[LOGO] HIGH EQUITY PARTNERS, SERIES 85,
a California limited partnership
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS AMENDED AND RESTATED PARTNERSHIP AGREEMENT
("Partnership Agreement") dated as of the 31st day of December,
1984, by and among Resources High Equity, Inc., a Delaware
corporation ("Managing General Partner"), as a General Partner, Z
Square G Partners II ("Associate General Partner"), as a General
Partner, and C. Xxxxxxx Xxxxxx, as the original Limited Partner,
all of whom do hereby agree that a limited partnership formed on
August 19, 1983 pursuant to the Uniform Limited Partnership Act
of the State of California, shall be continued upon the following
terms and conditions:
1. NAME AND PLACE OF BUSINESS
The name of the Partnership is [LOGO] High Equity Partners,
Series 85, a California limited partnership and its principal
place of business in California is 0000 Xxxxxxx Xxxxx, Xxxxxx Xxx
Xxx, Xxxxxxxxxx 00000 and in New York is 000 Xxxxx Xxxxxx, Xxx
Xxxx Xxx Xxxx 00000, or such other place or places as the
Managing General Partner may hereafter determine.
2. DEFINITIONS AND GLOSSARY OF TERMS
2.1 The following terms used in this Partnership Agreement
shall (unless otherwise expressly provided herein or unless the
context otherwise requires) have the following respective
meanings:
2.1.1 "Acquisition Expenses" shall mean expenses
including but not limited to legal fees and expenses, travel and
communications expenses, costs of appraisals, nonrefundable
option payments on property not acquired, accounting fees and
expenses, title insurance, and miscellaneous expenses related to
selection and acquisition of properties, whether or not acquired.
2.1.2 "Acquisition Fees" shall mean the total of
all fees and commissions paid by any person to any person,
including any Sponsor, in connection with the purchase or
development of any Property by the Partnership, whether
designated as real estate commission, selection fee, nonrecurring
management fee, nonrecurring start-up fee, development fee (which
is defined as a fee for the packaging of a partnership's
property, including negotiating and approving plans, and
undertaking to assist in obtaining zoning and necessary variances
and necessary financing for the specific property, either
initially or at a later date), or any fee of a similar nature,
however designated.
2.1.3 "Adjusted Cash From Operations" shall mean
the excess of cash revenue from operation of Partnership Property
over cash disbursements without deduction for depreciation and
amortization of intangibles such as organization and debt
placement costs but after a reasonable allowance for cash
reserves for repairs, replacements, and anticipated obligations
(including debt service), as determined by the Managing General
Partner.
2.1.4 "Adjusted Invested Capital" shall be the
Original Invested Capital paid by the original owner of each
Unit, reduced by the total of cash distributed from Cash From
Sales or Financings and from working capital reserves (to the
extent such cash distributed came from Net Proceeds) to such
Limited Partner and to all prior or subsequent holders of such
Unit.
2.1.5 "Affiliate" of a person shall mean (i) any
person directly or indirectly controlling, controlled by or under
common control with such person; (ii) a person owning or
controlling 10% or more of the outstanding voting securities or
beneficial interests of such person; (iii) any officer, director,
general partner, trustee or anyone acting in a substantially
similar capacity as to such person, and (iv) any person who is an
officer, director, general partner, trustee, or holder of 10% or
more of the voting securities or beneficial interests of any of
the foregoing; provided, however, that a partner in a partnership
or joint venture with (a) the Partnership or (b) an Affiliate of
a General Partner, shall not by virtue of such relationship be
deemed an Affiliate of a General Partner.
2.1.6 "Associate General Partner" shall mean Z
Square G Partners II, or any other person or entity which
succeeds it in such capacity.
2.1.7 "Cash From Initial Financing" with respect to
a Partnership Property shall mean the net cash realized by the
Partnership from the initial financing of a Property.
2.1.8 "Cash From Sales or Financings" shall mean
the net cash realized by the Partnership from any financing of
any Partnership Property or from the Sale or Disposition of any
Partnership Property after retirement of applicable mortgage debt
and all expenses related to the transaction (including required
payments of the Mortgage Placement Fee), together with interest
on any notes taken back by the Partnership upon the sale of a
Property; however, Cash From Sales or Financings shall not
include cash from working capital reserves to the extent such
reserves come from Net Proceeds.
2.1.9 "Certificate of Limited Partnership Interest"
shall mean a certificate signed on behalf of the Partnership by
the Managing General Partner evidencing the interest of a Limited
Partner in the Partnership.
2.1.10 "Closing Date" shall mean each date
designated by the Managing General Partner on which Limited
Partners are admitted to the Partnership as a result of Unit
purchases occurring during the offering period.
2.1.11 "Code" shall mean the Internal Revenue Code
of 1954, as amended, or corresponding provisions of subsequent
revenue laws.
2.1.12 "Distributions" shall refer to any cash or
other property distributed to the Limited Partners and the
General Partners arising from their interests in the Partnership,
but shall not include any payments to the General Partners under
the provisions of Paragraphs 9 or 10 of this Partnership
Agreement.
2.1.13 "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
2.1.14 "Final Closing Date" shall mean the date on
which the last closing of Units sold pursuant to the Prospectus
occurs.
2.1.15 "Front-End Fees" shall refer to fees and
expenses paid by any party for any services rendered in
connection with and during the Partnership's organization and
acquisition stages including Organization and Offering Expenses,
Acquisition Fees and Acquisition Expenses, and any other similar
fees.
2.1.16 "General Partners" refer to Resources High
Equity, Inc., a Delaware corporation, and Z Square G Partners II,
a New York general partnership, or to any other person,
corporation or other entity which succeeds them in such capacity,
including the Successor General Partner.
2.1.17 "Gross Proceeds" shall mean the aggregate
total of the Original Invested Capital of the original and all of
the additional Limited Partners.
2.1.18 "Gross Revenues" shall mean all revenues from
the operation of real property Partnership other than from
security deposits paid by lessees thereof. The term "Gross
Revenues" not include revenues from the Sale or Disposition of
Partnership Properties.
2.1.19 "Initial Capital Accounts" shall mean the
Original Invested Capital of the Limited Partners and, with
respect to Resources High Equity, Inc. and Z Square G Partners II
those capital contributions in the amounts of $980.00 and $20.00,
respectively.
2.1.20 "Initial Closing Date" shall mean the date on
which the first closing on Units sold pursuant to the Prospectus
occurs.
2.1.21 "Integrated" shall mean Integrated Resources,
Inc.
2.1.22 "Invested Assets" shall mean the amount of
Gross Proceeds actually paid or allocable to the purchase,
development, construction and/or improvement of Properties
acquired by the Partnership (including working capital reserves,
Property Evaluation Fees, Acquisition Fees and Acquisition
Expenses actually paid or allocable thereto).
2.1.23 "Investment in Properties" shall refer to the
amount of Gross Proceeds actually paid or allocated to the
purchase, development, construction or improvement of Properties
acquired by the Partnership (including working capital reserves
allowable thereto in an amount of up to 5% of the Gross Proceeds,
and other cash payments such as interest and taxes, but excluding
"Front-End Fees").
2.1.24 "XXX" shall mean an Individual Retirement
Account established under Section 408 of the Code.
2.1.25 "Limited Partners" shall refer to the initial
Limited Partner and to any other persons who are admitted to the
Partnership as additional or substituted Limited Partners.
Reference to a "Limited Partner" shall refer to any one of them.
2.1.26 "Majority Vote" shall mean the vote of the
holders of more than 50% of the Total Outstanding Units.
2.1.27 "Managing General Partner" shall refer to
Resources High Equity, Inc., or to any other person or
corporation which succeeds it in such capacity.
2.1.28 "Mortgage Placement Fee" shall refer to the
fee payable to an Affiliate of the Managing General Partner under
the provisions of Paragraph 9.4.3 hereof.
2.1.29 "Net Income" or "Net Loss" shall mean the
taxable income or taxable loss of the Partnership (including the
Partnership's share of income or loss of any partnership, venture
or other entity which owns a particular Property), as determined
for federal income tax purposes, computed (i) by taking into
account each item of Partnership income, gain, loss, deduction or
credit not already included in the computation of taxable income
and taxable loss and (ii) by excluding each such Partnership item
which is separately allocated pursuant to Paragraph 11 hereof.
2.1.30 "Net Proceeds" shall mean the total Gross
Proceeds less Organization and Offering Expenses.
2.1.31 "Organization and Offering Expenses" shall
refer to those expenses incurred in connection with preparing the
Partnership for registration and subsequently offering and
distributing Units to the Public, including all advertising
expenses in connection with the distribution of such Units but
excluding all underwriting and sales commissions.
2.1.32 "Original Invested Capital" shall mean with
respect to a Limited Partner the amount in cash paid by the
original owner of his Units which amount shall be attributed to
such Units in the hands of subsequent holders thereof.
2.1.33 "Partners" shall refer collectively to the
General Partners and to the Limited Partners and reference to a
"Partner" shall be to any one of the Partners.
2.1.34 "Partnership" shall refer to the Limited
Partnership created under this Partnership Agreement.
2.1.35 "Partnership Management Fee" shall refer to
the fee payable to the Managing General Partner under the
provisions of Paragraph 9.4.1 hereof.
2.1.36 "person" shall mean any individual
corporation, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or other legal
entity.
2.1.37 "Properties" shall refer to all properties or
any interest therein acquired directly or indirectly by the
Partnership, in whole or in part, with Net Proceeds. Reference
to "Property" shall be to any one of them
2.1.38 "Property Evaluation Fee" shall refer to the
fee payable to an Affiliate of the Managing General Partner under
the provisions of Paragraph 9.3.2 hereof.
2.1.39 "Property Management Fee" shall refer to the
fee payable to an Affiliate of the Managing General Partner under
the provisions of Paragraph 9.4.2 hereof.
2.1.40 "Prospectus" shall mean the final prospectus
in the registration of Units filed with the Securities and
Exchange Commission on Form S-11, as amended.
2.1.41 "Qualified Plans" shall mean qualified
pension, profit-sharing and other employee retirement benefit
plans (including Xxxxx plans) and trusts, bank commingled trust
funds for such plans and trusts and IRAs.
2.1.42 "Sale or Disposition" shall mean any of the
following Partnership transactions: sales, exchanges or other
dispositions of real or personal property, condemnations or any
recoveries of damage awards and insurance proceeds (other than
business or rental interruption insurance proceeds).
2.1.43 "Sponsor" shall mean any person directly or
indirectly instrumental in organizing, wholly or in part, the
Partnership or who will manage or participate in the management
of the Partnership and any Affiliate of such person, but does not
include (i) any person whose only relationship with the
Partnership or the General Partners is that of an independent
property manager whose only compensation from the Partnership is
as such, and (ii) wholly-independent third parties such as
attorneys, accountants and underwriters whose only compensation
from the Partnership is for professional services rendered in
connection with the offering of Units or the operations of the
Partnership.
2.1.44 "Subordinated Incentive Fee" shall refer to
the fee payable to the Managing General Partner or its Affiliates
under the provisions of Paragraph 9.5.1 hereof.
2.1.45 "Subordinated Real Estate Commission" shall
refer to the fee payable to an Affiliate of the Managing General
Partner under the provisions of Paragraph 9.5.2 hereof.
2.1.46 "Substantially All of the Assets" shall mean,
unless the context otherwise dictates, Property representing
66 2/3% or more of the net book value of all of the Partnership's
Property as of the end of the most recently completed fiscal
quarter.
2.1.47 "Successor General Partner" shall mean
Integrated or anyone designated as such by Integrated pursuant to
this Partnership Agreement.
2.1.48 "Taxable Partner" shall mean (a) a Limited
Partner who purchases Units from the Partnership during the
offering period and who at the time of such purchase is not (i) a
Qualified Plan, (ii) an organization (other than a cooperative
described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 (Normal Taxes and Surtaxes) of the Code, or
(iii) a foreign person or entity, unless more than 50% of the
gross income derived by the foreign person or entity from the
Partnership is subject to U.S. income tax, and (b) each
subsequent transferee of any of such Units.
2.1.49 "Tax-Exempt Partner" shall mean (a) a Limited
Partner who purchases Units from the Partnership during the
offering period and who at the time of such purchase is (i) a
Qualified Plan, (ii) an organization (other than a cooperative
described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 (Normal Taxes and Surtaxes) of the Code, or
(iii) a foreign person or entity, unless more than 50% of the
gross income derived by the foreign person or entity from the
Partnership is subject to U.S. income tax, and (b) each
subsequent transferee of any of such Units.
2.1.50 "Total Outstanding Units" shall mean all
Units issued at or before the Final Closing Date.
2.1.51 A "Unit" shall represent a capital
contribution of $250 to the Partnership and shall entitle the
holder thereof to an interest in the Net Income, Net Loss and
Distributions of the Partnership, without regard to capital
accounts.
3. BUSINESS AND PURPOSE
3.1 Primary Purpose. The primary purpose (character of
business) of the Partnership is to invest in, hold and manage
existing or to-be-constructed office buildings, shopping centers
and other commercial and industrial properties such as industrial
parks and warehouses, and, to a lesser extent, residential
properties. The Partnership may, in some cases, take title to
the improvements and lease the land with respect to the above-
described properties. The Partnership may enter into ventures,
partnerships and other business arrangements with respect to real
estate deemed prudent by the Managing General Partner in order to
achieve successful operations for the Partnership; provided,
however, that such arrangements are subject to the provisions of
Paragraph 15.4.8.
