EXHIBIT 3-A
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(Carlyle-XIV)
EXHIBIT A
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIV
AGREEMENT OF LIMITED PARTNERSHIP, made and entered into by and
between CARLYLE-XIV MANAGERS, INC. (an Illinois corporation) and REALTY
ASSOCIATES-XIV (an Illinois limited partnership) (the "General Partners"),
and JMB INVESTOR SERVICES CORPORATION (an Illinois corporation) and those
persons who shall hereafter be admitted as Substituted Limited Partners.
ARTICLE I
FORMATION OF LIMITED PARTNERSHIP
The parties hereby enter into a limited partnership under the
provisions of the Uniform Limited Partnership Act of the State of Illinois
and the rights and liabilities of the Partners shall be as provided in that
Act except as herein otherwise expressly provided.
ARTICLE II
NAME
The business of the Partnership shall be conducted under the name of
"CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIV" or such other name as the
Corporate General Partner shall hereafter designate in writing to the
Limited Partners.
ARTICLE III
DEFINITIONS
"Acquisition Expenses" means those expenses including but not limited
to legal fees and expenses, travel and communications expenses, costs of
appraisals, non-refundable option payments on property not acquired,
accounting fees and expenses, title insurance, and miscellaneous expenses
related to selection and acquisition of real property investments by the
Partnership, whether or not acquired.
"Acquisition Fees" means the total of all fees and commissions paid
by any person to any person including the Corporate General Partner or its
Affiliates in connection with the identification, evaluation,
investigation, negotiation, selection, purchase, construction or
development of any real property investments by the Partnership (except a
development fee paid to a person who is not an Affiliated Person of the
General Partners in connection with a Property actually acquired), real
estate commissions, selection fees, development fees, non-recurring
management fees, a Loan Guarantee Fee or any fee of a similar nature,
however designated and however treated for tax or accounting purposes.
"Additional Limited Partnership Interests" means the Limited
Partnership Interests issued to the Initial Limited Partner and transferred
to Assignee Holders pursuant to Section 8.3.
"Adjusted Capital Account" means, with respect to any calendar
quarter and any Limited Partnership Interest, the Capital Investment with
respect to such Limited Partnership Interest reduced by any distributions
of Sale or Refinancing Proceeds made with respect to such Limited
Partnership Interest up to and including any such distributions made with
respect to such calendar quarter.
"Affiliate" or "Affiliated Person" means, when used with reference to
a specified person, (i) any person that directly or indirectly through one
or more intermediaries controls or is controlled by or is under
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common control with the specified person, (ii) any person which is an
officer, partner or trustee of, or serves in a similar capacity with
respect to, the specified person or of which the specified person is an
officer, partner or trustee, or with respect to which the specified person
serves in a similar capacity, (iii) any person which, directly or
indirectly, is the beneficial owner of 10% or more of any class of voting
securities of, or otherwise has a substantial beneficial interest in, the
specified person or of which the specified person is directly or indirectly
the owner of 10% or more of any class of voting securities or in which the
specified person has a substantial beneficial interest and (iv) any
relative or spouse of the specified person. Affiliate or Affiliated Person
of the Partnership or the General Partners does not include a person who is
a partner in a partnership with the Partnership or with any other
Affiliated Person, which person is not otherwise an Affiliate or Affiliated
Person of the Partnership or the General Partners.
"Agreement" means this Agreement of Limited Partnership, as amended,
modified or supplemented from time to time.
"Assignee Holder" means a Person who has acquired an Additional
Limited Partnership Interest from the Initial Limited Partner pursuant to
Section 8.3 and who has not become a Substituted Limited Partner, or a
person who has acquired an Additional Limited Partnership Interest by a
subsequent assignment by such Assignee Holder.
"Associate General Partner" means Realty Associates-XIV, so long as
it is not exercising the rights of the Corporate General Partner hereunder,
or any successor to its interest, or any portion thereof, in the
Partnership.
"Capital Account" means, with respect to any Interest, the aggregate
initial Capital Investment with respect to such Interest (1) reduced by (a)
any losses allocated with respect to such Interest under Article X and (b)
any distributions of Net Cash Receipts or Sale or Refinancing Proceeds with
respect to such Interest under Article IX, and (2) increased by (x) any
profits allocated with respect to such Interest under Article X and (y) any
Capital Investment made with respect to such Interest pursuant to Sections
9.3, 10.2 or 18.4.
"Capital Investment" means, (i) with respect to any Limited
Partnership Interest, $1,000 per each full Limited Partnership Interest,
regardless of whether the aggregate amount paid by the purchaser of such
Limited Partnership Interest equalled a lesser amount to the extent that a
selling commission for such Limited Partnership Interest equalled less than
8% for certain sales, as contemplated by the Prospectus, and (ii) with
respect to any General Partnership Interest, the total amount of money
contributed to the Partnership by the General Partner holding such Interest
(or the predecessor holder of such Interest).
"Consent" means either the consent given by vote at a meeting called
and held in accordance with the provisions of Section 21.1 hereof or the
prior written consent, as the case may be, of a Person to do the act or
thing for which the consent is solicited, or the act of granting such
consent, as the context may require.
"Corporate General Partner" means Carlyle-XIV Managers, Inc. in its
capacity as such or any successor to its interest, or any portion thereof,
in the Partnership.
"Current Capital Account" means, with respect to any calendar year or
portion thereof and any Limited Partnership Interest, the average of the
Adjusted Capital Accounts with respect to a Limited Partnership Interest
for each of the four calendar quarters of such year (or all preceding
calendar quarters of such year if a determination is being made prior to
the end of the fourth calendar quarter of such year).
"Front-End Fees" means the fees and expenses paid by any person for
any services rendered in connection with the organizational or acquisition
phase of the Partnership, including Organization and Offering Expenses,
Acquisition Fees, Acquisition Expenses, and any other similar fees, however
designated (except a development fee paid to a person who is not an
Affiliate of the General Partners in connection with a Property actually
acquired).
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"General Partnership Interest" means the entire interest of the
Corporate General Partner or the Associate General Partner in the
Partnership at any particular time. Such Interest includes the right to any
and all benefits to which a General Partner may be entitled as provided in
this Agreement, together with the obligations of such General Partner to
comply with all the terms and provisions of this Agreement.
"Gross Proceeds of the Offering" means the aggregate of Capital
Investments with respect to Limited Partnership Interests received and
retained by the Partnership from the offering contemplated by Section 8.3.
"Holder" or "Holder of Interests" means (i) an Assignee Holder, (ii)
a Limited Partner holding any Interests as to which no assignment is then
currently recognized, including the Initial Limited Partner, or (iii) an
assignee of Interests from a Limited Partner who has been recognized as
such pursuant to Section 16.2.
"Initial Limited Partner" means JMB Investor Services Corporation, an
Illinois corporation.
"Interest" means a General Partnership Interest or a Limited
Partnership Interest.
"Investment in Properties" means the amount of Gross Proceeds of the
Offering actually paid or allocated to the purchase, development,
construction or improvement of properties acquired by the Partnership,
including the purchase of properties, working capital reserves allocable
thereto (except that working capital reserves in excess of 5% of Gross
Proceeds of the Offering shall not be included), and other cash payments,
such as interest, taxes, and other similar items, or which are paid to or
for the account of a seller of a property to the Partnership or an
Affiliated Person of such seller, and which are paid for from the Gross
Proceeds of the Offering to the Limited Partners in connection with the
Partnership's acquisition of its interest in a Property, but excluding
Front-End Fees.
"Limited Partners" means any Person who is a Limited Partner, whether
the Initial Limited Partner (but only to the extent of its $5,000 Capital
Investment with respect to the Interests it holds as to which no assignment
is then currently recognized) or a Substituted Limited Partner at the time
of reference thereto, in such Person's capacity as a Limited Partner of the
Partnership.
"Limited Partnership Interest" means the entire interest in the
Partnership representing a Capital Investment of $1,000 with respect to
such Interest including, in determining the amount of any such Capital
Investment the excess, if any, of 8% of such $1,000 over the selling
commission actually paid as a result of any discount as provided in the
Prospectus. Reference to a majority or specified percentage in interest of
the Limited Partners means Limited Partners whose combined Capital
Investments constitute over 50% or such specified percentage, respectively,
of the Capital Investments with respect to all Limited Partnership
Interests. Such Interest includes the right to any and all benefits to
which a Limited Partner may be entitled as provided in this Agreement,
together with the obligations of such Limited Partner to comply with ail
the terms and provisions of this Agreement.
"Net Cash Receipts" means all cash revenues and funds received by the
Partnership (other than funds received as capital contributions or the
proceeds of any refinancing or sales of Partnership assets), less the sum
of the following to the extent made from such cash revenues and funds
received by the Partnership (but not to the extent made from any other
sources, including without limitation, from Sale or Refinancing Proceeds,
or cash reserves maintained pursuant to Section 15.19): (i) all principal
and interest payments on mortgage and other indebtedness of the Partnership
and all other sums paid to lenders; (ii) all cash expenditures (including
expenditures for capital improvements) incurred incident to the normal
operation of the Partnership's business, including those expenses of the
Corporate General Partner reimbursed by the Partnership pursuant to Section
9.5; and (iii) such additions to cash reserves, maintained pursuant to
Section 15.19, as the Corporate General Partner shall determine.
"Organizational and Offering Expenses" means those expenses incurred
in connection with the formation and qualification of the Partnership, the
registration of the Interests under applicable Federal and
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state law, and in marketing, distributing and issuing the Interests, and
any other expenses actually incurred and directly related to the offering
and sale of the Interests including such expenses as: (a) fees paid to
underwriters' attorneys, (b) registration fees, filing fees and taxes, (c)
the costs of qualifying, printing, amending, supplementing, mailing and
distributing the registration statement and Prospectus, including telephone
and telegraphic costs, (d) the costs of qualifying, printing, amending,
supplementing, mailing and distributing sales materials used in connection
with the issuance and marketing of the Interests, including telegraph and
telephone costs, (e) salaries and direct expenses of officers and employees
of the Corporate General Partner and its Affiliates while directly engaged
in organizing the Partnership and in registering, marketing, distributing,
processing and establishing records of the Interests and establishing
records and paying underwriters' commissions, (f) accounting and legal fees
incurred in connection therewith, and (g) an advertising expenses incurred
in connection therewith, including the costs related to investor and
broker/dealer sales meetings.
"Partner" means any General Partner or Limited Partner.
"Partnership" means the limited partnership formed pursuant to this
Agreement by the parties hereto, as said limited partnership may from time
to time be constituted.
"Partnership Properties" means the real properties described in the
Prospectus, or real properties not so described but which are purchased out
of the proceeds of Capital Investments of the Limited Partners or out of
the proceeds (other than Sale or Refinancing Proceeds) of a disposition of
property by the Partnership and all improvements thereon and all repairs,
replacements or renewals thereof, together with all personal property
acquired by the Partnership which is from time to time located thereon or
specifically used in connection therewith and, in the case of any Property
owned by another partnership or pint venture in which the Partnership shall
be a partner, the term "Properties" shall include any real property which
is so owned. "Property" shall mean any of the Partnership Properties.
"Person" means any individual, partnership, corporation, trust or
other entity.
"Prospectus" means the prospectus contained in the registration
statement filed with the Securities and Exchange Commission for the
registration of Limited Partnership Interests under the Securities Act of
1933, in the final form in which said prospectus is filed with said
Commission and as thereafter supplemented pursuant to Rule 424 under said
Act.
"Sale or Refinancing Proceeds" means the net cash proceeds of
refinancing or of sale or other disposition of Partnership Property
received by the Partnership, after deducting any expenses incurred in
connection therewith and after application of any of such proceeds, at the
sole discretion of the Corporate General Partner, toward the payment of any
indebtedness of the Partnership, the purchase of land underlying any
Partnership Property, the purchase or financing of any improvements or
expansion of any Partnership Property, the purchase of any interest in a
joint venture partnership which owns a particular Partnership Property,
which interest is owned by a joint venture partner, and the payment of any
other expenses or the establishment of any reserves deemed reasonably
necessary by the Corporate General Partner, provided however, that if the
Partnership acquires properties for which no permanent financing has been
obtained and the Partnership obtains such financing for such properties
(including the sale of a partial equity interest in the property as a means
of financing) in the future, the proceeds of such financing shall not be
deemed Sale or Refinancing Proceeds in the event that the General Partners
determine to reinvest such proceeds in additional real property
investments; further provided, however, that proceeds of any sale or
refinancing as set forth above may not be utilized as set forth above,
except to pay any indebtedness of the Partnership or the creation of
reserves deemed reasonably necessary, unless the distribution of the
proceeds of such sale or refinancing to the Limited Partners pursuant to
Section 9.3 would be at least equal to the Federal income tax payable by
the Limited Partners by reason of their investment in the Partnership for
the year in which such sale or refinancing occurs (assuming taxation of
such Limited Partners' ordinary income at a 35% rate). "Sale or Refinancing
Proceeds" shall also include the net interest
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received (except that such net interest shall be treated as "Net Cash
Receipts" to the extent necessary to cause the Limited Partners' cumulative
distribution of "Net Cash Receipts" with respect to all fiscal quarters
through the end of the year of such receipt to equal 6% of their Current
Capital Accounts for such years commencing with the third calendar quarter
of 1985), principal or other cash proceeds received by the Partnership
pursuant to purchase money obligations arising from any sale or disposition
of Partnership Property. The disposition of a Partnership Property to JMB
Realty Corporation or any other Affiliate of the Corporate General Partner
by transfer back to JMB or such Affiliate or by transfer back to the seller
or an affiliate thereof, whether in the form of a rescission, exchange,
resale or otherwise, shall not be deemed to be a sale and to result in Sale
or Refinancing Proceeds hereunder, and any refinancing of a Partnership
Property as contemplated in the Prospectus or as otherwise contemplated at
the time of acquisition of such Partnership Property, shall not be deemed a
refinancing, and any proceeds therefrom shall not be deemed Sale or
Refinancing Proceeds, but any proceeds thereby recovered by the Partnership
shall be subject to investment by the General Partners as original capital
of the Partnership.
"Substituted Limited Partner" means any Person admitted to the
Partnership as a Limited Partner pursuant to the provisions of Section
16.2.
