Exhibit 99.1
MASTER AGREEMENT
This MASTER AGREEMENT (this "Agreement") is made and entered
into this 22nd day of May, 1998, by and among OLY FUND II GP
INVESTMENTS, L.P., a Texas limited partnership ("Olympus"), OLY
LENDER STRATUS, L.P., a Texas limited partnership ("Oly Lender"),
OLY/STRATUS EQUITIES, L.P., a Texas limited partnership, ("Oly
Equities"), STRATUS PROPERTIES INC., a Delaware corporation
("Stratus") and STRATUS VENTURES I BORROWER L.L.C. ("Stratus
Ventures").
RECITALS
WHEREAS, Stratus is in the business of land and
commercial real estate development ancillary to its land
development activities.
WHEREAS, Olympus desires to invest up to Fifty Million
and No/100 Dollars ($50,000,000.00) through the formation of a
series of entities with Stratus or affiliates of Stratus to
(i) develop certain properties currently owned by Stratus
(collectively, "Existing Properties") and individually, an
"Existing Property") and (ii) acquire and develop other
properties throughout the United States (collectively, "New
Properties") and individually, a "New Property").
WHEREAS, Olympus as general partner of Oly Equities
desires to invest Ten Million and No/100 Dollars ($10,000,000.00)
in Stratus in the form of a mandatorily redeemable preferred
stock pursuant to a "Securities Purchase Agreement" (herein so
called) to be entered into between Oly Equities and Stratus
contemporaneously herewith, which amount may be used by Stratus
for any corporate purposes it deems appropriate.
WHEREAS, Olympus as general partner of Oly Lender
desires to provide up to Ten Million and No/100 ($10,000,000.00)
in convertible debt financing to Stratus Ventures pursuant to a
"Loan Agreement" (herein so called) to be entered into between
Stratus Ventures and Oly Lender contemporaneously herewith, which
amount may be used by Stratus Ventures to invest with Olympus in
one or more entities that will be formed to acquire and develop
New Properties.
WHEREAS, Stratus desires to grant Olympus a first right
of refusal to invest in certain development opportunities.
NOW THEREFORE, for and in consideration of the premises
and mutual covenants and agreements contained in this Agreement,
the parties hereby agree as follows:
ARTICLE I
PROPERTY DEVELOPMENT
I.1 Equity Commitment. Olympus hereby agrees, for a
period of three (3) years from the date hereof, to co-invest with
Stratus in ventures in an amount up to Fifty Million and No/100
Dollars ($50,000,000.00) of equity capital (in the form of equity
and mezzanine debt, which shall be subordinate to third party
secured financing) (the "Equity Funds") for the development of
(i) certain Existing Properties and (ii) certain New Properties
on the basis described in this Agreement.
(a) Existing Properties. In accordance with and
subject to the Proposal Process set forth in Section 2.1,
for the development of an Existing Property, Olympus and
Stratus agree that the typical venture will provide (i) a
property contribution by Stratus at a contribution value to
be designated by Stratus and agreed to by Olympus, (ii) a
contribution of cash Equity Funds by Olympus and
(iii) unless otherwise mutually agreed, Stratus and Olympus
shall receive identical instruments in exchange for such
contributions, whether in the form of equity or mezzanine
debt. If the value of the Existing Property exceeds
Stratus' equity contribution amount to the venture, then
Stratus shall receive cash from the venture in the amount by
which the Existing Property contribution value exceeds
Stratus' equity contribution.
(b) New Properties. In accordance with and
subject to the Proposal Process set forth in Section 2.1,
for the acquisition and development of a New Property,
Olympus and Stratus agree that the typical venture will
provide (i) a capital contribution by Stratus of cash,
common stock or other securities, like-kind exchanges,
guarantees, or some combination thereof recorded at a value
mutually agreed by Stratus and Olympus, (ii) a capital
contribution by Olympus in cash and (iii) unless otherwise
mutually agreed, Stratus and Olympus shall receive identical
instruments in exchange for such contributions, whether in
the form of equity or mezzanine debt.
I.2 Third Party Investors/Developers. In the event
Olympus and Stratus agree to include a third party investor
and/or developer in any venture, Olympus and Stratus shall
mutually agree upon a reduction in the participation interest of
Olympus and Stratus in order to accommodate such third party;
provided, however, the participation interest offered to Olympus
shall at all times be equal to or greater than the participation
interest of each of the other parties.
ARTICLE II
FIRST RIGHT OF REFUSAL
II.1 Offer. Stratus shall provide Olympus a written
offer (an "Offer") to invest in any real estate acquisition or
development opportunity (the "Development Opportunity") that
becomes available to Stratus and Stratus desires to pursue;
provided, however, Stratus shall not be required to provide
Olympus with an Offer of any Development Opportunity for which
Equity Funds will be provided entirely by Stratus and Olympus
shall not have a right to participate therein. The economic
terms shall be established by the Proposal Process (herein so
called) of this Section 2.1 as follows:
(a) The Initial Proposal. Each Offer shall
include a proposal (the "Initial Proposal") which shall
contain the information described on Schedule 2.1(a)
attached hereto, to the extent reasonably available.
Subject to Section 1.2, Stratus shall at all times in the
Proposal Process offer to Olympus at least a 50%
equity/mezzanine participation. Within fifteen (15) days of
receiving the Offer and the Initial Proposal, Olympus shall
notify Stratus in writing whether or not the Initial
Proposal is acceptable to Olympus. If Olympus fails to
notify Stratus in writing within such fifteen (15) days of
receipt of any Offer and Initial Proposal, Olympus shall be
deemed to have declined such Offer and Initial Proposal and
shall have no further right to participate in such
Development Opportunity.
(b) The Alternative Proposal. If the Initial
Proposal is not acceptable to Olympus, Olympus may reject
the Initial Proposal or, alternatively, within such 15-day
period provided in Section 2.1(a), provide written notice to
Stratus that the Initial Proposal is not acceptable,
together with a bona fide alternative written proposal (the
"Alternative Proposal") which sets forth economic terms of
the Development Opportunity that would be acceptable to
Olympus. Within fifteen (15) days of receipt of the
Alternative Proposal, Stratus shall provide Olympus written
notice whether or not the Alternative Proposal is acceptable
to Stratus. If Stratus fails to provide Olympus such
written notice, Stratus shall be deemed to have declined the
Alternative Proposal.
(c) The Second Alternative Proposal. If Stratus
does not accept the Alternative Proposal, Stratus shall have
the right to proceed with the Development Opportunity if and
only if (i) (A) the Development Opportunity is capitalized
by a third party on materially more favorable terms and
conditions to Stratus than that proposed by Olympus'
Alternative Proposal and (B) the transaction (the "Third
Party Transaction") contemplated by the Development
Opportunity with the third party closes on or before six (6)
months after Olympus receives written notice from Stratus
that Stratus does not accept the Alternative Proposal or
Stratus is deemed to have declined the Alternative Proposal,
or (ii) Stratus elects to provide the Equity Funds required
for the Development Opportunity without third party equity
financing. A Third Party Transaction will be conclusively
presumed to be on materially more favorable terms and
conditions to Stratus than Olympus' Alternative Proposal if
Stratus elects to present to Olympus the terms and
conditions of the proposed Third Party Transaction and
Olympus does not within fifteen (15) days agree to enter
into a transaction regarding the Development Opportunity
upon the same terms and conditions as the third party
proposed; provided, however, Stratus shall not be required
to present any such third party proposal to Olympus. If,
within such 6-month period, Stratus has not closed the Third
Party Transaction and has not closed on the Development
Opportunity for its own account, Stratus and Olympus shall
reconsider the Initial Proposal and the Alternative
Proposal. On or before twenty (20) days after such 6-month
period, Olympus may, but shall not be obligated to, provide
Stratus with a second alternative proposal (the "Second
Alternative Proposal"), which sets forth economic terms of
the Development Opportunity that would be acceptable to
Olympus. Within twenty (20) days of receipt of the Second
Alternative Proposal, Stratus shall provide Olympus written
notice whether or not the Second Alternative Proposal is
acceptable to Stratus. If Stratus fails to provide Olympus
such written notice, Stratus shall be deemed to have
declined the Second Alternative Proposal. If Stratus
provides Olympus such written notice that Stratus does not
accept the Second Alternative Proposal or Stratus is deemed
to have declined the Second Alternative Proposal, Stratus
shall have the right to proceed with the Development
Opportunity if and only if (y) the Development Opportunity
is capitalized by a third party on at least as favorable
terms and conditions to Stratus as the Second Alternative
Proposal or (z) Stratus elects to provide the Equity Funds
required for the Development Opportunity without third party
equity financing.
Notwithstanding anything to the contrary contained in this
Agreement, the obligation of each party to proceed under the
terms of any "Proposal" (herein so defined to mean either the
Initial Proposal, the Alternative Proposal or the Second
Alternative Proposal) shall be contingent upon the right of such
party, for a period of thirty (30) days after receipt of the
written acceptance by either Olympus or Stratus of any Proposal,
to perform such due diligence and title and survey review as such
party deems necessary and which is consistent with ordinary and
customary real estate investment and/or underwriting criteria.
Each party shall use its best efforts and act in good faith to
perform all such due diligence.
II.2 Termination of First Right of Refusal. All of
Stratus' and Olympus' obiligations under this Article 2
including, without limitation, the obligation of Stratus to
provide Olympus any Offer shall terminate upon the earliest of
(i) the investment or commitment by Olympus of the full amount of
the Equity Funds for Development Opportunities, (ii) three (3)
years after the date hereof, (iii) Olympus' failure to
participate in or agree to participate in at least one (1)
Development Opportunity presented by Stratus to Olympus pursuant
to the terms of this Agreement within any consecutive 12-month
period or (iv) the mutual agreement of the parties.
II.3 Olympus' Origination. Olympus will endeavor to,
but shall not be obligated to, source and present new
opportunities to Stratus for acquisition and development
consistent with Stratus' existing business objectives. The
parties acknowledge and agree that each of Olympus and Stratus
and their respective affiliates shall be free to pursue and/or
invest in and/or operate other business opportunities that may or
may not compete with activities of the other party or its
affiliates, subject to the terms and conditions set forth in this
Agreement, including, specifically, without limitation, Stratus'
obligation to offer Olympus a first right of refusal as set forth
in this Article 2.
ARTICLE III
PARTNERSHIP STRUCTURE
III.1 Formation of Partnership. On or before
twenty (20) days after either Olympus or Stratus agrees in
writing to any Proposal delivered to the other pursuant to the
terms of Section 2.1, Olympus and Stratus agree to cause their
respective entities as contemplated by Section 3.2 to execute a
partnership (or, if appropriate to the situation and mutually
agreeable to the parties, other limited liability vehicle)
agreement which sets forth the terms and conditions of the
agreement between the Olympus and Stratus partners with regard to
the Development Opportunity described in such Proposal.
III.2 Entity Agreement. Attached as Exhibit A is
the form of the partnership agreement which shall be used by
Stratus and Olympus to negotiate an agreement regarding a
Proposal. The economic terms of equity participation, promoted
interests, if any, and distributions and other terms of the
partnership agreement and related documents shall reflect the
terms agreed to by both parties pursuant to the Proposal Process.