3.2 Working Capital Reserves. For the Partnership
Properties, the Partnership shall initially endeavor to maintain
a cash reserve for major repairs, replacements, capital
improvements, contingencies and accruals required for insurance,
real estate taxes and related items in an amount equal to at
least 2% of the Gross Proceeds applicable to the acquisition of
such Properties. Any cash reserve used as aforesaid need not be
restored and if restored, shall be restored from cash generated
from Partnership Properties. Upon the disposition of each
Partnership Property, any cash reserve for that Property need not
be maintained thereafter, but may be applied as reserves for
other Properties. Furthermore, in any fiscal quarter after the
Partnership is fully invested in Properties and operating income
and expense levels have been ascertained, but in no event earlier
than one year following the Final Closing Date, the Managing
General Partner may determine that reserves of the Partnership
are in excess of the amount deemed sufficient in connection with
the Partnership's operations and such reserves may be reduced,
but in no event to less than 1% of the Gross Proceeds, and the
amount of such reduction for a particular quarter would be
allocated in the same manner as Adjusted Cash From Operations and
distributed as a return of Original Invested Capital with
appropriate notice to Limited Partners.
4. TERM
The Partnership commenced as of the 19th day of August,
1983, and shall continue until the 31st day of December, 2008,
unless previously terminated in accordance with the provisions of
this Partnership Agreement.
5. GENERAL PARTNERS
5.1 Capital Contributions of General Partners. Resources
High Equity, Inc. as the Managing General Partner, has
contributed $980.00 in cash to the Partnership; Z Square G
Partners II, as the Associate General Partner, has contributed
$20.00 in cash to the Partnership. At all times during the
existence of the Partnership, each General Partner shall have a
present and continuing interest in Net Income, Net Loss and
Distributions according to the provisions of Paragraph 11.
5.2 Capital Accounts. A separate capital account shall be
maintained for each General Partner. There shall be credited to
each General Partner's capital account (a) the amount of money
and the adjusted basis of any property contributed to the capital
of the Partnership; (b) such General Partner's share of
Partnership Net Income; and (c) such General Partner's share of
the increase in the basis of the Partnership's Property arising
out of the recapture of the investment tax credit. There shall
be charged against each General Partner's capital account (i) the
amount of money and basis of property distributed to such General
Partner, (ii) such General Partner's share of Partnership Net
Loss; (iii) such General Partner's share of expenditures of the
Partnership which are neither deductible nor properly chargeable
to its capital account; and (iv) such General Partner's share of
the decrease in the basis of the Partnership's Property under
Code Section 48(q) arising from the allowance of the investment
tax credit. All items of income exempt from federal income tax
and expenditures not deductible in computing federal income tax
shall be allocated among the Partners in accordance with their
allocable share of Net Income and Net Loss set forth in Paragraph
11.2 hereof.
5.3 Deficiencies. In the event that, immediately prior to
the dissolution of the Partnership referred to in Paragraph 19.2,
the General Partners shall have a deficiency, if any, in their
capital accounts as determined in accordance with tax accounting
principles, and if the assets available for distribution upon the
dissolution and termination of the Partnership are insufficient
to allow Distributions to Limited Partners of amounts equal to
the then balances in their capital accounts an determined in
accordance with tax accounting principles, the General Partners
shall contribute in cash to the capital of the Partnership an
amount equal to whichever is the least of (a) the deficiency in
the General Partners' capital accounts, (b) 1.01% of the Original
Invested Capital which has not been returned pursuant to
Paragraph 11 below or (c) the deficit in a hypothetical capital
account of the General Partners assuming they only had an
aggregate of 1% of each item of Partnership income, gain, loss
deduction or credit at all times during the existence of the
Partnership. The hypothetical capital account under clause (c)
above shall not take into account any actual distribution of cash
during the life of the Partnership and any deficit payment shall
be borne 98% by the Managing General Partner and 2% by the
Associate General Partner.
6. LIMITED PARTNERS
6.1 Original Limited Partner. The original Limited Partner
has contributed the sum of $2,500 to the capital of the
Partnership and has received ten Units for such contribution.
6.2 Additional Limited Partners. The Partnership is
authorized to sell and issue not more than 400,000 additional
Units, and to admit as additional limited Partners the persons
who contribute cash to the capital of the Partnership for Units.
6.3 Admission of Limited Partners. Subject to the
provisions of Paragraph 6.7, each person who acquires any such
additional Units shall become a Limited Partner in the
Partnership at such time as he has: (i) purchased ten or more
Units (except that the required purchase shall only be four Units
for a Xxxxx Plan or an XXX), (ii) contributed the sum of $250 in
cash for each Unit purchased, (iii) executed and filed with the
Partnership a written instrument which sets forth an intention to
become a Limited Partner and requests admission to the
Partnership in that capacity, together with such other
instruments as the Managing General Partner may deem necessary or
desirable to effect such admission, including the written
acceptance and adoption by such person of the provisions of this
Partnership Agreement and the execution, acknowledgment and
delivery to the Managing General Partner of a special power of
attorney, the form, style and content of which are more fully
described herein, and (iv) the Managing General Partner accepts
such person as a Limited Partner in the Partnership.
6.4 Amendments. The Managing General Partner shall in
timely fashion amend (but not later than the last day of the
fiscal quarter following the date of acceptance of the additional
Limited Partner's subscription) this Partnership Agreement and
any separate certificate of limited partnership filed for record
to reflect the admission of a person as an additional Limited
Partner.
6.5 No Additional Units. The Partnership shall not issue
any additional Units after the Final Closing Date.
6.6 Capital Accounts. A separate capital account shall be
maintained for each Limited Partner. There shall be credited to
each Limited Partner's capital account (a) the amount of money
and the adjusted basis of any property contributed to the capital
of the Partnership, (b) such Limited Partner's share of
Partnership Net Income and (c) such Limited Partner's share of
the increase in the basis of the Partnership's Property arising
out of the recapture of the investment tax credit. There shall
be charged against each Limited Partner's capital account (i) the
amount of money and basis of property distributed to such Limited
Partner, (ii) such Limited Partner's share of Partnership Net
Loss, (iii) such Limited Partner's share of expenditures of the
Partnership which are neither deductible nor properly chargeable
to its capital account and (iv) such Limited Partner's share of
the decrease in the basis of the Partnership's Property under
Code Section 48(q) arising from the allowance of the investment
tax credit. All items of income exempt from federal income tax
and expenditures not deductible in computing federal income tax
shall be allocated among the Partners in accordance with their
allocable share of Net Income and Net Loss set forth in Paragraph
11.2 hereof.
6.7 Escrow of Funds. All Original Invested Capital shall
be received by the Partnership in trust, and shall be deposited
in an escrow account in any banking institution designated by the
Managing General Partner as escrow holder for the Original
Invested Capital. Upon receipt of a minimum of $2,500,000 in
Original Invested Capital from purchasers of Units, the
Partnership will admit such purchasers into the Partnership as
additional Limited Partners not later than 15 days after the
release from escrow of the purchasers' funds to the Partnership.
The escrow holder shall transfer such persons' cash contributions
to the Partnership as Original Invested Capital; the interest
earned thereon, shall, however, be distributed to the Limited
Partners. If the $2,500,000 minimum amount is not obtained
within six months from the date of the Prospectus, all Original
Invested Capital will be promptly refunded to the purchasers with
any interest earned on such Original Invested Capital. All
subscriptions will be accepted or rejected by the Partnership
within 30 days of their receipt (if rejected, all subscription
proceeds will be promptly returned to the investor.
7. STATUS OF LIMITED PARTNERS
7.1 General Limitation on Liability. Limited Partners
shall not be bound by, or be personally liable for, the expenses,
liabilities or obligations of the Partnership and no Limited
Partner shall be required to lend funds to the Partnership or to
make any further capital contribution after his Original
Contribution, or to repay to the Partnership, any partner or any
creditor of the Partnership all or any portion of any negative
amount of such Limited Partner's capital account
7.2 Certain Liabilities of Limited Partners. In accordance
with state law, a limited partner may, under certain
circumstances, be required to return to the partnership for the
benefit of partnership creditors, amounts previously distributed
to him as a return of capital, plus interest. It is the intent
of the Partners that no Distribution to any Limited Partner of
Adjusted Cash From Operations pursuant to Paragraph 11.5 or Cash
From Sales or Financings pursuant to Paragraph 11.6 shall be
deemed a return or withdrawal of capital, even if such
Distribution represents, for federal income tax purposes or
otherwise (in full or in part), a distribution of depreciation or
any noncash item accounted for as a loss or deduction from or
offset to the Partnership's income and no Limited Partner shall
be obligated to pay any such amount to or for the account of the
Partnership or any creditor of the Partnership. However, if any
court of competent jurisdiction holds that, notwithstanding the
provisions of this Partnership Agreement, any Limited Partner is
obligated to make any such payment, such obligation shall be the
obligation of such Limited Partner and not of the General
Partners.
8. STATUS OF UNITS
Each Unit shall be fully paid and nonassessable.
9. COMPENSATION TO GENERAL PARTNERS AND THEIR AFFILIATES
9.1 The General Partners and their Affiliates will receive
compensation from the Partnership only as specified by this
Partnership Agreement.
9.2 Limitation on Compensation
9.2.1 The aggregate amount of the Acquisition Fees,
Acquisition Expenses and Property Evaluation Fees paid to all
persons shall not exceed the lesser of (a) 18% of Gross Proceeds
(calculated on the amount of the offering proceeds invested in
Properties and adjusted to include Acquisition Fees, Acquisition
Expenses, Property Evaluation Fees and a pro rate amount of cash
reserves and Organization and Offering Expenses paid by the
Partnership) or (b) such compensation customarily charged in
arms' length transactions by others rendering similar services as
an ongoing public activity in the same geographical location and
for comparable property. The Partnership shall comply with the
foregoing limitation at any given time on an ongoing program
basis.
9.2.2 No Acquisition Fee shall be paid by the
Partnership to any Affiliate of the Partnership, nor shall any
Affiliate of the Partnership receive a fee, commission or other
benefit from any person, upon any reinvestment of Cash From Sales
or Financings by the Partnership.
9.2.3 Except an set forth in this Paragraph 9, no
other real estate commission, property purchase fee, finder's fee
or other compensation shall be paid or payable by the Partnership
to the General Partners or to any other person in connection with
the acquisition of specific real properties provided, however, in
the event they exceed the limitations in this Paragraph 9.2 the
Managing General Partner may cause Acquisition Fees to be paid to
other persons, which payments will be without cost to the
Partnership.
9.2.4 The aggregate amounts payable to the General
Partners and their Affiliates (a) pursuant to Paragraphs 9.4.1,
10.1(b) and 11.5 shall not exceed 20% of Adjusted Cash From
Operations and (b) pursuant to Paragraphs 9.4.3, 9.5.1, and 11.6
shall not exceed 25% of Cash From Sales or Financings.
Moreover, if the amounts payable to the General Partners and
their Affiliates pursuant to Paragraphs 9.4.3 and 11.6 exceed 10%
of Cash From Sales or Financings, the payment of such excess
shall be subordinated to distributions to the Limited Partners of
Cash From Sales or Financings equal to their total of Original
Invested Capital and a sum equal to 10% per annum cumulative
noncompounded on their Adjusted Invested Capital.
9.3 Acquisition Stage
9.3.1 Acquisition Fees. Subject to the limitations
contained in Paragraph 9.2., the Managing General Partner or its
Affiliates shall receive Acquisition Fees in an amount equal to
an aggregate of 6% of Gross Proceeds, calculated on the amount of
the offering proceeds invested in Partnership Properties
purchased through the services of the Managing General Partner or
its Affiliates and adjusted to include Acquisition Fees and a pro
rata amount of cash reserves and Organization and Offering
Expenses paid by the Partnership or by the sellers of the
Partnership Properties acquired, together with reimbursement for
Acquisition Expenses incurred. The Acquisition Fees shall be
payable at the close of escrow or, if there is no escrow, at the
time legal title to such Property is transferred to the
Partnership, or later if the Managing General Partner determines
that it is in the best interest of the Partnership.
9.3.2 Property Evaluation Fee. Subject to the
limitations contained in Paragraph 9.2.1, the Managing General
Partner or its Affiliates shall receive from the Partnership a
Property Evaluation Fee in an amount equal to 2% of Gross
Proceeds as compensation for services rendered in evaluating
possible Property investments which are not ultimately acquired
by the Partnership. The Property Evaluation Fee shall be paid to
the Managing General Partner or its Affiliates on the date which
is 90 days after the Final Closing Date.
9.4 Operating Stage (Operating Compensation)
9.4.1 Partnership Management Fee. As compensation
for services rendered in managing the affairs of the Partnership,
the Managing General Partner shall be entitled to receive the
Partnership Management Fee which shall be an amount per annum
equal to .5% of Invested Assets during the first two years of
operation of the Partnership and 1.05% of Invested Assets
thereafter. The Partnership Management Fee shall be paid
quarterly when Adjusted Cash From Operations is distributed to
the Limited Partners.