ARTICLE IV
PURPOSE
The business of the Partnership is to invest in, acquire, hold,
maintain, operate, improve, develop, lease and otherwise use real
properties and interests therein for profit (and in connection therewith
the Partnership shall have the power to dispose of, in any manner, any such
real properties or interests therein) and to engage in any and all
activities related or incidental thereto.
ARTICLE V
NAMES AND ADDRESSES OF PARTNERS
The names and addresses of the General Partners and the names,
addresses and Capital Investments (which may be expressed as the number of
Limited Partnership Interests held) with respect to the Additional Limited
Partnership Interests issued to the Initial Limited Partner as provided in
Section 8.3, Limited Partnership Interests otherwise held by the Initial
Limited Partner as provided in Section 8.3 and Limited Partnership
Interests held by other Limited Partners as provided in Section 16.2, are
as set forth in Schedule A attached hereto and incorporated herein by
reference.
ARTICLE VI
TERM
The term of the Partnership shall be from the date hereof to
December 31, 2034, unless sooner terminated as hereinafter provided.
ARTICLE VII
PRINCIPAL PLACE OF BUSINESS
The principal place of business of the Partnership shall be 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. The Corporate General Partner may
from time to time change the principal place of business and in such event,
the Corporate General Partner shall notify the Holders in writing within 20
days of the effective date of such change. The Corporate General Partner
may in its discretion establish additional places of business of the
Partnership.
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ARTICLE VIII
CAPITAL AND CONTRIBUTIONS
SECTION 8.1. The capital of the Partnership shall be the amount
stated to be such from time to time in Schedule A attached hereto and
incorporated herein by reference. No Limited Partner shall have any right
to demand or receive the return of his capital contribution to the
Partnership. It is the intent of the Partners that no distribution or
allocation (or any part of any distribution or allocation) made to any
Partner pursuant to this Agreement shall (unless so designated in an
amendment to the Partnership's Certificate of Limited Partnership) be
deemed a return or withdrawal of capital, even if such distribution or
allocation is made with respect to any fiscal period for which the
Partnership has Net Cash Receipts but no net income or profits due to
depreciation or any other non-cash item accounted for as a loss or
deduction from or offset to Partnership income, and that no allocation to
any Partner of any loss, whether attributable to depreciation or otherwise,
under this Agreement shall create any asset of or obligation to the
Partnership, even if such allocation reduces such Partner's Capital Account
or creates or increases a deficit in such Partner's Capital Account. It is
also the intent of the Partners that, except as provided in Sections 10.2
and 18.4 hereof, no Partner shall be obligated to pay any amount deemed to
be a return or withdrawal of capital 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
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 or of the Partnership.
SECTION 8.2. Except as set forth in Schedule A and in Sections 9.3,
10.2 and 18.4, the General Partners shall not, as General Partners, make
any contribution to the capital of the Partnership. In the event that any
of the General Partners shall purchase any Limited Partnership Interests,
such General Partner shall in all respects be treated as a Limited Partner
to the extent of the Limited Partnership Interests purchased by him.
SECTION 8.3. The Corporate General Partner is hereby authorized to
issue Additional Limited Partnership Interests to the Initial Limited
Partner from time to time, if, after any such issuance, the number of
Limited Partnership Interests does not exceed 500,000 Limited Partnership
Interests or such higher maximum amount (not to exceed 750,000 Limited
Partnership Interests) as the Corporate General Partner shall determine (in
addition to the five Limited Partnership Interests acquired by the Initial
Limited Partner). It is hereby understood and agreed that the Initial
Limited Partner may transfer such Additional Limited Partnership Interests
to other Persons in a public offering pursuant to a registration statement
filed with the Securities and Exchange Commission for the registration of
such Additional Limited Partnership Interests under the Securities Act of
1933, and the Partnership and the General Partners agree to take such
actions as are necessary in order to facilitate such offering; provided
that (a) the proceeds of such offering shall be paid to the Partnership as
Capital Investments with respect to such Additional Limited Partnership
Interests and (b) no transferee of such Additional Limited Partnership
Interests shall be or become a Substituted Limited Partner (but shall be an
Assignee Holder hereunder) except pursuant to the provisions of Section
16.2. All subscriptions from Assignee Holders for the purchase of
Additional Limited Partnership Interests shall be accepted or rejected by
the Corporate General Partner within 30 days of receipt. If not rejected
within 30 days of receipt by the Partnership, any subscriptions shall be
deemed to be accepted. Except as provided in Section 8.7, no sale shall be
made of fewer than five Additional Limited Partnership Interests (or such
greater minimum number of Additional Limited Partnership Interests as may
be required by applicable state or Federal laws) to any Person, and no sale
of Additional Limited Partnership Interests shall be consummated unless and
until the Partnership has received subscriptions for the purchase of at
least 2,500 Additional Limited Partnership Interests. Pending the receipt
of subscriptions for not less than 2,500 Additional Limited Partnership
Interests, all subscription proceeds shall be kept by the Corporate General
Partner separate and apart from all other funds, and shall be deposited and
held in trust in one or more interest-bearing or non-interest-bearing
accounts, in the discretion of the Corporate General Partner. All funds
paid in by investors to whom the Additional Limited Partnership Interests
are offered shall continue to be their property and shall be held in trust
in an escrow account for their benefit until such time as the Partnership
has received subscriptions to purchase 2,500 Additional Limited Partnership
Interests; in the event that the Partnership has
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not received subscriptions to purchase 2,500 Additional Limited Partnership
Interests by December 31, 1984, the Corporate General Partner shall
terminate the offering and all subscription payments shall be refunded in
full to the subscribers together with a pro rata share of any net earnings
thereon based on the amount of the subscription proceeds of each subscriber
and the number of days such subscription proceeds were held in the escrow
account. All persons whose subscriptions for Additional Limited Partnership
Interests are accepted by the Partnership on or prior to the date in 1984
as shall have been selected by the Corporate General Partner and announced
as the cut-off for the first admission of Limited Partners, shall be
recognized as Assignee Holders (through an assignment from the Initial
Limited Partner) with respect to such subscriptions for Limited Partnership
Interests as of the first day or such other day as the Corporate General
Partner may determine of the month in which such Additional Limited
Partnership Interests have been assigned to such persons as determined by
the Corporate General Partner and as reflected on the books of the
Partnership (such date being known as the "First 1984 Admission Date"); all
persons whose subscriptions for Additional Limited Partnership interests
are accepted by the Partnership in 1984 after the First 1984 Admission Date
shall be recognized as Assignee Holders with respect to such subscriptions
as of the first day or such other day as the Corporate General Partner may
determine of the month in which the Partnership has accepted such
subscriptions and such Additional Limited Partnership Interests have been
assigned to such persons, as determined by the Corporate General Partner
and as reflected on the books of the Partnership (such subsequent dates
being known as "1984 Admission Dates" and the last such date being known as
the "Final 1984 Admission Date"), and all persons whose subscriptions for
Additional Limited Partnership Interests are accepted by the Partnership in
1985 shall be recognized as Assignee Holders as of the first day or such
other day as the Corporate General Partner may determine of the month in
which the Partnership accepts such subscription and such Additional Limited
Partnership Interests have been assigned to such persons, as determined by
the Corporate General Partner and as reflected on the books of the
Partnership (such dates being known as "1985 Admission Dates" and the last
such date being known as the "Final 1985 Admission Date"). The Corporate
General Partner may in its sole discretion require that all purchasers of
Additional Limited Partnership Interests be admitted as Limited Partners of
the Partnership and is authorized to take any and all action as shall be
necessary to effect such admission.
SECTION 8.4. In the event the required minimum in subscriptions is
received and the offering is consummated, a subscriber recognized as a
Holder in 1984 shall be entitled to receive from the Partnership a
distribution equal to the amount of his Capital Investment multiplied by
the interest rate or rates per annum determined by the Corporate General
Partner, as provided on the Prospectus, for the period from the day after
his subscription proceeds are received in the escrow account for each month
or portion thereof prior to the earlier of (i) December 1, 1984 or (ii) the
Final 1984 Admission Date. A subscriber recognized as an Assignee Holder in
1985 shall be entitled to receive from the Partnership a distribution equal
to the amount of his Capital Investment multiplied by the interest rate or
rates per annum determined by the Corporate General Partner, as provided in
the Prospectus, for the period from the day after his subscription proceeds
are received in the escrow account until two weeks prior to the termination
of the offering of Additional Limited Partnership Interests to the public
under Section 8.3. Payment of such distributions for 1984 and 1985 shall be
made on or before December 31, 1984 and 60 days after the Final 1985
Admission Date, respectively, and shall be made without regard to the
income of the Partnership as a guaranteed payment, i.e., such distribution
will not be charged to the Holder's Capital Account but will be treated as
an expense.
SECTION 8.5. The Partnership shall pay Organizational and Offering
Expenses incurred in the creation of the Partnership and the sale of
Additional Limited Partnership Interests to the public. The foregoing
expenses may be paid directly by the Partnership or may be reimbursed by
the Partnership to Affiliates of the Corporate General Partner; provided,
however, that with respect to Organizational and Offering Expenses relating
to the organization of the Partnership, the Partnership shall not pay
salaries to, and the Corporate General Partner or its Affiliates may not be
reimbursed for the salaries and related salary expenses incurred by, any
Controlling Person (as defined below).
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SECTION 8.6. Except as otherwise provided in Section 8.3, the
Corporate General Partner shall have sole and complete discretion in
determining the terms and conditions of the public offering and sale of
Additional Limited Partnership Interests and the Corporate General Partner
is authorized and directed to do all things which it deems to be necessary,
convenient, appropriate or advisable in connection therewith, including,
but not limited to, the preparation and filing on behalf of the Partnership
of a registration statement with the Securities and Exchange Commission and
the securities commissions (or similar agencies or offices) of such
jurisdictions as the Corporate General Partner shall determine and the
execution or performance of agreements with underwriters and others
concerning the marketing of Additional Limited Partnership Interests on
such basis and upon such terms as the Corporate General Partner shall
determine. It is expressly agreed that JMB Securities Corporation, which is
an Affiliate of the Corporate General Partner, may participate in such
offering as the dealer manager and may receive selling commissions or
concessions on the same terms as other dealers in connection therewith.
SECTION 8.7. Subject to Section 8.3, Additional Limited Partnership
Interests (including partial Additional Limited Partnership Interests) may
be sold to any Holders of Interests who elect to reinvest any cash
distributions in the Partnership and to any limited partners in the prior
Carlyle real estate limited partnerships who elect to participate in the
program for the reinvestment of their cash distributions from such
partnerships in the Partnership; provided, however, that such distributions
which are to be reinvested will be placed in an escrow account by the
Corporate General Partner for the benefit of such reinvesting Holder of
Interests or limited partner in a prior Carlyle real estate limited
partnership until a minimum of $250 is available for investment; and
provided, further, however, that each such Holder of Interests or limited
partner electing to have such distributions from the Partnership or from
prior Carlyle real estate limited partnerships reinvested will receive,
with each confirmation of distribution, a notice advising such Holder of
Interests or such limited partner that he is entitled to change his
election with respect to subsequent distributions, by return of a notice to
the Partnership by a date to be specified by the Corporate General Partner.
All such funds received by the Partnership will be held in escrow as
provided in Section 8.3. If, prior to achieving the minimum reinvestment
amount of $250, a Holder of Interests or limited partner in a prior Carlyle
real estate limited partnership changes his distribution election, the
amount held in escrow will be refunded together with interest thereon for
the period the funds were held in the escrow account at the rate(s)
provided in Section 8.4. In addition. Holders of Interests and limited
partners in prior Carlyle real estate limited partnerships who elect to
reinvest their distributions from such partnerships in the Partnership may
acquire Additional Limited Partnership Interests (or partial Additional
Limited Partnership Interests) in the Partnership by additional
contributions to the Partnership of $500 or more. A Holder of Interests
electing to participate in the program for the reinvestment of his
distributions may have his distributions reinvested in a subsequent Carlyle
real estate limited partnership only if prior to the time of such
reinvestment he has received the final prospectus (and any supplements
thereto) offering interests in the current Carlyle real estate limited
partnership, and such prospectus provides for a distribution reinvestment
program, a registration statement covering the interests in the current
Carlyle real estate limited partnership has been declared effective under
the Securities Act of 1933, the offering of such interests is qualified for
sale under the applicable state securities laws and the participant
qualifies under the applicable investor suitability standards as contained
in the prospectus for the then effective Carlyle real estate limited
partnership. If any of the foregoing conditions are not satisfied at the
time of a distribution, such distribution will be paid in cash. Each Holder
of Interests electing to participate in the distribution election program
hereby agrees that, if, at any time, he fails to meet the applicable
Carlyle real estate limited partnership investor suitability requirements
or cannot make the other investor representations or warranties set forth
in the then current Carlyle real estate limited partnership prospectus,
partnership agreement or subscription agreement relating thereto, he will
promptly notify JMB Investor Services Corporation in writing. If any
attempted election is ineffective for any reason, the prior election of the
Holder of Interests will remain in effect until a new distribution election
is submitted to the Partnership.
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ARTICLE IX
DISTRIBUTIONS AND COMPENSATIONS
SECTION 9.1. No portion of Net Cash Receipts shall be used by the
Partnership for the acquisition of additional real properties by the
Partnership, nor shall cash reserves therefrom be established by the
Corporate General Partner for the acquisition of additional real property
investments.
SECTION 9.2. Disbursements of Net Cash Receipts shall be made in
such amounts and at such times as the Corporate General Partner may
determine but not less frequently than once each calendar quarter
(commencing with the third calendar quarter of 1985). Such disbursements of
Net Cash Receipts shall be made as follows:
(a) 6.25% of the amount being disbursed shall be paid to the
Corporate General Partner as a fee for managing the affairs of the
Partnership;
(b) The remainder of the amount being disbursed shall be
distributed to the General Partners and the Limited Partners as their
distributive shares in the same respective proportions in which they are
allocated net profits or losses of the Partnership pursuant to Section 10.1
(i.e., 96% to the Limited Partners and 4% to the General Partners).
