partner,
against payment of the purchase price by way of
certified cheque drawn on a reputable Canadian
chartered bank and receipt of a release of all
guarantees, if any, granted by the Departing Limited
Partner to a lender to the Limited Partnership, will
tender to the relevant Purchasing Remaining Limited
Partner(s) determined by the General Partner in
accordance with section 12.2 all transfer or
conveyance documentation as may be reasonably
required by the Purchasing Remaining Limited
Partner's or Partners' counsel;
(d) the closing of any sale of Units pursuant to this
section 12.3 will be held at 11:00 o'clock a.m.,
Vancouver, B.C. time, at the office of the General
Partner, or at such other place in Vancouver, B.C. as
the General Partner may advise, on the day ( the
"Closing Date") which is the earlier of:
(i) the first business day in November following
the expiry of the Extended Exercise Period, and
(ii) 30 days after final determination in accordance
with section 12.4 of the Appraised Value of a
Unit owned by the Departing Limited Partner or,
if that day is not a business day, on the next
business day thereafter,or at such earlier date as all
the Departing Limited Partners and Purchasing
Remaining Limited Partners may agree;
(e) the purchase price payable by a Purchasing Remaining
Limited Partner in respect of a Unit owned by a
Departing Limited Partner will be the Appraised Value
of a Unit owned by a Departing Limited Partner
determined pursuant to section 12.4, subject to all
necessary or customary adjustments, both incoming and
outgoing, in respect of the ownership and operation
of the Property including, without limitation, in
respect of prepaid expenses, taxes, insurance, rental
deposits, rents, business licences, and other items,
as of the Closing Date (such adjustment to be made on
a Unit proportionate basis taking into account the
total number of Units issued);
49
(f) time will be of the essence in the performance of the
obligations and agreements of the contracts of
purchase and sale referred to above; and
(g) the obligations and liabilities of each Departing
Limited Partner and each Purchasing Remaining Limited
Partner will be several, and not joint and several,
and will be limited in the case of each Purchasing
Remaining Limited Partner to the number of Put Units
allocated to the Purchasing Remaining Limited Partner
in accordance with section 12.2(c).
12.4 Appraised Value of a Unit. The Appraised Value of a Unit
owned by a Departing Limited Partner will be the per Unit
value of all Units owned by the Departing Limited Partner,
determined as follows:
(a) such value will be based upon the fair market value
of the Property as at the preceding 30th day of June
(the "Fair Market Value of the Property"), being the
cash price which a ready, willing and able purchaser
would pay to purchase the Property (without regard to
any financing which would be assumed, granted, or
discharged by the purchaser);
(b) the Appraised Value of the a Unit owned by a
Departing Limited Partner will be quotient obtained
by dividing:
(i) the aggregate amount which the Departing
Limited Partner would have received pursuant to
article 9 if the Property had been sold at the
Fair Market Value of the Property (except that
no reserve will be maintained), adjusted to
such extent as the General Partner may
reasonably consider to be appropriate to take
into account any tax benefit that the Departing
Limited Partner has previously received in
respect of "capital cost allowance" (as defined
for the purposes of the Income Tax Act
(Canada)) relating to the Property without
having future exposure to increased tax
liabilities relating to the recapture of such
capital cost allowance by the Limited
Partnership,by
(ii) the aggregate number of Units owned by the
Departing Limited Partner;
(c) the Partners will attempt to agree upon the Fair
Market Value of the Property within 30 days after the
expiry of an Extended Exercise Period;
(d) if the Partners are unable to agree upon the Fair
Market Value of the Property within such 30 day
period, an appraiser will determine the Fair Market
Value of the Property in accordance with section
12.4(a). The appraiser will be appointed by
agreement of the Departing Limited Partners group and
the Purchasing Remaining Limited Partners group (the
determination of each group to be made by resolution
passed by the members of the group holding not less
than a simple majority of all Units held by members
of the group) or, in the absence of such agreement,
as selected by the General Partner. The appraiser
will be at arm's length from each Partner and will be
a member of the Appraisal Institute of Canada (or a
successor thereto or replacement therefor) who has
obtained the degree of Accredited Appraiser Canadian
Institute (AACI) from such institute (or a similar
degree of such successor or replacement) and is
engaged in the business of appraising real estate in
the municipality in which the Property is located;
(e) The appraiser will have access to all books of
accounts, records, vouchers, cheques, papers and
documents which may relate to the Property. Each
50
Partner will co-operate with the appraiser for such
purpose and provide all information and documents
reasonably requested by him. In the determination of
the Fair Market Value of the Property, the appraiser
will have regard to all relevant considerations
including historic and potential performance and
including the likely cost of the appraisal process to
the Limited Partnership and will make all proper and
necessary allowances for contingent or other
liabilities.