9.4.2 Property Management Fee. An Affiliate of the
Managing General Partner shall be entitled to a Property
Management Fee for services in providing continuing professional
property management or supervision of professional property
managers of the Partnership Properties. Such fees shall be paid
monthly and shall be equal to the following: (a) in the case of
residential property, the maximum fee (including rent-up, leasing
and re-leasing fees) shall be 5% of the annual Gross Revenues
from such property; (b) in the case of industrial and commercial
property other than that described in clause (c) below, the
maximum fee shall be 6% of the Gross Revenues where the Affiliate
of the Managing General Partner includes leasing, re-leasing and
leasing related services, or 3% of the Gross Revenues where the
Affiliate of the Managing General Partner does not perform such
services; (d) in the case of industrial and commercial property
which is not leased on a long term basis (ten or more years) the
maximum fee shall be 1% of the Gross Revenues (except for a
one-time initial fee of 3% of the Gross Revenues on each such
lease, which fee shall be payable over the first five full years
of the original term of the lease); provided, however, that the
fees payable hereunder shall not exceed the competitive rate
charged by an independent third party rendering comparable
services which could be reasonably made available to the
Partnership. The Property Management Fee shall be paid on a
monthly basis as compensation for the services of the Affiliate
of the Managing General Partner in overall management of the
Partnership Properties. For purposes of calculating the maximum
Property Management Fee hereunder, fees paid to unaffiliated
third parties for property management services shall be included
and there shall be excluded locator services performed by
unaffiliated third parties in geographical areas where such
locator services are not traditionally included in property
management services.
9.4.3 Mortgage Placement Fee. As compensation for
services rendered in securing any initial financing of a
Partnership Property, the Managing General Partner or its
Affiliates shall receive a Mortgage Placement Fee in an amount
equal to two and one-half percent (2.5%) of all Cash From Initial
Financing, which fee shall be paid by the Partnership when Cash
From Initial Financing is received by the Partnership, provided
however, that 40% of the Mortgage Placement Fee shall be payable
to the Managing General Partner or its Affiliates only after
Distributions of Cash From Initial Financing have been made to
Limited Partners in an aggregate amount equal to their Original
Invested Capital.
9.5. Liquidating Stage (Final Compensation)
9.5.1 Subordinated Incentive Fee. As compensation
for the services rendered in evaluating and selecting Properties
for the Partnership, making decisions as to the nature and terms
of the acquisition and disposition of such Properties, selecting,
retaining and supervising consultants, contractors, architects,
engineers, lenders, borrowers and others and otherwise generally
managing the day-to-day operations of the Partnership, the
Managing General Partner and its Affiliates shall be entitled to
receive the Subordinated Incentive Fee. The Subordinated
Incentive Fee shall be an amount equal to 15% of the Cash From
Sales or Financings and shall be paid when such Cash From Sales
or Financings is distributed; provided, however, that payment
thereof shall be computed on the remainder after the Partnership
has distributed to Limited Partners an aggregate amount in cash
which is equal to (i) the total of Original Invested Capital and
(ii) a sum equal to ten percent per annum cumulative non-
compounded on their Adjusted Invested Capital, commencing on the
last day of the calendar quarter in which each Limited Partner's
contribution of Original Invested Capital is received by the
Partnership.
9.5.2 Subordinated Real Estate Commission. The
Partnership shall pay for real estate brokerage services to all
persons involved in the sale of Partnership Properties, real
estate brokerage fees which are reasonable, customary and
competitive, taking into consideration the size, type and
location of the Property ("Competitive Commission"), which shall
not in the aggregate exceed 6% of the gross sales price of the
Property; however, as to any Affiliate of the General Partners
such fees shall be paid only if such Affiliate provides a
substantial amount of services in the sales effort and shall not
exceed the lesser of (i) a percentage of the gross sales price of
a Property equal to one-half of the Competitive Commission, or
(ii) 3% of the gross sales price of a Property. The real estate
brokerage fee shall be payable upon the completion of the sale of
each Property; provided, however, the payment thereof to any
Affiliate of the General Partners shall be made only after the
Partnership has distributed to Limited Partners an aggregate
amount in cash which is equal to: (i) the total of Original
Invested Capital and (ii) a sum equal to six percent per annum
cumulative noncompounded on their Adjusted Invested Capital,
commencing on the last day of the calendar quarter in which each
Limited Partner's contribution of Original Invested Capital is
received by the Partnership. There is no limitation or
subordination for any real estate commission paid only to
non-Affiliates. If an Affiliate participates with a
non-Affiliated broker, the limitations contained in this
Paragraph 9.5.2 shall apply to commissions paid by the
Partnership to all Affiliates involved in the transaction
9.6 Fees on Expulsion. Should a General Partner be
expelled from the Partnership, such Partner shall be entitled to
interest on any loans so made, subject to the provisions of this
Partnership Agreement, and any portion of the Acquisition Fee,
Partnership Management Fee, Property Management Fee, Subordinated
Incentive Fee, Subordinated Real Estate Commission, Property
Evaluation Fee, Mortgage Placement Fee, or any other fee or
commission payable according to the provisions of this Paragraph
9 which is then accrued and due, but not yet paid, shall be paid
by the Partnership to such General Partner or its Affiliate, as
the case may be, in cash within 30 days of the date of expulsion
as stated in the written notice of expulsion, unless such amount
is included in the purchase price of the General Partner's
interest in the Partnership as determined under Paragraph 17.4
hereof.
10. PARTNERSHIP EXPENSES
10.1 Reimbursement of Expenses. (a) The General Partners and
their Affiliates may be reimbursed for the following Partnership
expenses:
10.1.1 Organization and Offering Expenses;
10.1.2 the actual cost of goods and materials used
for or by the Partnership and obtained from entities unaffiliated
with the Sponsor; and
10.1.3 administrative services necessary to the
prudent operation of the Partnership, provided that such
reimbursement will be at the lesser of (a) the actual cost to the
General Partners or Affiliates, or (b) 90% of the amount the
Partnership would be required to pay to independent parties for
comparable administrative services in the same geographical
location. For purposes of this Paragraph 10.1.3, the cost of
services shall mean the pro rata cost of personnel, including an
allocation of overhead directly attributable to such personnel,
based on the amount of time such personnel spent on such
services, or such other method of allocation acceptable to the
Partnership's independent certified public accountants.
(b) In addition, the Partnership shall pay the
Managing General Partner at the rate of $0.75 per Unit per annum
based on the Total Outstanding Units at the end of each calendar
quarter, payable 25% per calendar quarter, on account of expenses
incurred by the Managing General Partner related to the
administration of the Partnership; provided however, that such
payment shall in no event be more than $150,000 per annum after
the Final Closing Date. The payments provided for in this
Paragraph shall be nonaccountable and shall be paid to the
Managing General Partner at such time as Distributions are made
to the Limited Partners under the provisions of Paragraph 11.5.
10.2 Limitations on Reimbursement. The General Partners and
their Affiliates will not be reimbursed by the Partnership for
the following expenses:
10.2.1 services for which the General Partners or
Affiliates are entitled to compensation in the form of a separate
fee pursuant to Paragraph 9 hereof;
10.2.2 rent or depreciation, utilities or capital
equipment;
10.2.3 Organization and Offering Expenses in excess
of the lesser of $1,500,000 or 3% of the Gross Proceeds; or
10.2.4 salaries, fringe benefits, travel expenses or
other administrative items incurred by or allocated to any
controlling person of the General Partners or Affiliates. For
purposes of this subparagraph, "controlling person" shall mean
any person, regardless of title, who performs executive or senior
management functions for the General Partners or Affiliates
similar to those of executive management or senior management,
and directors, or those holding 5% or more equity interest in the
General Partners or Affiliates, or persons having the power to
direct or cause the direction of the General Partners or
Affiliates through ownership of voting securities, by contract or
otherwise. It is not intended that every person who carries a
title such as vice president, senior vice president, secretary or
treasurer be considered a controlling person.
10.3 Partnership Obligations. Subject to Paragraphs 10.1
and 10.2 preceding, the Partnership shall pay all expenses (which
expenses shall be billed directly to the Partnership) of the
Partnership which may include, but are not limited to:
10.3.1 all costs of personnel employed by the
Partnership and involved in the business of the Partnership,
including persons who may also be employees of the Managing
General Partner;
10.3.2 all costs of borrowed money. taxes and
assessments on Partnership Properties and other taxes applicable
to the Partnership;
10.3.3 legal, audit, accounting, brokerage and other
fees;
10.3.4 printing, engraving and other expenses and
taxes incurred in connection with the issuance, distribution,
transfer, registration and recording of documents evidencing
ownership of an interest in the Partnership or in connection with
the business of the Partnership;
10.3.5 fees and expenses paid to independent
contractors, appraisers, mortgage bankers, brokers and servicers,
leasing agents, consultants, on-site managers, real estate
brokers, insurance brokers and other agents;
10.3.6 expenses in connection with the disposition,
replacement, alteration, repair, remodeling, refurbishment,
leasing, refinancing and operation of Partnership Properties
(including the costs and expenses of foreclosures, insurance
premiums, real estate brokerage and leasing commissions and of
maintenance of such Property);
10.3.7 the cost of insurance as required in
connection with the business of the Partnership;
10.3.8 expenses of organizing, revising, amending,
converting, modifying or terminating the Partnership;
10.3.9 the cost of preparation and dissemination of
the informational material and documentation relating to
potential Sales or Dispositions of Partnership Property;
10.3.10 the cost incurred in connection with any
litigation in which the Partnership is involved, as well as in
the examination, investigation or other proceedings conducted by
any regulatory agency of the Partnership, including legal and
accounting fees incurred in connection therewith;
10.3.11 the cost of any computer equipment or
services used for or by the Partnership;
10.3.12 the cost of any accounting, statistical or
bookkeeping equipment necessary for the maintenance of the books
and records of the Partnership and
10.3.13 supervision and expenses of professionals
retained by the Partnership in connection with any of the
foregoing, including, without limitation, attorneys, accountants
and appraisers.
11. ALLOCATION OF INCOME, LOSS AND DISTRIBUTIONS
11.1.1 Apportionment of Net Income, Net Loss and
Distributions. That portion of Net Income, Net Loss and
Distributions of the Partnership allocated to Limited Partners as
a group with respect to any calendar quarter shall be apportioned
among the Limited Partners in the ratio in which the number of
Units owned by each of them on the first day of such quarter
bears to the total number of Units owned by all of them as of
that date, without regard to capital accounts or the number of
days during such quarter in which a person was a Limited Partner.
Notwithstanding the foregoing, with respect to any calendar
quarter during which any Closing Date occurs, Net Income, Net
Loss and Distributions with respect to such month shall be
apportioned among Limited Partners of record as of the first day
of such month in proportion to the number of Units owned by each
Limited Partner of record on the first day of such month, without
regard to capital accounts or the number of days during such
month that such person was a Limited Partner. An investor shall
be deemed to be a Limited Partner of record as of the first day
of a calendar month only if the admission of such investor as a
Limited Partner occurs after the 15th day of the calendar month
preceding such month or on or before the 15th day of the month
for which the allocation is being made. In the case of a
proposed assignment of Units, the assignment shall be effective,
and the assignee of record shall be deemed to be the owner of
such Units, from and after the "effective date" of the assignment
of such Units (as defined in Paragraph 12.2 hereof), with the
assignee of record being entitled to allocations of Net Income
and Net Loss and Distributions only with respect to the period
commencing with the effective date of the assignment. That
portion of Net Income, Net Loss and Distributions allocated to
the General Partners as a group shall be apportioned among the
General Partners 98% to the Managing General Partner and 2% to
the Associate General Partner.
11.1.2 Minimum Gain. Notwithstanding Paragraph
11.1.1 (Apportionment), if the capital accounts of all Limited
Partners are not equal and if any allocation of Net Loss to a
Limited Partner would reduce a Limited Partner's capital account
balance below zero or would increase the negative balance in such
Limited Partner's capital account at a time when another Limited
Partner has a positive capital account balance, to the extent
such allocation would cause the sum of the negative capital
account balances of all Partners (determined after taking account
of Distributions theretofore made, and all allocations of taxable
income and taxable loss for the Partnership's prior taxable
years) to exceed the Partnership's "minimum gain," as determined
at the close of the Partnership's taxable year in respect of
which the taxable loss is to be allocated, such excess shall
instead be allocated pro rata to Limited Partners having positive
capital account balances in proportion to their respective
positive capital account balances until such capital account
balances are reduced to zero; provided, however, that in no event
shall there be a reallocation of any item of income, gain, loss
or deduction previously allocated among the Partners pursuant to
this Agreement. For purposes of determining a Limited Partner's
capital account balance under this Paragraph 11, Distributions
made prior to or contemporaneous with any allocation to a Limited
Partner shall be reflected in such Partner's capital account
prior to making such allocation to such Partner. The term
"minimum gain" shall have the meaning ascribed to such term under
Treasury Regulations as proposed, reproposed or adopted (as the
case may be) under Code Section 704 (currently, the excess of the
outstanding principal mortgage balance over the adjusted basis of
a Property). For purposes of this Paragraph 11.1.2 and Paragraph
11.4.3 (Minimum Gain Deficiency), a Partner's negative capital
account will be credited to the extent that such Partner is
unconditionally obligated to (x) fund deficits in such Partner's
capital account upon liquidation of the Partnership or (y)
contribute additional capital to the Partnership.
11.2 Allocation of Net Income and Net Loss. Except as
otherwise provided in Paragraphs 11.1.2 (Minimum Gain) and 11.4.3
(Minimum Gain Deficiency) of this Agreement, Net Income (other
than depreciation and other than Net Income arising from the
occurrence of a Sale or Disposition) and Net Loss shall be
allocated 5% to the General Partners and 95% to the Limited
Partners.
11.3 Depreciation. The provisions of this Paragraph 11.3
shall apply only in the event that Units are acquired from the
Partnership prior to the Final Closing Date by "tax-exempt
entities," as defined under Section 168(j)(4) of the Code. All
depreciation in each taxable year shall generally be allocated 5%
to the General Partners and 95% to the Taxable Partners and the
depreciation allocated to Taxable Partners, shall be allocated
among the Taxable Partners in accordance with the provisions of
Paragraph 11.1.1 (Apportionment).