SECTION 9.3. All Sale or Refinancing Proceeds shall be distributed
as follows:
(i) first, 99% to the Limited Partners and 1% to the General
Partners to the extent that all previous distributions to the Limited
Partners under this Section 9.3(i) do not equal the Capital Investments
with respect to Limited Partnership Interests;
(ii) second, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners have received an amount equal to (a)
the sum of the amounts by which, for all fiscal years commencing with the
third calendar quarter of 1985 and continuing through the fiscal year for
which such distribution is made, the amount of Net Cash Receipts
distributed to the Limited Partners pursuant to Section 9.2 for such years
was less than 6% per annum of the Current Capital Accounts for such years
(so that for the purposes of the computation of such deficiency, the amount
by which distributions of Net Cash Receipts for any fiscal years were in
excess of 6% per annum of the Current Capital Accounts of Limited Partners
shall be credited to reduce any deficiency for any other fiscal year) less
(b) the sum of all previous distributions made to the Limited Partners out
of Sale or Refinancing Proceeds pursuant to this Section 9.3(ii);
(iii) third, in the case of sales of Properties by the
Partnership or by a partnership, venture or other entity which owns a
particular Property, subject to the limitations set forth in Section 15.9,
an amount to the General Partners equal to 3% of the gross selling price of
the Property being sold plus up to 3% of the aggregate selling prices of
Properties previously sold to the extent the General Partners have not
previously received such 3% of the selling prices of such Properties by
reason of clauses (i) and (ii) of this Section 9.3 (the selling price or
prices of all such Properties to include the amount of any indebtedness to
which such Property or Properties are subject or which is assumed by the
buyer); and
(iv) fourth, the balance 85% to the Limited Partners and 15%
to the General Partners. The calculations provided under this Section 9.3
shall be made on a cumulative basis so that if it is determined, on any
date on which a distribution of Sale or Refinancing Proceeds is to be made,
that distributions previously made under clause (ii) hereof plus cumulative
distributions of Net Cash Receipts made to the Limited Partners under
Section 9.2 exceed 6% per annum of the Current Capital Accounts for each
year or part thereof (beginning with the third calendar quarter of 1985
("excess distributions")), then the General Partners shall receive
distributions from such Sale or Refinancing Proceeds in an amount equal to
the sum of (a) the amount of such Sale or Refinancing Proceeds
(undiminished by the amount determined under (b) hereof) to which the
General Partners are entitled pursuant to clauses (iii) and (iv) hereof,
plus
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(b) the amount the General Partners would have received pursuant to clauses
(iii) and (iv) hereof if the excess distributions had been distributed to
the Partners at the time of the prior Sales or Refinancings.
In the event that Acquisition Fees paid to anyone exceed 17% of the
Gross Proceeds of the Offering contemplated by Section 8.3, the amount
distributable to the General Partners pursuant to Section 9.3(i) and (ii)
shall be reduced by the amount of any such excess.
If, upon the completion of the liquidation of the Partnership and the
distribution of all Partnership funds, the sum of the Capital Investments
with respect to Limited Partnership Interests plus the maximum amount
distributable to the Limited Partners under Section 9.3(ii) exceeds the
distributions of Sale or Refinancing Proceeds to the Limited Partners
pursuant to Sections 9.3(i) and (ii) (said excess is hereinafter referred
to as the "Excess Amount"), the General Partners shall make capital
contributions to the Partnership (which contributions shall be credited to
their Capital Accounts) in an amount equal to the lesser of the Excess
Amount or the amounts of Sale or Refinancing Proceeds received by the
General Partners pursuant to Sections 9.3(i) and (ii). Such capital
contributions are to be made 50% by the Corporate General Partner and 50%
by the Associate General Partner and shall be distributed to the Limited
Partners.
SECTION 9.4. If the Capital Accounts with respect to all Limited
Partnership Interests are equal at the time of any distribution of Net Cash
Receipts or Sale or Refinancing Proceeds to the Limited Partners, such
distribution shall be made with respect to each Interest outstanding at the
time of such distribution in the proportion which such Interest bears to
the total number of Limited Partnership Interests then outstanding. If
the Capital Accounts with respect to all Limited Partnership Interests are
not equal at the time of any such distribution of Net Cash Receipts or Sale
or Refinancing Proceeds to the Limited Partners, any such distribution of
Net Cash Receipts or Sale or Refinancing Proceeds distributable to the
Limited Partners shall be made first with respect to any Limited
Partnership Interests with a Capital Account immediately prior to such
distribution showing a balance which is greater in amount (or lesser in
deficit) than the Capital Account for any other Limited Partnership
Interests, such distribution to be made with respect to and among the
Holders of such Limited Partnership Interests showing such a greater
balance in their Capital Accounts in a manner so as to equalize to the
extent possible the Capital Accounts for all Limited Partnership Interests
following such distribution; provided that in the event the Corporate
General Partner reasonably anticipates that the Capital Accounts with
respect to all Limited Partnership Interests will, apart from such
distribution, be equal by the end of the following fiscal year, such
distribution shall be made in accordance with the preceding sentence in the
same manner as if such Capital Accounts were equal at the time of such
distribution.
SECTION 9.5. All of the Partnership's expenses shall be billed
directly to and paid by the Partnership. Reimbursements (other than for
Organizational and Offering Expenses as provided in Section 8.5) to the
General Partners or any Affiliates shall not be allowed, except for (i) the
actual cost to the General Partners or such Affiliates of goods, materials
and services used for or by the Partnership and obtained from entities
which are not affiliated with the General Partners; (ii) salaries and
related salary expenses for services which could be performed directly for
the Partnership by independent parties, such as legal, accounting, transfer
agent, data processing, duplicating and other such services; (iii)
Partnership reports and communications to investors; and (iv)
administrative services necessary to the prudent operation of the
Partnership. No reimbursement under clauses (ii) through (iv) above shall
be permitted for services for which the General Partners or Affiliates
receive a separate fee or for (x) the salaries and related salary expenses
incurred by any Controlling Person and (y) any indirect expenses incurred
by them in performing services for the Partnership, such as rent,
depreciation charges relating to capital equipment, utilities and other
administrative items. "Controlling Person" for purposes of Section 8.5 and
this Section 9.5 shall mean any person, regardless of title, who performs
executive or senior management functions for the General Partners or
Affiliates similar to those of directors, executive management and senior
management, or any person who either holds 5% or more equity interest in
the General Partners or Affiliates or has the power to direct or cause the
direction of the General Partners or Affiliates, whether through the
ownership of voting securities, by contract, or otherwise, or, in the
absence of a specific role or title, any person having the power to direct
or cause the direction of the management level employees and policies of
the General Partners or Affiliates. It is not
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intended that every person who carries a title such as vice president,
senior vice president, secretary or treasurer be included in the definition
of Controlling Person. In no event shall any amount charged to the
Partnership as a reimbursable expense by the General Partners exceed the
lesser of (a) the actual cost of such services, or (b) the amount which the
Partnership would be required to pay to independent parties for comparable
services. In the Partnership's annual report to Limited Partners, there
shall be provided an itemized breakdown of reimbursements made to the
Corporate General Partner and any Affiliates pursuant to this Section 9.5.
The reimbursement for expenses provided in this Section 9.5 shall be made
to the General Partners regardless of whether any distributions are made to
the Limited Partners under the provisions of Section 9.2.
SECTION 9.6. Distributions to the General Partners of Net Cash
Receipts and Sale or Refinancing Proceeds pursuant to this Article IX shall
be allocated between the Corporate and Associate General Partners as
follows:
(a) Net Cash Receipts distributable to the General Partners
pursuant to Section 9.2(b) shall be allocated between the Associate General
Partner and the Corporate General Partner in the same respective
proportions as profits or losses of the Partnership (other than any profits
or losses attributable to the sale or other disposition of Partnership
Properties) are allocated pursuant to Section 10.7(a); and
(b) Sale or Refinancing Proceeds distributable to the General
Partners pursuant to Section 9.3 shall be allocated between the Corporate
General Partner and the Associate General Partner in the same respective
proportions as profits or losses from the sale or other disposition if
Partnership Properties are allocated pursuant to Section 10.7(b).
SECTION 9.7. Except with respect to matters as to which the
Corporate General Partner is granted discretion hereunder, the opinion of
the independent certified public accountants retained by the Partnership
from time to time shall be final and binding with respect to all
computations and determinations required to be made under this Article IX
(including computations and determinations in connection with any
distribution pursuant to Article XVIII).
ARTICLE X
ALLOCATIONS OF PROFITS AND LOSSES
SECTION 10.1. The profits or losses of the Partnership (other than
any profits or losses attributable to the sale or other disposition of
Partnership Properties) shall be allocated as follows: 96% of such profits
or losses shall be allocated to the Limited Partners and 4% of such profits
or losses shall be allocated to the General Partners; except that any such
profits or losses for the period prior to the First 1984 Admission Date
shall be allocated 99% to the General Partners and 1% to the Initial
Limited Partner.
SECTION 10.2. The profit of the Partnership from any sale or other
disposition of Partnership Property (after deducting any expenses relating
to such sale or other disposition) shall be allocated as follows: first,
there shall be allocated to the General Partners an amount equal to the
greater of (i) 1% of such profit or (ii) the amount distributable (in
excess of the General Partners' aggregate net positive Capital Account
balances) to the General Partners as Sale or Refinancing Proceeds from such
sale or other disposition in accordance with Section 9.3; then, all
remaining profit shall be allocated to the Limited Partners. Notwith-
standing the allocation in the first sentence of this Section 10.2, such
allocation, the aggregate deficit balances, if any, in the Capital Accounts
of the General Partners would exceed the Potential Unrealized Gain of the
Partnership on the date of such allocation (allocated pro rata between the
General Partners in proportion to the negative balances in their respective
Capital Accounts), then the allocation of profit to the Limited Partners
under this Section 10.2 shall be reduced and the allocation of profit to
the General Partners under this Section 10.2 shall be increased (to be
shared by them in proportion to the deficit balances in their respective
Capital Accounts) to the extent necessary to cause the aggregate deficit
balances in the Capital Accounts of the General Partners after such
allocation to equal the Potential Unrealized Gain.
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Notwithstanding the allocation in the first sentence of this Section 10.2,
if, at any time profit is realized by the Partnership on the sale or other
disposition of a Property, any current or anticipated reduction of the
Partnership's indebtedness or distribution (including the Partnership's
share of indebtedness of a joint venture partnership in which it holds an
interest, or any anticipated distribution of cash to the General Partners
within the same or next succeeding fiscal year) would cause the deficit
balances in the Capital Accounts of either or both of the General Partners
to be greater than its or their share of the Partnership's indebtedness or
distribution (including the Partnership's share of indebtedness of a joint
venture partnership in which it holds an interest, or any anticipated
distribution of cash to the General Partners within the same or next
succeeding fiscal year) after such reduction or distribution, then an
allocation of gain to each General Partner of profit under this Section
10.2 shall be made to the extent necessary to cause the deficit balance in
each General Partner's Capital Account to be no less than such General
Partner's share of the Partnership's indebtedness after such reduction.
"Potential Unrealized Gain" shall equal the amount of profit which would be
realized by the Partnership for Federal income tax purposes (to be shared
pro rata in proportion to the respective deficit balances of the General
Partners) if all Partnership Properties were sold for their fair market
value as determined by the Corporate General Partner (and all installment
receivables of the Partnership were collected) on the date of such
allocation. Notwithstanding anything to the contrary in this Agreement,
upon the ultimate liquidation of the Partnership, if a General Partner has
a deficit balance in its Capital Account (after giving effect to the
allocations set forth in this Agreement, including without limitation, the
allocations set forth in this Section 10.2), such General Partner will make
a capital contribution equal to such deficit balance.
SECTION 10.3. The loss of the Partnership from any sale or other
disposition of Partnership Property shall be allocated as follows: 99% of
such loss shall be allocated to the Limited Partners and 1% of such loss
shall be allocated to the General Partners.
SECTION 10.4. Any Assignee Holder of an Additional Limited
Partnership Interest who is recognized as such pursuant to Section 16.1
shall be allocated all Profits or Losses, and shall be entitled to all Net
Cash Receipts and Sale or Refinancing Proceeds distributable, with respect
to such Additional Limited Partnership Interest as hereinafter provided.
Except as otherwise set forth in this Section 10.4 and in Section 10.5
below, all profits or losses allocable with respect to Limited Partnership
Interests shall be allocated among each of the Holders of Interests as of
the end of each calendar year in proportion to the ratio which the number
of Interests owned by each of them bears to the total number of Interests
owned by all such Holders of Interests as of the end of such calendar year.
All profits or losses (other than any profits or losses attributable to the
sale or other disposition of Partnership Properties) for a calendar year
allocable with respect to any Limited Partnership Interest which may have
been transferred during such year shall be allocated between the transferor
and the transferee based upon the number of quarterly periods that each was
recognized (pursuant to Article XVI) as the Holder of the Limited
Partnership Interest, without regard to the results of Partnership
operations during particular quarterly periods of such calendar year and
without regard to whether cash distributions were made to the transferor or
transferee. All profits or losses of the Partnership attributable to the
sale or other disposition of Partnership Properties and allocable with
respect to the Interests shall be allocated to the recognized Holders of
the Limited Partnership Interests (pursuant to Article XVI) as of the last
day of the quarterly period in which the Partnership recognized such
profits or losses for tax purposes.
SECTION 10.5. The profits or losses of the Partnership allocable with
respect to Limited Partnership Interests for the calendar years 1984 and
1985 shall be allocated on the basis of interim closings of the
Partnership's books on a cash basis on each 1984 Admission Date, on
December 31, 1984, on each 1985 Admission Date, and on December 31, 1985,
and profits or losses for such respective period shall be allocated as
follows:
All profits or losses allocable to the Limited Partners for the
period prior to the First 1984 Admission Date shall be allocated to JMB
Investor Services Corporation in its capacity as the Initial Limited
Partner.
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All profits or losses allocable to the Limited Partners for the
period from the First 1984 Admission Date through December 31, 1985 shall
be allocated among the Limited Partners as follows:
(a) Each item of profit or loss for the periods from any 1984
Admission Date through the next succeeding 1984 Admission Date, which 1984
periods terminate on or before the 1984 Admission Date as selected by the
Corporate General Partner and announced as the "Cut-Off Admission Date"
(herein the "Initial 1984 Periods"), shall be allocated to those Holders
who were recognized on or before the date at the beginning of each such
Initial 1984 Period (herein such Holders are called the "First 1984
Eligible Holders") as follows:
(i) If the Capital Accounts with respect to each
Additional Limited Partnership Interest of all First 1984 Eligible Holders
are equal, then such profits or losses shall be allocated among the First
1984 Eligible Holders in proportion to the ratio which the number of
Additional Limited Partnership Interests owned by each of them bears to the
number of such Interests owned by all such Holders.