(f) At the time of his appointment the appraiser will be
requested to make his report within thirty (30) days
but he will not make his report until he has given
the General Partner and each of the Departing Limited
Partners and each of the Purchasing Remaining Limited
Partners reasonable opportunity to present arguments
and evidence in respect thereof. The appraiser will
report his determination of any matter referred to
him pursuant hereto in writing to the General Partner
and each of the Departing Limited Partners and each
of the Purchasing Remaining Limited Partners and his
report will be binding upon them.
(g) The appraiser will be deemed to be acting as an
expert and not as an arbitrator, and his fees and
expenses will be paid by the Limited Partnership.
13. SALE OF THE PROPERTY
13.1 Events Giving Rise to Sale. The General Partner shall
commence efforts and have the authority to sell the
Property at a price and on terms determined by the General
Partner, acting reasonably and in the best interests of the
Limited Partnership, upon the earliest to occur of the
following:
(a) the authorization of the General Partner to proceed
to sell the Property pursuant to section 12.2(d)(i);
(b) the passage of an Extraordinary Resolution approving
the sale of the Property (or a portion thereof); and
(c) an event causing the dissolution of the Limited
Partnership pursuant to section 14.1.
14. DISSOLUTION OF THE LIMITED PARTNERSHIP
14.1 Events Giving Rise to Dissolution. The Limited Partnership
shall be dissolved upon the earliest to occur of the
following:
(a) the bankruptcy, dissolution, or winding up (except
dissolution as a consequence of merger, amalgamation,
consolidation, or other corporate reorganization) of
the General Partner or the occurrence of an event
which would permit a trustee or receiver to acquire
control of the affairs of the General Partner during
the term of this Agreement, unless the General
Partner is replaced as provided in this Agreement
within 60 days;
(b) December 31, 2050;
(c) when substantially all of the assets of the Limited
Partnership have been disposed of and all Limited
Partnership activities have been wound up by the
General Partner;
(d) the passage of an Extraordinary Resolution approving
the dissolution and winding up of the Limited
Partnership;
51
(e) the General Partner not being able to secure
additional financing on terms the General Partner
considers will enable the Limited Partnership to
carry on the Business in the normal course and pay
its debts as they become due and the failure of a
Unanimous Resolution providing for the Limited
Partners to contribute additional capital to the
Limited Partnership as proposed by the General
Partner and the General Partner, acting reasonably,
determining that within the next twelve (12) months
the Limited Partnership will not have sufficient
funds to carry on the Business in the normal course
and to pay the debts of the Limited Partnership as
they become due;
(f) the resignation or removal of the General Partner,
unless the General Partner is replaced as provided
for in this Agreement within 60 days of such
resignation or removal; and
(g) the dissolution of the Limited Partnership by
operation of law or judicial order.
14.2 Liquidation of Limited Partnership Assets. In the event of
the dissolution of the Limited Partnership, the General
Partner shall commence to wind up the affairs of the
Limited Partnership and to liquidate its assets. The
Partners shall continue to share profits and losses during
the period of liquidation in the same manner and proportion
as before the dissolution. The General Partner shall have
full right and discretion to determine the time, manner and
terms of any sale or sales of Limited Partnership assets
pursuant to such liquidation having due regard to the
activity and condition of the relevant market and general
financial and economic conditions.
14.3 Distributions. Following the payment of or provision for
all debts and liabilities of the Limited Partnership and
all expenses of liquidation, and subject to the right of
the General Partner to set up such cash reserves as it may
deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Limited Partnership, the
proceeds of the liquidation and any other funds of the
Limited Partnership shall be distributed to the Partners in
accordance with article 9. In due course and in the
reasonable judgement of the General Partner, cash reserves,
if any, will be distributed to the Partners in accordance
with the terms of this Agreement.