11.4 Allocation of Net Income From a Sale or Disposition.
Net Income for tax purposes, arising from the occurrence of a
Sale or Disposition shall be allocated as follows (such Net
Income shall be allocated, and capital account balances
determined, prior to making Distributions arising from such Sale
or Disposition):
11.4.1 First, except as otherwise provided in
Paragraphs 11.4.3 (Minimum Gain Deficiency) and 11.4.4
(Termination Rules), such Net Income, up to an amount equal to
the depreciation deductions previously allocated to the Partners
which are attributable to the Partnership Properties that are the
subject of the Sale or Disposition, shall be allocated to each
Partner in an amount equal to the depreciation previously
allocated to such Partner (including depreciation allocated to
prior owners of such Units) (less Net Income, if any, in respect
of any Sale or Disposition allocated to each such Partner
pursuant to Paragraph 11.4.4) for all taxable years pursuant to
Paragraph 11.3 (Depreciation) (less Net Income, if any, in
respect of any Sale or Disposition allocated to each such Partner
pursuant to Paragraph 11.4.4). For purposes of determining the
amount of depreciation previously allocated to a Limited Partner,
the depreciation previously allocated to any prior owner of such
Limited Partner's Units shall be deemed to have been allocated to
such Limited Partner.
11.4.2 Second, the remainder of such Net Income, if
any, shall be allocated 5% to the General Partners and 95% to the
Limited Partners.
11.4.3 Minimum Gain Deficiency. This Paragraph
11.4.3 shall apply only if at the close of any Partnership
taxable year (a) the portion of the aggregate negative capital
account balances of all Partners having negative capital account
balances which results from the allocation of losses or
deductions attributable to Partnership nonrecourse indebtedness
secured by Partnership Property ("Negative Nonrecourse Balances")
exceeds (b) minimum gain, if any, as defined in Paragraph 11.1.2
(the excess of clause (a) over clause (b) hereinafter is referred
to as "Minimum Gain Deficiency). Notwithstanding the provisions
of Paragraph 11.4.1 and 11.4.2 hereof, an amount of Net Income
arising from a Sale or Disposition equal to the Minimum Gain
Deficiency shall first be allocated to each Partner having a
Negative Nonrecourse Balance in the proportion in which such
Partner's Negative Nonrecourse Balance bears to the aggregate
Negative Nonrecourse Balance of all Partners ("Nonrecourse
Balance Ratio"). In the event that the foregoing allocation
would be insufficient to eliminate the Minimum Gain Deficiency,
in amount of gross income (as defined in Section 61 of the Code
other than gross income recognized upon a Sale or Disposition) of
the Partnership necessary to eliminate the Minimum Gain
Deficiency shall be allocated to each Partner with a Negative
Nonrecourse Balance in proportion to the Partners' Nonrecourse
Balance Ratio. Any allocation under this Paragraph 11.4.3 shall,
to the extent possible, be made at a time no later than the time
at which the Minimum Gain Deficiency arises; provided, however,
that in no event shall there be a reallocation of any item of
income, gain, loss or deduction previously allocated among the
Partners pursuant to this Agreement.
11.4.4 Termination Rules. Notwithstanding the
foregoing provisions of this Paragraph 11.4, upon a Sale or
Disposition in connection with the termination of the Partnership
(defined as the Sale or Disposition of the Partnership's last
three Properties) (a) Net Income arising from such a Sale or
Disposition, up to an amount equal to the sum of the negative
capital account balances of Partners having negative capital
account balances shall first be allocated to Partners having
negative capital account balances pro rata in proportion to their
respective negative capital account balances and (b) Net Income
arising from such a Sale or Disposition allocated to the Limited
Partners as a group pursuant to Paragraphs 11.4.1 and 11.4.2
shall be allocated first to Limited Partners having the smallest
capital accounts per Unit so as to equalize, to the extent
possible, the capital accounts per Unit of all Limited Partners
and then allocated as described in add Paragraphs 11.4.1 and
11.4.1
11.4.5 Income Characterization. For purposes of
determining the character (as ordinary income or capital gain) of
any Net Income allocated to a Partner pursuant to this Paragraph
11.4, such portion of the Net Income allocated pursuant to this
Paragraph 11.4 which is treated as (a) ordinary income
attributable to the recapture of depreciation or (b) addition to
tax attributable to the recapture of investment tax credits,
respectively, shall be allocated among the Partners in the
proportion which (i) the amount of depreciation or investment tax
credit, respectively, previously allocated to each Partner
relating to the Property which is the subject of the Sale or
Disposition bears to (ii) the total of such depreciation or
investment tax credit, respectively, allocated to all Partners.
This Paragraph 11.4.5 shall not alter the amount of allocations
among the Partners pursuant to Paragraph 11.4, but merely the
character of gain so allocated. For purposes of determining the
amount of depreciation or investment tax credits previously
allocated to a Limited Partner, the depreciation and investment
tax credits previously allocated to any prior owner of such
Limited Partner's Units shall be deemed to have been allocated to
such Limited Partner.
11.5 Distribution of Adjusted Cash From Operations.
Adjusted Cash From Operations remaining after payment of the
Partnership Management Fee shall be allocated at the close of
each calendar quarter and distributed approximately 45 days after
the close of such calendar quarter, 5% to the General Partners
and 95% to the Limited Partners.
11.6 Distributions of Cash From Sales or Financings. Cash
From Sales or Financings, to the extent distributable hereunder,
shall be distributed as soon as is practicable after the end of
each fiscal quarter in the following order of priority:
11.6.1 first, 95% to the Limited Partners and 5% to
the General Partners, until each Limited Partner has received
aggregate Distributions pursuant to this Paragraph 11.6.1 equal
to his Original Invested Capital plus an amount which, when added
to all prior Distributions to such Limited Partner, shall be
equal to 6% per annum cumulative noncompounded on his Adjusted
Invested Capital, commencing on the last day of the calendar
quarter in which such Limited Partner's contribution of Original
Invested Capital is received by the Partnership;
11.6.2 second, after payment to an Affiliate of the
Managing General Partner of its Subordinated Real Estate
Commission, 95% to the Limited Partners and 5% to the General
Partners, until each Limited Partner has received an amount
which, when added to all prior Distributions to such Limited
Partner, equals 10% per annum cumulative noncompounded on his
Adjusted Invested Capital, commencing on the last day of the
calendar quarter in which such Limited Partner's contribution of
Original Invested Capital is received by the Partnership; and
11.6.3 third, after payment of the Subordinated
Incentive Fee, 95% to the Limited Partners and 5% to the General
Partners.
11.7 Distributions on Termination. In connection with the
"termination" of the Partnership (deemed as the Sale or
Disposition of the last three Properties), Cash From Sales or
Financings and any remaining working capital reserves shall be
allocated among, and distributed to, the Partners first in
proportion to, and to the extent of, their positive capital
accounts after the Net Income from any Sale or Disposition of
Partnership Property has been allocated pursuant to Paragraph
11.4 hereof. Distributions pursuant to this Paragraph 11.7 shall
be deemed to have been made in satisfaction of the Distributions
required by Paragraph 11.6 (in the case of nonterminating Sales
or Dispositions) in the order of priority described therein.
11.8 Restrictions. The Partnership may be restricted from
making Distributions under the terms of notes, mortgages or other
types of debt obligation which it may issue or assume in
conjunction with borrowed funds. In addition, Distributions are
subject to the payment of Partnership expenses and to the
maintenance of sufficient reserves for alterations, repairs,
improvements, maintenance and replacement of furniture and
fixtures. Distributions may also be restricted or suspended in
circumstances when the Managing General Partner determines, in
its absolute discretion, that such action is in the best
interests of the Partnership.
11.9 Consent to Methods. The methods herein above set forth
by which Distributions and allocations of Net Income and Net Loss
are made and apportioned are hereby expressly consented to by
each Partner as an express condition to becoming a Partner.
11.10 Distributions Subject to Payments. All Distributions
are subject to the payment of Partnership expenses, and to the
maintenance of reasonable reserves for alterations, repairs,
improvements, maintenance and replacement of furniture and
fixtures.
11.11 Deductions of General Partners. To the extent that
the Partnership shall be entitled to any deduction for federal
income tax purposes as a result of any interest in Net Income,
Net Loss and Distributions granted to a General Partner, such
deduction shall be allocated for federal income tax purposes to
such General Partner.
11.12 Distributions for Taxes. The Managing General
Partner shall also distribute after the completion of each
calendar year such amounts of Cash From Sales or Financings (when
considered with prior Distributions of Adjusted Cash From
Operations) sufficient to allow a Limited Partner in a 28%
federal income tax bracket to pay the income taxes due with
respect to Net Income derived by him from the Sale or Disposition
giving rise to such tax liability.
11.13 Return of Unutilized Proceeds. In the event that any
portion of the Net Proceeds are not invested or committed for
investment within 24 months from the date of the Prospectus
(except for any amounts utilized to pay Partnership operating
expenses, including amounts set aside for reserves as set forth
in Paragraph 3.2 of this Partnership Agreement), such portion of
the Net Proceeds shall be distributed to the Limited Partners as
a return of capital. For the purposes of this Paragraph 11.13,
funds will be deemed to have been committed to investment and
will not be returned to the Limited Partners to the extent
written agreements in principle or letters of understanding were
at any time executed, regardless of whether any such investment
may or may not be consummated, and to the extent any funds have
been reserved to make contingent payments in connection with any
Property, regardless of whether any such payments may or may not
be made.
11.14 One Percent Interest of General Partners. In no
event shall the General Partners' interests in each item of
Partnership income, gain, loss, deduction or credit be less than
one percent of each such item at all times during the existence
of the Partnership. For this purpose, Units held by the General
Partners as Limited Partners shall not be taken into account.
11.15 Escheat of Distributions. If, upon the termination
and dissolution of the Partnership, there remains outstanding on
the books of the Partnership a material amount of Distribution
checks which have not been negotiated for payment by Limited
Partners, the Managing General Partner may, if deemed to be in
the best interests of the Partnership, cause such amounts to be
redistributed pro rata to Limited Partners of record on such
final distribution date who have previously cashed all of their
Distribution checks; provided, however, that the Partnership
shall not be liable for any subsequent claims for payment of such
redistributed Distributions. The Managing General Partner is not
required to make such a redistribution, in which case such
amounts will eventually escheat to the state.
12. ASSIGNMENT OF UNITS
12.1 Right to Assign Units. A Limited Partner shall have
the right to assign ten or more whole Units (provided, however,
unless prohibited by any applicable state securities laws, four
Units may be acquired or retained by an XXX or Xxxxx Plan and
provided further that a Limited Partner, other than an XXX or
Xxxxx Plan, must assign all of his Units if he would otherwise
retain less than ten Units)by a written instrument of assignment
specifying the number of Units assigned, duly executed by the
assignor of such Units, the terms of which are not in
contravention of any of the provisions of this Partnership
Agreement. No assignment of Units (whether intended to effect a
transfer of record ownership or otherwise) shall be effective for
any purpose until the "effective date" of assignment, as defined
in Paragraph 12.2, has occurred. A Limited Partner shall within
30 days after assignment notify the Managing General Partner of
any assignment of a beneficial interest in any Units which occurs
without a transfer of record ownership.
12.2 Effectiveness of Assignment. No attempted transfer of
Units shall be effective, and the Partnership and the Managing
General Partner shall be entitled to treat the assignor of such
Units as the absolute owner thereof in all respects, and shall
incur no liability for allocations of Net Income. Net Loss or
Distributions or transmittal of reports and notices required to
be given to Limited Partners hereunder which are made in good
faith to such assignor, until (a) such time as the written
instrument of assignment has been received by the Partnership and
recorded on its books and (b) the "effective date" of the
assignment has passed. The "effective date" of any assignment,
and the date on which any assignee shall be deemed an assignee of
record, shall be the first day of the first full calendar quarter
following the later of (i) the date set forth on the written
instrument of assignment or (ii) the date on which the
Partnership has actual notice of the assignment of Units.
12.3 Allocations between Assignor and Assignee. Net Income,
Net Loss and Distributions will be allocated between the assignor
and the assignee of record as provided under Article 11 hereof,
with the owner of a Unit on the first day of a calendar quarter
being allocated the Partnership's Net Income, Net Loss and
Distributions with respect to such quarter.
12.4 Limitation on Number of Units Assigned. Except as
provided in this Paragraph, no assignment of any Units by a
Limited Partner may be made if the Units sought to be assigned,
when added to the total of all other Units assigned within the
period of twelve consecutive months prior to the proposed date of
assignment would, in the opinion of counsel for the Partnership,
result in the termination of the Partnership under the Code.
However, such assignment may be made if, upon the application and
at the expense of the Limited Partner desiring to assign his
Units in the Partnership, there shall have been granted to the
transferring Limited Partner and the Partnership a private ruling
by the Internal Revenue Service that the proposed assignment will
not cause such termination.
12.5 Compliance with Applicable Rules. No assignment, sale,
transfer, exchange or other disposition of any Units may be made
except in compliance with the then applicable rules of any other
applicable governmental authority.
12.6 Ineffectual Assignments. Any assignment, sale,
exchange or other transfer in contravention of any of the
provisions of this Paragraph 12 shall be void and ineffectual,
and shall not bind or be recognized by the Partnership.