(ii) If the Capital Accounts with respect to each
Additional Limited Partnership Interest of all First 1984 Eligible Holders
are not then equal, then such profits shall be allocated, first, to each
First 1984 Eligible Holder having an Additional Limited Partnership
Interest with a Capital Account immediately prior to such allocation
showing a balance which is smaller in amount (or a deficit which is greater
in amount) than the Capital Account for any other Additional Limited
Partnership Interest of a First 1984 Eligible Holder (commencing with First
1984 Eligible Holders whose Capital Account balances are smallest in amount
(or greatest in deficit)), until the balance in each such Capital Account
after such allocation equals the balance in the Capital Account of the
Additional Limited Partnership Interest of a First 1984 Eligible Holder
which was next smaller in amount (or greater in deficit) before such
allocation; thereafter, such profits shall continue to be allocated to
First 1984 Eligible Holders having Additional Limited Partnership Interests
with Capital Accounts showing balances which are then smallest in amount
(or greatest in deficit), as above, until either (x) the balances of the
Capital Accounts with respect to the Interests of all First 1984 Eligible
Holders are equal or (y) all such profits have been allocated.
(iii)If the Capital Accounts with respect to each
Additional Limited Partnership Interest of all First 1984 Eligible Holders
are not then equal, then such losses shall be allocated, first, to each
First 1984 Eligible Holder having an Additional Limited Interest with a
Capital Account immediately prior to such allocation showing a balance
which is greater in amount (or lesser in deficit) than the Capital Account
for any other Additional Limited Partnership Interest of a First 1984
Eligible Holder (commencing with First 1984 Eligible Holders whose Capital
Account balances are greatest in amount (or smallest in deficit)), until
the balance in each such Capital Account after such allocation equals the
balance in the Capital Account of the Additional Limited Partnership
Interest of a First 1984 Eligible Holder which was next greater in amount
(or lesser in deficit) before such allocation; thereafter, such losses
shall continue to be allocated to the First 1984 Eligible Holders having
Additional Limited Partnership Interests with Capital Accounts showing
balances which are then greatest in amount (or least in deficit), as above,
until either (x) the balances of the Capital Accounts with respect to the
Additional Limited Partnership Interests of all First 1984 Eligible Holders
are equal or (y) all such losses have been allocated.
(b) Each item of profit or loss for the periods from any 1984
Admission Date to the next succeeding 1984 Admission Date, which periods
terminate after the Cut-Off Admission Date, and for the period from the
Final 1984 Admission Date through December 31, 1984 (herein the "Subsequent
1984 Periods"), shall be allocated to those Holders who were recognized on
or before the date at the beginning of each such Subsequent 1984 Periods
(herein such Holders, including all First 1984 Eligible Holders, are called
the "1984 Eligible Holders") as follows:
(i) If the balances in the Capital Accounts with
respect to each Additional Limited Partnership Interest of all First 1984
Eligible Holders are equal, and the balances in the Capital Accounts with
respect to each Interest of all 1984 Eligible Holders who were recognized
as Assignee Holders after the Cut-Off Admission Date (henceforth "Second
1984 Eligible Holders") are equal, and the ratio
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between such Capital Account balances reflects aggregate allocations of
profits or losses through the immediately preceding Period such that there
have been allocated to First 1984 Eligible Holders profits or losses,
taking into account all prior allocations of profits or losses, which are
137-1/2% of such aggregate profits or losses allocated to Second 1984
Eligible Holders (the allocation of profits or losses with respect to each
Additional Limited Partnership Interest in such ratio being hereinafter
called the "Cut-Off Allocation"), then profits or losses for such
Subsequent 1984 Period shall be allocated among the 1984 Eligible Holders
in accordance with the Cut-Off Allocation.
(ii) If the Capital Accounts with respect to each
Additional Limited Partnership Interest of all First 1984 Eligible Holders
and the Capital Accounts with respect to each Additional Limited
Partnership interest of all Second 1984 Eligible Holders are not in a ratio
such that aggregate profits and losses have been allocated in accordance
with the Cut-Off Allocation, then profits shall be allocated, first, if
there are First 1984 Eligible Holders whose Capital Account balances are
not equal, to each First 1984 Eligible Holder (exclusive of First 1984
Eligible Holders admitted at the First 1984 Admission Date) holding an
Interest with a Capital Account immediately prior to such allocation
showing a balance which is smaller in amount (or a deficit which is greater
in amount) than the Capital Account for any other Additional Limited
Partnership Interest of a First 1984 Eligible Holder (exclusive of First
1984 Eligible Holders admitted at the First 1984 Admission Date)
(commencing with the First 1984 Eligible Holders whose Capital Account
balances are smallest in amount (or greatest in deficit)), until the
balance in each such Capital Account after such allocation equals the
balance in the Capital Account of the Additional Limited Partnership
Interest of a First 1984 Eligible Holder (exclusive of First 1984 Eligible
Holders admitted at the First 1984 Admission Date) which was next smaller
in amount (or greater in deficit) before such allocation; and thereafter,
such profits shall continue to be allocated to First 1984 Eligible Holders
(exclusive of First 1984 Eligible Holders admitted at the First 1984
Admission Date) having Additional Limited Partnership Interests with
Capital Accounts showing balances which are then smallest in amount (or
greatest in deficit), as above, until either (x) the balances of the
Capital Accounts with respect to such Additional Limited Partnership
Interests of all First 1984 Eligible Holders (exclusive of First 1984
Eligible Holders admitted at the First 1984 Admission Date) are equal or
(y) all such profits have been allocated; second, such profits shall be
allocated to First 1984 Eligible Holders (exclusive of First 1984 Eligible
Holders admitted at the First 1984 Admission Date) and to those Second 1984
Eligible Holders having an Additional Limited Partnership Interest with a
Capital Account immediately prior to such allocation showing a balance
which is smaller in amount (or a deficit which is greater in amount) than
the Capital Account for any other Additional Limited Partnership Interest
of a Second 1984 Eligible Holder (commencing with the Second 1984 Eligible
Holders whose Capital Account balances are smallest in amount (or greatest
in deficit)), until the balances in each such Capital Account after such
allocation are in the ratio which reflects aggregate allocations of profits
and losses for such Additional Limited Partnership Interests in the ratio
of the Cut-Off Allocation, and thereafter, such profits shall continue to
be allocated to all First 1984 Eligible Holders (exclusive of First 1984
Eligible Holders admitted at the First 1984 Admission Date) and to those
Second 1984 Eligible Holders having Additional Limited Partnership
Interests with Capital Accounts showing balances which are then smallest in
amount (or greatest in deficit), as above, until either (x) the balances of
the Capital Accounts with respect to such Interests of all 1984 Eligible
Holders (exclusive of First 1984 Eligible Holders admitted at the First
1984 Admission Date) and Second 1984 Eligible Holders are in the ratio
which reflects aggregate allocations of profits and losses for such
Additional Limited Partnership Interests in the ratio of the Cut-Off
Allocation or (y) all such profits have been allocated; and third, profits
for such Subsequent 1984 Period shall be allocated among the 1984 Eligible
Holders in accordance with the Cut-Off Allocation.
(iii)If the Capital Accounts with respect to each
Additional Limited Partnership Interest of all First 1984 Eligible Holders
and the Capital Accounts with respect to each Additional Limited
Partnership Interest of all Second 1984 Eligible Holders are not in a ratio
such that aggregate profits or losses have been allocated in accordance
with the Cut-Off Allocation, then losses shall be
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allocated first, if there are Second 1984 Eligible Holders whose Capital
Account balances are not equal, to each Second 1984 Eligible Holder having
an Additional Limited Partnership Interest with a Capital Account
immediately prior to such allocation showing a balance which is greater in
amount (or lesser in deficit) than the Capital Account for any other
Additional Limited Partnership Interest of a Second 1984 Eligible Holder
(commencing with the Second 1984 Eligible Holders whose Capital Account
balances are greatest in amount (or smallest in deficit)), until the
balance in each such Capital Account after such allocation equals the
balance in the Capital Account of the Additional Limited Partnership
Interest of a Second 1984 Eligible Holder which was next greater in amount
(or lesser in deficit) before such allocation and thereafter, losses shall
continue to be allocated to Second 1984 Eligible Holders having Additional
Limited Partnership Interests with Capital Accounts showing balances which
are the then greatest in amount (or least in deficit), as above, until
either (x) the balances of the Capital Accounts with respect to such
Interests of all Second 1984 Eligible Holders are equal or (y) all such
losses have been allocated; second, such losses shall be allocated to all
Second 1984 Eligible Holders holding Additional Limited Partnership
Interests and to those First 1984 Eligible Holders having Additional
Limited Partnership Interests with a Capital Account immediately prior to
such allocation showing a balance which is greater in amount (or lesser in
deficit) than the Capital Account for any other Additional Limited
Partnership Interest of a First 1984 Eligible Holder (commencing with First
1984 Eligible Holders whose Capital Account balances are greatest in amount
(or smallest in deficit)), until the balance in each such Capital Account
after such allocation is in a ratio which reflects aggregate allocations of
profits and losses for such Additional Limited Partnership Interests in the
ratio of the Cut-Off Allocation, and thereafter, such losses shall continue
to be allocated to all Second 1984 Eligible Holders holding Additional
Limited Partnership Interests and to those First 1984 Eligible Holders
having Additional Limited Partnership Interests with Capital Accounts
showing balances which are then greatest in amount (or least in deficit),
as above, until either (x) the balances of the Capital Accounts with
respect to such Interests of all 1984 Eligible Holders are in a ratio which
reflects aggregate allocations of profits and losses for such Additional
Limited Partnership Interests in the ratio of the Cut-Off Allocation or (y)
all such losses have been allocated; and third, losses for such Subsequent
1984 Period shall be allocated among the 1984 Eligible Holders in
accordance with the Cut-Off Allocation.
(c) Each item of profit or loss for the periods from January 1,
1985 to the first 1985 Admission Date, from any 1985 Admission Date to the
next succeeding 1985 Admission Date and from the last 1985 Admission Date
through December 31, 1985 (herein the "1985 Periods"), shall be allocated
to those Holders who were recognized as Assignee Holders on or before the
date at the beginning of each such 1985 Period (herein such Holders are
called the "Eligible Holders") as follows:
(i) If the Capital Accounts with respect to each Additional
Limited Partnership Interest of all Eligible Holders are equal, then such
profits or losses shall be allocated among the Eligible Holders in
proportion to the ratio which the number of Additional Limited Partnership
Interests owned by each of them bears to the number of such Interests owned
by all Holders.
(ii) If the Capital Accounts with respect to each Additional
Limited Partnership Interest of all Eligible Holders are not then equal,
then such profits shall be allocated first, to each Eligible Holder having
an Additional Limited Partnership Interest with a Capital Account
immediately prior to such allocation showing a balance which is smaller in
amount (or a deficit which is greater in amount) than the Capital Account
for any other Additional Limited Partnership Interest of an Eligible Holder
(commencing with those Capital Accounts having balances which were smallest
in amount (or greatest in deficit)), until the balance in each such Capital
Account after such allocation equals the balance in the Capital Account of
the Additional Limited Partnership Interest of an Eligible Holder which was
next smaller in amount (or greater in deficit) before such allocation;
thereafter, such profits shall continue to be allocated to Eligible Holders
having Additional Limited Partnership Interests with Capital Accounts
showing balances which are then smallest in amount (or greatest in
deficit), as above, until either (x) the balances of the Capital Accounts
with respect to such Interests of all Eligible Holders are equal or (y) all
such profits have been allocated.
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(iii) If the Capital Accounts with respect to each Additional
Limited Partnership Interest of all Eligible Holders are not then equal,
then such losses shall be allocated first, to each Eligible Holder having
an Additional Limited Partnership Interest with a Capital Account
immediately prior to such allocation showing a balance which is greater in
amount (or lesser in deficit) than the Capital Account for any other
Additional Limited Partnership Interest of an Eligible Holder (commencing
with those Capital Accounts having balances which were greatest in amount
(or smallest in deficit)), until the balance in each such Capital Account
after such allocation equals the balance in the Capital Account of the
Additional Limited Partnership Interest of an Eligible Holder which was
next greater in amount (or lesser in deficit) before such allocation;
thereafter, such losses shall continue to be allocated to each successive
group of Eligible Holders having Additional Limited Partnership Interests
with Capital Accounts showing balances which are the then greater in amount
(or least in deficit), as above, until either (x) the balances of the
Capital Accounts with respect to such Interests of all Eligible Holders are
equal or (y) all such losses have been allocated.
Further, in the event that the Capital Account balances with respect
to the Additional Limited Partnership Interests of all Assignee Holders are
not equal after all such profits or losses for calendar year 1985 have been
allocated, net profits or losses for any subsequent year shall first be
allocated in accordance with clauses (ii) and (iii) of this Section 10.5(c)
(with the entire such year being treated as a period) until such Capital
Account balances are equal. Thereafter, all such profits or losses
allocable to the Assignee Holders shall be allocated in proportion to the
ratio which the number of Interests owned by each of them bears to the
number of Interests held by all such Holders.
SECTION 10.6. "Profits" or "losses" as used herein includes, without
limitation, each item of Partnership income, gain, loss and deduction as
determined for Federal income tax purposes. Any credits of the Partnership
as determined for Federal income tax purposes for a calendar year shall be
allocated as profits or losses of the Partnership (other than any profits
or losses attributable to the sale or other disposition of Partnership
properties) in accordance with Section 10.1.
SECTION 10.7. Profits or losses allocable to the General Partners
pursuant to this Article X shall be allocated between the Corporate and
Associate General Partners as follows:
(a) Profits or losses allocable to the General Partners pursuant to
Section 10.1 shall be allocated 80% to the Associate General Partner and
20% to the Corporate General Partner; and
(b) Profits or losses allocable to the General Partners pursuant to
the first sentence of Section 10.2 and pursuant to Section 10.3 shall be
allocated 50% to the Corporate General Partner and 50% to the Associate
General Partner.
Notwithstanding anything to the contrary that may be expressed or
implied in this Agreement, the interests of all of the General Partners
taken together in each item of Partnership income, gain, loss, deduction or
credit will be equal to at least 1% of each of those items at all times
during the existence of the Partnership. In determining the interests of
the General Partners in those items, any Limited Partnership Interests
owned by the General Partners shall not be taken into account.