14.4 Statements. Within a reasonable time following the
completion of the liquidation of the Limited Partnership's
assets, the General Partner shall supply to each of the
Limited Partners a statement, prepared by the accountant of
the Limited Partnership, which shall set forth the assets
and the liabilities of the Limited Partnership as of the
date of complete liquidation, and each Partner's share of
distributions pursuant to section 14.3.
14.5 Cash Distributions. No Limited Partner shall have any
right to demand or receive property other than cash upon
dissolution and termination of the Limited Partnership or
to demand the return of his capital contribution to the
Limited Partnership other than upon the dissolution and
termination of the Limited Partnership.
14.6 Termination. Upon the completion of the liquidation of the
Limited Partnership and the distribution of all Limited
Partnership funds, the Limited Partnership shall terminate
and the General Partner shall have the authority to execute
and record any and all documents required to effect the
dissolution and termination of the Limited Partnership.
14.7 Continuity. The Limited Partnership will not, except as
set forth in this Agreement, dissolve or terminate upon the
occurrence of any event, including the admission of a
successor or replacement General Partner or a new or
additional Limited Partner or by the withdrawal, removal,
death, insolvency, resignation, bankruptcy, or other
disability of a Partner.
14.8 Income Tax Election. The Limited Partners may elect, by
Extraordinary Resolution, that upon the dissolution of the
Limited Partnership, the deemed disposition by the Limited
Partnership of the Property for income tax purposes will
take place at the cost amount (as defined in the Income Tax
Act (Canada)) of the Property rather than the fair market
value and that election will be binding upon all Limited
Partners.
52
15. RESTRICTIONS ON SALE, ASSIGNMENT, PLEDGING OR TRANSFER
15.1 Transfer Restrictions. No Limited Partner shall sell,
assign, pledge, charge or otherwise dispose of, encumber or
in any manner transfer any of the Units or any right or
interest therein, whether voluntarily or by operation of
law, or by gift or otherwise (any or all of such
transactions being hereinafter referred to as a
"Transfer"), unless the transferee shall first have
obtained the written consent of the General Partner (which
consent may be arbitrarily withheld) and then shall have
entered into an agreement with the General Partner and all
of the other Limited Partners:
(a) agreeing to be bound by the terms of this Agreement;
(b) agreeing to be bound by any other agreement the
transferring Limited Partner has entered into
pursuant to the terms hereof;
(c) consenting to any resolutions of the Limited Partners
under this Agreement; and
(d) assuming all of the obligations of the transferring
Limited Partner under this Agreement and agreeing to
be bound by the terms hereof in the same manner as
the transferring Limited Partner;
all of the foregoing being in form and substance to the
satisfaction of the General Partner and upon receipt and
completion of the above conditions, the General Partner
will:
(e) record the Transfer;
(f) amend the Certificate to show the name of the
transferee;
(g) make any other filing that is required by law; and
(h) forward a notice of the Transfer to the transferee.
The transferring Limited Partner shall pay all reasonable
expenses (including legal fees and disbursements) incurred
by the General Partner or the Limited Partnership in
connection with the Transfer.
15.2 Void Transfers. Any Transfer, or purported Transfer, of
Units shall be null and void unless the terms, conditions,
and provisions of section 15.1 are strictly observed and
followed.
16. NOTICES
16.1 General Partner. Any notice, direction or request required
or permitted to be given to the General Partner or the
Initial Limited Partner hereunder shall be in writing and
shall be given by personal service at, or by mailing by
registered mail, with postage thereon fully prepaid, in a
sealed envelope, addressed to the General Partner at, the
General Partner's registered office.
16.2 Limited Partner. Any notice, direction or request required
or permitted to be given to a Limited Partner hereunder
53
shall be in writing and shall be given by personal service
at, or by mailing by registered mail, with postage thereon
fully prepaid, in a sealed envelope addressed to such
Limited Partner at, his address as it appears on the
Register of Limited Partners.
16.3 Receipt and Delivery. Any notice, direction or request
delivered personally as aforesaid shall be deemed to have
been received by and given to the addressee on the day of
delivery. Any notice, direction or request mailed as
aforesaid shall be deemed to have been received by and
given to the addressee on the third business day following
the date of mailing, provided that for such purposes no day
during which there shall be a strike or other occurrence
which shall interfere with normal mail service shall be
considered a business day.
16.4 Change of Address. The General Partner or the Initial
Limited Partner may from time to time change its address
for the purpose of this Agreement by notice to that effect
given to the Limited Partners. A Limited Partner may from
time to time change his or its address for the purpose of
this Agreement by notice to that effect given to the
General Partner; in that event the General Partner will
amend the Register of Limited Partners accordingly.