13. SUBSTITUTED LIMITED PARTNERS
13.1 Conditions for Substitution. No assignee shall have
the right to become a substituted Limited Partner in place of his
assignor unless all of the following conditions are first
satisfied:
13.1.1 the provisions of Paragraph 12 of this
Partnership Agreement are compiled with;
13.1.2 the instrument of assignment sets forth the
intention of the assignor that the assignee succeed to the
assignor's interest as a substituted Limited Partner in his
place;
13.1.3 the assignor and assignee shall have executed
and acknowledged such other instruments as the Managing General
Partner may deem necessary or desirable to effect such
substitution, including the written acceptance and adoption by
the assignee of the provisions of this Partnership Agreement, as
the same may be amended and his execution, acknowledgment and
delivery to the Managing General Partner of a special power of
attorney, the form and content of which are described herein; and
13.1.4 a transfer fee not to exceed $100 shall have
been paid to the Partnership to cover all reasonable expenses
connected with such substitution.
13.2 Consent to Admission of Limited Partners. By executing
or adopting this Partnership Agreement, each Limited Partner
hereby consents to the admission of additional or substituted
Limited Partners by the Managing General Partner and to any
assignee of his Units becoming a substituted Limited Partner.
13.3 Amendments to Reflect Admissions. The Managing General
Partner shall cause the Partnership Agreement or any separate
certificate of limited partnership to be amended to reflect the
admission and/or substitution of Limited Partners at least once
in each fiscal quarter.
14. BOOKS, RECORDS, ACCOUNTING AND REPORTS
14.1 Location of Records; Copies. The Partnership's books
and records, the Partnership Agreement and all amendments
thereto, any separate certificates of limited partnership, and
copies of each appraisal on Partnership Property shall be
maintained at the principal office of the Partnership or such
other place as the Managing General Partner may determine and
shall be open to inspection and examination of Limited Partners
or their duly authorized representatives at all reasonable times.
Upon written request, any Limited Partner or his duly authorized
representative will be provided with a copy of the certificate or
certificates of limited partnership containing the most recent
listing of Partners' names, addresses and capital contributions.
Each appraisal on Partnership Property will be maintained by the
Managing General Partner and will be available for such
inspection and examination by any Limited Partner or his duly
authorized representative for a period of at least five years
following the date of acquisition of the Property that is the
subject of such appraisal
14.2 Financial Statements. The Managing General Partner
shall have prepared at least annually, at Partnership expense,
financial statements (balance sheet, statement of income or loss,
partners' equity and changes in financial position) prepared in
accordance with generally accepted accounting principles and
accompanied by a report thereon containing an opinion of an
independent certified public accounting firm. Copies of such
statements and report shall be distributed to each Limited
Partner within 120 days after the close of each taxable year of
the Partnership.
14.3 Annual Report. The Managing General Partner shall have
prepared at least annually, at Partnership expense: (i) a
statement of cash flow, (ii) Partnership information necessary in
the preparation of the Limited Partners' federal income tax
returns, (iii) a report of the business of the Partnership, (iv)
a statement as to the compensation received by the General
Partners during the year from the Partnership, which statement
shall set forth the services rendered or to be rendered by the
Managing General Partner and the amount of fees received, and a
report identifying distributions from: (a) Adjusted Cash From
Operations of that year, (b) Cash From Sales or Financings and
(c) working capital reserves and other sources, together with a
breakdown of all costs reimbursed to the General Partners and
Affiliates from the Partnership. The allocation of such costs to
the Partnership must be verified by the independent certified
public accountants and such verification shall include (i) a
review of the time records of individual employees, the costs of
whose services were reimbursed; and (ii) a review of the
specific nature of the work performed by each such employee.
Copies of such report shall be distributed to each Limited
Partner within 120 days after the close of each taxable year of
the Partnership; provided, however, all Partnership information
necessary in the preparation of the Limited Partners' federal
income tax returns shall be distributed to each Limited Partner
not later than 75 days subsequent to December 31 of each year.
14.4 Report on Compensation. The Managing General
Partner shall have prepared quarterly, at Partnership expense,
commencing with the first fiscal quarter after the Closing Date:
(i) a statement as to the compensation received by the General
Partners during such quarter from the Partnership, which
statement shall set forth the services rendered or to be rendered
and the amount of fees received, and (ii) other relevant
information. Copies of such statements shall be distributed to
each Limited Partner within 60 days after the end of each
quarterly period.
14.5 Semi-Annual Report. Until such time as the Partnership
is registered under Section 12(g) of the Securities Exchange Act
of 1934, the Managing General Partner shall have prepared, at
Partnership expense, a semi-annual report covering the first six
months of Partnership operations in each fiscal year, commencing
with the first six-month period after the Closing Date and
annually thereafter, unaudited financial statements (balance
sheet, statement of income or loss for such first six-month
period and statements of Adjusted Cash From Operations for such
first six-month period) and a statement of other pertinent
information regarding the Partnership and its activities during
the six-month period covered by the report. Copies of such
statements and other pertinent information shall be distributed
to each Limited Partner within 60 days after the close of the
six-month period covered by the report of the Partnership.
14.6 Quarterly Report. At such time as the Partnership is
registered under Section 12(g) of the Securities Exchange Act of
1934, the Managing General Partner shall have prepared, at
Partnership expense, a quarterly report covering the first three
quarterly fiscal year periods of Partnership operations in each
fiscal year, commencing with the first quarterly period required
after Section 12(g) registration is effective, unaudited
financial statements (balance sheet, statement of income or loss
for such quarterly period and statement of Adjusted Cash From
Operations for such quarterly period) and a statement of other
pertinent information regarding the Partnership and its
activities during the quarterly period covered by the report.
Copies of such statements and other pertinent information shall
be distributed to each Limited Partner within 60 days after the
close of the quarterly period covered by the report of the
Partnership.
14.7 Report on Acquisitions. The Managing General Partner
shall have prepared, at Partnership expense, no later than the
end of each fiscal quarter in which Partnership Properties are
acquired, a report which shall describe therein: (i) the
location and a description of the general character of all
materially important Properties acquired or presently intended to
be acquired by the Partnership during the quarter, (ii) the
present or proposed use of such Properties and their suitability
and adequacy for such use, (iii) the terms of any material laws
affecting the Property; (iv) a statement that title insurance and
any required construction and performance bonds or other
assurances with respect to builders have been or will be obtained
on all Properties acquired; and (v) such other relevant
information with respect to the acquisition of such Properties as
the Managing General Partner deems appropriate (including by way
of illustration the date and appraised value of the real
property, and the amount of Net Proceeds remaining uncommitted,
in terms of dollars and percentage of Gross Proceeds). Copies of
such report shall be distributed to each Limited Partner within
45 days after the end of such quarter.
14.8 Tax Returns.
(Intentionally Deleted]
14.9 Miscellaneous Reports. The Managing General Partner,
at Partnership expense, shall cause to be prepared and timely
filed, with appropriate federal and state regulatory and
administrative bodies, all reports required to be filed with such
entities under then current applicable laws, rules and
regulations. Such reports shall be prepared on the accounting or
reporting basis required by such regulatory bodies. Any Limited
Partner shall be provided with a copy of any such report upon
request without expense to him.
14.10 Records on Suitability. The Managing General Partner,
at Partnership expense, shall maintain for a period of at least
four years a record of the information obtained to indicate that
a Limited Partner meets the suitability standards set forth in
the Prospectus.
15. RIGHTS, AUTHORITY, POWERS, RESPONSIBILITIES AND DUTIES OF
THE MANAGING GENERAL PARTNER
15.1 Services of Managing General Partner. The Managing
General Partner shall only be responsible for the following
services to the Partnership:
15.1.1 supervising the organization of the
Partnership and the offering and sale of Units;
15.1.2 arranging for (a) the identification of
suitable investments for the Partnership; (b) a review of the
significant factors in deciding whether or not to make a
particular investment and (c) the making of such final investment
decision;
15.1.3 supervising Partnership management, which
includes:(a) establishing policies for the operation of the
Partnership; (b) causing the Partnership's agents or employees to
arrange for the provision of services necessary to the operation
of the Partnership (including any necessary property management,
accounting and legal services and services relating to
distributions by the Partnership); (c) when necessary or
appropriate, approving actions to be taken by the Partnership;
(d) providing advice, consultation, analysis and supervision with
respect to the functions of the Partnership in acquiring
Properties (including compliance with federal, state and local
regulatory requirements and procedures); (e) executing documents
on behalf of the Partnership and (f) making all decisions as to
accounting matters;
15.1.4 approving the terms of Sales or Dispositions
including establishing the terms for and arranging any such and
transaction; and
15.1.5 compliance with Section 6112 of the Code
including acting as the "designated person" and maintaining, on
behalf of the Partnership, lists of investors in the Partnership.
15.2 Powers of Managing General Partner. The conduct of the
Partnership's business shall be controlled solely by the Managing
General Partner in accordance with this Partnership Agreement.
Provided that the Managing General Partner has not been expelled
from the Partnership, adjudicated a bankrupt, insolvent,
dissolved or ceased to exist, the Associate General Partner shall
not participate in or exercise control over the affairs of the
Partnership. The Managing General Partner shall have all
authority, rights and powers conferred by law and those required
or appropriate to the management of the Partnership business
which, by way of illustration but not by way of limitation,
shall, subject only to the provisions of Paragraph 15.4
following, include the right, authority and power.
15.2.1 to acquire, improve, hold and dispose of real
property, interests therein or appurtenances thereto, as well as
personal or mixed property connected therewith, including the
purchase, lease, improvement, maintenance, exchange, trade or
sale of such properties at such price, rental or amount, for
cash, securities (in compliance with appropriate securities
regulations) or other property, and upon terms as the Managing
General Partner deems, in its sole discretion, to be in the best
interests of the Partnership;
15.2.2 to borrow money and, if security is required
therefor, to mortgage or subject any Partnership investment to
any other security device to obtain replacements of any mortgage
or other security device and to prepay, in whole or in part,
refinance, increase, modify, consolidate or extend any mortgage
or other security device all of the foregoing at such terms and
in such amounts as the Managing General Partner, in its sole
discretion, deems to be in the best interests of the Partnership,
subject to the provisions of this Partnership Agreement;
15.2.3 to place record title to, or the right to
use, Partnership assets in the name or names of a nominee or
nominees, trustee or trustees for any purpose convenient or
beneficial to the Partnership;
15.2.4 to acquire and enter into any contract of
insurance which the Managing General Partner deems necessary or
appropriate for the protection of the Partnership and the General
Partners, for the conservation of Partnership assets or for any
purpose convenient or beneficial to the Partnership;
15.2.5 to employ persons in the operation and
management of the business of the Partnership including, but not
limited to, supervisory managing agents, building management
agents, insurance brokers, real estate brokers and loan brokers,
on such terms and for such compensation as the Managing General
Partner shall determine, subject, however, to the limitations
with respect thereto as set forth in Paragraph 9 and provided
that agreements with the Managing General Partner or its
Affiliates for the services set forth in Paragraph 9 shall
contain the terms and limitations as to fees and expenses as set
forth in Paragraph 9 and provided further that any of such
agreements shall be terminated immediately upon dissolution of
the Partnership under Paragraph 19.1;
15.2.6 to prepare or cause to be prepared reports,
statements and other relevant information for distribution to
Limited Partners, including annual and quarterly interim reports;
15.2.7 to open accounts and deposit and maintain
funds in the name of the Partnership in banks or savings and loan
associations;
15.2.8 to cause the Partnership to make or revoke
any of the elections permitted under the Code;
15.2.9 to select as its accounting year a calendar
year or such fiscal year as approved by the Internal Revenue
Service;
15.2.10 to determine the appropriate accounting
method to be used by the Partnership in maintaining its books and
records;
15.2.11 to offer and sell Units in the Partnership to
the public directly or through any licensed Affiliate of the
Managing General Partner and to employ personnel, agents and
dealers for such purpose;
15.2.12 to require in all Partnership obligations
that the General Partners shall not have any personal liability
thereon but that the person or entity contracting with the
Partnership is to look solely to the Partnership and its assets
for satisfaction and in the event that any such obligations have
personal liability, the General Partners may require their
satisfaction prior to contracts without such personal liability;
provided, however, that the inclusion of the aforesaid provisions
shall not materially affect the cost of the service or material
being supplied and all Partnership obligations are satisfied in
accordance with prudent business practices as to time and manner
of payment;
15.2.13 to purchase Property in its own name or in
the name of a nominee, a trust or a corporate "nominee" or
otherwise and hold title thereto temporarily for the purpose of
facilitating the acquisition of such Property for the
Partnership, or completion of construction of the Property, or
any other purpose related to the business of the Partnership;
provided that such Property is purchased by the Partnership for a
purchase price no greater than the cost of such Property to the
Managing General Partner, except for compensation in accordance
with Paragraph 9 of this Partnership Agreement; and further
provided that there is no benefit arising out of such transaction
of the Managing General Partner apart from the compensation
otherwise permitted by this Partnership Agreement;
15.2.14 to allow the Partnership to borrow money from
Integrated on a short-term basis, at any time and from time to
time including, but not limited to, prior to the Final Closing
Date, and in connection therewith to pay interest and other
financing charges or fees which shall not exceed amounts which
would be charged by unrelated banks on comparable loans for the
same purpose in the locality of the property;
15.2.15 to allow Integrated to act as the
Partnership's agent in investing in short-term investments;
15.2.16 to invest the Net Proceeds temporarily prior
to investment in Properties in short-term, highly liquid
investments where there is appropriate safety of principal; and
15.2.17 to amend this Agreement from time to time,
(a) to add to the representations, duties or
obligations of the Managing General Partner or its Affiliates or
surrender any right or power granted to the Managing General
Partner or its Affiliates herein, for the benefit of the Limited
Partners;
(b) to cure any ambiguity, to correct or
supplement any provision herein which may be inconsistent with
any other provision herein, or to make any other provisions with
respect to matters or questions arising under this Agreement
which will not be inconsistent with the provisions of this
Agreement;
(c) to delete or add any provision of this
Agreement required to be so deleted or added by the Staff of the
Securities and Exchange Commission or by a state securities
commissioner or similar such official, which addition or deletion
is deemed by such Commission or official to be for the benefit or
protection of the Limited Partners;
(d) at such time as the Managing General Partner
in its sole discretion deems to be in the best interests of the
Partnership and subject to the prior approval of the California
Department of Corporations, to make any and all necessary and
proper changes, additions or deletions required to cause this
Partnership Agreement to conform with, and be an agreement of
limited partnership pursuant to, the provisions of the California
Uniform Limited Partnership Act as the same became operative on
July 1, 1984 and to make all filings as may be necessary or
proper to provide that this Partnership Agreement, shall
constitute, for all purposes, an agreement under the terms of
such new act, and shall thereafter be governed by the provisions
of such now act;
(e) to make any amendments that the Managing
General Partner reasonably believes (i) are appropriate to lessen
the possibility that Units would be deemed "plan assets" as that
term is used in ERISA and to maintain the status of the
Partnership as a partnership and not as an association for
federal income tax purposes or (ii) are required to obtain a
prohibited transaction exemption from the Department of Labor;
(f) to change the name of the Partnership to any
lawful name which it may select;
(g) to amend the provisions of Paragraph 11 or
any other provisions of this Agreement if upon the advice of
special tax counsel (with respect to tax matters) or counsel
(with respect to all other matters) to the Partnership and the
Managing General Partner, such modification is necessary to (i)
cause the allocations and distributions contained in Paragraph 11
to have substantial economic effect in accordance with the most
recently proposed or final regulations relating to Section 704 of
the Code or any other statutory provision or regulation relating
to such allocations or (ii) cause the provisions of this
Agreement to comply with any applicable federal legislation or
law change or administrative pronouncements or regulations
enacted or issued after the date of this Agreement;
(h) to reflect the addition or substitution of
Limited Partners or the reduction of capital accounts upon the
return of capital to Partners; and
(i) to reduce from quarterly to monthly or
another shorter period the dates upon which transfers of Units
will be recognized;
15.2.18 to transfer investments to partnerships
wholly owned by the Partnership so as to eliminate the necessity
of filing amendments to this Agreement in each jurisdiction in
which there is an investment of the Partnership each time there
is a change in the composition of the Limited Partners (the
Managing General Partner shall give written notice to the Limited
Partners of any such transfer);
15.2.19 to take such steps as the Managing General
Partner determines are advisable or necessary in order to
preserve the tax status of the Partnership as a pass-through
entity for federal income tax purposes, including, without
limitation, imposing restrictions on transfers of Units (provided
such restrictions on transfers do not cause the Partnership's
assets to be deemed to be "plan assets" with respect to investors
which are Qualified Plans);
15.2.20 to compel a dissolution and termination of
the Partnership or restructuring of the Partnership's activities
to the extent necessary (a) to comply with any exemption in final
plan asset regulations adopted by the Department of Labor,
including, but not limited to, establishing a fixed percentage of
Units permitted to be held by Qualified Plans or other tax-exempt
investors or discontinuing sales to such entities after a given
date, in the event that either (i) the assets of the Partnership
constitute "plan assets" for purposes of ERISA or (ii) the
transactions contemplated hereunder constitute prohibited
transactions under ERISA or the Code and an exemption for such
transactions is not obtainable from the Department of Labor or
(b) to obtain a prohibited transaction exemption from the
Department of Labor;
15.2.21 to execute, acknowledge and deliver any and
all instruments to effectuate the foregoing, and to take all such
action in connection therewith as the Managing General Partner
shall deem necessary or appropriate.