ARTICLE XI
BOOKS OF ACCOUNT, RECORDS AND REPORTS
SECTION 11.1. The Corporate General Partner shall keep proper and
complete records and books of account in which shall be entered fully and
accurately all transactions and other matters relating to the Partnership's
business as are usually entered into records and books of account
maintained by persons engaged in businesses of a like character. The
Partnership books and records of account shall be kept on the cash basis,
except as the Corporate General Partner may otherwise determine. The books
and records shall at all times be maintained at the principal office of the
Partnership and shall be open to the inspection and examination of the
Partners or their duly authorized representatives during reasonable
business hours. The
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Corporate General Partner shall furnish a list of names and addresses of
all Limited Partners (including the number of Limited Partnership Interests
owned by each of them) to any Limited Partner who requests such a list in
writing and who pays the costs of collection, duplication and mailing
thereof.
SECTION 11.2. Within 60 days after the end of each of the first three
fiscal quarters of each year, the Corporate General Partner shall send to
each person who was a Holder of Interests at any time during the quarter
then ended the following (none of which need be audited): (i) a balance
sheet, (ii) a profit and loss statement, (iii) a cash flow statement, (iv)
a statement of cash distributions for such quarter, (v) a statement
describing the amount of all fees and other compensation and distributions
paid by the Partnership for such quarter to any General Partner or any
Affiliate of any General Partner, (vi) a report of any material acquisition
or disposition of real property during such fiscal quarter describing such
Property and the terms and conditions of its acquisition or disposition,
and (vii) until the capital contributions of the Partnership are fully
invested, a special report of property acquisitions during the preceding
quarter including a complete description of the Properties purchased, the
purchase price and the terms of the purchase including the Partnership's
cash investment, the amount and date of the appraisal of any such Property,
all fees paid to Affiliates of the General Partners in connection with such
acquisitions and the amount of capital contributions which remains
unexpended or uncommitted (stated in terms of dollar amount and as a
percentage of capital contributions).
SECTION 11.3. Within 75 days after the end of each fiscal year, the
Corporate General Partner shall send to each person who was a Holder of
Interests at any time during the fiscal year, then ended such tax
information as shall be necessary for the preparation by such Holder of his
Federal income tax return and state income and other tax returns with
regard to jurisdiction in which the Partnership is formed or qualified.
Notwithstanding any adjustment of the allocation of profits or losses
provided in this Agreement by any judicial body or governmental agency, the
allocations of profits or losses provided in this Agreement shall control
for purposes of this Agreement, including without limitation, the
determination of the Partners' Capital Accounts (or any amendment hereto
pursuant to Section 21.2).
SECTION 11.4. Within 120 days after the end of each fiscal year, the
Corporate General Partner shall send to each person who was a Holder of
Interests at any time during the fiscal year then ended (i) a balance sheet
as of the end of such fiscal year and statements of income, Partners'
equity and changes in financial position for such fiscal year, all of which
shall be prepared in accordance with generally accepted accounting
principles and accompanied by an auditor's report containing an unqualified
opinion of a firm of independent certified public accountants (or, if
qualified, stating the basis for such qualification), (ii) a cash flow
statement (which need not be audited), (iii) a report summarizing the fees
and other remuneration paid by the Partnership for such fiscal year to any
General Partner or any Affiliate of any General Partner, (iv) a report of
the activities of the Partnership during such fiscal year and (v) a
statement (which need not be audited) showing the Net Cash Receipts and
Sale or Refinancing Proceeds distributed to Holders of Interests in respect
of such year, which statement shall identify Net Cash Receipts distributed
from operations during the year (including payments under management
agreements and lease payments under net leases, if any, with sellers), and
Net Cash Receipts from operations during the prior year and from uninvested
reserves held from the proceeds of the offering of Additional Limited
Partnership Interests.
SECTION 11.5. The Corporate General Partner shall prepare and file
with appropriate state authorities all reports required to be filed by
state securities or "Blue Sky" authorities.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Partnership shall end on the thirty-first day
of December in each year.
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ARTICLE XIII
PARTNERSHIP FUNDS
The funds of the Partnership shall be deposited in such bank account
or accounts, or invested in such interest-bearing or non-interest-bearing
investments, as shall be designated by the Corporate General Partner. Such
funds shall not be commingled with funds of any other real estate limited
partnership or other entity, including, without limitation, an entity
managed or advised by the Corporate General Partner or its Affiliates. All
withdrawals from any of such bank accounts shall be made by the duly
authorized agent or agents of the Corporate General Partner.
ARTICLE XIV
STATUS OF LIMITED PARTNERS
SECTION 14.1. The Limited Partners shall not participate in the
management or control of the Partnership's business nor shall they transact
any business for the Partnership, nor shall they have the power to act for
or bind the Partnership, said powers being vested solely and exclusively in
the General Partners. The Limited Partners shall have no interest in the
stock or assets of the Corporate General Partner, or in any proceeds of any
sales thereof (which sales shall not be restricted in any respect) by
virtue of acquiring or owning Limited Partnership Interests of the
Partnership.
SECTION 14.2. No Limited Partner shall have any personal liability
whatever, whether to the Partnership, to any of the Partners or to the
creditors of the Partnership, for the debts of the Partnership or any of
its losses beyond the amount committed by him to the capital of the
Partnership as set forth opposite his name in Schedule A. Each Limited
Partnership Interest shall be fully paid and non-assessable.
SECTION 14.3. The death or legal incapacity of a Limited Partner
shall not cause a dissolution of the Partnership, but the rights of such
Limited Partner to share in the profits and losses of the Partnership, to
receive distributions of Partnership funds and to assign a Limited
Partnership Interest pursuant to Article XVI hereof shall, on the happening
of such an event, devolve upon his personal representative, or in the event
of the death of one whose Limited Partnership Interest is held in joint
tenancy, shall pass to the surviving joint tenant, subject to the terms and
conditions of this Agreement, and the Partnership shall continue as a
limited partnership. The estate of the deceased Limited Partner or such
surviving joint tenant, as the case may be, shall be liable for all the
obligations of the deceased Limited Partner. However, in no event shall
such personal representative or surviving joint tenant become a Substituted
Limited Partner, except with the consent of the Corporate General Partner
in accordance with Section 16.2 hereof.
SECTION 14.4. The Partnership and the General Partner will not
consent or agree to list Limited Partnership Interests or any interests
therein in any form, whether or not held by Limited Partners, for trading
on any securities exchange or over-the-counter market.
ARTICLE XV
POWERS, RIGHTS AND DUTIES OF THE GENERAL PARTNERS
SECTION 15.1. The Corporate General Partner shall have exclusive
authority to manage the operations and affairs of the Partnership and to
make all decisions regarding the business of the Partnership with the sole
exception that all purchases and sales of any Partnership Property which
are recommended by the Corporate General Partner must be approved by the
individual managing general partners of the Associate General Partner,
provided that Partnership Property shall not be purchased at a price
(including a pro rata portion of Acquisition Fees which shall be
attributable to such Property) in excess of the value thereof as determined
by an independent appraisal (which appraisal shall be retained for at least
five years). Except as aforesaid, the Associate General Partner shall have
no authority to manage or control the business and affairs of the
Partnership. Pursuant to the foregoing, it is understood and agreed that
the Corporate General
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Partner shall have all of the rights and powers of a general partner as
provided in the Illinois Uniform Limited Partnership Act and as otherwise
provided by law and any action taken by the Corporate General Partner shall
constitute the act of and serve to bind the Partnership. It is further
understood and agreed that the Chairman, President or any Vice President of
the Corporate General Partner (including any partner of the Associate
General Partner who is Chairman, President or a Vice President of the
Corporate General Partner) may act for and in the name of the Corporate
General Partner in the exercise by the Corporate General Partner of any of
its rights and powers hereunder. In dealing with the Corporate General
Partner (or the Chairman, President or any Vice President thereof) acting
on behalf of the Partnership, no person shall be required to inquire into
the authority of such Partner or such individual to bind the Partnership.
Persons dealing with the Partnership are entitled to rely conclusively upon
the power and authority of each General Partner (and of the Chairman,
President or any Vice President of the Corporate General Partner) as set
forth in this Agreement.
SECTION 15.2. The Corporate General Partner is hereby granted the
right, power and authority to do on behalf of the Partnership all things
which, in its sole judgment, are necessary, proper or desirable to carry
out the aforementioned duties and responsibilities, including, but not
limited to, the right, power and authority: to incur all reasonable
expenditures; to employ and dismiss from employment any and all employees,
agents, independent contractors, real estate managers, brokers, attorneys
and accountants; to let or lease all or any portion of any property (except
that the Partnership shall not be the owner of a leasehold estate in
property in which JMB or its affiliates have an ownership interest) for any
purpose and without limit as to the term thereof, whether or not such term
(including renewal terms) shall extend beyond the date of the termination
of the Partnership and whether or not the portion so leased is to be
occupied by the lessee or, in turn, subleased in whole or in part to
others; to create, by grant or otherwise, easements and servitudes (whether
for charitable purposes or otherwise); to borrow money and as security
therefor to mortgage all or any part of any property; to construct, alter,
improve, repair, raze, replace or rebuild any Property; to obtain
replacements of any mortgage or mortgages related in any way to the
Property owned by the Partnership, and to prepay in whole or in part,
refinance, recast, modify, consolidate or extend any mortgages affecting
any such Property; to do any and all of the foregoing at such price, rental
or amount, for cash, securities or other property and upon such terms as
the Corporate General Partner deems proper (provided, however, that in
connection with the borrowing of money recourse for the repayment of which
is limited solely to Partnership Property, no lender shall be granted or
acquire, at any time as a result of making such a loan, any direct or
indirect interest in the profits, capital or property of the Partnership
other than as a secured creditor); to place record title to any Property in
its name or in the name of a nominee or a trustee for the purpose of
mortgage financing or any other convenience or benefit of the Partnership;
and to execute, acknowledge and deliver any and all instruments to
effectuate any and all of the foregoing. In the event the Partnership
utilizes any all-inclusive note, said note shall provide that the
Partnership shall receive credit on its obligation under said note for
payments made by the Partnership directly on the underlying encumbrance and
that a bank, escrow company or other paying agent shall collect payments
(other than amounts not to be applied to the underlying encumbrance) on the
all-inclusive note and make disbursements therefrom to the holder of the
underlying encumbrance prior to making any disbursements to the holder of
the all-inclusive note or, in the alternative, all payments on the
all-inclusive note and underlying notes shall be made directly by the
Partnership. The General Partners shall not, in connection with the
purchase of real properties for the Partnership, incur aggregate mortgage
indebtedness in excess of the lesser of (i) 80% of the aggregate
independently appraised value of all Properties, or (ii) 90% of the
aggregate purchase prices plus other initial cash payments made or required
in connection with the purchase of all Properties.
SECTION 15.3. Subject to the approval of the individual managing
general partners of the Associate General Partner when required by the
provisions of Section 15.1, the Corporate General Partner shall have the
right, power and authority to lease, sell, exchange or refinance, or grant
an option for the sale of, all or any portion of any Property of the
Partnership at such rental, price or amount, for cash, securities or other
property and upon such other terms as the Corporate General Partner in its
sole discretion deems proper;
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provided, that (subject to Section 17.5) the sale or other disposition of
all or substantially all of the Partnership's assets (except for the sale
or other disposition of the final property remaining as a result of sales
of properties as contemplated by the Prospectus) shall require the approval
of Limited Partners holding a majority of the then outstanding Interests.
No Affiliate of the General Partners shall receive any commission on the
sale of any property by the Partnership.
SECTION 15.4. The Corporate General Partner shall devote such time
to the Partnership business as it, in its sole discretion, shall deem to be
necessary to manage and supervise the Partnership business and affairs in
an efficient manner; but nothing in this Agreement shall preclude the
employment, at the expense of the Partnership, of any agent or third party
to manage or provide other services in respect of the Partnership property
subject to the control of the Corporate General Partner.
SECTION 15.5. The General Partners shall not be required to manage
the Partnership as their sole and exclusive functions, and they may have
other business interests and may engage in other activities in addition to
those relating to the Partnership, including the rendering of advice or
services of any kind to other investors and the making or management of
other investments. Neither the Partnership nor any Partner shall have any
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. Neither the Associate General Partner nor the
Corporate General Partner nor any Affiliate of any General Partner shall be
obligated to present any particular investment opportunity to the
Partnership even if such opportunity is of a character which, if presented
to the Partnership, could be taken by the Partnership, and each of them
shall have the right to take for its own account (individually or
otherwise) or to recommend to others any such particular investment
opportunity. In the event that any particular investment opportunity is
presented to the General Partners or an Affiliate which might be made by
the Partnership and by any Affiliate of the General Partners, a decision as
to the suitability of the investment for the Partnership will be based on a
review of its investment portfolio, and upon a review of such factors as
the cash flow of the investment, the effect of the acquisition on the
diversification of the Partnership's investments generally, the size of the
investment compared to the capitalization of the Partnership and the amount
it has available for investment, the expected income tax effect of such
investment, the Partnership's policies relating to leverage, and the length
of time that the Partnership has had funds available for investment To the
extent that a particular investment opportunity might be determined to be
suitable for the Partnership and one or more such Affiliates, priority will
generally be given to the entity having had uninvested funds for the
longest period of time.