17. GENERAL CONTRACT PROVISIONS
17.1 Amendments. Subject to section 17.2:
(a) this Agreement may be amended by the General Partner,
without prior notice to or consent of any Limited
Partner, in order to reflect the admission of
substituted Limited Partners;
(b) this Agreement may be amended by the General Partner
with the authorization and consent of the Limited
Partners given by an Extraordinary Resolution; and
(c) the General Partner may, without consent from any
Limited Partner, amend any provision of this
Agreement from time to time:
(i) as may be required by any lenders providing
financing for the Business, provided such
amendment does not change the proportionate
interest of any Limited Partner in the Limited
Partnership and provided such amendment does
not impose a direct obligation on any Limited
Partner to contribute further capital to the
Limited Partnership;
(ii) for the purpose of adding to this Agreement any
further covenants, restrictions, deletions or
provisions which, in the written opinion of
counsel to the Limited Partnership, are for the
protection of the Limited Partners;
(iii) to cure any ambiguity or to correct or
supplement any provisions contained herein
which, in the written opinion of counsel to the
Limited Partnership, may be defective or
inconsistent with any other provision contained
herein, provided, in the written opinion of
such counsel, the cure, correction or
supplemental provision does not and will not
materially adversely affect the interests of
any Limited Partner; or
(iv) to make such other provisions with regard to
matters or questions arising under this
Agreement which, in the written opinion of
counsel to the Limited Partnership, do not and
will not materially adversely affect the
interests of any Limited Partner;
provided that all Limited Partners are notified in
writing of full details of any amendment to this
Agreement under this section 17.1(c) within 30 days
of the effective date of the amendment.
54
17.2 Limitations on Amendment.
This Agreement may not be amended if the amendment would:
(a) reduce the Units of a Limited Partner, unless each
and every Limited Partner consents thereto in
writing;
(b) change the liability of a Limited Partner;
(c) allow a Limited Partner to exercise control of the
Business;
(d) change the Limited Partnership from a limited
partnership to a general partnership; or
(e) change the allocations to the General Partner under
articles 9, 10 and/or change payments to the General
Partner or Synreal Services Corporation under article
6 or otherwise adversely affect the interest of the
General Partner, unless the General Partner consents
thereto in writing;
17.3 Limited Partner Not a General Partner. In the event that
any provision of this Agreement should have the effect of
imposing upon any Limited Partner any of the obligations of
the General Partner, such provision shall be of no force
and effect and shall not be considered a part of this
Agreement, but the remainder of this Agreement shall
continue in effect.
17.4 Arbitration. Any dispute concerning this Agreement will be
referred to or settled by arbitration, the arbitration will
be conducted pursuant to the Commercial Arbitration Act
(British Columbia). Any award made in the course of any
such arbitration will be final and binding upon the
parties.
17.5 Waiver. No failure or delay on the part of any party in
exercising any right, power or privilege under this
Agreement will operate as a waiver thereof, nor will any
single or partial exercise of any right, power or privilege
under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege; the rights and remedies herein are expressly
specified to be cumulative and not exclusive of any rights
or remedies which any Partner would otherwise have; except
as limited herein, any Partner may, in its sole discretion,
exercise any and all rights, powers, remedies and recourses
available to it under this Agreement or any other remedy
available to it and such rights, powers, remedies and
recourses may be exercised concurrently or individually
without the necessity of making any election.
17.6 Entire Agreement. This Agreement contains the whole
agreement amongst the Partners and there are no terms,
conditions or collateral agreements expressed, implied or
statutory, other than those expressly set forth in this
Agreement.
17.7 Further Assurances. The Partners agree to sign such
further and other papers, cause such meetings to be held
and resolutions passed, exercise their vote and influence,
do and perform and cause to be done and performed such
further and other acts and things as may be necessary or
desirable in order to give full effect to this Agreement
and every part thereof.
17.8 Counterparts. This Agreement, or any amendment to it, may
be executed in several counterparts, each of which when so
executed shall be deemed to be an original and such
counterparts together shall constitute one and the same
instrument, which shall be sufficiently evidenced by any
such original counterpart.