15.2.22 Any person dealing with the Partnership or
the General Partners may rely upon a certificate signed by the
Managing General Partner as authority with respect to: (i) the
identity of any General Partner or Limited Partner hereof; (ii)
the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by a General Partner or
in any other manner germane to the affairs of the Partnership;
(iii) the persons who are authorized to execute and deliver any
instrument or document of the Partnership; or (iv) any act or
failure to act by the Partnership or as to any other matter
whatsoever involving the Partnership or any Partner.
15.3 The Managing General Partner shall, except as otherwise
provided in this Partnership Agreement, have all the rights and
powers and shall be subject to all the restrictions and
liabilities of a partner in a partnership without limited
partners.
15.4 Limitations. Neither the General Partners nor any
Affiliate shall have the authority to:
15.4.1 enter into contacts with the Partnership
which would bind the Partnership after the expulsion,
adjudication of bankruptcy at insolvency of a General Partner, or
continue the business with Partnership assets after the
occurrence of such event;
15.4.2 grant to them or any Affiliate an exclusive
listing for the sale of Partnership assets, including Partnership
Properties;
15.4.3 sell Substantially All of the Assets of the
Partnership in a single sale, or in multiple sales in the same
twelve-month period, except in the orderly liquidation and
winding up of the business of the Partnership upon its
termination and dissolution in the ordinary course;
15.4.4 pledge or encumber Substantially All of the
Assets of the Partnership at one time, other, than in connection
with the acquisition or improvement of assets or the refinancing
of previous obligations;
15.4.5 alter the primary purpose of the Partnership
as set forth in Paragraph 3;
15.4.6 receive a rebate or give-up or participate in
any reciprocal business arrangements which would enable it or an
Affiliate to do so;
15.4.7 sell or lease real property to any entity in
which a General Partner or any Affiliate has an interest, other
than a joint venture or similar program which complies with the
conditions set forth in Paragraph 15.4.8;
15.4.8 cause the Partnership to invest in any
program, partnership or other venture unless: (i) it is a general
partnership or a joint venture; (ii) such general partnership or
venture owns and operates a particular property and the
Partnership alone or with any Affiliate acquires the controlling
interest in such entity; (iii) the Partnership, as a result of
the form of such ownership of a property, is not charged directly
or indirectly, more than once for the same service; (iv) the
agreement of partnership or joint venture does not authorize the
Partnership to do anything as a partner or joint venturer with
respect to the property which the Partnership or a General
Partner could not do directly because of the policies set forth
in this Partnership Agreement; and (v) the General Partners and
the Affiliates of a General Partner are prohibited from receiving
any compensation, fees or expenses which are not permitted to be
paid under the terms of this Partnership Agreement;
15.4.9 cause the Partnership to invest in joint
venture arrangements with an Affiliate (including, without
limitation, a public or private limited partnership sponsored by
the Managing General Partner or an Affiliate) unless the
following additional conditions are met: (a) such Affiliate has
investment objectives and policies comparable to those of the
Partnership; (b) there are no duplicative property management or
other fees; (c) the compensation of the Managing General Partner
and sponsor of such Affiliate is substantially identical; (d) the
Partnership has a right of first refusal to buy if such Affiliate
wishes to sell property held in the joint venture; and (e) the
investment of the Partnership and the Affiliate in the joint
venture are on substantially the same terms and conditions;
15.4.10 except as permitted by this Partnership
Agreement and by the Prospectus, purchase or lease real property
from the Partnership or sell or lease real property to the
Partnership;
15.4.11 purchase Partnership Property for the
Partnership without first having obtained an appraisal with
respect to the value thereof, rendered by an independent
appraiser who is a member of a nationally recognized society of
appraisers which provides that the purchase price of such
Property plus any Acquisition Fees paid with respect to such
Property by any person equals or is less than the appraised
value;
15.4.12 cause the Partnership to exchange Units for
real property;
15.4.13 make long-term secured or unsecured loans to
the Partnership;
15.4.14 subject to any restrictions contained in this
Partnership Agreement, cause the Partnership to finance a
Partnership Property by use of a wraparound note and mortgage
("all-inclusive" note and deed of trust) unless: (i) no General
Partner nor any Affiliate thereof shall receive interest in
excess of that payable to the lender on such underlying
encumbrances; (ii) all payments on the underlying obligation
shall be made by the Partnership or, in the alternative, payments
by the Partnership on the wraparound note are made to a third
party collecting agent which in turn disburses such payment,
first to the holder of such underlying obligation, and thereafter
to the holder of the wraparound note; and (iii) the Partnership
receives credit on its all inclusive note for payments made
directly on the underlying obligations;
15.4.15 do any act in contravention of this
Partnership Agreement or, except as permitted by this Partnership
Agreement, which would make it impossible to carry on the
ordinary business of the Partnership;
15.4.16 confess a judgment against the Partnership in
connection with any threatened or pending legal action;
15.4.17 possess any Partnership Property or assign
the rights of the Partnership in specific Partnership Property
for other than a Partnership purpose;
15.4.18 except as provided in Paragraph 17, admit a
person as a General Partner except with the consent of the
Limited Partners as provided for in this Partnership Agreement;
15.4.19 perform any act (other than an act required
by this Agreement or any act taken in good faith reliance upon
counsel's opinion) which would, at the time such act occurred,
subject any Limited Partner to liability as a general partner in
any jurisdiction;
15.4.20 reinvest any Adjusted Cash From Operations or
Cash From Initial Financing;
15.4.21 invest any of the Gross Proceeds in
Properties which are non-income-producing;
15.4.22 receive any insurance brokerage fee or write
any insurance policy covering any of the Partnership Properties;
15.4.23 employ, or permit to employ, the funds or
assets of the Partnership in any manner except for the exclusive
benefit of the Partnership;
15.4.24 incur any nonrecourse indebtedness wherein
the lender will have or acquire, at any time as a result of
making the loan, any direct or indirect interest in the profit,
capital or property of the Partnership other than as a secured
creditor;
15.4.25 obtain financing in connection with the
acquisition of a Property or acquire a Property subject to
mortgage indebtedness or, within five years after a Property is
acquired by the Partnership, obtain initial financing with
respect to such Property or, after such five-year period has
ended, obtain initial financing with respect to a Property unless
the Partnership has received an opinion of counsel that such
financing will not result in income derived from the
Partnership's Properties constituting "unrelated business taxable
income" to tax-exempt investors
15.4.26 commingle the Partnership funds with those of
any other person or entity except to the extent that funds are
temporarily retained by property managers and except that funds
of the Partnership and funds of other partnerships sponsored by
the Managing General Partner or its Affiliates may be held in an
account or accounts established and maintained for the purpose of
making computerized disbursements and/or short-term investments;
provided, however, that Partnership funds are protected from
claims of such other partnerships and/or their creditors;
15.4.27 except as otherwise permitted by this
Agreement, cause the Partnership to enter into any transactions
with any other partnership in which a General Partner or any
Affiliates have an interest including, but not limited to, any
transaction involving the sale, lease or purchase of any property
to or from the Partnership, the rendering of services to or from
the Partnership, or the lending of any monies or other property
to or from the Partnership;
15.4.28 except as otherwise permitted by this
Agreement, receive any commission or fee for the placement of
mortgage loans or trust deed loans on the Partnership Property or
otherwise act as a finance broker on behalf of the Partnership;
15.4.29 directly or indirectly pay or award any
finder's fees, commissions or other compensation to any person
engaged by a potential investor for investment advice as an
inducement to such advisor to advise the purchaser regarding the
purchase of Units or knowingly permit any dealer or salesman to
do so; provided, however, that Affiliates of the General Partners
shall not be prohibited from paying the normal sales commissions
payable to a registered broker-dealer or other properly licensed
person for selling Units;
15.4.30 operate the Partnership in such a manner as
to have the Partnership classified as an "investment company" for
purposes of the Investment Company Act of 1940;
15.4.31 invest any of the gross Proceeds in junior
mortgages, deeds of trust or other similar obligations;
15.4.32 use any of the Gross Proceeds to prepay
interest on Partnership mortgages, deeds of trust or other
similar obligations; however, the Managing General Partner may
cause the Partnership to pay "points" to prospective lenders as a
condition to obtaining financing;
15.4.33 cause the Partnership to enter into any
agreements with a General Partner or its Affiliates which shall
not be subject to termination without penalty by either party
upon not more than 60 days' written notice;
15.4.34 cause the Partnership to enter into any
contracts to construct or develop Partnership Property without
such contract being guaranteed at the price contracted by an
adequate completion bond or other satisfactory arrangements;
15.4.35 cause the Partnership to lend money to the
General Partner or their Affiliates;
15.4.36 except as specifically provided for in this
Partnership Agreement, cause the Partnership to invest in or
underwrite the securities of other issuers for any purposes;
15.4.37 cause the Partnership to incur mortgage
financing which, with level payments, would amortize such
financing over a period in excess of 30 years; all such financing
including all inclusive and wraparound loans and interest-only
loans, shall provide that no balloon payments may become due
sooner than the earlier of: (a) ten years from the date the
Partnership acquires the Property, or (b) two years beyond the
anticipated holding period of the Property, provided in such case
that a balloon payment shall not become due sooner than seven
years from the date the Partnership acquires the Property (the
foregoing restrictions shall not apply to financing representing
in the aggregate, 25% or less of the total purchase price of the
Properties acquired);
15.4.38 incur aggregate borrowing of the Partnership
in excess of 80% of the aggregate value as determined by the
lender as of the date of financing as to all Properties which are
financed.