SECTION 15.6. The Partnership may (i) obtain financing (other than
permanent financing) from an Affiliate of the General Partners in
connection with the purchase of Properties or purchase improved Properties
with improvements under construction for which an Affiliate of the General
Partners has provided financing or (ii) invest in joint venture
partnerships with other persons (which may include Affiliates), which such
joint venture partnerships own and operate a particular Property (in which
event the Partnership would have either a right of first refusal to
purchase the joint venture partner's interest in the Property or be
entitled to receive a preferential amount from the proceeds of sale of the
Property); provided however, that in connection with such financing (a) the
Affiliate of the General Partners may not receive interest and other
financing charges or fees in excess of the lesser of (i) the amounts which
would be charged by unrelated lending institutions on comparable loans for
the same purpose in the locality of the property and (ii) the rate per
annum equal to 2% plus the prime commercial rate of Continental Illinois
National Bank and Trust Company of Chicago, and (b) no prepayment charge or
penalty may be required by the Affiliate of the General Partners on a loan
to the Partnership secured by a junior or all-inclusive encumbrance on the
property, except to the extent that such prepayment charge or penalty is
attributable to the underlying encumbrance; and further provided that (x)
the Partnership shall not make any such investment in a joint venture
partnership unless the Partnership (together with any Affiliate) acquires a
controlling interest in such other joint venture partnership and (y) in the
case of joint venture investments with Affiliates, (A) the Partnership and
the Affiliate of the General Partners shall have substantially identical
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investment objectives, (B) the Partnership's investment is on substantially
the same terms and conditions as the investment of such Affiliate, (C) the
purchase price of the Partnership's investment has been confirmed by
independent appraisal as not greater than the fair market value of such
investment, (D) the compensation to the General Partners is substantially
identical to the compensation received by such Affiliate, (E) such
investment shall not result in the impairment, abrogation or circumvention
of any of the terms or provisions of this Agreement and (F) the investments
shall not be in public or private limited partnerships or other public real
estate investment entities (except as otherwise expressly permitted by this
Section with respect to private limited partnerships). In addition, the
payment of duplicate property management or other fees in connection with
investments in joint venture partnerships is prohibited and the operation
and management of such a joint venture partnership shall in all other
respects be consistent with the provisions and limitations contained in
this Agreement. The Partnership and any joint venture partner shall be
required to pay only their respective or their proportionate share of legal
fees and other expenses in connection with the acquisition of a Property by
a joint venture partnership.
SECTION 15.7. The Partnership shall not purchase real property from
any General Partner or any Affiliate of the General Partners which is
selling such property for its own account and not as a broker or agent for
persons who are not Affiliates of the General Partners, nor shall the
Partnership sell any real property to any General Partner or any Affiliate
of the General Partners (except that the Partnership may sell a Property or
Properties to the General Partners or Affiliates of the General Partners in
the event that insufficient Additional Limited Partnership Interests are
sold pursuant to Section 8.3 to make required payments on such Property or
Properties, as described in the Prospectus). Notwithstanding the foregoing,
the Corporate General Partner may purchase Property in its own name, or
that of a nominee and assume loans in connection therewith and temporarily
hold title thereto for the purpose of facilitating the acquisition of such
Property or the borrowing of money or obtaining of financing 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 cash investment no greater
than the cash investment in such Property by the Corporate General Partner
and that no other payment directly or indirectly arising out of such
transaction is received by any General Partner or Affiliate thereof apart
from compensation otherwise permitted by this Agreement. The Partnership
shall not make any loans to any General Partner or any Affiliate of the
General Partners. The foregoing provision shall not, however, prohibit (i)
transfers incident to the formation of joint ventures with Affiliates of
the General Partners permitted by Section 15.6, or (ii) the making of loans
or advances by the Partnership to a joint venture partnership which owns
and operates a particular Partnership Property as provided for in Section
15.6. The General Partners or their Affiliates may lease office or other
space in Partnership Properties; provided, however, that any such lease (a)
shall be for rentals and on terms not less favorable to the Partnership
than those available to the Partnership from unaffiliated tenants, (b)
shall be terminable on 60 days' prior written notice by the Partnership
without penalty and (c) shall provide that any rentals from subleases
relating thereto which are in excess of the rentals from such lease shall
be paid to the Partnership and, provided further, that no more than 15% of
the office space of the Partnership Properties shall be leased to JMB or
its Affiliates.
SECTION 15.8. The Corporate General Partner is hereby expressly
authorized, in the name of and on behalf of the Partnership, to pay or
cause to be paid to JMB Realty Corporation ("JMB") (the parent company of
the Corporate General Partner) or its Affiliates (including the Associate
General Partner), or to purchase Properties in connection with the purchase
of which JMB or its Affiliates shall receive from the sellers thereof,
Acquisition Fees in the aggregate amount, for services and advice in
connection with the identification, evaluation, investigation, negotiation,
selection and purchase of all Partnership Properties, equal to 14-7/8% of
the Gross Proceeds of the Offering; provided, however, that, in no event
shall the total of all Acquisition Fees paid to anyone in connection with
the identification, evaluation, investigation, negotiation, selection and
purchase of all Partnership Properties exceed 18% of the Gross Proceeds of
the Offering (which 18% limitation contained in this proviso shall be
computed on that portion of the Gross Proceeds of the Offering, including a
proportionate share of uninvested reserves and a proportionate share of
Front-End Fees incurred in connection with the offering applicable to the
Property which is the subject of
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the transaction and to the Properties previously acquired by, or contracted
for by, the Partnership); and provided further, however, that in no event
shall the total of all Acquisition Fees paid to anyone exceed the
compensation customarily charged by others rendering similar services as an
on-going public activity in connection with comparable evaluation,
investigation, negotiation, selection and purchase of comparable property.
In addition, the Partnership will pay to JMB or its affiliates a Loan
Guarantee Fee for the guarantee of the Partnership's nonrecourse short-term
borrowings or other obligations on which no other person is personally
liable. The Loan Guarantee Fee shall be equal to 2% per annum of the
outstanding balance of the Partnership's nonrecourse short-term borrowings.
The Loan Guarantee Fee constitutes a portion of the Acquisition Fees, as
defined in this Agreement, and is subject to the overall limitations on
Acquisition Fees described in this Section 15.8 so that the Acquisition
Fees payable to JMB or its Affiliates on account of the identification,
evaluation, investigation, negotiation, selection and purchase of
Partnership Properties plus the Loan Guarantee Fee shall in no event exceed
the limitations on Acquisition Fees included in the first and second
provisos to the first sentence of this Section 15.8. In addition, the
Corporate General Partner shall commit a percentage of Gross Proceeds of
the Offering to Investment in Properties which, at a minimum, is equal to
the greater of: (i) 80% of the Gross Proceeds of the Offering reduced by
..1625% for each 1% of the aggregate indebtedness secured or to be secured
by all liens and mortgages encumbering Partnership Properties; or (ii) 67%
of Gross Proceeds of the Offering. For purposes of this calculation,
"aggregate indebtedness secured or to be secured by all liens and mortgages
encumbering Partnership Properties" is the percentage resulting when such
aggregate indebtedness is divided by the aggregate of the purchase price of
all Partnership Properties, excluding Front-End Fees. If the aggregate
Acquisition Fees payable in connection with the purchase of real properties
by the Partnership should exceed either of the above-described amounts, or
if Front-End Fees must be reduced for the Partnership to commit the minimum
percentage of Gross Proceeds of the Offering to Investment in Properties as
set forth above, the General Partners shall cause JMB to reimburse the
Partnership for the amount of any such excess Acquisition Fees received by
it. Such Acquisition Fees paid to JMB or its Affiliates hereunder shall
compensate JMB or its Affiliates for the identification, evaluation,
investigation, negotiation and selection of potential investments in
properties, including those which are ultimately not acquired by the
Partnership.
SECTION 15.9. The amount distributable to the General Partners under
Section 9.3(iii) in connection with sale of a Partnership Property shall in
no event exceed 50% of the amount customarily charged in connection with
sales of properties in arm's-length transactions by non-affiliates of JMB
rendering real estate brokerage services as an on-going public activity in
the same geographical location and for comparable property; provided,
however, that the amount distributable to the General Partners under
Section 9.3(iii) plus the real estate commission paid to anyone in
connection with the sale of a Partnership Property shall in no event exceed
the lesser of (i) 6% of the gross purchase price of the Property paid to
the Partnership by the purchaser, or (ii) the amount customarily charged in
connection with sales of properties in arm's-length transactions by
non-affiliates of JMB rendering real estate brokerage services as an
on-going public activity in the same geographical location and for
comparable property. No commission shall be paid to JMB or an Affiliate of
JMB in connection with the purchase of a Property purchased with Sale or
Refinancing Proceeds (provided, however, that JMB or an Affiliate of JMB
may receive such commission in connection with the purchase of a property
which is in substitution for a property transferred back to a seller as
described in the definition of "Sale or Refinancing Proceeds", provided
that no commission was paid and retained in connection with the purchase of
the Property so transferred back). Notwithstanding all other provisions of
this Section 15.9, no Affiliate of the General Partners shall be given the
exclusive right to sell or exclusive employment to sell any property of the
Partnership and no amounts shall be distributable to the General Partners
under Section 9.3(iii) unless the General Partner or Affiliates of the
General Partner perform services in connection with the sale of a property.
SECTION 15.10. Affiliates of the General Partners may be employed by
or retained by the Partnership to provide property management and leasing
services for the Partnership (it being understood and agreed that the
provision of such services does not constitute a part of the duties or
obligations of the General
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Partners as general partners of the Partnership); provided, that the
Corporate General Partner shall not enter into any agreement for property
management with an Affiliate on terms less favorable to the Partnership
than those customarily charged for similar services in the relevant
geographical area and in no event shall fees to an Affiliate of the General
Partners for property management and leasing services exceed the following
schedule:
(i) in the case of residential property, the maximum fee
(including all rent-up, leasing, and releasing fees and bonuses, and
leasing related services, except for locator services performed by
non-affiliated parties) shall be 5% of the gross receipts from the property
being managed;
(ii) in the case of industrial or commercial property, except
as set forth in (iii) below, the maximum fee from such property shall be 6%
of the gross receipts from the property being managed where the Affiliate
of the General Partners performs leasing, re-leasing and leasing related
services, and the maximum fee shall be 3% of gross receipts from the
property being managed if the Affiliate of the General Partners does not
perform leasing, re-leasing and leasing related services with respect to
the property;
(iii) in the case of industrial or commercial properties which
are leased for ten or more years on a net (or similar) basis, the maximum
fee shall be 1% of the gross receipts from the property being managed,
except for a one time initial leasing fee of 3% of the gross receipts on
each lease payable over the first five full years of the original term of
the lease. In addition, any property management agreements with Affiliates
shall be terminable by either party, without penalty, upon 60 days' prior
written notice.
SECTION 15.11. The Corporate General Partner may enter into
agreements with Affiliates of the General Partners to provide insurance
brokerage services to the Partnership; provided that (i) before any such
brokerage services are provided, there shall have been obtained quotes from
three independent insurance brokers relating to the proposed coverage,
which quotes shall be upon coverage and terms comparable to those proposed
to be provided by such Affiliate and such Affiliate shall not provide such
insurance brokerage services unless it can obtain such insurance at a cost
which is no greater than the lowest of the three unaffiliated insurance
broker quotes, (ii) at any time JMB Insurance Agency, Inc. ceases to derive
at least 75% of its gross income from insurance commissions with respect to
insurance written for persons who are not Affiliates of any of the General
Partners, JMB Insurance Agency, Inc. shall not write any further insurance
on behalf of the Partnership or any property then owned by it and (iii) any
agreement with Affiliates to provide insurance brokerage services to the
Partnership shall be terminable by either party, without penalty, upon 60
days' prior written notice.
SECTION 15.12. The validity of any transaction, agreement or payment
involving the Partnership and the General Partners or any Affiliate thereof
otherwise permitted by the terms of this Agreement shall not be affected by
reason of the relationship between the Partnership or the General Partners
and such Affiliate or the approval of said transaction, agreement or
payment by directors of the Corporate General Partner or by partners of the
Associate General Partner, all or some of whom are officers or directors of
or are otherwise interested in or related to such Affiliate. All
transactions, agreements or payments involving the Partnership and the
General Partners or any Affiliate thereof shall be on terms no less
favorable to the Partnership than those available to the Partnership in
similar dealings with unaffiliated third parties, and all agreements and
transactions shall, to the extent not earned or performed, be terminable,
without penalty, on 60 days' prior written notice by the Partnership.
SECTION 15.13. The General Partners or any Affiliate thereof shall
not directly or indirectly pay or award any finder's fee, commission or
other compensation to any person engaged by a potential investor for
investment advice as an inducement to such advisor to advise the purchase
of Interests; provided, however, that this provision shall not prohibit the
normal selling commission payable to a registered broker-dealer or other
properly licensed person (including Affiliates of the General Partners) for
selling Interests. The Corporate General Partner shall not receive, in
connection with the performance of any services by any
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Affiliate thereof, any rebates or give-ups, nor may the Corporate General
Partner participate in any reciprocal business arrangements which would
have the effect of circumventing restrictions set forth herein upon
dealings with its Affiliates. Nothing contained in this Agreement shall be
deemed to prohibit the Corporate General Partner or any Affiliate of the
General Partners from dealing, or otherwise engaging in business with,
persons (other than Affiliates of the General Partners) transacting
business with the Partnership or from providing services relating to the
purchase, sale, ownership, management, development or operation of real
property and receiving compensation therefor, not involving any direct or
indirect payment by the Partnership or any rebate or reciprocal arrangement
as described in the foregoing sentences, from any person who has provided
or may in the future provide any services to, sell property to, or purchase
property from, the Partnership.
SECTION 15.14. The Corporate General Partner shall have a fiduciary
responsibility for the safekeeping and use of all funds and assets of the
Partnership, whether or not in its immediate possession or control, and the
Corporate General Partner shall not employ or permit another to employ such
funds or assets in any manner except for the exclusive benefit of the
Partnership.
SECTION 15.15. Neither the General Partners nor any officer or
director of the Corporate General Partner nor any partner of the Associate
General Partner shall be liable, responsible or accountable in damages or
otherwise to the Partnership or any Holder for any action taken or failure
to act on behalf of the Partnership within the scope of the authority
conferred on the General Partners by this Agreement or by law unless such
action or omission was performed or omitted fraudulently or in bad faith or
constituted misconduct or negligence (gross or ordinary).
SECTION 15.16. The Partnership shall indemnify and hold harmless each
General Partner and each partner of the Associate General Partner (herein
the "Indemnified Parties") from and against any loss, expense, damage or
injury suffered or sustained by him by reason of any acts, omissions or
alleged acts or omissions arising out of his activities on behalf of the
Partnership or in furtherance of the interests of the Partnership,
including, but not limited to, any judgment, award, settlement, reasonable
attorney's fees and other costs or expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim and
including any payments made by the Corporate General Partner to any of its
officers or directors pursuant to an indemnification agreement no broader
than this Section 15.16; provided that the acts, omissions or alleged acts
or omissions upon which such actual or threatened action, proceeding or
claims are based were in good faith and were not performed or omitted
fraudulently or in bad faith or as a result of misconduct or negligence
(gross or ordinary) by such Indemnified Party. Such indemnification shall
be made only to the extent of assets of the Partnership.