17.9 Severability. Every provision of this Agreement is
intended to be severable. If any term or provision hereof
is illegal or invalid for any reason whatsoever, such
illegality shall not affect the validity of the remainder
of this Agreement.
55
17.10 Assignment. Subject to the restrictions on assignment
herein provided for, this Agreement shall enure to the
benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, successors and
assigns.
17.11 Independent Legal Advice. Each of the Limited Partners
acknowledges and agrees that the General Partner and its
officers and directors have requested that all Limited
Partners review this Agreement with independent legal
counsel and tax advisors prior to becoming a party hereto.
17.12 Set-Off. The Limited Partnership may deduct from, and set-
off against, any amount payable by the Limited Partnership
to any Partner from time to time, any amount now or
hereafter owing by such Partner to the Limited Partnership.
IN WITNESS WHEREOF the parties have executed this agreement.
SYNREAL VENTURE XYZ MANAGEMENT CORPORATION
Per:____________________________
Authorized Signatory
SYNREAL HOLDING CORPORATION
Per: ____________________________
Authorized Signatory
56
SCHEDULE A
DESCRIPTION OF THE PROPERTY
XYZ LIMITED PARTNERSHIP
Xxxxx Xxxxxxx
XXX Xxxxxx, Xxxx, Xxxxxxxx
Legal Description
Lot ABC, .
57
SCHEDULE B
SUBSCRIPTION FORM AND POWER OF ATTORNEY
XYZ LIMITED PARTNERSHIP
By this Subscription Form:
The Investor, ________________________________________ (the "Investor"),
offers to subscribe for ________ Units (the "Units") in the XYZ Limited
Partnership(the "Partnership") at the subscription price of $25,000 per Unit
and tenders herewith, as payment for the Units, with a cheque made payable to
"[insert legal counsel for limited partnership]" in the amount of $25,000 per
Unit, being the Investor's aggregate capital contribution.
The Investor acknowledges and represents to Synreal Venture XYZ Management C
orporation (the "General Partner"), the general partner of the Partnership,
and to the Partnership that:
(a) he is subscribing for and purchasing the Units as principal for his own
account and not for the benefit of or on behalf of any other person;
(b) on acceptance of this subscription he will become a party to and be
entitled to the rights and be subject to the obligations of a limited partner
as set out in the agreement (the "Limited Partnership Agreement") among all
the partners of the Partnership;
(c ) no advertisement has been made by the Partnership or the General Partner
to induce the purchase of the Units by him;
(d) if he is a resident of the province of British Columbia, he is acquiring
the Units pursuant to an exemption from the registration and prospectus
requirements of the Securities Act (British Columbia) and regulations thereto
(collectively the "B.C. Securities Legislation") and as such:
(i) he is restricted from using most of the civil remedies available under
B.C. Securities Legislation;
(ii) he may not receive information that would otherwise be required to be
provided to him under B.C. Securities Legislation:
(iii) the Partnership and the General Partner are relieved from certain
obligations that would otherwise apply under B.C. Securities Legislation;
(iv) if an individual, he will be required to complete Schedule "A" hereto
prior to his subscription being accepted;
(v) if other than an individual, he will be required to complete an
acknowledgement in the form of Form 20A (NIP) to the Rules to the Securities
Act (British Columbia); and
(vi) he is "sophisticated purchaser" as that term is defined in Schedule "B"
hereto;
(e) if he is a resident of the province of Alberta, he is acquiring the Units
pursuant to an exemption from the registration and prospectus requirements of
the Securities Act (Alberta) and regulations thereto (collectively the "Alberta
Securities Legislation") and as such:
(i) knows that he is purchasing the securities pursuant to an exemption under
the Alberta Securities Legislation on the basis that he is sophisticated and,
as a consequence:
a. he is restricted from using most of the civil remedies available under
Alberta Securities Legislation;
b. he may not receive information that would otherwise be required to be
provided to him under Alberta Securities Legislation; and
58
c. the Partnership and the General Partner are relieved from certain
obligations that would otherwise apply under Alberta Securities Legislation;
and
(ii) has the investment acumen to assess the offering as a result of:
a. previous business or investment experience; or
b. advice which he received on this investment that was:
i. independent advice of the offering obtained from a registered advisor or
an advisor exempt from registration under section 64 of the Securities Act
(Alberta); and
ii. not obtained from a promoter of the issuer whose securities are being
offered;
(f) he is a resident of the province in which the subscriber's address
specified below is located, and is a "resident of Canada" within the meaning
of such term under the Income Tax Act (Canada);
(g) the partnership has provided him with an Offering Memorandum (the
"Offering Memorandum"), dated xxxxxx describing the offering of Units, prior
to accepting his subscription;
(h) no statements or representations have been made by the Partnership, the
General Partner, their affiliates, agents or any party in connection with the
Units, that the total losses to be allocated to and the amounts deductible in
respect of a Unit will exceed the cost of such Unit (less certain prescribed
benefits pursuant to the definition of tax shelter in the Income Tax Act
(Canada) and Regulations thereto) at the end of any taxation year that ends
within four years after the day on which the Unit is acquired;
(i) no statements or representations have been made by the Partnership, the
General Partner, their affiliates, agents or any party in connection with the
Units, with respect to the Investor's ability to finance the purchase of a
Unit on a limited recourse basis or otherwise; and
(j) the Investor is not, and while a Limited Partner will not become, a tax
shelter or a tax shelter investment for the purposes of the Income Tax Act
(Canada) and any proposed revisions or amendments thereto, nor will the
Investor issue interests in itself which are tax shelter investments or
transfer its interest to an investor who is a tax shelter investment.