15.5 Amendment to Partnership Agreement. Notwithstanding
anything to the contrary contained in this Partnership Agreement,
this Agreement may not be amended without the consent of the
Partners to be adversely affected by any amendment that:
15.5.1 converts a Limited Partner into a general
partner;
15.5.2 modifies the limited liability of a Limited
Partner;
15.5.3 alters the interest of the General Partners
or Limited Partners in Net Income or Net Loss or Distributions
from the Partnership except as provided in Paragraph 15.2.17; or
15.5.4 adversely affects the status of the
Partnership as a partnership for federal income tax purposes.
15.6 Statements after Removal of General Partner. Within 90
days after the Limited Partners have voted to remove any General
Partner, the Managing General Partner shall have prepared, at
Partnership expense, a financial statement (balance sheet,
statement of income or loss, partners' equity and changes in
financial position) prepared in accordance with generally
accepted accounting principles and accompanied by a report
thereon containing an opinion of an independent certified public
accounting firm of recognized standing and shall cause such
statement to be mailed to the Limited Partners as soon as
possible after receipt thereof.
15.7 No Personal Liability. The General Partners shall have
no personal liability for the repayment of the Original Invested
Capital of any Limited Partner or to repay the Partnership any
portion or all of any negative balance in their capital accounts,
except as otherwise provided in Paragraph 5.3.
15.8 Notice of Limitation of Liability. Each of the General
Partners shall at all times conduct its or his affairs and the
affairs of the Partnership and all of its Affiliates in such a
manner that neither the Partnership nor any Partner nor any
Affiliate of any Partner will have any personal liability under
any mortgage on any of the Partnership Properties unless, in the
opinion of the Managing General Partner it would be in the best
interest of the Limited Partners. The Managing General Partner
shall use its beat efforts, in the conduct of the Partnership's
business to put all suppliers and other persons with whom the
Partnership does business on notice that the Limited Partners are
not liable for Partnership obligations and all agreements to
which the Partner is a party shall include a statement to the
effect that the Partnership is a limited partnership organized
under the Uniform Limited Partnership Act of California; but the
Managing General Partner shall not be liable to the Limited
Partners for any failure to give such notice to such suppliers or
other persons.
15.9 Notice of Withdrawal of General Partner. Following the
receipt by the Managing General Partner of written notice of the
proposed retirement or withdrawal of any General Partner, the
Managing General Partner shall promptly send written notice of
such retirement or withdrawal to the Limited Partners.
15.10 Commitment to Investment in Properties. The
Managing General Partner shall commit to Investment in Properties
88% of the Gross Proceeds.
PAGE A-28 MISSING
16.2.4 amendment of the Partnership Agreement,
provided such amendment is not for any of the purposes set forth
in Paragraph 15.2.17;
16.2.5 the sale of all or Substantially All of the
Assets of the Partnership in a single sale, or in multiple sales
in the same twelve-month period, except in the liquidation and
winding up of the business of the Partnership upon its
termination and dissolution in the ordinary course;
16.2.6 the pledge or encumbrance of all or
Substantially All of the Assets of the Partnership at one time,
other than in connection with the acquisition or improvement of
assets, initial financing of a Partnership Property, or the
refinancing of previous obligations; and
16.2.7 the extension of the term of the Partnership.
16.3 Call of Meeting. The Managing General Partner may at
any time call a meeting of the Limited Partners or for a vote,
without a meeting, of the Limited Partners on matters on which
they are entitled to vote, and shall call for such meeting or
vote following receipt of written request therefor of Limited
Partners, holding 10% or more of the Total Outstanding Units as
of the date of receipt of such written request ("notice date").
Within ten days of such notice date, the Managing General Partner
shall notify either personally or by first class mail all Limited
Partners of record as of the notice date as to the time
(specified by the Limited Partners calling the meeting or by the
Managing General Partner, as the case may be) and place of the
Partnership meeting, if called, and the general nature of the
business to be transacted thereat, or if no such meeting has been
called, of the matter or matters to be voted upon and the date
upon which the votes will be counted. The notice shall contain a
detailed statement of the action proposed, including a verbatim
statement of the wording of any resolution proposed for adoption
by the Limited Partners and of any proposed amendment to the
Partnership Agreement. Any Partnership meeting or the date upon
which such votes, without a meeting, will be counted (regardless
of whether the Managing General Partner has called for such
meeting or vote upon the request of Limited Partners or has
initiated such event without such request) shall be no less than
15 nor more than 60 days after the notice date. All expenses of
the voting and such notification shall be borne by the
Partnership.
16.4 Manner of Voting. A Limited Partner who is entitled to
vote shall be entitled to cast one vote for each Unit which he
owns: (i) at a meeting, in person, by written proxy or by a
signed writing directing the manner in which he desires that his
vote be cast, which writing must be received by the Managing
General Partner prior to such meeting, or (ii) without a meeting.
by a signed writing directing the manner in which he desires that
his vote be cast, which writing must be received by the Managing
General Partner prior to the date, upon which the votes of
Limited Partners of record on the notice date. whether at a
meeting or otherwise, shall be counted. No General Partner shall
be entitled to vote unless he or it owns Units. Limited Partners
holding a majority of the Limited Partnership Interests entitled
to vote, represented in person or by proxy, shall constitute a
quorum at a meeting of the Limited Partners. In connection with
each meeting or vote without a meeting of the Limited Partners,
the Partnership shall provide for proxies or written consents
which specify a choice between approval and disapproval of each
matter to be acted upon at the meeting or by vote without a
meeting. The laws of the State of California pertaining to the
validity and use of corporate proxies shall govern the validity
and use of proxies given by Limited Partners. At each meeting of
Limited Partners, the Managing General Partner shall appoint such
officers and adopt such rules for the conduct of such meeting as
the Managing General Partner shall doom appropriate.
16.5 Limitations. No Limited Partner shall have the right
or power to: (i) withdraw or reduce his contribution to the
capital of the Partnership except as a result of the dissolution
of the Partnership or as otherwise provided by law, (ii) bring an
action for partition against the Partnership, (iii) cause the
termination and dissolution of the Partnership by court decree or
otherwise, except as set forth in this Partnership Agreement, or
(iv) demand or receive property other than cash in return for his
contribution. No Limited Partner shall have priority over any
other Limited Partner either as to the return of contributions of
capital or as to Net Income, Net Loss or Distributions. Other
than upon the termination and dissolution of the Partnership as
provided by this Partnership Agreement, there has been no time
agreed upon when the contribution of each Limited Partner may be
returned.
16.6 List of Limited Partners. Upon the written request of
and at the expense of a Limited Partner, the Managing General
Partner will allow such person, or his representative, to examine
at the Partnership's office a list containing the name and
address of each Limited Partner, and, if further requested by
such person, or his representative, to obtain such list by mail
at his expense.
17. WITHDRAWAL, EXPULSION, BANKRUPTCY OR DISSOLUTION OF A GENERAL PARTNER
AND TRANSFER OF A GENERAL PARTNER'S INTEREST
17.1 Expulsion. A General Partner may be expelled from the
Partnership upon a Majority Vote. Written notice of an expulsion
of a General Partner shall be served either by certified or by
registered mail, return receipt requested, or by personal
service. Such notice shall set forth the date upon which the
expulsion is to become effective.
17.2 Sale of Interest. Upon the expulsion, adjudication of
bankruptcy, dissolution or other cessation to exist of the
Managing General Partner ("Terminated Partner"), the interest of
such Terminated Partner in the Net Income, Net Loss and
Distributions of the Partnership shall be purchased by the
Partnership for a purchase price determined according to the
provisions of Paragraph 17.3.
17.3 Sale Price. The Terminated Partner shall receive from
the Partnership the fair market value of its interest in the
Partnership, determined by agreement between the Terminated
Partner and the Partnership or, if they cannot agree, by
arbitration in accordance with the then current rules of the
American Arbitration Association in New York, Now York. The
expenses of arbitration shall be borne equally by the Terminated
Partner and the Partnership. For this purpose, the fair market
value of the interest of the Terminated Partner shall be deemed
to be the amount the Terminated Partner would receive upon
dissolution and termination of the Partnership under Paragraph
19.2 assuming such dissolution or termination occurred on the
date of the dissolving event and assuming the assets of the
Partnership were sold for their then fair market value without
compulsion of the Partnership to sell such assets. In the case
of voluntary withdrawal, payment shall be made by a noninterest
bearing unsecured promissory note with principal payable, if at
all, from Distributions which the Terminated Partner otherwise
would have received had the Terminated Partner not withdrawn as a
General Partner in the Partnership. In the case of involuntary
withdrawal, removal, adjudication of bankruptcy or dissolution,
payment shall be made by a promissory note bearing 9% simple
interest per annum on the unpaid principal amount of the
promissory note with principal and all unpaid accrued interest
subject to mandatory prepayment from all Cash From Sales" or
Financings and the remaining unpaid principal balance and unpaid
accrued interest on such promissory note due and payable five
years from the date of the occurrence of an event specified in
Paragraph 19.1.
17.4 Purchase Price. Should a new General Partner be
elected under Paragraph 16.2, such new General Partner
("Acquiring Partner") shall purchase from the Partnership, within
60 days of its election, the interest which the Partnership
purchased from the Terminated Partner. For such interest the
Acquiring Partner shall pay the amount determined pursuant to
Paragraph 17.3 to be the fair market value of such interest.
Payment shall be made by a promissory note bearing 9% simple
interest per Annum on the unpaid principal amount of the
promissory note secured by assignment by the Acquiring Partner to
the Partnership of the future Distributions by the Partnership to
the Acquiring Partner, which principal amount together with
accrued interest shall be payable at the times and in the amounts
equal to seventy-five percent (75%) of such Distributions until
such time as the principal amount together with accrued interest
is paid in full, but shall become due and payable in full by the
Acquiring Partner at such time as the Partnership is finally
wound up and liquidated.
17.5 Associate General Partner. Any Associate General
Partner may withdraw, provided there has been 60 days prior
written notice to the Limited Partners of such withdrawal. In
the event the Associate General Partners is a general
partnership, it shall be deemed to have withdrawn as a General
Partner, regardless of the lack of notice to Limited Partners,
upon the retirement, removal, adjudication of bankruptcy,
insolvency, insanity or death of any of its partners. Upon the
withdrawal, expulsion, adjudication of bankruptcy, insolvency,
dissolution or other cessation to exist of Z Square G Partners
II, or any successor Associate General Partner the Partnership
will repurchase the interest in the Net Income, Net Loss" and
Distributions of the Partnership held by the Associate General
Partner as a General Partner, but not as a Limited Partner,
provided there is at least one existing General Partner at such
time. The Partnership will purchase such interest for a purchase
price determined in accordance with Paragraph 17.3. Upon such
occurrence, Integrated will purchase such interest in the Not
Income, Net Loss and Distributions of the Partnership from the
Partnership and Integrated shall become the Successor General
Partner. The provisions of this Paragraph are hereby expressly
consented to by each Limited Partner as an express condition to
becoming a Limited Partner.
17.6 Successor General Partner. In the event that
Integrated shall become the Successor General Partner, Integrated
shall have the right to appoint a successor Associate General
Partner (who may be an officer or director of Integrated or an
officer or director of any Affiliate of Integrated or a
subsidiary of Integrated) and thereafter resign as the Successor
General Partner, provided that, prior to such resignation
becoming effective, the Partnership shall receive an opinion of
counsel to the Partnership to the effect that the Partnership
will continue to be treated as a partnership for federal income
tax purposes. Any successor Associate General Partner appointed
pursuant to this Paragraph shall be entitled to retire in the
same manner as any prior Associate General Partner and while a
General Partner, to receive the interest of the Associate General
Partner in Net Income, Net Loss and Distributions. The
provisions of this Paragraph are hereby expressly consented to by
each Limited Partner as an express condition to becoming a
Limited Partner.
17.7 Assignment. A General Partner's interest in the
Partnership shall not be assignable, except in connection with
any merger, consolidation or sale as provided in Paragraph 19.5,
without a Majority Vote. Any entity to which the entire interest
of the Managing General Partner in the Partnership is assigned in
compliance with this Paragraph shall be substituted by the
Managing General Partner by the filing of appropriate amendments
to the Partnership Agreement in its stead as a General Partner of
the Partnership, Notwithstanding the foregoing provisions, the
Associate General Partner may not sell, assign, transfer or
otherwise dispose of, or pledge, hypothecate or in any manner
encumber its interest in the Partnership except as permitted in
Paragraph 17.5 of this Partnership Agreement, and any act in
violation of this provision shall not be binding upon or
recognized by the Partnership regardless of whether any or all of
the General Partners shall have knowledge thereof.
18. CERTAIN TRANSACTIONS
The General Partners, any Limited Partner, any Affiliates,
any shareholder, officer, director, partner or employee thereof,
or any person owning a legal or beneficial interest therein, may
engage in or possess an interest in any other business or venture
of every nature and description, independently or with others
including, but not limited to, the ownership, financing, leasing,
operation, management, brokerage and development of real
property. Neither the Partnership nor any Partner shall have the
right by virtue of this Agreement or the Partnership relationship
created hereby in or to such other ventures or activities or to
the income or proceeds derived therefrom and the pursuit of such
ventures, even if competitive with the business of the
Partnership, shall not be deemed wrongful or improper. In the
event that any public partnerships managed by the Managing
General Partner or its Affiliates with similar investment
objectives to those of the Partnership is in the market for
similar properties, the Managing General Partner and its
Affiliates will review the investment portfolio of each such
entity and will decide which such entity will acquire the
specific property on the basis of such factors, among others, as
the cash fund requirements of each entity, the effect of the
acquisition on diversification of each entity's portfolio, the
cash flow of the investment, the estimated income tax effects of
the purchase on each entity, the amount of funds available and
the length of time such funds have been available for investment.