At the closing of the formation of any partnership, the
partnership shall reimburse each party's all expenses incurred in
connection with the Development Opportunity; provided, however,
that the legal expenses incurred in connection with each party's
negotiation of the partnership agreement shall be the
responsibility of such party and not be reimbursed by the
partnership. In addition, Stratus shall have the right of
reimbursement of Stratus' expenses incurred in pursuing other
Development Opportunities for the purposes hereof and which were
agreed to by Olympus, such agreement being evidenced upon
delivery by Olympus to Stratus of an executive summary of such
Development Opportunity prepared and executed by Olympus, as
provided in the Loan Agreement. The Olympus partner shall be a
special purpose entity that will be formed by Olympus or its
affiliates. The Stratus partner shall be a special purpose
entity that will be formed by Stratus or its affiliates; provided
that with respect to Development Opportunities relating to New
Properties in which Olympus provides proceeds under the Loan
Agreement between Olympus and Stratus Ventures, then the Stratus
partner shall be Stratus Ventures or a wholly-owned subsidiary of
Stratus Ventures. Unless otherwise agreed to in the Proposal
Process, each partner's interest (i.e., Olympus, Stratus and any
third party) shall be based on its respective aggregate cash
capital contribution or deemed capital contribution as a
percentage of the total cash capital contributions and deemed
capital contributions made by all the partners. Unless otherwise
agreed to in the Proposal Process, after payment of any non-
partner obligations, all net cash flow from a project shall be
distributed pro-rata to each partner in the ratio of its
respective ownership percentages.
III.3 Management Agreement. Unless otherwise
agreed, Stratus or its affiliate shall serve as property manager
to the partnership on market terms and conditions as mutually
agreed by Olympus and Stratus. Attached as Exhibit B is the form
of property management agreement to be used by Stratus and
Olympus to negotiate an agreement in connection with a Proposal.
The economic terms of the compensation to the property manager
shall be presented in the Proposal and be mutually agreeable to
the parties based upon the circumstances of the services to be
rendered.
ARTICLE IV
MANDATORILY REDEEMABLE PREFERRED STOCK
AND CONVERTIBLE LOAN
IV.1 Mandatorily Redeemable Preferred Stock .
Simultaneously with the execution of this Agreement, Oly Equities
and Stratus will execute and deliver the Securities Purchase
Agreement in the form of Exhibit C pursuant to which Oly Equities
will purchase from Stratus 1,712,328 shares of a mandatorily
redeemable preferred stock for the aggregate amount of Ten
Million and No/100 Dollars ($10,000,000.00).
IV.2 Loan Agreement. Simultaneously with the execution
of this Agreement, Oly Lender and Stratus Ventures will execute
the Loan Agreement in the form of Exhibit D pursuant to which Oly
Lender agrees to lend to Stratus Ventures up to Ten Million and
No/100 Dollars ($10,000,000.00) to be used in Development
Opportunities relating to New Properties. Stratus Ventures must
draw at least Seven Million Five Hundred Thousand and No/100
Dollars ($7,500,000.00) under the Loan Agreement prior to Stratus
contributing other forms of equity to the ventures, unless
otherwise approved by Oly Lender; provided that nothing herein
shall prohibit Stratus from funding any Development Opportunity.
IV.3 Investor Rights Agreement. Simultaneously with
execution of this Agreement, Oly Equities and Stratus will
execute and deliver the Investor Rights Agreement in the form of
Exhibit E.
IV.4 Conversion of Loan. Subject to the conversion
limitations set forth in Article XIV of the Loan Agreement,
Stratus will deliver to Oly Lender such number of shares of its
common stock into which the loan is converted pursuant to the
Loan Agreement at such time as Oly Lender converts the loan or
portion thereof as provided in the Loan Agreement.
ARTICLE V
MISCELLANEOUS
V.1 Entire Agreement. This Agreement, including all
exhibits and schedules attached hereto and all documents
referenced herein or therein, constitutes the entire agreement
among the parties with respect to the subject matter hereof and
supersedes any prior agreement or understanding among them with
respect to such subject matter.
V.2 Severability. If any provision of this Agreement,
or the application of such provision to any person or
circumstance, shall be held invalid under the applicable law of
any jurisdiction, the remainder of this Agreement or the
application of such provision to other persons or circumstances
or in other jurisdictions shall not be affected thereby. Also,
if any provision of this Agreement is invalid or unenforceable
under any applicable law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such law. Any provision
hereof that may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision hereof.
V.3 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given if sent by overnight courier, hand
delivered, mailed (first class registered mail or certified mail,
postage prepaid) or sent by telecopy at the addresses or
facsimile numbers listed below or to such other address as any
party shall have last designated by notice to the other and all
other parties hereto in accordance with this Section 5.3 .
Notices sent by hand delivery shall be deemed to have been given
when received; notices mailed in accordance with the foregoing
shall be deemed to have been given three days following the date
so mailed; notices sent by telecopy shall be deemed to have been
given when electronically confirmed; and notices sent by
overnight courier shall be deemed to have been given on the next
business day
following the date so sent.
If to Olympus: Oly Fund II GP Investments, L.P.
200 Crescent Court, Suite 1650
Dallas, Texas 75201
Attention: Hal R. Hall
Telecopy: (214) 740-7355
with a required copy to: Robert C. Feldman, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopy: (214) 746-7777
If to Oly Lender: Oly Lender Stratus, L.P.
200 Crescent Court, Suite 1650
Dallas, Texas 75201
Attention: Hal R. Hall
Telecopy: (214) 740-7355
with a required copy to: Robert C. Feldman, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopy: (214) 746-7777
If to Oly Equities: Oly/Stratus Equities, L.P.
200 Crescent Court, Suite 1650
Dallas, Texas 75201
Attention: Hal R. Hall
Telecopy: (214) 740-7355
with a required copy to: Robert C. Feldman, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopy: (214) 746-7777
If to Stratus: Stratus Properties Inc.
98 San Jacinto Blvd., Suite 2200
Austin, Texas 78701
Attention: William H. Armstrong, III
Telecopy: (512) 478-6340
with a required copy to: John G. Amato
1615 Poydras Street
New Orleans, Louisiana 70112
Telecopy: (504) 585-3513
If to Stratus Ventures: Stratus Ventures I Borrower L.L.C.
98 San Jacinto Blvd., Suite 2200
Austin, Texas 78701
Attention: William H. Armstrong, III
Telecopy: (512) 478-6340
with a required copy to: John G. Amato
1615 Poydras Street
New Orleans, Louisiana 70112
Telecopy: (504) 585-3513
V.4 Governing Laws. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of Texas (without regard to principles of conflicts of
laws).
V.5 Successors and Assigns. Except as otherwise
specifically provided, this Agreement shall be binding upon and
inure to the benefit of Olympus, Oly Lender, Oly Equities,
Stratus and Stratus Ventures and their respective successors and
permitted assigns. Each of Olympus, Oly Lender and Oly Equities
shall have the right to assign its rights and obligations to an
affiliate controlled by or under common control with Olympus Real
Estate Fund II, L.P, which is at all times in a position to fund
the financial obligations hereunder.
V.6 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall constitute one and
the same instrument.
V.7 Headings. The section and article headings in
this Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of
any provision hereof.
V.8 Other Terms. All references to "Articles" and
"Sections" contained in this Agreement are, unless specifically
indicated otherwise, references to articles, sections,
subsections and paragraphs of this Agreement. Whenever in this
Agreement the singular number is used, the same shall include the
plural where appropriate (and vice versa), and words of any
gender shall include each other gender where appropriate. As
used in this Agreement, the following words or phrases shall have
the meanings indicated: (i) "or" shall mean "and/or"; (ii) "day"
shall mean a calendar day; (iii) "including" or "include" shall
mean "including without limitation"; and (iv) "law" or "laws"
shall mean statutes, regulations, rules, judicial orders and
other legal pronouncements having the effect of law. Whenever
any provision of this Agreement requires or permits a party to
take or omit to take any action, or make or omit to make any
decision, unless the context clearly requires otherwise, such
provision shall be interpreted to authorize an action taken or
omitted, or a decision made or omitted, by the party acting alone
and in good faith.
V.9 No Recordation. Neither this Agreement nor any
document referring to this Agreement shall be recorded in any
county, public or official records other than as exhibits to
Stratus' reports filed with the Securities and Exchange
Commission or otherwise as required pursuant to any legal
obligations of any of the parties or their affiliates. If
requested by any party, upon expiration or other termination of
this Agreement or any obligations or rights hereunder, the
parties will promptly execute any document reasonably necessary
to evidence to third parties the termination of this Agreement or
any obligations or rights hereunder.
IN WITNESS WHEREOF, this Agreement has been executed as of
the day and year first above written.
OLYMPUS:
Oly Fund II GP Investments, L.P.,
a Texas limited partnership
By: Oly Real Estate Partners II, L.P.,
a Texas limited partnership,
its general partner
By: Oly REP II, L.P.,
a Texas limited partnership,
its general partner
By: Oly Fund II, LLC,
a Texas limited liability company,
its general partner
By: /s/Hal R. Hall
--------------
Hal R. Hall
Vice President
OLY LENDER:
OLY LENDER STRATUS, L.P.,
a Texas limited partnership
By: Oly Fund II GP Investments, L.P.,
a Texas limited partnership,
its general partner
By: Oly Real Estate Partners II, L.P.,
a Texas limited partnership,
its general partner
By: Oly REP II, L.P.,
a Texas limited partnership,
its general partner
By: Oly Fund II, LLC,
a Texas limited liability company,
its general partner
By: /s/ Hal R. Hall
---------------
Hal R. Hall
Vice President
OLY/STRATUS:
OLY/STRATUS EQUITIES, L.P.,
a Texas limited partnership
By: Oly Fund II GP Investments, L.P.,
a Texas limited partnership,
its general partner
By: Oly Real Estate Partners II, L.P.,
a Texas limited partnership,
its general partner
By: Oly REP II, L.P.,
a Texas limited partnership,
its general partner
By: Oly Fund II, LLC,
a Texas limited liability company,
its general partner
By: /s/Hal R. Hall
--------------
Hal R. Hall
Vice President
STRATUS:
STRATUS PROPERTIES INC.,
a Delaware corporation
By: /s/ William H. Armstrong III
----------------------------
William H. Armstrong, III
President
STRATUS VENTURES:
STRATUS VENTURES I BORROWER L.L.C.,
a Delaware limited liability company
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By: /s/ William H. Armstrong III
----------------------------
William H. Armstrong, III
President
EXHIBIT A
FORM PARTNERSHIP AGREEMENT
[ATTACHED]
EXHIBIT B
FORM MANAGEMENT AGREEMENT
[ATTACHED]
EXHIBIT C
SECURITIES PURCHASE AGREEMENT
FILED AS SEPARATE EXHIBIT TO CURRENT REPORT ON
FORM 8-K
EXHIBIT D
LOAN AGREEMENT
FILED AS SEPARATE EXHIBIT TO CURRENT REPORT ON
FORM 8-K
EXHIBIT E
INVESTORS RIGHTS AGREEMENT
FILED AS SEPARATE EXHIBIT TO CURRENT REPORT ON
FORM 8-K
SCHEDULE 2.1(a)
INITIAL PROPOSAL OUTLINE
The following outline shall be representative of the information
that would normally be included in Initial Proposals that Stratus
presents to Olympus, to the extend reasonably available. Content
and format may vary from one Initial Proposal to another
depending on (i) the type of property being considered (i.e.,
office building vs. residential subdivision), (ii) the status of
the project (i.e., existing vs. proposed) and (iii) the
availability of information.