The Investor covenants and agrees with the General Partner and the
Partnership that the Investor shall on an annual basis obtain from the Canada
Customs and Revenue Agency a certification that the Investor is a resident in
Canada for Canadian income tax purposes.
The Investor appoints the General Partner, with full power of substitution,
as his attorney, with authority in his name, place, and for his benefit to do
the following:
(a) to execute, deliver, and file as and where required:
(i) the Limited Partnership Agreement, and all other instruments required
under the laws of the Province of xxxxx [province of LP establishment] to
form and keep in good standing the Partnership as a limited partnership;
(ii) all instruments necessary to reflect any amendment to the Limited
Partnership Agreement;
(iii) any election which may be made pursuant to the Income Tax Act (Canada),
including pursuant to subsection 97 (2) of such act, if applicable;
(iv) any certificates of fictitious or trade names; and
(v) all instruments necessary to reflect the termination of the Partnership,
including cancellation of any certificates or declarations and any elections
under subsection 98 (3) of the Income Tax Act (Canada);
(b) to execute and file with any governmental body or agency any documents
necessary to be filed in connection with the business or property of the
Partnership; and
(c) to execute and deliver all such other documents or instruments as may be
deemed necessary by the General Partner in order to carry out fully the
provisions of this subscription, the Limited Partnership Agreement, and any
other material contracts referred to in the Offering Memorandum, in
accordance with their respective terms;
(d) to obtain from the Canada Custom and Revenue Agency, on an annual basis,
certification that the Investor is a resident of Canada for Canadian income
tax purposes and to complete, execute and deliver any forms, requests,
authorizations, or other documentation required to obtain such certification;
and
59
(e) to complete, amend or correct any documentation required in connection
with this subscription or any of the foregoing.
The power of attorney granted herein is irrevocable, is a power coupled with
an interest, will survive the death or other legal incapacity of the Investor
and the assignment, to the extent of the obligations of the Investor under
the Limited Partnership Agreement hereunder, by the Investor of the whole or
any part of the interest of the Investor in the Partnership, and extends to
the heirs, executors, administrators, successors and assigns of the Investor.
The power of attorney granted herein may be exercised by the General Partner
on behalf of the Investor by executing any instrument with a single signature
as attorney and agent for all the Limited Partners of the Partnership or by
such form of execution as the General Partner may determine, and it will not
be necessary for the General Partner to execute any instrument under seal.
The Investor agrees to be bound by any representations and actions made or
taken in good faith by the General Partner pursuant to this power of attorney
in accordance with the terms hereof or in accordance with the Limited
Partnership Agreement or in furtherance of the transactions contemplated by
the Offering Memorandum and the Investor hereby waives all defences which may
be available to him to contest, negate or disaffirm any action of the General
Partner taken in good faith under this power of attorney.