SECTION 15.17. The Corporate General Partner may, in its sole
discretion, make or revoke the election referred to in Section 754 of the
Internal Revenue Code of 1954 or any similar provision enacted in lieu
thereof. Each of the Partners will, upon request, supply the information
necessary to properly give effect to such election.
SECTION 15.18. The General Partners shall not, on behalf of the
Partnership, acquire any property in exchange for Interests in the
Partnership.
SECTION 15.19. The Corporate General Partner shall initially, upon
completion of the offering contemplated by the Prospectus, establish
reserves for working capital and to pay taxes, insurance, debt service,
repairs, replacements or renewals, or other costs and expenses incident to
the ownership or operation of the Partnership's properties and for such
other purposes as the Corporate General Partner may determine, in an amount
equal to not less than 3% of the Gross Proceeds of the Offering and
thereafter shall maintain such reserves in such amounts as the Corporate
General Partner deems appropriate under the circumstances from time to
time.
SECTION 15.20. The Corporate General Partner, in its capacity as a
general partner in any partnership or joint venture which may hold title to
any Property, shall not do, or cause any of its subsidiaries acting in
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such capacity to do, any act which would not be permitted under this
Agreement to be done by it as the Corporate General Partner, if title to
such Property were held directly by the Partnership and shall, in general,
act, and cause any such subsidiary to act, in such capacity in the same
manner as if title to such property were held directly by the Partnership.
SECTION 15.21. The Corporate General Partner may, in its sole
discretion, at any time after the Partnership has received subscriptions
for the purchase of at least 2,500 Additional Limited Partnership
Interests, obtain financing to pay the selling commissions, initially
payable to JMB Securities Corporation, in connection with the solicitation
of the subscriptions received by the Partnership to the date of such
payment.
SECTION 15.22. The Corporate General Partner may at any time, on
behalf of the Partnership, borrow money and otherwise enter into banking
transactions in the ordinary course of business with Continental Illinois
National Bank and Trust Company of Chicago or acquire properties subject to
indebtedness owed to such Bank.
ARTICLE XVI
TRANSFER OF PARTNERSHIP INTERESTS
SECTION 16.1. The Partnership shall recognize as an Assignee Holder
of Additional Limited Partnership Interests each Person to whom the Initial
Limited Partner assigns Additional Limited Partnership Interests which are
purchased in the public offering pursuant to Section 8.3 as of such dates
from time to time during the offering period as the Corporate General
Partner shall determine, provided that (a) the Partnership has received the
capital set forth on Schedule A with respect to such Additional Limited
Partnership Interests and (b) the Initial Limited Partner has executed an
assignment in form and substance satisfactory to the Corporate General
Partner, setting forth the names and addresses of the Assignee Holders to
whom such Interests are being assigned.
SECTION 16.2. Subsequent to the public offering pursuant to Section
8.3, a Holder of Interests may assign the whole or any part of his interest
in the Partnership (but only in whole Limited Partnership Interests or in
whole and partial Limited Partnership Interests if simultaneously assigning
the whole of his interest in the Partnership), and such assignment shall
confer upon the assignee the right to become a Substituted Limited Partner
in the following manner and subject to the following conditions:
(i) An instrument of assignment executed by both the assignor
and the assignee of the Limited Partnership Interests satisfactory in form
to the Corporate General Partner shall be delivered to the Corporate
General Partner.
(ii) The instrument of assignment shall be accompanied by a
transfer fee not in excess of $100 which shall be paid to the Partnership
to cover all reasonable fees and filing costs in connection with such
transfer.
(iii) No assignment shall be effective until the first day of
the calendar quarter following the calendar quarter in which the Corporate
General Partner actually receives the instrument of assignment which
complies with the requirements of subparagraph (i) above.
(iv) No assignment (other than by gift, bequest, inheritance
or operation of law) shall be effective prior to termination of the
offering of Additional Limited Partnership interests to the public as
contemplated by Section 8.3.
(v) No assignment shall be effective if such assignment
would, in the opinion of counsel for the Corporate General Partner, result
in the termination of the Partnership for purposes of the then applicable
provisions of the Internal Revenue Code of 1954.
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(vi) No assignment shall be effective if the assignment would,
to the knowledge of the Corporate General Partner, violate the provisions
of any applicable state securities law.
(vii) No assignment to a minor or incompetent shall be
effective in any respect.
(viii) The right of an assignee to become a Substituted Limited
Partner shall be subject to the written Consent of the Corporate General
Partner, which Consent may be granted or denied in the sole and absolute
discretion of the Corporate General Partner and prior to the giving of
which Consent, such substitution shall not be effective. The written
Consent or a notice of denial of Consent shall be given to the assignee not
later than the last day of the calendar month following the month the
Corporate General Partner actually receives the instrument of assignment
which complies with the requirements of subparagraph (i) above.
There shall be no other restrictions on the assignment of Limited
Partnership Interests.
SECTION 16.3. Upon effectiveness of an assignment of Limited
Partnership Interests under Section 16.2, the Corporate General Partner
shall, subject to Section 16.2, execute, file and record with the
appropriate governmental agencies such documents (including amendments to
this Agreement) as are required to accomplish the substitution of the
assignee thereof as a Substituted Limited Partner. In no event shall the
Consent of any Limited Partner (other than the assignor) be required to
effect such substitution. The Partnership shall treat such person entitled
to become a Substituted Limited Partner (pursuant to the provisions of
Section 16.2 and Section 21.4) as the Substituted Limited Partner with
respect to the Limited Partnership Interests assigned from the date such
assignment is effective under Section 16.2, notwithstanding the time
consumed in preparing and filing the necessary documents with governmental
agencies necessary to effectuate the substitution. Assignee Holders (and
any assignees with respect to any Limited Partnership Interests of such
Assignee Holders) who effect such a transfer and become Substitute Limited
Partners will not be permitted subsequently to reassign their Limited
Partnership Interests to the Initial Limited Partner and once more become
Assignee Holders. Any assignee of an Interest shall, for the purposes of
Section 9.2, 9.3 and 10.4, be recognized as a Holder of Interests as of the
first day of the fiscal quarter next succeeding the fiscal quarter in which
the Corporate General Partner actually receives the instrument of
assignment that complies with the requirements of subparagraph (i) of
Section 16.2.
SECTION 16.4. With the Consent of all the other General Partners and
of such number of the Limited Partners as are then required under the
Uniform Limited Partnership Act of the State of Illinois and under the laws
of such other jurisdictions in which the Partnership is formed or
qualified, to Consent to or ratify the admission of a General Partner, but
in no event with the consent of the Holders of less than a majority of the
Limited Partnership Interests, any General Partner may at any time
designate one or more persons to be successors to such General Partner or
to be additional General Partners, in each case with such participation in
such General Partner's Interest as such General Partner and such successors
or additional General Partners may agree upon, provided that the Limited
Partnership Interests shall not be affected thereby. In the event of the
addition or substitution of a General Partner in accordance with the
provisions of this Section 16.4, the Corporate General Partner shall
execute, file and record with the appropriate governmental agencies such
documents (including amendments to this Agreement) as are required to
reflect the substitution or admission of such substituted or additional
General Partner.
SECTION 16.5. Any person who acquires Interests or is admitted to
the Partnership as a Substituted Limited Partner or as a successor or
additional General Partner shall be subject to and bound by all the
provisions of this Agreement as if originally a party to this Agreement.
Any person who becomes an Assignee Holder of any Interest shall be deemed,
by virtue of such acquisition, to have adopted and to have agreed to be
bound by all of the provisions of this Agreement, as amended from time to
time in accordance with its terms.
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ARTICLE XVII
DISSOLUTION OF THE PARTNERSHIP
SECTION 17.1. The dissolution, bankruptcy or withdrawal from the
Partnership of a General Partner shall dissolve the Partnership unless
within 60 days thereafter the remaining General Partner shall elect to
continue the Partnership business. In the event of such election, the
Partnership shall not be dissolved, but shall continue with the remaining
General Partner as a General Partner; and in the event the sole remaining
General Partner shall be the Associate General Partner, all rights, power
and authority vested by this Agreement in the Corporate General Partner
shall be vested in the Associate General Partner. In the event no such
election is made, the Partnership shall be dissolved and terminated in
accordance with Article XVIII hereof. In the event of the bankruptcy,
dissolution or withdrawal of either of the General Partners during the
first 10 years of the Partnership or during such time as the Partnership
retains its original properties, whichever is shorter, the remaining
General Partner will elect to continue the Partnership for such period. In
the event of the bankruptcy, dissolution or withdrawal of a General Partner
at any time during the life of the Partnership, the remaining General
Partner shall promptly give the Limited Partners notice of the occurrence
of an event constituting such bankruptcy, dissolution or withdrawal. The
sole remaining General Partner shall give the Limited Partners 60 days'
prior written notice of its intent to voluntarily withdraw as a General
Partner of the Partnership. The Corporate General Partner hereby agrees not
to withdraw as a General Partner of the Partnership during the period of 10
years following commencement of the public offering of Additional Limited
Partnership Interests in the Partnership unless, prior to such withdrawal,
the Limited Partners have exercised their right pursuant to Section 17.5
(and subject to the conditions set forth therein) to elect a new General
Partner.
SECTION 17.2. The happening of any one of the following events shall
work an immediate dissolution of the Partnership:
(i) the bankruptcy, dissolution or withdrawal of the last
remaining General Partner;
(ii) the sale of all the real estate assets (which shall
include purchase money security interests) of the Partnership;
(iii) the agreement in writing by Limited Partners holding a
majority of all the then outstanding Limited Partnership Interests to
dissolve the Partnership (subject to Section 17.5); or
(iv) the termination of the term of the Partnership pursuant
to Article VI of this Agreement.
SECTION 17.3. For purposes of this Agreement, the "bankruptcy" of a
General Partner shall be deemed to have occurred upon the expiration of 60
days following the happening of any of the following: (i) the filing of an
application by such General Partner for, or a consent to, the appointment
of a trustee of his assets, (ii) the filing by such General Partner of a
voluntary petition in bankruptcy or the filing of a pleading in any court
of record admitting in writing his inability to pay his debts as they come
due, (iii) the making by such General Partner of a general assignment for
the benefit of creditors, (iv) the filing by such General Partner of an
answer admitting the material allegations of, or his consenting to, or
defaulting in answering, a bankruptcy petition filed against him in any
bankruptcy proceeding or (v) the entry of an order, judgment or decree by
any court of competent jurisdiction adjudicating such General Partner a
bankrupt or appointing a trustee of his assets.
SECTION 17.4. For purposes of this Agreement, the dissolution of a
General Partner shall not include a dissolution of Realty Associates-XIV by
reason of the death, bankruptcy, adjudication of incompetency or withdrawal
(whether voluntary or involuntary) of one or more of the general partners
thereof so long as the remaining general partner or partners of Realty
Associates-XIV elect to continue the business of such partnership.
SECTION 17.5. Upon the written consent or affirmative vote of
Limited Partners holding a majority of the then outstanding Limited
Partnership Interests, any General Partner may be removed; provided,
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however, that this Section 17.5 shall not become effective prior to the
termination of the offering of Additional Limited Partnership Interests
pursuant to Section 8.3. Any General Partner so removed shall, for the
purpose of this Agreement, be deemed to have "withdrawn" from the
Partnership. Unless the General Partner so removed was the last remaining
General Partner, a new General Partner may be elected within 60 days
following the effective date of such removal by the written consent or
affirmative vote of Limited Partners holding a majority of the then
outstanding Limited Partnership Interests. If, at any time during the
existence of the Partnership, there is only one General Partner, Limited
Partners holding a majority of the then outstanding Limited Partnership
Interests may elect an additional General Partner. The removal of a General
Partner shall in no way derogate from any rights of such General Partner
attributable to the period prior to the date of such removal.
Notwithstanding the foregoing and any other provisions of this Agreement,
the rights of the Limited Partners to remove a General Partner and to elect
a new General Partner and the rights of the Limited Partners to dissolve
the Partnership under Section 17.2, to amend the Partnership Agreement
under Section 21.1 and to approve the sale of all or substantially all of
the Partnership's assets under Section 15.3 shall not be exercised in any
manner unless and until (i) the Partnership has received an opinion of
counsel satisfactory to the holders of a majority of the outstanding
Limited Partnership Interests as to the legality of such action, and (ii)
either (A) the Partnership has received an opinion of counsel satisfactory
to the holders of a majority of the outstanding Limited Partnership
Interests that such action may be effected without adversely affecting the
status of the Limited Partners as limited partners of the Partnership, or
(B) a state court having original jurisdiction in the premises has entered
a judgment which has become final to the foregoing effect as to the laws of
the State of Illinois and an opinion of counsel as provided in subsection
(ii)(A) has been obtained as to the laws of such jurisdictions, other than
the State of Illinois, in which the Partnership is formed, reformed,
reorganized or otherwise qualified. For purposes of this Section 17.5,
counsel will be deemed satisfactory to the Limited Partners if proposed by
the Corporate General Partner and affirmatively approved within 45 days by
Holders of a majority of the outstanding Limited Partnership Interests;
provided, that if the holders of 10% or more of the outstanding Limited
Partnership Interests propose counsel for this purpose, such proposed
counsel, and not counsel proposed by the General Partners, shall be
submitted for approval by the Limited Partners and will be deemed approved
by the Limited Partners unless objected to in writing by the Holders of a
majority of the then outstanding Limited Partnership Interests within 45
days.
SECTION 17.6. In the event of the removal of any General Partner
under Section 17.5, or the bankruptcy, dissolution, or withdrawal of a
General Partner under Section 17.1, and the continuation of the Partnership
pursuant to the applicable provisions hereof, its interest (including the
value of all of its interest in Net Cash Receipts, Sale or Refinancing
Proceeds and all net profits or losses for tax purposes) as such General
Partner shall be purchased by the Partnership from such General Partner for
a purchase price equal to the fair market value of such interest. Such
value shall first be determined by agreement between such General Partner
and the Partnership (acting only after approval by the Holders of a
majority of the then outstanding Limited Partnership Interests). Such
General Partner and the Partnership shall initially agree on such fair
market value and submit it to the Limited Partners. The Partnership's
agreement on the fair market value of the interest of such General Partner
in the Partnership shall become effective only after the affirmative vote
of the Holders of a majority of the then outstanding Limited Partnership
Interests. If the General Partner and the Partnership cannot agree upon the
fair market value of such interest within 60 days after the occurrence of
the event upon which the interest of such General Partner is to be
purchased by the Partnership, the fair market value thereof shall be
determined by appraisals by two independent appraisers, one selected by the
person who ceases to be a General Partner under Section 17.5 or 17.1 and
one by the Limited Partners. In the event that such two appraisers are
unable to agree on the value of the interest of the person who ceases to be
a General Partner under Section 17.5 or 17.1, they shall jointly appoint a
third independent appraiser whose determination shall be final and binding.