1. Executive Summary
A synopsis of the project, product, pricing, proposed
program, timing, capital requirements and resulting
financial projections.
2. Location Maps
Regional, area and local maps sufficient to locate the
project.
3. Property Photographs
Aerial, elevation, interior and area photographs to
illustrate the project and surrounding area.
4. Drawings
Site plans, building elevations and floor plans shall be
included when appropriate and/or available.
5. Proposed Transaction Terms
Proposed participants, expected capital contributions,
relative ownership, cash distribution priority, if any,
third party debt requirements, debt guarantees, partnership
governance and project management oversight and compensation
shall be outlined. Changes/variances to the partnership
agreement and management agreement templates shall be
highlighted.
6. Plan
A bullet point synopsis of the program envisioned to
develop, sell and/or operate the project, including a
summary of the project and its pricing, to the extent
practical and appropriate.
7. Financial Projections
Annual financial projections using discounted cash flow
analysis to evaluate the following three (3) scenarios:
best case, prudent case and pessimistic case. The financial
projections shall also include revenue, operating expense,
capital expenditures, annual debt service, cumulative
source/use statement and individual partner returns, to the
extent practical and appropriate.
8. Schedule
A high-level bar chart (Gantt chart) summarizing the tasks
to complete prior to closing along with the tasks and
milestones for the project that occur subsequent to closing.
9. Due Diligence Matters & Risk Assessment
A summary of completed and ongoing due diligence work,
including any material risks identified.
10. Appendix
Proposals may also include appropriate and pertinent
supporting information such as the following: purchase
agreement, market research product inventory listings,
entitlement information.
11. Recovery by Stratus of "Pursuit Costs" of Prior Development
Opportunities
Proposals will identify reimbursable actual direct expenses
incurred by Stratus in connection with its pursuit of prior
Development Opportunities to be offered to Olympus.
12. Revisions to the Representations and Warranties of Stratus
and Stratus Ventures Made in the Loan Agreement
Proposals may also include any revisions to be made to the
terms and conditions of the representations and warranties
made by Stratus and Stratus Ventures in Loan Agreement.
Exhibit A
_______________________ LIMITED PARTNERSHIP
(A Texas Limited Partnership)
LIMITED PARTNERSHIP AGREEMENT
____________________
Dated as of __________, 1998
____________________
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions
1.1 Definitions....................................... 1
ARTICLE 2
Organization
2.1 Formation of Limited Partnership.................. 8
2.2 Name.............................................. 8
2.3 Character of Business............................. 8
2.4 Registered Office and Agent....................... 8
2.5 Fiscal Year....................................... 8
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership.......... 8
3.2 Additional Capital Contributions.................. 9
3.3 No Return of Capital Contributions................ 11
3.4 Interest.......................................... 11
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership......................... 11
4.2 Management Committee.............................. 12
4.3 Major Decisions................................... 14
4.4 Budgets and Reports............................... 15
4.5 Powers of the Operating Partner................... 15
4.6 Liability of Partners............................. 15
4.7 Other Activities of Partners...................... 16
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation....................................... 16
5.2 Indemnity......................................... 16
ARTICLE 6
Distributions and Allocations
6.1 Distributions..................................... 17
6.2 Tax Allocations................................... 17
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners......................... 17
7.2 Transfer of Partnership Interests................. 17
7.3 Buy/Sell.......................................... 18
7.4 No Substituted Partners........................... 21
7.5 Withdrawal of Partners............................ 21
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns..................... 21
8.2 Place Kept; Inspection............................ 22
8.3 Tax Matters Partner............................... 22
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers............................ 22
9.2 Certain Other Amendments.......................... 22
ARTICLE 10
Dissolution and Termination
10.1 Dissolution....................................... 23
10.2 Accounting on Dissolution......................... 24
10.3 Termination....................................... 24
10.4 No Negative Capital Account Obligation............ 24
10.5 No Other Cause of Dissolution..................... 24
10.6 Merger............................................ 25
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition............................... 25
11.2 Entire Agreement.................................. 25
11.3 Severability...................................... 25
11.4 Notices........................................... 25
11.5 Governing Laws.................................... 25
11.6 Successors and Assigns............................ 26
11.7 Counterparts...................................... 26
11.8 Headings.......................................... 26
11.9 Other Terms....................................... 26
11.10 Power of Attorney................................. 26
11.11 Transfer and Other Restrictions................... 27
______________________ LIMITED PARTNERSHIP
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement (this "Agreement") of
_____________________,a__________________(the "Part Partner")
and _____________________, as the financial partner (the "Financial
Partner") and __________________,a ______________________________
are referred to herein as the "Limited Partners"). The
General Partners and the Limited Partners are herein collectively
referred to as the "Partners" and individually referred to
as a "Partner". The Operating Partner is additionally referred
to as "FM." The Financial Partner is additionally referred to
as "Olympus."
RECITALS
A. The parties hereto desire to form a limited partnership
under the Act (as defined below).
B. The Partnership is being formed for the purpose of
acquiring, owning, developing and reselling that certain property
located in __________________________________________and known as
________________________ (the "Property").
C. The initial Partners hereto desire to enter into this
Agreement to establish their respective rights and obligations
with respect to the Partnership and to provide for the orderly
management of the affairs of the Partnership.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Partners hereby agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Act" shall have the meaning set forth in Section 2.1.
"Affiliate" shall mean, when used with reference to a
specified Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the
specified Person. As used in this definition of Affiliate,
the term "Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through
ownership of voting securities, by contract, or otherwise.
"Business" shall mean all tangible and intangible
property of the Partnership as of the date of the Buy/Sell
offer and any proceeds therefrom subject to all obligations
or liabilities associated therewith.
"Business Day" shall mean any day other than a
Saturday, Sunday, or holiday on which national banking
associations in the State of Texas are authorized or
required to be closed.
"Business Plan" shall mean the business plan attached
hereto as Exhibit A and incorporated herein, and as may be
amended from time to time in accordance with the provisions
hereof or as may attached hereto within sixty (60) days of
the execution of this Agreement upon approval of the
Management Committee.
"Buy-Sell" shall have the meaning set forth in Section
7.3.
"Buy/Sell Closing Date" shall have the meaning set
forth in Section 7.3.
"Buy/Sell Election Period" shall have the meaning set
forth in Section 7.3.
"Buy/Sell Offer" shall have the meaning set forth in
Section 7.3.
"Buy/Sell Purchaser" shall have the meaning set forth
in Section 7.3.
"Buy/Sell Seller" shall have the meaning set forth in
Section 7.3.
"Capital Account" shall mean a separate account
maintained for each Partner in accordance with the
provisions of Regulation section 1.704-1(b)(2)(iv). Each
Partner shall have only one Capital Account, regardless of
the number of classes of units or other interests in the
Partnership owned by such Partner. Initially, the Capital
Account of each Partner shall have a positive balance equal
to its initial Capital Contribution. Such Capital Account
shall thereafter be adjusted in accordance with the
following provisions:
(a) Additions. The Capital Account shall be
increased by the sum of (i) except as otherwise
provided in paragraph (f) below in the case of a
contribution of a promissory note, the amount of cash
and the fair market value (determined as of the date of
contribution, without regard to section 7701(g) of the
Code, including a constructive contribution resulting
from a termination and reconstitution of the
Partnership under section 708(b)(1)(B) of the Code) of
property contributed, or deemed to have been
contributed, to the capital of the Partnership by the
Partner, net of any liabilities assumed by the
Partnership in connection with such contribution or to
which the contributed property is subject under section
752 of the Code; plus (ii) the amount of any net income
or other item of income or gain allocated to the
Partner pursuant to Article 6 hereof.
(b) Subtractions. The Capital Account shall be
reduced by the sum of (i) the amount of any net loss or
other item of expense, loss or deduction allocated to
the Partner pursuant to Article 6 hereof; plus (ii) the
Distribution Value (determined without regard to
section 7701(g) of the Code) of any cash or other
property distributed, or deemed to have been
distributed, by the Partnership to the Partner, net of
any liabilities assumed by the distributee in
connection with the distribution or to which the cash
or other distributed property is subject under section
752 of the Code.
(c) Other Adjustments. The Capital Account shall
otherwise be adjusted by the Financial Partner in
accordance with the other capital account maintenance
rules of Regulation section 1.704-1(b)(2)(iv). In
connection with the foregoing:
(d) Determination of Fair Market Value. In
determining the balance of each Partner's Capital
Account, and for all other purposes of this Agreement,
the fair market value of an asset contributed to or
distributed by the Partnership shall be determined in
good faith by the General Partners (which shall use
their reasonable efforts not to overstate or understate
the fair market value of any such asset).
Notwithstanding the preceding sentence, it is
understood that no Partner shall have any obligation to
contribute any real property asset to the Partnership
unless all General Partners have agreed to the fair
market value of the asset. [NOTE: The valuation of
significant property assets will be reflected in the
offer, as such term is defined in the Master Agreement
(the "Master Agreement"), between [Oly/FM Funding] and
FM Properties Inc., dated May 22, 1998, and agreed to
prior to the creation of the Partnership.]
(e) Capital Account of Transferee. A transferee of
all or part of an interest in the capital and profits
of the Partnership shall succeed to the Capital Account
of the transferor to the extent that such Capital
Account relates to the transferred interest.
(f) Contribution of Note. Notwithstanding any other
provision of this definition of Capital Account, if a
Partner has contributed his promissory note to the
capital of the Partnership and such note is not readily
traded on an established securities market, then the
principal of such note shall not be credited to the
Partner's Capital Account until and to the extent that
either (i) the Partnership makes a taxable disposition
of the note or (ii) principal payments are made on the
note, all in accordance with Regulation section
1.704-1(b)(2)(iv)(d)(2).
"Capital Contribution" shall mean the gross amount of
cash or the fair market value of other property contributed
or caused to be contributed to the capital of the
Partnership by a Partner with respect to such Partner's
capital account.
"Cash Flow" of the Partnership for any period shall
mean any and all cash revenues generated from the ownership,
sale of lots, sale of undeveloped parcels, lease and other
operation of the Partnership assets and any and all capital
transaction proceeds minus the sum of (i) any operating and
capital expenses incurred in the operation of the business
of the Partnership, including without limitation any
payments of interest and principal (other than payments of
principal that are refinanced by the Partnership) on
Partnership indebtedness required by the lender of such
indebtedness during the quarterly period in question, and
(ii) a reasonable reserve for necessary or desirable
operating and capital expenses of the Partnership that are
anticipated to be incurred or to become due and payable
within six (6) months as the Management Committee, in the
exercise of its reasonable discretion and as is consistent
with the Operating Budget and the Business Plan, shall
determine.
"Code" shall mean the Internal Revenue Code of 1986 and
any successor statute, as amended from time to time.
"Contribution Percentage" of a General Partner shall be
based on the actual equity capital contributions of such
Partner in relation to the total equity capital
contributions of all General Partners.
"Deadlock" shall mean the failure of the General
Partners to agree with respect to any Major Decision or
other issue with respect to the Partnership which could have
a material adverse effect or impact to the Partnership if
such issue remains unresolved between the Partners.
"Deemed Recipient" shall have the meaning set forth in
Section 3.2.