The General Partner and the Partnership represent and warrant jointly and
severally to the Investor that;
(a) the General Partner is a valid and subsisting corporation duly
incorporated and in good standing under the laws of the Province of xxxxxxx;
(b) the Partnership was validly organized as a limited partnership under the
laws of the Province of xxxxx;
(c) each of the Partnership and the General Partner is duly registered and
licensed to carry on business in the jurisdiction in which they carry on
business or own property;
(d) the authorized and issued capital of each of the Partnership and the
General Partner is as disclosed in the Offering Memorandum;
(e) the Partnership will be the beneficial owner of the properties,
businesses and assets or in the interests in the properties, businesses or
assets referred to in the Offering Memorandum as being owned by it; all
agreements by which the Partnership holds an interest in a property, business
or asset are in good standing according to their terms, and the properties
are in good standing under the applicable laws of the jurisdiction in which
they are situated;
(g)the Partnership has complied and will comply fully with the requirements
of all applicable securities laws, including, without limitation, the
Securities Act ( British Columbia) and the Securities Act (Alberta) and the
regulations thereunder in relation to the issue and trading of its securities
and in all matters relating to the sale of Units to the Investor;
(h) the issue and sale of the Units by the Partnership to the Investor does
not and will not conflict with, and does not and will not resulting a breach
of the terms of the Limited Partnership Agreement, the Partnership's
certificate of formation under applicable legislation or any agreement or
instrument to which the Partnership or the General Partner is a party;
(i) neither the Partnership nor the General Partner is a party to any actions,
suits or proceedings which could materially affect its respective business or
financial condition, and no such actions, suits, or proceedings are
contemplated or have been threatened;
(j) this Subscription Form and Power of Attorney has been authorized by all
necessary corporate action on the part of the Partnership and the General
Partner;
(k) no order ceasing or suspending trading in securities of the Partnership
nor prohibiting the sale of such securities has been issued to the Partnership
or the General Partner or their respective directors, officers, principals, or
promoters or to any other companies that have common directors, officers,
principals, or promoters and no investigations or proceedings for such purposes
are pending or threatened; and
(l) the warranties and representations of the Partnership and the General
Partner herein are true and will remain so as of the conclusion of the
purchase of the Units by the Investor.
60
The Investor acknowledges that the Units and the interest in the Partnership
acquired by him may not be marketable and may not be transferable and that a
copy of the Limited Partnership Agreement will be made available to him upon
his request. The Partnership is required to deliver a copy of the Offering
Memorandum to the Investor before accepting his subscription for the purchase
of Units.
The Investor may withdraw from his subscription agreement if he provides the
Partnership with written notice of his intention not to be bound by this
agreement within two business days of his receipt of the Offering Memorandum.
If the Offering Memorandum, or any amendment to it, contains a
misrepresentation at the time the subscription agreement is entered into, the
investor may, while still owner of the Units, either rescind this subscription
agreement or commence a civil action against the Partnership for damages. The
contractual rights of action described in the Offering Memorandum are hereby
conferred on Investors and are incorporated into and shall constitute terms
and conditions of this subscription agreement.
These contractual rights of action, rescission, and withdrawal are in
addition to, and without derogation from, any other right available at law to
the Investor. Reference should be made to the B.C. Securities Legislation
and Alberta Securities Legislation for the full text of the rights referred
to above.
The Investor agrees that acceptance of this subscription will be effective
upon the mailing of a written confirmation of such acceptance to the address
stated below.
Signed at the City of _____________, Province of ______________, this_______
day of _________, 2001______________________________
____________________________ ___________________________________________
Signature of Witness Signature of Investor or,
If the Investor is a Company, signature of
authorized signatory
___________________________________________
Mr./Mrs./Ms./______________________________
Name of Investor or, if the Investor is a
company,Legal Company name (please print)
___________________________________________
___________________________________________
Company Name
Address of Investor:
__________________________________________
__________________________________________
__________________________________________
61
ACCEPTANCE OF SUBSCRIPTION
This Subscription is accepted by the General Partner for the Partnership on
_______________________, 2001.
XYZ LIMITED PARTNERSHIP, By its General Partner
Synreal Venture XYZ Management Corporation
Per: _______________________________________
62
SCHEDULE "A" TO SUBSCRIPTION FORM AND POWER OF ATTORNEY
This is the form required under section 135 of the Rules and, if applicable,
by an order issued under section 59 of the Securities Act (British Columbia)
FORM 20 (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from XYZ Limited Partnership (the "Issuer)
________ [number] limited partnership units (the "Securities") of the Issuer.
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be beneficial owner of the Securities.