If funds should be available to two or more public
partnerships (other than specified asset public partnerships) to
purchase a given property or properties and the other factors
enumerated above have been evaluated and deemed equally
applicable to each partnership, then the Managing General Partner
and its Affiliates will acquire such properties for the public
partnerships on a basis of rotation with the order of priority
determined by the dates of formation of the public partnerships
and report such acquisitions to the public partnerships not
selected.
The General Partners shall be obligated, only under the
circumstances set forth above, to present investment
opportunities to the Partnership. In all other circumstances,
the General Partners shall have the right to take for their own
accounts or to recommend to others any investment opportunity.
19. TERMINATION AND DISSOLUTION OF THE PARTNERSHIP
19.1 Terminating Events. The Partnership shall be
terminated and dissolved upon the earliest to occur of the
following:
19.1.1 the withdrawal, expulsion, adjudication of
bankruptcy, insolvency, dissolution or other cessation to exist
as a legal entity of a General Partner, unless all the remaining
General Partners (but excluding any Successor General Partner)
within 60 days of the date of such event, elect to continue the
business of the Partnership (expenses incurred in reformation, or
attempted reformation, of the Partnership shall be deemed
expenses of the Partnership);
19.1.2 a Majority Vote (which may, but need not, be
solicited by the Managing General Partner) in favor of
dissolution and termination of the Partnership;
19.1.3 the expiration of the term of the
Partnership; or
19.1.4 the disposition of all interests in real
property and other assets of the Partnership and the receipt of
the final payment of the purchase price of all such real property
and assets.
19.2 Liquidation and Distribution of Assets. Upon a
dissolution and termination of the Partnership for any reason,
the Managing General Partner shall take full account of the
Partnership assets and liabilities shall liquidate the assets as
promptly as is consistent with obtaining the fair value thereof,
and shall apply and distribute the proceeds therefrom in the
following order:
19.2.1 to the payment of creditors of the
Partnership but excluding secured creditors whose obligations
will be assumed or otherwise transferred on the liquidation of
Partnership assets;
19.2.2 to the repayment of any outstanding loans
made by the General Partner to the Partnership; and
19.2.3 to the General Partners and Limited Partners
pursuant to the provisions of Paragraph 11.6 of this Partnership
Agreement.
19.3 No Voluntary Dissolution or Withdrawal. Until the
dissolution of the Partnership, the Managing General Partner
shall not take any voluntary steps to dissolve itself or
voluntarily withdraw from the Partnership.
19.4 No Limitation on Merger or Reorganization. Nothing in
this Agreement shall be deemed to prevent the merger or
reorganization of Resources High Equity, Inc. into or with any
other corporation, or the transfer of all the capital stock of
Resources High Equity, Inc. and the assumption of the rights and
duties of the Managing General Partner by, in the case of a
merger, reorganization or consolidation, the surviving
corporation by operation of law.
19.5 ERISA Termination. In addition to the events described
in Paragraph 19.1, the Managing General Partner may also
terminate the offering and/or compel a termination and
dissolution of the Partnership, upon notice to all Limited
Partners but without the consent of any Limited Partner, if the
Managing General Partner, after consulting with counsel to the
Partnership, reasonably believes either (i) the Partnership's
assets constitute "plan assets," as such term is deemed for
purposes of ERISA, or (ii) any of the transactions contemplated
hereunder constitute "prohibited transactions" under ERISA and no
exemption for such transactions is obtainable from the United
States Department of Labor.
20. SPECIAL POWER OF ATTORNEY
20.1 Grant of Power of Attorney. By executing this
Partnership Agreement or any transfer form, each Limited Partner
grants to the Managing General Partner a special power of
attorney irrevocably making, constituting and appointing the
Managing General Partner as the attorney-in-fact for such Limited
Partner, with power and authority to act in his name and on his
behalf to execute, acknowledge and swear to in the execution,
acknowledgment and filing of documents, which shall include, by
way of illustration but not of limitation, the following:
20.1.1 the Partnership Agreement, any separate
certificates of limited partnership, as well as any amendments to
the foregoing which, under the laws of the State of California or
the laws of any other state, are required to be filed or which
the Managing General Partner deems to be advisable to file;
20.1.2 any other instrument or document which may be
required to be filed by the Partnership under the laws of any
state or by any governmental agency, or which the Managing
General Partner deems advisable to file; and
20.1.3 any instrument or document which may be
required to effect the continuation of the Partnership, the
admission of an additional or substituted Limited Partner, or the
dissolution and termination of the Partnership (provided such
continuation, admission or dissolution and termination are in
accordance with the terms of this Partnership Agreement), or to
reflect any reductions in amount of contributions of Partners.
20.2 Character of Power of Attorney. The special power of
attorney being hereby granted by each Limited Partner:
20.2.1 is a special power of attorney coupled with
an interest, is irrevocable, shall survive the death or legal
incapacity of the granting Limited Partner, and is limited to
those matters herein set forth;
20.2.2 may be exercised by the Managing General
Partner acting alone for each Limited Partner by a facsimile
signature of the Managing General Partner or by one of its
officers, or by listing all of the Limited Partners executing any
instrument with a signature of the Managing General Partner or
one of its officers acting as its attorney-in-fact; and
20.2.3 shall survive an assignment by a Limited
Partner of all or any portion of his Units except that, where the
assignee of the Units owned by a Limited Partner has been
approved by the Managing General Partner for admission to the
Partnership as a substituted Limited Partner, the special power
of attorney shall survive assignment for the sole purpose of
enabling the Managing General Partner to execute, acknowledge and
file any instrument or document necessary to effect such
substitution.
20.3 Power to Appoint Successor General Partner. Each
Limited Partner agrees that each special attorney specified in
Paragraph 20.1. with full power of substitution, is hereby
authorized and empowered to execute, acknowledge, make, swear to,
verify, deliver, record, file and/or publish, for and on behalf
of such Limited Partner, any and all instruments and documents
which may be necessary or appropriate to permit the appointment
of the Successor General Partner to be lawfully made or action
lawfully taken or omitted. Each Limited Partner is fully aware
that he and each other Limited Partner have executed this special
power of attorney, and that each Limited Partner will rely on the
effectiveness of such powers with a view to the orderly
administration of the Partnership's affairs.
21. INDEMNIFICATION
21.1 Agreement to Indemnify. The Partnership, its receiver
or its trustee, shall indemnify, save harmless and pay all
judgments and claims against the General Partners, their
officers, directors, partners, employees, subsidiaries and
affiliated assigns from any liability, loss or damage incurred by
them or by the Partnership by reason of any act performed or
omitted to be performed by them in connection with the business
of the Partnership, including costs and attorneys' fees (which
attorneys' fees may be paid as incurred) and any amounts expended
in the settlements of any claims of liability, loss or damage;
provided that, if such liability, loss or claim arises out of any
action or inaction of the General Partners, the General Partners
must have determined in good faith, that such course of conduct
was in the best interests of the Partnership and did not
constitute negligence or misconduct by the General Partners and,
provided further, that any such indemnification shall be
recoverable only from the assets of the Partnership and not from
the assets of the Limited Partners. All judgments against the
Partnership and a General Partner, wherein a General Partner is
entitled to indemnification, must first be satisfied from
Partnership assets before such General Partner is responsible for
these obligations. Nothing contained herein shall constitute a
waiver by any Limited Partner of any right which he may have
against any party under federal or state securities laws.
21.2 Limitations. Notwithstanding the foregoing Paragraph
21.1, neither the General Partners, nor any officer, director,
partner, employee, subsidiary or affiliated assign of the General
Partners shall be indemnified pursuant to the foregoing Paragraph
21.1 from any liability, loss or damage incurred by them in
connection with (i) any claim or settlement involving allegations
that the Securities Act of 1933 or any state securities laws were
violated by the General Partners or by any such other person or
entity unless: (a) the General Partner or other persons or
entities seeking indemnification are successful in defending such
action and (b) such indemnification is specifically approved by a
court of law which shall have been advised as to the current
position of both the Securities and Exchange Commission and the
California Commissioner of Corporations regarding indemnification
for violations of securities law or (ii) any liability imposed by
law, including liability for negligence or misconduct.
22. MISCELLANEOUS
22.1 Counterparts. This Partnership Agreement may be
executed in several counterparts and all so executed shall
constitute one Partnership Agreement, binding on all of the
parties hereto, notwithstanding that all of the parties are not
signatory to the original or the same counterpart.
22.2 Binding Provisions. The terms and provisions of this
Partnership Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the respective
Partners.
22.3 Severability. In the event any sentence or paragraph
of this Partnership Agreement is declared by a court of competent
jurisdiction to be void, such sentence or paragraph shall be
deemed severed from the remainder of the Partnership Agreement
and the balance of the Partnership Agreement shall remain in
effect.
22.4 Notice. All notices under this Partnership Agreement
shall be in writing and shall be given to the Limited Partner
entitled thereto, by personal service or by mail, posted to the
address maintained by the Partnership for such person or at such
other address as he may specify in writing.
22.5 Headings. Paragraph titles or captions contained in
this Partnership Agreement are inserted only as a matter of
convenience and for reference. Such titles and captions in no
way define, limit, extend or describe the scope of this
Partnership Agreement nor the intent of any provision hereof.
22.6 Meanings. Whenever required by the context hereof, the
singular shall include the plural, and vice-versa; the masculine
gender shall include the feminine and neuter genders, and
vice-versa; and the word "person" shall include a corporation,
partnership, firm or other form of association.
22.7 General Partners. The names and addresses of the
General Partners are:
Managing General Partner
Resources High Equity, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
and
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Associate General Partner
Z Square G Partners II
000 Xxxxx Xxxxxx, Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Successor General Partner
Integrated Resources, Inc.
000 Xxxxx Xxx
Xxx Xxxx, Xxx Xxxx 00000
22.8 Limited Partners. The names, addresses and capital
contributions of the Limited Partners are set forth on Exhibit I
attached hereto, which exhibit shall be maintained at the
principal place of business of the Partnership.
22.9 Governing Law. Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof
shall be construed under the laws of the State of California and
that the Uniform Limited Partnership Act of the State of
California shall govern the partnership aspects of this
Agreement.
22.10 Other Jurisdictions. In the event the business of
the Partnership is carried on or conducted in states in addition
to the State of California, then the parties agree that this
Partnership shall exist under the laws of each state in which
business is actually conducted by the Partnership, and they
severally agree to execute such other and further documents as
may be required or requested in order that the Managing General
Partner legally may qualify this Partnership in such states. The
power of attorney granted to the Managing General Partner by each
Limited Partner in Paragraph 20 shall constitute the authority of
the Managing General Partner to perform the ministerial duty of
qualifying this Partnership under the laws of any state in which
it is necessary to file documents or instruments of
qualification. A Partnership office or principal place of
business in any state may be designated from time to time by the
Managing General Partner.
22.11 Power to Reconstitute. In the event that the
State of California amends the California Uniform Limited
Partnership Act in any manner which precludes the Partnership, at
any time, from obtaining an opinion of tax counsel to the effect
that the Partnership will be treated as a partnership for federal
income tax purposes and not as an association taxable as a
corporation, then the Managing General Partner may, in its sole
discretion, reconstitute the Partnership under the laws of
another state.
GENERAL PARTNERS:
SUCCESSOR GENERAL PARTNER: MANAGING GENERAL PARTNER:
INTEGRATED RESOURCES, INC. RESOURCES HIGH EQUITY, INC.
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx, Senior Xxxx X. Xxxxxxx,
Executive Vice President President
ORIGINAL LIMITED PARTNER: ASSOCIATE GENERAL PARTNER:
Z SQUARE G PARTNERS II
/s/ C. Xxxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
C. Xxxxxxx Xxxxxx Xxxxxx X. Xxxxxxxx,
a General Partner
EXHIBIT I
HIGH EQUITY PARTNERS, SERIES 85,
a California limited partnership
GENERAL PARTNERS
Capital
Name and Address Contribution
Resources High Equity, Inc $980.00
0000 Xxxxxxx Xxxxx
Xxxxxx Xxx Xxx, Xxxxxxxxxx 00000
and
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Z Square G Partners II $ 20.00
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
LIMITED PARTNER
Name and Address
C. Xxxxxxx Xxxxxx $ 2,500
000 Xxxx Xxxxxxxxx
Xxxxx Xxx, XX 00000
HIGH EQUITY PARTNERS, SERIES 85
a California limited partnership
INDEX TO PARTNERSHIP AGREEMENT
Page
1. Name and Place of Business A-1
2. Definitions and Glossary of Terms A-1
3. Business and Purpose A-5
4. Term A-6
5. General Partners A-6
6. Limited Partners A-6
7. Status of Limited Partners A-7
8. Status of Units A-8
9. Compensation to General Partners and their Affiliates A-8
10. Partnership Expenses A-11
11. Allocation of Income, Loss and Distributions A-12
12. Assignment of Units A-16
13. Substituted Limited Partners A-17
14. Books, Records, Accounting and Reports A-18
15. Rights, Authority, Powers, Responsibilities and
Duties of the Managing General Partner A-20
16. Rights, Powers and Voting Rights of the Limited
Partners A-28
17. Withdrawal, Expulsion, Bankruptcy or Dissolution
of a General Partner and Transfer of a General
Partner's Interest A-30
18. Certain Transactions A-31
19. Termination and Dissolution of the Partnership A-32
20. Special Power of Attorney A-33
21. Indemnification A-34
22. Miscellaneous A-34