The Partnership shall pay the person ceasing to be a General Partner for
the value of its interest in the Partnership as so determined by delivery
of a promissory note payable to such General Partner or its order in a face
amount equal to such fair market value (either as agreed or as determined
by appraisal) containing acceleration and other similar provisions as would
be usual and customary in a commercial promissory note, and bearing simple
interest at a rate per
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annum equal to the lesser of the prime commercial lending rate from time to
time announced by Continental Illinois National Bank and Trust Company of
Chicago plus two percent (2%) per annum, or ten percent (10%) per annum
with all principal and accrued interest subject to mandatory payment from
time to time from all Sale or Refinancing Proceeds realized by the
Partnership. Payment in full of all principal and interest on the
promissory note received by such General Partner pursuant to this Section
17.6 shall constitute complete and full discharge for all amounts owing to
such General Partner on account of its interest in the Partnership. For
purposes of this Section 17.6, the independent appraiser selected by the
Limited Partners shall be selected in the following manner: A list of three
qualified MAI (Member of Appraisal Institute) appraisers shall be obtained
(by a General Partner not being removed) from the Chicago Chapter of the
American Institute of Real Estate Appraisers and one of said three
appraisers shall be selected by random number and proposed by such General
Partner for selection by the Limited Partners. Such appraiser shall be
deemed selected by the Limited Partners unless objected to in writing by
the Holders of a majority of the then outstanding Limited Partnership
Interests within 45 days after notification thereof is sent by such General
Partner.
SECTION 17.7. In the event that a replacement General Partner is
elected by the Limited Partners under Section 17.5, such replacement or
successor General Partner (the "Acquiring Partner") shall purchase from the
Partnership, within 60 days of the date on which it becomes a General
Partner, the interest in the Partnership which the Partnership purchased
from the person ceasing to be a General Partner as provided in Section 17.6
above. For such interest, the Acquiring Partner shall pay the amount
determined pursuant to Section 17.6 to be the fair market value of such
interest. Payment shall be made by a promissory note bearing simple
interest at a rate per annum equal to the lesser of the prime rate from
time to time announced by Continental Illinois National Bank and Trust
Company of Chicago plus two percent (2%) per annum or ten percent (10%) per
annum on the unpaid principal amount of the promissory note and shall be
secured by assignment by the Acquiring Partner to the Partnership of all
its future distributions of Net Cash Receipts or Sale or Refinancing
Proceeds from the Partnership to the Acquiring Partner. The principal
amount of such promissory note, together with accrued interest, shall be
payable only at such times and only in such amounts as are equal to
seventy-five percent (75%) of such distributions until such time as the
principal amount together with accrued interest is paid in full.
ARTICLE XVIII
ADDITIONAL PROVISIONS CONCERNING
DISSOLUTION OF THE PARTNERSHIP
SECTION 18.1. In the event of the dissolution of the Partnership for
any reason, the Corporate General Partner shall commence to wind up the
affairs of the Partnership and to liquidate its investments. The Limited
Partners shall continue to share profits and losses during the period of
liquidation in the same proportion as before the dissolution. The Corporate
General Partner shall have full right and unlimited discretion to determine
the time, manner and terms of any sale or sales of Partnership property
pursuant to such liquidation having due regard to the activity and
condition of the relevant market and general financial and economic
conditions.
SECTION 18.2. Following the payment of all debts and liabilities of
the Partnership and all expenses of liquidation and subject to the right of
the Corporate General Partner to set up such cash reserves as it may deem
reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Partnership, the proceeds of the liquidation and any
other funds of the Partnership shall be distributed (as Net Cash Receipts
or Sale or Financing Proceeds as the case may be) in accordance with
Article IX hereof.
SECTION 18.3. Within a reasonable time following the completion of
the liquidation of the Partnership's Properties, the Corporate General
Partner shall supply to each of the Partners a statement audited by the
Partnership's independent accountants which shall set forth the assets and
the liabilities of the Partnership as of the date of complete liquidation,
each Holder's pro rata portion of distributions pursuant to Section 18.2
and the amount distributed to the General Partners pursuant to Section
18.2.
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SECTION 18.4. Each Limited Partner shall look solely to the assets
of the Partnership for all distributions with respect to the Partnership
and his capital contribution thereto and share of profits or losses thereof
and shall have no recourse therefor (upon dissolution or otherwise) against
any General Partner or any Limited Partner; provided, however, that upon
dissolution and termination of the Partnership, the General Partners will
contribute to the Partnership in the proportion set forth below an
aggregate amount equal to (and except as provided in Section 10.2 shall not
be obligated to contribute more than) the amount which is determined to be
the smaller of (i) the deficit balance in their Capital Accounts at such
termination or (ii) the excess of 1.01% of the capital contributions made
by the Limited Partners over the aggregate capital contributions made by
the General Partners as provided in Schedule A, Section 9.3 and otherwise
under this Agreement. Such capital contribution under (i) or (ii) above is
to be made 80% by the Corporate General Partner and 20% by the Associate
General Partner. No Limited Partner shall have any right to demand or
receive property, other than cash upon dissolution and termination of the
Partnership.
SECTION 18.5. Upon the completion of the liquidation of the
Partnership and the distribution of all Partnership funds, the Partnership
shall terminate and the Corporate General Partner shall have the authority
to execute and record a Certificate of Cancellation of the Partnership as
well as any and all other documents required to effectuate the dissolution
and termination of the Partnership.
ARTICLE XIX
POWER OF ATTORNEY
SECTION 19.1. The Limited Partners, including each Substituted
Limited Partner, by their execution hereof, jointly and severally hereby
irrevocably constitute and appoint the Corporate General Partner, with full
power of substitution, their true and lawful attorney-in-fact, in their
name, place and stead to make, execute, sign, acknowledge, swear to, record
and file, on behalf of them and on behalf of the Partnership, the
following:
(i) a Certificate of Limited Partnership, a Certificate of
Doing Business Under an Assumed Name, and any other certificates or
instruments which may be required to be filed by the Partnership or the
Partners under the laws of the State of Illinois and any other jurisdiction
whose laws may be applicable;
(ii) a Certificate of Cancellation of the Partnership and such
other instruments or documents as may be deemed necessary or desirable by
the Corporate General Partner upon the termination of the Partnership
business;
(iii) any and all amendments of the instruments described in
subsections 19.1(i) and 19.1(ii) above, provided such amendments are either
required by law to be filed, or are consistent with this Agreement
(including, without limitation, any amendments admitting or substituting
assignees of Limited Partnership Interests as Limited Partners or admitting
or substituting an additional or successor General Partner) or have been
authorized by the particular Limited Partner or Partners; and
(iv) any and all such other instruments as may be deemed
necessary or desirable by the Corporate General Partner to carry out fully
the provisions of this Agreement in accordance with its terms.
SECTION 19.2. The foregoing grant of authority:
(i) is a Special Power of Attorney coupled with an interest,
is irrevocable and shall survive the death or incapacity of the Limited
Partner granting the power;
(ii) may be exercised by the Corporate General Partner on
behalf of each Limited Partner by a facsimile signature or by listing all
-of the Limited Partners executing any instrument with a single signature
as attorney-in-fact for all of them; and
(iii) shall survive the delivery of an assignment by a Limited
Partner of the whole or any portion of his Limited Partnership Interest.
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ARTICLE XX
NOTICES
All notices and demands required or permitted under this Agreement
shall be in writing and may (except in the event of a mail strike) be sent
by mail, postage prepaid, to the Partners at their addresses as shown from
time to time on the records of the Partnership. Any Partner may specify a
different address by notifying the Corporate General Partner in writing of
such different address.
ARTICLE XXI
AMENDMENT OF LIMITED PARTNERSHIP AGREEMENT;
MEETINGS OF LIMITED PARTNERS
SECTION 21.1. Except as otherwise required by law and subject to
Section 17.5, this Agreement may be amended in any respect after the
termination of the offering of Additional Limited Partnership Interests
pursuant to Section 8.3 upon the affirmative vote of Limited Partners
holding a majority of the then outstanding Limited Partnership Interests;
provided, however, that without the consent of the Partners to be adversely
affected by the amendment, this Agreement may not be amended so as to (i)
convert a Limited Partner into a General Partner; (ii) modify the limited
liability of a Limited Partner; or (iii) alter the interest of a General or
Limited Partner in profits or losses or in cash distributions of the
Partnership. If Limited Partners holding 10% or more of the then
outstanding Limited Partnership Interests request in writing that the
Corporate General Partner submit to a vote of the Limited Partners a
particular proposed amendment to this Agreement, the Corporate General
Partner shall do so. Any vote of the Limited Partners may be accomplished
at a meeting of Limited Partners called for such purpose by the Corporate
General Partner upon not less than 10 days' prior notice or, in lieu of a
meeting, by the written Consent of the Limited Partners holding the
required number of the then outstanding Limited Partnership Interests.
SECTION 21.2. In addition to any amendments otherwise authorized
herein, this Agreement may be amended from time to time by the Corporate
General Partner without the consent of any of the Limited Partners (i) to
add to the representations, duties or obligations of the General Partners
or surrender any right or power granted to the General Partners herein, for
the benefit of the Limited Partners; (ii) 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; and (iii) 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 other Federal agency or by a
State "Blue Sky" commissioner or similar such official, which addition or
deletion is deemed by such Commission, agency or official to be for the
benefit or protection of the Limited Partners; provided, however, that no
amendment shall be adopted pursuant to this Section 21.2 unless the
adoption thereof (1) is for the benefit of or not adverse to the interests
of the Limited Partners; (2) is consistent with Article XV hereof; (3) does
not alter the interest of a General or Limited Partner in profits or losses
or in cash distributions of the Partnership; and (4) does not, in the
opinion of counsel for the Partnership, by its terms alter the limited
liability of the Limited Partners or the status of the Partnership as a
partnership for Federal income tax purposes. In addition to any amendments
otherwise authorized herein, the Corporate General Partner, without the
consent of any of the Limited Partners, may amend the provisions of Article
X hereof relating to the allocations of profits or losses among the
Partners if the Partnership is advised at any time by the Partnership's
accountants or legal counsel that in their opinion there is no reasonable
basis on which such allocations would be respected for Federal income tax
purposes, due to promulgation of Treasury Regulations or other developments
in the law; provided, however, that the Corporate General Partner is
empowered to amend such provisions only to the extent necessary to give
such provisions a reasonable basis on which such allocations would be
respected after such developments in the law in accordance with the advice
of such accountants or legal counsel, so that any such amendment will have
the least possible effect on the provisions for allocations set forth in
this Agreement. Any such amendment to the allocations made by the Corporate
General Partner in reliance upon the advice of the
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accountants or legal counsel described above shall be deemed to be made in
compliance with the fiduciary obligation of the Corporate General Partner
to the Partnership and the Limited Partners, and no such amendment to the
allocations shall give rise to any claim or cause of action by any Limited
Partner.
SECTION 21.3. In the event this Agreement shall be amended pursuant
to this Article XXI, the Corporate General Partner shall amend the
Certificate of Limited Partnership to reflect such change if it deems such
amendment of the Certificate to be necessary.
SECTION 21.4. In addition to the amendments otherwise authorized
herein, amendments may be made to this Agreement from time to time by the
General Partners, without the consent of the Limited Partners, to
substitute an Assignee Holder or other assignee as a Limited Partner with
respect to a Limited Partnership Interest; provided that such amendment to
this Agreement shall be signed by the Corporate General Partner, by the
Person to be substituted as a Limited Partner, and, by the assigning
Limited Partner unless the assigning Limited Partner is the Initial Limited
Partner.
SECTION 21.5. Upon the written request of Limited Partners holding
more than 10% of the then outstanding Limited Partnership Interests, the
Corporate General Partner shall call a meeting of the Limited Partners for
any of the matters for which the Limited Partners may vote as set forth in
this Agreement. Notice of such meeting shall be given within 10 days
after, and the meeting shall be held within not less than 15 nor more than
60 days after, receipt of such request.
ARTICLE XXII
MISCELLANEOUS
SECTION 22.1. The Partners agree that the Partnership properties are
not and will not be suitable for partition. Accordingly, each of the
Partners hereby irrevocably waives any and all rights that he may have to
maintain any action for partition of any of the Partnership property.
SECTION 22.2. This Agreement constitutes the entire agreement among
the parties. It supersedes any prior agreement or understandings among
them, and it may not be modified or amended in any manner other than as set
forth herein.
SECTION 22.3. This Agreement and the rights of the parties hereunder
shall be governed by and interpreted in accordance with the laws of the
State of Illinois.
SECTION 22.4. Except as herein otherwise specifically provided, this
Agreement shall be binding upon and inure to the benefit of the parties and
their legal representatives, heirs, administrators, executors, successors
and assigns.
SECTION 22.5. Wherever from the context it appears appropriate, each
term stated in either the singular or the plural shall include the singular
and the plural and pronouns stated in either the masculine, the feminine or
the neuter gender shall include the masculine, feminine and neuter.
SECTION 22.6. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit or extend the scope
or intent of this Agreement or any provision hereof.
SECTION 22.7. If any provision of this Agreement or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement or the application of such provision to persons
or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 22.8. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. In addition, this Agreement
may contain more than one counterpart of the signature page, and this
Agreement may be
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executed by the affixing of the signatures of each of the Partners to one
of such counterpart signature pages; all of such counterpart signature
pages shall be read as though one, and they shall have the same force and
effect as though all of the signers had signed a single signature page.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 1st of June, 1984.
GENERAL PARTNERS
CARLYLE-XIV MANAGERS, INC.
By: /S/ XXXX XXXXXXX
------------------------------
Its Vice President
REALTY ASSOCIATES-XIV
By: /S/ XXXX X. XXXXX
------------------------------
Managing General Partner
LIMITED PARTNER
JMB INVESTOR SERVICES CORPORATION
By: /S/ XXXX XXXXXXX
------------------------------
Its Vice President
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