"Default Amount" shall have the meaning set forth in
Section 3.2.
"Default Date" shall have the meaning set forth in
Section 3.2.
"Defaulting Partner" shall have the meaning set forth
in Section 3.2.
"Distribution Period" shall mean (i) the period
beginning on the Effective Date and ending on ___________,
____ and (ii) each calendar quarter thereafter.
"Distribution Value" shall mean the dollar amount of
any cash distribution and the fair market value, as jointly
determined in good faith by the Partners (each of which
shall use its reasonable efforts not to overstate or
understate fair market value), of any non-cash property
distribution at the time of the distribution, net of the
distributee's share of any liabilities to which the
distributed property is subject and net of any liabilities
assumed by the distributee.
"Effective Date" shall have the meaning set forth in
the preamble to this Agreement.
"Escrow Agent" shall have the meaning set forth in
Section 7.3.
"Financial Partner" shall mean [Olympus], together with
its successors and assigns.
"FM" shall have the meaning set forth in the preamble
of this Agreement.
"FM Representative" shall have the meaning set forth in
Section 4.2.
"Indemnified Parties" shall have the meaning set forth
in Section 7.3.
"Loan" shall have the meaning set forth in Section 3.1.
"Lender" shall have the meaning set forth in Section
3.1.
"Major Decision" means any decision with respect to (1)
approval of the Business Plan, including the decision to
make additional Capital Contributions except as provided in
Section 3.2(a); (2) approval of the Operating Budget; (3)
approval of the plans and specifications for the Property,
and the subsequent approval of all material change orders or
amendments given in substitution for such approved plans and
specifications; (4) approval of any financing or
refinancing, whether secured or unsecured, unless previously
approved in the Business Plan or annual Operating Budget;
(5) approval of acquisition of any additional property, (6)
approval of admission or withdrawal of any Partners to the
Partnership, (7) approval of any sale, exchange or other
disposition of the Property unless pursuant to governance
deadlock provision in Section 7.3 below or in the Business
Plan or annual Operating Budget; (8) approval of any
amendments to the Agreement; (9) approval of any termination
or dissolution of the Partnership; and (10) appointment of a
successor property manager pursuant to Section 4.1.
"Management Agreement" shall have the meaning set forth
in Section 4.1.
"Management Committee" shall have the meaning set forth
in Section 4.2.
"Mandatory Additional Contribution" shall have the
meaning set forth in Section 3.2.
"Non-Defaulting Partners" shall have the meaning set
forth in Section 3.2.
"Offer Amount" shall have the meaning set forth in
Section 7.3.
"Offer Deposit" shall mean the sum of Five Hundred
Thousand and No/100 Dollars ($500,000.00) in cash.
"Offeree" shall have the meaning set forth in Section
7.3.
"Offeror" shall have the meaning set forth in Section
7.3.
"Olympus" shall have the meaning set forth in the
preamble of this Agreement.
"Olympus Representative " shall have the meaning set
forth in Section 4.2.
"Operating Budget " shall mean the budget attached
hereto as Exhibit B and incorporated herein, as may be
amended from time to time in accordance with the provisions
hereof, or to be attached hereto within sixty (60) days of
the execution of this Agreement upon approval by the
Management Committee in accordance with this Agreement.
"Operating Partner" shall mean [FM], together with its
successors or assigns.
"Partner" shall mean any Person executing this
Agreement as of the Effective Date as a partner or hereafter
admitted to the Partnership as a partner as provided in this
Agreement, but does not include any Person who has ceased to
be a Partner of the Partnership.
"Partnership" shall have the meaning set forth in the
preamble to this Agreement.
"Partnership Interest" shall have the meaning set forth
in Section 7.3.
"Person" shall mean an individual, partnership, joint
venture, limited partnership, limited liability company,
foreign limited liability company, trust, business trust,
estate, corporation, custodian, trustee, executor,
administrator, nominee, association, cooperative or entity
in a representative capacity.
"Property" shall have the meaning set forth in the
preamble of this Agreement.
[To be used where applicable: "Preferred Return" shall
mean the following:
(a) With respect to the first Distribution Period,
the Preferred Return of a Partner shall be the product
of (i) the Unreturned Capital of such Partner from time
to time during such Distribution Period, times (ii)
[_________ percent (____%)], times (iii) a fraction,
the numerator of which is the number of days in such
Distribution Period and the denominator of which is
three hundred and sixty-five (365).
(b) With respect to each Distribution Period
following the first Distribution Period, the Preferred
Return of a Partner shall be the sum of (i) the excess
(if any) of such Partner's Preferred Return determined
as of the last day of the Distribution Period
immediately preceding the Distribution Period under
consideration over any distribution made to such
Partner pursuant to Section 6.1 hereof with respect to
such immediately preceding Distribution Period, plus
(ii) the product of (A) the sum of (1) the excess (if
any) of such Partner's Preferred Return determined as
of the last day of the Distribution Period immediately
preceding the Distribution Period under consideration
over any distribution made to such Partner pursuant to
Section 6.1 hereof with respect to such immediately
preceding Distribution Period, plus (2) the Unreturned
Capital (if any) of such Partner from time to time
during the Distribution Period under consideration,
times (B) [_______ percent (____%)], times (C) a
fraction, the numerator of which is the number of days
in the Distribution Period under consideration and the
denominator of which is three hundred and sixty-five
(365).]
"Receipt Amount" shall have the meaning set forth in
Section 7.3.
"Regulation" shall mean Treasury Regulations
promulgated under Title 26 of the United States Code.
"Replacement Loan" shall have the meaning set forth in
Section 3.2.
"Representative" shall have the meaning set forth in
Section 4.2.
"Required Capital Contributions" shall have the meaning
set forth in Section 3.1.
"Required Interest" shall mean both of the General
Partners.
"Sharing Ratio" shall have the meaning set forth on
Schedule I attached hereto.
"Tax Matters Partner" shall have the meaning set forth
in Section 8.3.
"Unreturned Capital" as of a date shall mean the
following:
(a) In the case of each of the Partners, its
Unreturned Capital shall be the excess, if any, of the total
Capital Contributions made by such Partner over the total
distributions received by such Partner under [Section
6.1(ii)] hereof prior to the date as of which such Partner's
Unreturned Capital is determined.
(b) In the case of a transferee of an interest in
the Partnership, the transferee's Unreturned Capital shall
be the Unreturned Capital as of the date of the transfer of
the transferor times a fraction, the numerator of which is
the Contribution Percentage attributable to the interest in
Partnership capital and profits transferred by the
transferor to the transferee, and the denominator of which
is the sum of the Contribution Percentages attributable to
both the interest in Partnership capital and profits
retained by the transferor (if any) and the interest in
Partnership capital and profits transferred by the
transferor to the transferee. Likewise, the Unreturned
Capital of the transferor shall be reduced by the Unreturned
Capital of the transferee to whom all or part of the
transferor's interest in Partnership capital and profits has
been transferred.
ARTICLE 2
Organization
2.1 Formation of Limited Partnership. The Partners
have formed a limited partnership pursuant to and in accordance
with the provisions of the Texas Revised Limited Partnership Act,
as from time to time amended ("Act"). The Financial Partner
shall file, on behalf of the Partnership a certificate of limited
partnership with the office of the Secretary of State of Texas.
2.2 Name. The name of the Partnership is Oly FM
[Property Name] L.P. The Management Committee may change the
name of the Partnership from time to time and shall give prompt
written notice thereof to the Operating Partner and each Limited
Partner; provided, however, that such name may not contain any
portion of the name or mark of the Partners without such
Partner's consent. In such event, the Financial Partner shall
promptly file in the office of the Secretary of State of Texas an
amendment to the Partnership's certificate of limited partnership
reflecting such change of name.
2.3 Character of Business. The purpose of the
Partnership shall be (i) to acquire, hold, develop, sell,
encumber, or otherwise act with respect to investments, direct or
indirect, in the Property, and (ii) to engage in such other
business as may be conducted by a limited partnership organized
under the laws of the State of Texas.
2.4 Registered Office and Agent. The name and
address of the Partnership's initial registered agent are Olympus
Real Estate Corporation, 200 Crescent Court, Suite 1650, Dallas,
Texas 75201. The Partnership's initial principal place of
business shall be 200 Crescent Court, Suite 1650, Dallas,
Texas 75201. The Financial Partner may change such registered
agent, registered office, or principal place of business from
time to time. The Financial Partner shall give prompt written
notice of any such change to the Operating Partner and each
Limited Partner. The Partnership may from time to time have such
other place or places of business within or without the State of
Texas as may be determined by the Financial Partner.
2.5 Fiscal Year. The fiscal year of the Partnership
shall end on December 31 of each calendar year unless, for United
States federal income tax purposes, another fiscal year is
required. The Partnership shall have the same fiscal year for
United States federal income tax purposes and for accounting
purposes.
ARTICLE 3
Capital Contributions
3.1 Capital Contributions to the Partnership. The
Partners shall contribute or be deemed to have contributed
capital to the Partnership in the amounts respectively set forth
opposite their names on Schedule I to this Agreement on the
Effective Date (collectively, the "Required Capital
Contributions"). Also, in addition to the Required Capital
Contributions, the Partners acknowledge that in order to purchase
and develop the Property, the Partnership will need to secure
from a third party lender (the "Lender") a term loan, which shall
be in the amount set forth in the Business Plan and on terms and
conditions satisfactory to the Management Committee and approved
in accordance with this Agreement (the "Loan").
3.2 Additional Capital Contributions.
(a) After the funding of the Required Capital
Contribution set forth above (including any amounts deemed
to have been contributed), and to the extent not available
from proceeds of the Loan, either (i) the General Partners
may agree to make additional Capital Contributions to the
Partnership as are deemed advisable by the General Partners
(each exercising their independent discretion) and by
amendment to the Business Plan, or (ii) if either (A) there
has been a default or an event of default under the Loan or
(B) additional capital is necessary to complete any capital
improvement program approved in the Business Plan, or
(C) funds are necessary for continued operation of the
Property consistent with the Business, then the Financial
Partner may elect to call or not call for additional Capital
Contributions (in each case, the "Mandatory Additional
Contribution") to be made to the Partnership to cure any
default or event of default under the Loan or to complete
such capital improvement program or fund operations. The
Mandatory Additional Contribution in question shall be made
by the General Partners pro rata, based on the Contribution
Percentages of the General Partners. This Section 3.2 is
solely for the benefit of the Partners, and shall not, nor
shall it be deemed to, create any rights in, or provide any
benefit to, any other person or entity, and the decision to
make additional contributions to the Partnership shall be
made in the sole and absolute discretion of the Financial
Partner, except as my be provided in the Business Plan.