3. I [Circle One] have/have not received an offering memorandum describing
the Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has reviewed or
passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) I may lose all of my investment, AND
(d) There are restrictions on my ability to resell the Securities and it is
my responsibility to find out what those restrictions are and to comply with
them before selling the Securities, AND
(e) I will not receive a prospectus that the Securities Act (British Columbia)
(the "Act") would otherwise require be given to me because the Issuer has
advised me that it is relying on a prospectus exemption, AND
(f) because I am not purchasing the Securities under a prospectus, I will not
have the civil remedies that would otherwise be available to me, AND
(g) the Issuer has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except
purchases referred to in paragraph 5 (g), and as a result I do not have the
benefit of any protection that might have been available to me by having a
dealer act on my behalf.
5. I also acknowledge that: [circle one]
(a) I am purchasing Securities that have an aggregate acquisition cost of
$97,000 or more, OR
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(b) my net worth, or my net worth jointly with my spouse at the date of the
agreement of purchase and sale of the security, is not less that $400,000, OR
(c) my annual net income before tax is less than $75,000, or my annual net
income before tax jointly with my spouse is not less than $125,000, in each
of the two most recent calendar years, and I reasonably expect to have the
annual net income before tax of not less than $75,000 or annual net income
before tax jointly with my spouse of not less than $125,000 in the current
calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister, or child of a senior officer or
director of the Issuer, or of affiliate of the Issuer, OR
(f) I am a close personal friend of a senior officer or director of the
Issuer, or of an affiliate of the Issuer, OR
(h) I am purchasing securities under section 128(c) ($25,000 - registrant
required) of the Rules, and I have spoken to the person [Name of registered
person: _____________________________ (the "Registered Person)] who has
advised me that the Registered Person is registered to trade or advise in
the Securities and that the purchase of the Securities is a suitable
investment for me.
6. If I am an individual referred to in a paragraph 5(b), 5(c), or 5(d), I
acknowledge that, on the basis of information about the Securities furnished
by the Issuer, I am able to evaluate the risks and merits of the Securities
because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of Advisor;
_________________________ (the "Advisor")] who has advised me that the
Advisor is:
(i) registered to advise, or exempted from the requirement to be registered
to advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
DATED __________________, 2001
____________________________
Signature of purchaser
____________________________
Name of purchaser
____________________________
Address of purchaser
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SCHEDULE "B" TO SUBSCRIPTION FORM AND POWER OF ATTORNEY
"Sophisticated purchaser" means a purchaser that, in connection with a
distribution, gives an acknowledgement under section 135 of the Rules of the
Securities Act (British Columbia) to the Issuer, where the Issuer does not
believe, and has no reasonable grounds to believe, that the acknowledgement
is false, acknowledging both that:
1. the purchaser is able, on the basis of information about the investment
furnished by the Issuer, to evaluate the risks and merits of the prospective
investment because of:
(a) the purchaser's financial, business or investment experience, OR
(b) advice the purchaser receives from a person that is registered to advise,
or exempted from the requirement to be registered to advise, in respect of
the security that is the subject of the trade (the "Security"), and who is
not an insider of, or in a special relationship with, the Issuer of the
Security, AND
2. the purchaser is one of the following:
(a) a person registered under the Securities Act, OR
(b) an individual who:
(i) has a net worth, or net worth jointly with the individual's spouse, at
the date of the agreement of purchase and sale of the Security, of not less
that $400,000, OR
(ii) has had in each of the 2 most recent calendar years and reasonably
expects to have in the current calendar year.
A. annual net income before tax of not less than $75,000,OR
B. annual net income before tax, jointly with the individual's spouse, of
not less than $125,000, OR
(c) a corporation, partnership or trust that:
(i) has a net worth of not less that $400,000,OR
(ii) has had in each of the 2 most recent calendar years and reasonably
expects to have in the current calendar year net income before tax of not
less than $125,000, OR
(iii) a corporation in which all of the voting shares are beneficially owned
by sophisticated purchasers or of which the majority of the directors are
sophisticated purchasers, OR
(iv) a general partnership in which all of the partners are sophisticated
purchasers, OR
(v) a limited partnership in which a majority of the general partners are
sophisticated purchaser, OR
(vi) a trust in which all of the beneficiaries are sophisticated purchasers
or the majority of the trustees are sophisticated purchasers.
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SCHEDULE C
PROPERTY PURCHASE AGREEMENT
XYZ LIMITED PARTNERSHIP
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