(b) Each General Partner shall be required to make
its Mandatory Additional Contribution to the Partnership on
or before twenty-one (21) days after written notice to such
Partner ("Default Date"). In the event any General Partner
fails to make a Mandatory Additional Contribution as
required by this Section 3.2 within the time period set
forth herein (such Partner, being herein referred to as the
"Defaulting Partner"), then, the "Non-Defaulting Partners"
(herein so called) shall be entitled, as their sole and
exclusive remedy for such failure, by giving written notice
to the Defaulting Partner to make a loan (the "Replacement
Loan") to the Defaulting Partner in the amount of such
Mandatory Additional Contribution, which Replacement Loan
(i) shall be applied solely to fund the delinquent Mandatory
Additional Contribution, (ii) shall have a term of one
hundred twenty (120) days from the date of such loan and
(iii) shall bear interest at the lesser of (A) eighteen
percent (18%) per annum and (B) the maximum rate of interest
which may be charged, collected or contracted for under
applicable law, with accrued interest due at the maturity of
such loan (each such Replacement Loan together with all
accrued interest thereon from time to time, the "Default
Amount"). Anything contained in this Agreement to the
contrary notwithstanding, any Partner who becomes a
Defaulting Partner shall immediately and without any further
demand, notice or cure period (time being of the essence
herein) automatically cease to have a right to vote on all
Partnership decisions from and after the Default Date for
any purposes hereunder for the remainder of the life of the
Partnership (unless reinstated as described below);
provided, however, if a Defaulting Partner shall pay the
Default Amount in full to the Non-Defaulting Partners who
elected to make such loan, on or before the expiration of
the 120-day term of the Replacement Loan to such Defaulting
Partner, such Defaulting Partner's voting rights hereunder
shall be automatically re-instated (effective as of the date
such Default Amount is paid in full) for all purposes
including voting rights. If the Default Amount is not paid
in full on or before the expiration of the 120-day period,
the Defaulting Partner's voting rights shall not be
reinstated upon the subsequent payment of the Default
Amount.
(c) The Partners further agree that if the Default
Amount is not repaid to the Non-Defaulting Partners within
the 120-day term, then, without demand, notice or cure
period (time being of the essence herein), such Default
Amount shall for all purposes hereunder be deemed to be a
Capital Contribution by the Non-Defaulting Partners to the
Partnership effective as of the expiration of such 120-day
term of such Replacement Loan, which deemed Capital
Contribution shall be credited as an amount equal to the
product of 200% times the Default Amount, and the Capital
Account of the Defaulting Partner shall for all purposes be
appropriately reduced to reflect such treatment; provided,
however, with respect to any Default Amount attributable to
a Replacement Loan made more than one hundred twenty (120)
days after the initial Replacement Loan (which is not repaid
during its 120-day term) is made by one or more Non-
Defaulting Partner, the deemed Capital Contribution shall be
credited as an amount equal to the product of 300% times the
Default Amount, and in each case the distribution
percentages of the Defaulting Partner (i.e., the pro rata
share of the particular distribution which such Partner
would otherwise receive under such sections) shall be
reduced by, and the distribution percentages of each Non-
Defaulting Partner who makes its pro rata share of such loan
shall be increased by an amount equal to the quotient of (i)
200% (or 300%, as the case may be) times the Default Amount,
divided by (ii) the aggregate Capital Contributions made by
the Partners to the Partnership prior to the date of
calculation (including the Mandatory Additional
Contributions of all Non-Defaulting Partners but excluding
the Default Amount then in question).
(d) The new distribution percentages computed in
accordance with this Section 3.2 shall remain in effect
under this Agreement unless and until there is a subsequent
adjustment to the distribution percentages. Notwithstanding
the foregoing, no Partner's distribution percentage shall be
reduced under any circumstance to less than zero, nor shall
any Partner's distribution percentage be increased under any
circumstance to more than 100%. Mandatory Additional
Contributions shall be made pro rata, based on the relative
Contribution Percentages of the General Partners.
(e) Each Partner which becomes a Defaulting Partner
hereby irrevocably grants to the other Partners a
continuing, first priority, perfected security interest in
the Partnership Interest of such Defaulting Partner to
secure the prompt payment of each Replacement Loan made to
such Defaulting Partner until such time, if ever, as the
Default Amount with respect to the Replacement Loan under
consideration has been converted to a deemed Capital
Contribution pursuant to Section 3.2(c). On or before
fifteen (15) days after any written request of any Non-
Defaulting Partner, the Defaulting Partner shall execute and
deliver a UCC-1 financing statement in form and substance
acceptable to such Non-Defaulting Partner to evidence such
security interest, the failure of which shall constitute a
default under the Replacement Loan. Prior to a default or
maturity of a Replacement Loan, and without limiting the
remedies of the Non-Defaulting Partners, at the election of
the Non-Defaulting Partners, all distributions payable to
any Defaulting Partner under this Agreement shall be payable
directly to the Non-Defaulting Partners (pro rata based on
the relative amount of the Replacement Loan made by such
Non-Defaulting Partner) until the Replacement Loan(s) of
such Defaulting Partner are paid in full (or converted to a
deemed Capital Contribution), shall be paid directly to the
Non-Defaulting Partners until the entire amount of the
Replacement Loan is paid in full. Any amounts paid directly
to a Non-Defaulting Partner pursuant to the terms of the
preceding sentence shall be treated as paid to the person
(the "Deemed Recipient") entitled to receive the amount of
the distribution in the absence of the requirements of the
preceding sentence (thereby discharging the Partnership's
obligation to make the payment in question to the Deemed
Recipient) and then as applied by the Deemed Recipient on
behalf of the Defaulting Partner to the repayment of the
Defaulting Partner's loan.
(f) EXCEPT AS SET FORTH IN SECTION 3.1 OR THIS
SECTION 3.2, NO ADDITIONAL CAPITAL CONTRIBUTIONS SHALL BE
REQUIRED BY ANY PARTNER UNLESS AN EXPRESS WRITTEN CALL FOR A
CAPITAL CONTRIBUTION IS MADE BY THE FINANCIAL PARTNER TO
EACH OF THE GENERAL PARTNERS.
3.3 No Return of Capital Contributions. No Partner
is entitled to a return of its Capital Contribution, but shall
look solely to distributions from the Partnership as provided for
in Article 6 of this Agreement.
3.4 Interest. No Partner shall be entitled to
interest on its Capital Contribution or its Capital Account,
provided that each Partner's Capital Contribution shall accrue
the Preferred Return (which shall not be deemed to be interest)
as set forth herein. Any interest actually received by reason of
temporary investment of any part of the Partnership's funds shall
be included in the Partnership's funds.
ARTICLE 4
Rights and Obligations of Partners
4.1 Management of Partnership. The management,
control and direction of the Partnership and its operations,
business and affairs shall be vested exclusively in the
Management Committee, which shall have the right, power and
authority, acting solely by itself and without the necessity of
approval by any Limited Partner or any other person, to carry out
any and all of the purposes of the Partnership and to perform or
refrain from performing any and all acts that the Management
Committee may deem necessary, desirable, appropriate or
incidental thereto, except as otherwise provided in this
Agreement; provided, however, that the Operating Partner shall
manage the Partnership and its operations, business and affairs
solely as described in Section 4.5. The Management Committee may
assume the management duties and responsibilities of the
Operating Partner as set forth in Section 4.5 at any time in the
event the Management Committee determines in its good faith
discretion that either (i) the Operating Partner has acted
negligently or with willful misconduct in performing its duties
or (ii) the monthly financial reports of the Partnership reveal a
material adverse deviation from the Business Plan more than three
(3) times within any twelve (12) month period. The Management
Committee agrees that prior to its exercise of its right to
assume the management duties and responsibilities of the
Operating Partner as result of either default by the Operating
Partner, the Management Committee shall first deliver written
notice of said default to the Operating Partner and give the
Operating Partner ten (10) days thereafter in which to cure said
default, the Operating Partner so elects. No Limited Partner
shall participate in the management, control or direction of the
Partnership's operations, business or affairs, transact any
business for the Partnership, or have the power to act for or on
behalf of or to bind the Partnership. Notwithstanding anything
to the contrary provided herein, the Property shall be managed in
accordance with the terms and conditions of that certain
Management Agreement (the "Management Agreement") dated of even
date herewith by and between_____________ and___________________.
4.2 Management Committee.
[The structure and duties of the Management Committee
are subject to the proposal process of Section 2.1 of the
Master Agreement. Two (2) alternatives, depending on the
Capital Contributions of Olympus and FM, are provided
below.]
[Alternative 1
(a) The "Management Committee" (herein so called)
shall consist of three (3) representatives, one (1) of which
shall be designated by [Partner 1] (the "[Partner 1]
Representative") and two (2) of which shall be designated by
[Partner 2] (jointly, the "[Partner 2] Representative")
(individually, a "Representative and collectively, the
"Representatives"). The initial Representatives designated
by [Partner 1] and [Partner 2] are set forth opposite such
Partner's name below:
Partner Initial Representative
[Partner 1]
[Partner 2]
[Partner 2]
Olympus and FM may appoint alternates for the
Representatives appointed by it, which alternates shall have
all the powers of the Representatives in their absence or
inability to serve. Olympus and FM may change its
designated Representatives effective upon written notice
from Olympus or FM designating such Representative to the
other Partners. One of the [Partner 2] Representatives
shall serve as Chairman of the Management Committee and
shall set the agenda for such meetings.
(b) The Representatives shall meet quarterly (or
more often as the Management Committee may reasonably
determine) in the offices of the Partnership or by telephone
conference, unless the Representatives jointly agree that
the meeting is unnecessary or that a different schedule or
location for the meeting is appropriate, to discuss current
material management issues (but not day-to-day operations
matters which are in accordance with the operation
parameters set forth in the Business Plan, Operating Budget
or otherwise set forth in writing) or Major Decisions. At
each meeting the Representatives shall each receive one (1)
vote. All action taken by the Management Committee shall
require the approval or consent of at least two (2)
Representatives except Major Decisions which require
unanimous consent as described in Section 4.3 below.
Representatives may bring to any meeting such employees,
agents, professionals and advisors as they deem necessary or
appropriate to assist them at such meeting. A quorum shall
consist of at least one [Partner 1] Representative and one
[Partner 2] Representative unless the [Partner 1]
Representative has declined to attend two (2) consecutive
meetings, which are scheduled with at least seventy-two (72)
hours prior notice for each meeting at the offices of the
Partnership, in which event the quorum may be two (2)
[Partner 2] Representatives.
(c) The Financial Partner, on behalf of the
Management Committee, shall be authorized and empowered to
(i) make all day-to-day management decisions (provided that
such decisions are consistent with the operation parameters
set forth in the Business Plan, Operating Budget or
otherwise in writing) except for Major Decisions, (ii)
direct the Operating Partner, (iii) perform all acts and
enter into and perform all contracts and other undertakings
that the Financial Partner may, in the exercise of its
reasonable discretion, deem necessary, advisable,
appropriate or incidental thereto consistent with the
Business Plan and Operating Budget and (iv) terminate the
property manager in the event of a default in the Management
Standard (as that term is defined in the Management
Agreement), provided, if the property manager is terminated,
then the Partnership (as a Major Decision) shall designate a
successor property manager.]
[Alternative 2
(a) The "Management Committee" (herein so called)
shall consist of four (4) representatives, two (2) of which
shall be designated by [Partner 1] (jointly, the "[Partner
1] Representative") and two (2) of which shall be designated
by [Partner 2] (jointly, the "[Partner 2] Representative")
(individually, a "Representative and collectively, the
"Representatives"). The initial Representatives designated
by [Partner 1] and [Partner 2] are set forth opposite such
Partner's name below:
Partner Initial Representative
[Partner 1]
[Partner 1]
[Partner 2]
[Partner 2]
Olympus and FM may appoint alternates for the
Representatives appointed by it, which alternates shall have
all the powers of the Representatives in their absence or
inability to serve. Olympus and FM may change its
designated Representatives effective upon written notice
from Olympus or FM designating such Representative to the
other Partners. One of the [Partner 2] Representatives
shall serve as Chairman of the Management Committee and
shall set the agenda for such meetings.
(b) The Representatives shall meet quarterly (or
more often as the Management Committee may reasonably
determine) in the offices of the Partnership or by telephone
conference, unless the Representatives jointly agree that
the meeting is unnecessary or that a different schedule or
location for the meeting is appropriate, to discuss current
material management issues (but not day-to-day operations
matters which are in accordance with the operation
parameters set forth in the Business Plan, Operating Budget
or otherwise set forth in writing) or Major Decisions. At
each meeting the Representatives shall each receive one (1)
vote. All action taken by the Management Committee shall
require the approval or consent of at least three (3)
Representatives except Major Decisions which require
unanimous consent as described in Section 4.3 below.
Representatives may bring to any meeting such employees,
agents, professionals and advisors as they deem necessary or
appropriate to assist them at such meeting. A quorum shall
consist of at least one [Partner 1] Representative and one
[Partner 2] Representative unless both [Partner 2]
Representatives have declined to attend two (2) consecutive
meetings, which are scheduled with at least seventy-two (72)
hours prior notice for each meeting at the offices of the
Partnership, in which event the quorum may be two (2)
[Partner 1] Representatives, and vice versa.
(c) The Financial Partner, on behalf of the
Management Committee, shall be authorized and empowered to
(i) make all day-to-day management decisions (provided that
such decisions are consistent with the operation parameters
set forth in the Business Plan, Operating Budget or
otherwise in writing) except for Major Decisions, (ii)
direct the Operating Partner, (iii) perform all acts and
enter into and perform all contracts and other undertakings
that the Financial Partner may, in the exercise of its
reasonable discretion, deem necessary, advisable,
appropriate or incidental thereto and (iv) terminate the
property manager in the event of a default in the Management
Standard (as that term is defined in the Management
Agreement), provided, if the property manager is terminated,
then the Partnership (as a Major Decision) shall designate a
successor property manager.]
4.3 Major Decisions. All Major Decisions shall be made by
both the [Partner 1] Representative and the [Partner 2]
Representative. Accordingly, neither FM nor Olympus, on behalf
of the Management Committee, shall have the right or the power to
make any binding commitment on behalf of the Partnership in
respect of a Major Decision unless and until all of the
Representatives have authorized the same in writing.
4.4 Budgets and Reports.
(a) By January 31st of each calender year hereafter
during the term hereof, the Operating Partner shall prepare
a revised Operating Budget and the Business Plan for the
operation of the Partnership. The Management Committee
shall have thirty (30) days after receipt thereof to either
approve the submitted Business Plan and Operating Budget or
respond with required changes to same.
(b) The Operating Partner agrees to use diligence
and to employ all reasonable efforts to ensure that the
actual costs of operating the Partnership shall not exceed
the Operating Budget, either in total or for any one
accounting category. The Operating Partner shall secure the
written approval of the Management Committee for any
expenditure that (i) exceeds fifteen percent (15%) of the
annual budgeted amount for the Partnership in any one
accounting category on such Operating Budget or (ii) exceeds
ten percent (10%) of the annual budgeted amount for the
Partnership in all accounting categories of the Operating
Budget. During each applicable calendar year, the Operating
Partner agrees to promptly inform the Management Committee
of any major increases in costs and expenses or any major
decreases in revenue that were not foreseen during the
budget preparation period and thus were not reflected in the
Operating Budget.
(c) The Operating Partner shall also submit any
additional financial or operational reports as the Financial
Partner may from time to time reasonably request.
4.5 Powers of the Operating Partner. Subject to
Section 4.3, the Operating Partner shall have the duties, rights
and obligations to implement the operations of the Partnership as
described in the Business Plan, Operating Budget or approved in
writing by the Management Committee. Without limiting the
generality of Section 4.1, but subject to Section 4.3, the
Operating Partner, acting on behalf of the Partnership, shall
oversee the activities of property manager, or, if the Management
Agreement is terminated, until a successor property manager is
appointed, perform the duties, rights and obligations of the
property manager; provided, however, neither the Operating
Partner nor the property manager shall take any action that has a
material economic affect on the Partnership without the prior
approval of the Management Committee, including, without
limitation, approving the form and substance of all contracts,
loan documents or other documents necessary to operate the
business of the Partnership.
4.6 Liability of Partners. The General Partners
shall be personally liable for the debts and obligations of the
Partnership if (but solely to the extent) required by applicable
law; provided, however, that all such debts and obligations shall
be paid or discharged first with the property of the Partnership
(including insurance proceeds) before the General Partners shall
be obligated to pay or discharge any such debt or obligation with
its personal assets. Notwithstanding the preceding sentence, the
General Partners shall not be personally liable for any debts or
obligations which are nonrecourse or which, under the terms
thereof, do not create or impose such liability. No Limited
Partner shall be personally liable for any of the debts or
obligations of the Partnership.
4.7 Other Activities of Partners. Except as
otherwise agreed in writing, including, but not limited to, the
Commitment Agreement, each Partner (i) may carry on and conduct
in any way or in any capacity, including, but not limited to, for
such Partner's own right and for such Partner's own personal
account, as a partner in any other partnership, as a venturer in
any joint venture, as a member or manager in any limited
liability company, as an employee, officer, director or
stockbroker of any corporation, or as a participant in any
syndicate, pool, trust, association or other business
organization, a business that competes, directly or indirectly,
with the business of the Partnership, (ii) will be free in any
capacity to conduct business activities the same or similar as
conducted by the Partnership and (iii) may make investments in
any kind of property. The Partnership will have absolutely no
claim or right to any such business or assets thereof. Further,
the Partnership will have claim to and will own only those assets
contributed to the Partnership or acquired with Partnership funds
or credit. Neither this Agreement nor any principle of law or
equity shall preclude or limit, in any respect, the right of any
Partner or any affiliate thereof to engage in or derive profit or
compensation from any activities or investments, nor give any
other Partner any right to participate or share in such
activities or investments or any profit or compensation derived
therefrom.
ARTICLE 5
Exculpation and Indemnity
5.1 Exculpation. Neither the General Partners
nor any affiliate of the General Partners, nor any officer,
director, manager, member, employee, agent, stockholder, or
partner of the General Partners or any of its affiliates, shall
be liable, responsible, or accountable in damages or otherwise to
the Partnership or any Partner by reason of, or arising from or
relating to the operations, business, or affairs of, or any
action taken or failure to act on behalf of, the Partnership,
except to the extent that any of the foregoing is determined, by
a final, nonappealable order of a court of competent
jurisdiction, to have been primarily caused by the gross
negligence, willful misconduct, or bad faith of the person
claiming exculpation.
5.2 Indemnity. The Partnership shall indemnify the
General Partners, each affiliate of the General Partners, and
each officer, director, stockholder, manager, member, and partner
of the General Partners or any of its affiliates, and if so
determined by the General Partners, each employee or agent of the
General Partners or any of its affiliates, against any claim,
loss, damage, liability, or expense (including reasonable
attorneys' fees, court costs, and costs of investigation and
appeal) suffered or incurred by any such indemnitee by reason of,
or arising from or relating to the operations, business, or
affairs of, or any action taken or failure to act on behalf of,
the Partnership, except to the extent any of the foregoing (i) is
determined by final, nonappealable order of a court of competent
jurisdiction to have been primarily caused by the gross
negligence, willful misconduct, or bad faith of the person
claiming indemnification or (ii) is suffered or incurred as a
result of any claim (other than a claim for indemnification under
this Agreement) asserted by the indemnitee as plaintiff against
the Partnership. Unless a determination has been made (by final,
nonappealable order of a court of competent jurisdiction) that
indemnification is not required, the Partnership shall, upon the
request of any indemnitee, advance or promptly reimburse such
indemnitee's reasonable costs of investigation, litigation, or
appeal, including reasonable attorneys' fees; provided, however,
that the affected indemnitee shall, as a condition of such
indemnitee's right to receive such advances and reimbursements,
undertake in writing to repay promptly the Partnership for all
such advancements or reimbursements if a court of competent
jurisdiction determines that such indemnitee is not then entitled
to indemnification under this Section 5.2. No Partner shall be
required to contribute capital in respect of any indemnification
claim under this Section 5.2 unless otherwise provided in any
other written agreement to which such Partner is a party.
ARTICLE 6
Distributions and Allocations
6.1 Distributions. No later than thirty (30) days
after the end of each Distribution Period during which the
Partnership has Cash Flow, such Cash Flow shall be distributed as
set forth below and in the order of priority as set forth below.
[Economic terms to be agreed per proposal process of Section 2.1
of the Commitment Agreement.]
6.2 Tax Allocations. For United States federal
income tax purposes, allocations of items of income, gain, loss,
deduction, expense, and credit for each fiscal year of the
Partnership shall be in accordance with each Partner's economic
interest in the respective item, as determined by the Management
Committee pursuant to Section 704(b) of the Code, and the
regulations promulgated thereunder and subject to the
requirements of Section 704(c) of the Code and the regulations
promulgated thereunder. Unless the Management Committee
determines otherwise, allocations shall be made to each Partner
in the same manner as such Partner (i) would be required to
contribute to the Partnership or (ii) would receive as
distributions if the Partnership were to liquidate the assets of
the Partnership at their book value and distribute the proceeds
in accordance with Section 6. ; provided, however, that if any
such allocation is not permitted by applicable law, the
Partnership's subsequent income, gain, loss, deduction, expense
and credit shall be allocated among the Partners so as to reflect
as nearly as possible the allocation used in computing capital
accounts.
ARTICLE 7
Admissions, Transfers and Withdrawals
7.1 Admission of New Partners. After the Effective
Date, new Partners may be admitted to the Partnership only with
the written consent of, and upon such terms and conditions as are
approved by the unanimous approval of the Management Committee.
No admission of any new Partner shall cause the General Partner's
interest in Partnership allocations, distributions and capital to
be less than one percent (1%), and no Partner's Sharing Ratio in
the Partnership shall be reduced or diluted unless approved in
writing by such Partner or unless otherwise provided in any other
written agreement to which such Partner is a party.
7.2 Transfer of Partnership Interests.
(a) No Transfers Without Consent. No Partner may
transfer or encumber all or any portion of such Partner's
interest in the Partnership without the prior written
consent of the Management Committee; provided, however, that
Olympus may transfer all or any portion of its interest in
the Partnership to an Affiliate of Olympus Real Estate
Corporation without the consent of FM. Additionally, any
interest in the Partnership held by Olympus or its
Affiliates may be transferred in the exercise of rights of
the limited partners of Olympus Real Estate Fund II, L.P.
("Fund II") to remove the general partner under the limited
partnership agreement of Fund II.
(b) Death, Bankruptcy, etc. of Limited Partner. In
the event of the death, incompetence, insolvency,
bankruptcy, termination, liquidation or dissolution of any
Limited Partner:
(i) the Partnership shall not be terminated
or dissolved, and the remaining Partners shall continue
the Partnership and its operations, business and
affairs until the dissolution thereof as provided in
Section 10.1 of this Agreement;
(ii) such affected Limited Partner shall
thereupon cease to be a Partner for all purposes of
this Agreement and no officer, partner, beneficiary,
creditor, trustee, receiver, fiduciary or other legal
representative and no estate or other successor in
interest of such Limited Partner (whether by operation
of law of otherwise) shall become or be deemed to
become a Limited Partner for any purpose under this
Agreement;
(iii) the Partnership interest of such
affected Limited Partner shall not be subject to
withdrawal or redemption in whole or in part prior to
the dissolution, liquidation and termination of the
Partnership;
(iv) the estate or other successor in
interest of such affected Limited Partner shall be
deemed a transferee of, and shall be subject to all of
the obligations with respect to, the Partnership
interest of such affected Limited Partner as of the
date of death, incompetence, insolvency, bankruptcy,
termination, liquidation or dissolution, except to the
extent the Management Committee releases such estate or
successor from such obligations; and
(v) any legal representative or successor in
interest having lawful ownership of the assigned
Partnership interest of such affected Limited Partner
shall have the right to receive notices, reports and
distributions, if any, to the same extent as would have
been available to such affected Limited Partner.
7.3 Buy/Sell Option.
(a) In the event of a Deadlock at any time during
the term of the Partnership, either General Partner may
exercise a "buy-sell" right (the "Buy-Sell") as follows:
either General Partner (the "Offeror") exercising such Buy-
Sell (A) shall deliver to the other General Partner (the
"Offeree") a written notice (the "Buy/Sell Offer") stating
the Offeror's exercise of such right and setting forth the
Buy/Sell Offer and a description of any negotiations or
discussions with third parties that Offeror may have had
with respect to the sale of the Partnership Interest and the
Business, which Buy/Sell Offer shall represent the dollar
amount (without reduction for any deemed or imputed expenses
of sale) that the Offeror would be willing to pay to the
Partnership in cash for the Business (the "Offer Amount")
and (B) simultaneously with the delivery of the Buy/Sell
Offer, shall deliver into escrow with a title insurance
company located in Dallas, Texas selected by the Offeror
(the "Escrow Agent"), a good faith deposit in the amount of
the Offer Deposit. The Offeror hereby instructs the Escrow
Agent that the Escrow Agent shall either (i) in the event
the Offeree elects to sell its interest in the Partnership
(the "Partnership Interest") in accordance with the terms
hereof, apply such Offer Deposit to the purchase price as of
the Buy/Sell Closing Date (as hereinafter defined) or if the
Offeror fails to timely purchase the Offeree's Partnership
Interest in accordance with the terms hereof, disburse such
Offer Deposit in accordance with Section 7.3(g), or (ii) in
the event the Offeree elects to purchase the Offeror's
Partnership Interest, disburse such Offer Deposit in
accordance with Section 7.3(e).
(b) The notice transmitting the Buy/Sell Offer shall
be deemed to constitute an offer by the Offeror to purchase
the Offeree's Partnership Interest for a price equal to the
Receipt Amount. "Receipt Amount" shall mean the aggregate
amount which the Partner whose Partnership Interest is to be
transferred, whether Offeror or Offeree, would receive as a
Partnership distribution if (i) the Business were sold for
cash for the Offer Amount, (ii) all debts and liabilities of
the Partnership but without taking into account any deemed
or imputed expenses which would occur for the sale to third
parties (e.g. imputed brokerage fees, etc.) were paid in
full from such proceeds and (iii) prorations were made with
respect to all current assets and current liabilities of the
Partnership.
(c) The Offeree shall have forty-five (45) days from
the date of the Buy/Sell Offer to elect, by written notice
to the Offeror signed by the Partner constituting the
Offeree, whether to sell such Offeree's Partnership Interest
to the Offeror or whether to purchase (or cause its designee
to purchase) the Offeror's Partnership Interest in the
Partnership (the "Buy/Sell Election Period").
(d) If the Offeree fails to make an election within
such forty-five (45) day period, or fails to comply with
subsection (e) below, such Offeree shall be conclusively
deemed to have elected to sell its Partnership Interest in
the Partnership to the Offeror according to the terms of
this Section 7.3.
(e) If the Offeree makes an election to purchase
within such forty-five (45) day period by sending written
notice to the Offeror as required by subsection (c), and by
delivering into escrow with the Escrow Agent a good faith
deposit in the amount of the Offer Deposit, then, the
original Offeror shall be conclusively deemed to have
elected to sell its Partnership Interest in the Partnership
to the Offeree for a price equal to the applicable Receipt
Amount. In the event the Offeree timely makes an election
to purchase, the Offeree hereby instructs the Escrow Agent
that the Escrow Agent shall (i) return the Offeror's Offer
Deposit to the Offeror and (ii) hold the Offeree's Offer
Deposit and shall either apply such Offeree's Offer Deposit
to the purchase price or disburse such Offeree's Offer
Deposit in accordance with Section 7.3(g).
(f) The General Partner (the "Buy/Sell Purchaser")
that is obligated to purchase the Partnership Interest in
the Partnership of the other General Partner (the "Buy/Sell
Seller") pursuant to this Section 7.3 shall fix a closing
date (the "Buy/Sell Closing Date") for such purchase that is
not a Business Day that is not later than forty-five (45)
days after the expiration of the Buy/Sell Election Period,
by written notice to the Buy/Sell Seller at least fifteen
(15) days in advance of Buy/Sell Closing Date. The closing
of such purchase shall take place on the Buy/Sell Closing
Date at the address of the Escrow Agent. At such closing,
the Partner constituting the Buy/Sell Seller shall execute
and deliver to the Buy/Sell Purchaser (or its designee) such
instruments of assignment, bills of sale, amendments to this
Agreement and other instruments and documents as the
Buy/Sell Purchaser and the Buy/Sell Seller (or such
designee) may reasonably require for the conveyance to such
Buy/Sell Purchaser (or such designee) of all of the Buy/Sell
Seller's right, title and interest in and to the Buy/Sell
Seller's Partnership Interest in the Partnership against
receipt by the Buy/Sell Seller of a wire transfer of
immediately available funds in an amount equal to the
applicable Receipt Amount; and the Buy/Sell Seller hereby
irrevocably constitutes and appoints the Buy/Sell Purchaser
as its attorney-in-fact to execute, acknowledge and deliver
any of such instruments or documents. Each of the Buy/Sell
Seller and Buy/Sell Purchaser shall each bear their
respective closing costs and expenses (including, but not
limited to, all attorney's fees and costs and all applicable
transfer and income taxes) incurred in the purchase or sale
of the Buy/Sell Seller's Partnership Interest in the
Partnership hereunder. Such sale of such Partnership
Interest shall be made without representation, warranty or
recourse, except for representations and warranties in form
and substance reasonably acceptable to the Buy/Sell
Purchaser and the Buy/Sell Seller with respect to existence,
good standing, title, no encumbrance, authority,
authorization, no conflicts, and such other customary
matters as may be reasonably requested by the Buy/Sell
Purchaser. If the Buy/Sell Offer or the closing of the
purchase contemplated thereby causes the maturity of any
Partnership indebtedness to be accelerated, the Buy/Sell
Seller shall be released from liability resulting from such
accelerated indebtedness and the Buy/Sell Purchaser shall
pay such indebtedness in full (including without limitation,
any accrued but unpaid interest and any prepayment premiums
or penalties) at Buy/Sell Purchaser's sole cost and expense
and shall indemnify and hold Buy/Sell Seller harmless from
and against any losses, damages, costs or expenses
(including attorneys' fees) incurred by Buy/Sell Seller, or
the Buy/Sell Seller's Affiliates, employees, agents,
representatives, consultants, attorneys, fiduciaries,
servants, officers, directors, partners, predecessors,
successors and assigns and Affiliates of the foregoing (the
"Indemnified Parties"), as a direct or indirect result
thereof, other than any losses, damages, costs or expenses
(including attorneys' fees) incurred by any of the
Indemnified Parties as a direct result of such Indemnified
Party's bad conduct. As a precondition to the closing of
the Buy/Sell transaction, the Buy/Sell Seller shall be
released from liability from any indebtedness of the
Partnership, including, without limitation, the release of
any guaranty and collateral pledged to secure any guaranty
debt. Anything contained in this Agreement to the contrary
notwithstanding, in the event the sale of the Partnership
Interest is not consummated because of a default on the part
of Buy/Sell Seller or if a condition precedent cannot be
fulfilled because Buy/Sell Seller frustrated such
fulfillment, Buy/Sell Purchaser may, at its election, pursue
an action for specific performance and/or costs and
expenses.
(g) In the event that the Buy/Sell Purchaser
defaults in its obligation to purchase the Partnership
Interest of the Buy/Sell Seller in the Partnership on the
Buy/Sell Closing Date, the Buy/Sell Seller shall have the
right to (i) solicit third party offers on behalf of the
Partnership for the purchase of the Business, to accept the
best such offer, as determined by the Buy/Sell Seller in its
sole and absolute discretion, and to consummate the sale of
the Business to such third party pursuant to such offer,
(ii) purchase the Partnership Interest of the Buy/Sell
Purchaser for a purchase price equal to ninety percent (90%)
of the aggregate Partnership distributions that the Buy/Sell
Purchaser would be entitled to receive under this Agreement
if the Business were sold for cash for the Offer Amount and
all debts and liabilities of the Partnership (excluding
imputed sale expenses) were paid in full from such proceeds
and proration were made with respect to all current assets
and current liabilities of the Partnership, (iii)
specifically enforce the Buy/Sell Purchaser's obligation to
purchase the Partnership interest of the Buy/Sell Seller,
and (iv) notify the Escrow Agent holding the Offer Deposit
of the Buy/Sell Purchaser immediately to deliver such Offer
Deposit to the Buy/Sell Seller as liquidated damages for the
breach by such Buy/Sell Purchaser (and the Buy/Sell
Purchaser covenants and agrees to cause, and hereby
instructs, the Escrow Agent to deliver such Offer Deposit to
the Buy/Sell Seller). The delivery of the Offer Deposit to
the Buy/Sell Seller shall not constitute a return of
capital. The Buy/Sell Purchaser hereby constitutes and
appoints the Buy/Sell Seller as its attorney-in-fact to
execute and deliver on behalf of the Buy/Sell Purchaser all
documents as may be reasonably required in connection with
the delivery by the Escrow Agent of the Offer Deposit to the
Buy/Sell Seller.
7.4 No Substituted Partners. Except as permitted by
Section 7.1, no transferee of any general or limited partnership
interest in the Partnership may become a substituted General or
Limited Partner. Rather, any transferee of any Partnership
interest of a Partner shall be entitled solely to rights as
assignee of the rights to receive all or part of the share of the
income, gains, losses, deductions, expenses, credits,
distributions, or returns of capital to which his or its
transferor would otherwise be entitled with respect to the
Partnership interest so transferred.
7.5 Withdrawal of Partners. Except as permitted by
Section 7.2 hereof, no Partner shall have any right to withdraw
or resign from the Partnership without the unanimous consent of
the Management Committee.
ARTICLE 8
General Accounting Provisions and Books
8.1 Books of Account; Tax Returns. The Financial
Partner shall prepare and file, or shall cause to be prepared and
filed, all United States federal, state, and local income and
other tax returns required to be filed by the Partnership and
shall keep or cause to be kept complete and appropriate records
and books of account in which shall be entered all such
transactions and other matters relative to the Partnership's
operations, business and affairs as are usually entered into
records and books of account that are maintained by persons
engaged in business of like character or are required by the Act.
Except as otherwise expressly provided herein, such books and
records shall be maintained in accordance with the basis utilized
in preparing the Partnership's United States federal income tax
returns, which returns, if allowed by applicable law, may upon
the approval of the Management Committee be prepared on an
accrual basis.
8.2 Place Kept; Inspection. The books and records
shall be maintained at the principal place of business of the
Partnership, and all such books and records shall be available
for inspection and copying at the reasonable request, and at the
expense, of any Partner during the ordinary business hours of the
Partnership.
8.3 Tax Matters Partner. The Financial Partner
shall be the tax matters partner of the Partnership and, in such
capacity, shall exercise all rights conferred, and perform all
duties imposed, upon a tax matters partner under Sections 6221
through 6233 of the Code and the regulations promulgated
thereunder; provided, however, that the Operating Partner shall
have the right to review and approve any actions taken by the
Financial Partner in its capacity as the tax matters partner.
Notwithstanding the foregoing, the Financial Partner shall have
the right to select the methodology to be used pursuant to
Section 704(c) of the Code subject to the Operating Partner's
consent, which consent shall not be unreasonably withheld.
ARTICLE 9
Amendments and Waivers
9.1 Amendments and Waivers. Except as expressly
provided in Section 9.3 of this Agreement, the Management
Committee may, whether with or without the consent or vote of any
Limited Partner, amend or waive any provision of this Agreement
which merely (i) reflects the admission or withdrawal of one or
more Limited Partners in accordance with this Agreement,
(ii) corrects an error or clarifies an ambiguity in this
Agreement, (ii) does not adversely affect the Financial Partner
or the Operating Partner in any material respect or (iii) changes
Schedule I to this Agreement to reflect the Sharing Ratios or
Partnership Interests of the Partners as from time to time
amended in accordance with this Agreement. The Management
Committee shall amend Schedule I to this Agreement to reflect any
additional Capital Contributions. The Partners agree to look to
the books and records of the Partnership for determination of the
actual amount of Capital Contributions made to the Partnership,
as provided in Section 3.1 of this Agreement.
9.2 Certain Other Amendments. Notwithstanding any
provision to the contrary contained herein, no amendment to or
waiver of any provision of this Agreement shall be effective
against a given Partner without the consent or vote of such
Partner if such amendment or waiver would (i) cause the
Partnership to fail to be treated as a limited partnership under
the Act or cause a Limited Partner to become liable as a general
partner of the Partnership, (ii) change Section 3.1 of this
Agreement to increase a Partner's obligation to contribute to the
capital of the Partnership, (iii) change Section 5.1 or 5.2 of
this Agreement to affect adversely any Partner's rights to
exculpation or indemnification, (iv) change Section 6.1 or 6.2 of
this Agreement to affect adversely the participation of such
Partner in the income, gains, losses, deductions, expenses,
credits, capital or distributions of the Partnership (including
any amendments to admit one or more new Limited Partners or
General Partners), (v) change Section 7.1 of this Agreement to
affect adversely the anti-dilution rights of such Partner,
(vi) change the percentage of Partners necessary for any consent
or vote required hereunder to the taking of any action or (vii)
amend Section 9.2 of this Agreement.
ARTICLE 10
Dissolution and Termination
10.1 Dissolution. The Partnership shall be dissolved
upon the first to occur of the following events:
(i) the election of the both General
Partners to dissolve the Partnership with the consent
of the Limited Partners then representing eighty
percent (80%) in interest of all Limited Partners at
any time;
(ii) the election of the Financial Partner to
dissolve the Partnership if all or substantially all
Partnership assets shall have been sold or disposed of
or shall consist of cash;
(iii) both the General Partners shall
have withdrawn from the Partnership within the meaning
of the Act, or any other dissolution event specified in
the Act shall have occurred;
(iv) the Financial Partner shall have
(A) made a general assignment for the benefit of
creditors, (B) filed a voluntary petition in
bankruptcy, (C) filed a petition or answer seeking for
itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any bankruptcy or debtor relief law,
(D) filed an answer or other pleading admitting or
failing to contest the material allegations of a
petition filed against it in any bankruptcy or
insolvency proceeding brought against it or (E) sought,
consented to, or acquiesced in the appointment of a
trustee, receiver or liquidator of the Financial
Partner or of all or any substantial part of its
property;
(v) if within sixty (60) days after the
commencement of any proceeding against the Financial
Partner seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or
similar relief under any bankruptcy or debtor relief
law, the proceeding shall not have been dismissed; or
(vi) if within sixty (60) days after the
appointment (without the Financial Partner's consent or
acquiescence) of a trustee, receiver or liquidator of
the Financial Partner or of all or any substantial part
of its property, the appointment shall not have been
vacated or stayed if within sixty (60) days after the
expiration of any such stay, the appointment shall not
have been vacated.
Notwithstanding the foregoing, the Partnership shall not be
dissolved upon the occurrence of an event specified in (iii)
through (vi) of this Section 10.1 if within ninety (90) days
after such occurrence a majority in interest (under applicable
federal income tax principles) of the remaining Partners agree in
writing to continue the business of the Partnership and to the
appointment, effective as of the date of withdrawal, of a
successor Financial Partner.
10.2 Accounting on Dissolution. Following the
dissolution of the Partnership pursuant to Section 10.1 of this
Agreement, the books of the Partnership shall be closed, and a
proper accounting of the Partnership's assets, liabilities and
operations shall be made by the Financial Partner, all as of the
most recent practicable date. The Financial Partner shall serve
as the liquidator of the Partnership unless it has been removed
or unless it otherwise fails or refuses to serve. If the
Financial Partner does not serve as the liquidator, one or more
other persons or entities may be selected to serve by the
Operating Partner. The expenses incurred by the liquidator in
connection with the dissolution, liquidation and termination of
the Partnership shall be borne by the Partnership.
10.3 Termination. As expeditiously as practicable,
but in no event later than one year (except as may be necessary
to realize upon any material amount of property that may be
illiquid), after the dissolution of the Partnership pursuant to
Section 10.1 of this Agreement, the liquidator shall cause the
Partnership to pay the current liabilities of the Partnership and
(i) establish a reserve fund (which may be in the form of cash or
other property, as the liquidator shall determine) for any and
all other liabilities, including contingent liabilities, of the
Partnership in a reasonable amount determined by the liquidator
to be appropriate for such purposes or (ii) otherwise make
adequate provision for such other liabilities. To the extent
that cash required for the foregoing purposes is not otherwise
available, the liquidator may sell property, if any, of the
Partnership for cash. Thereafter, all remaining cash or other
property, if any, of the Partnership shall be distributed to the
Partners in accordance with the provisions of Section 6.1 of this
Agreement. The Partners must agree on the value and distributee
for all in-kind distributions or else all property must be sold
and the proceeds distributed in accordance herewith. At the time
final distributions are made in accordance with Section 6.1 of
this Agreement, a certificate of cancellation shall be filed in
accordance with the Act, and the legal existence of the
Partnership shall terminate, but if at any time thereafter any
reserved cash or property is released because in the judgment of
the liquidator the need for such reserve has ended, then such
cash or property shall be distributed in accordance with Section
6.1 of this Agreement.
10.4 No Negative Capital Account Obligation.
Notwithstanding any other provision of this Agreement to the
contrary, in no event shall any Partner who has a negative
capital account upon final distribution of all cash and other
property of the Partnership be required to restore such negative
account to zero.
10.5 No Other Cause of Dissolution . The Partnership
shall not be dissolved, or its legal existence terminated, for
any reason whatsoever except as expressly provided in this
Article 10.
10.6 Merger. Subject to the rights of the Partners
pursuant to Section 9.2, the Partnership may, with the written
consent of the Financial Partner acting with the unanimous
approval of the Management Committee, adopt a plan of merger and
engage in any merger permitted by applicable law.
ARTICLE 11
Miscellaneous
11.1 Waiver of Partition. Each Partner hereby
irrevocably waives any and all rights that he or it may have to
maintain an action for partition of any of the Partnership's
property.
11.2 Entire Agreement. This Agreement constitutes
the entire agreement among the Partners with respect to the
subject matter hereof and supersedes any prior agreement or
understanding among them with respect to such subject matter.
11.3 Severability. If any provision of this
Agreement, or the application of such provision to any person or
circumstance, shall be held invalid under the applicable law of
any jurisdiction, the remainder of this Agreement or the
application of such provision to other persons or circumstances
or in other jurisdictions shall not be affected thereby. Also,
if any provision of this Agreement is invalid or unenforceable
under any applicable law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such law. Any provision
hereof that may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other
provision hereof.
11.4 Notices. All notices, requests, demands, and
other communications hereunder shall be in writing and shall be
deemed to have been duly given if sent by overnight courier, hand
delivered, mailed (first class registered mail or certified mail,
postage prepaid), or sent by telex or telecopy if to the
Partners, at the addresses or telex or facsimile numbers set
forth on Schedule I hereto, and if to the Partnership, at the
address of its principal place of business at 200 Crescent Court,
Suite 1650, Dallas, Texas 75201 (fax 214/740-7340), or to such
other address as the Partnership or any Partner shall have last
designated by notice to the Partnership and all other parties
hereto in accordance with this Section 11.4. Notices sent by
hand delivery shall be deemed to have been given when received;
notices mailed in accordance with the foregoing shall be deemed
to have been given three days following the date so mailed;
notices sent by telex or telecopy shall be deemed to have been
given when electronically confirmed; and notices sent by
overnight courier shall be deemed to have been given on the next
business day following the date so sent.
11.5 Governing Laws. This Agreement shall be
governed by and construed and enforced in accordance with the
laws of the State of Texas (without regard to principles of
conflicts of laws).
11.6 Successors and Assigns. Except as otherwise
specifically provided, this Agreement shall be binding upon and
inure to the benefit of the Partners and their respective
successors and permitted assigns.
11.7 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall constitute one and
the same instrument.
11.8 Headings. The section and article headings in
this Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of
any provision hereof.
11.9 Other Terms. All references to "Articles" and
"Sections" contained in this Agreement are, unless specifically
indicated otherwise, references to articles, sections,
subsections, and paragraphs of this Agreement. Whenever in this
Agreement the singular number is used, the same shall include the
plural where appropriate (and vice versa), and words of any
gender shall include each other gender where appropriate. As
used in this Agreement, the following words or phrases shall have
the meanings indicated: (i) "or" shall mean "and/or"; (ii) "day"
shall mean a calendar day; (iii) "including" or "include" shall
mean "including without limitation"; and (iv) "law" or "laws"
shall mean statutes, regulations, rules, judicial orders, and
other legal pronouncements having the effect of law. Whenever
any provision of this Agreement requires or permits a Partner to
take or omit to take any action, or make or omit to make any
decision, unless the context clearly requires otherwise, such
provision shall be interpreted to authorize an action taken or
omitted, or a decision made or omitted, by the Partner acting
alone and in good faith.
11.10 Power of Attorney. By execution of this
Agreement, the Operating Partner and each Limited Partner hereby
makes, constitutes and appoints the Financial Partner, with full
power of substitution and re-substitution in the Financial
Partner (in its sole discretion), such Partner's true and lawful
attorney-in-fact (the "Attorney") for and in the Operating
Partner's or the Limited Partner's name, place and stead and for
its use and benefit, to prepare, execute, certify, acknowledge,
swear to, file, deliver or record any or all of the following,
authorized pursuant to the terms of this Agreement:
(i) the Partnership's certificate of limited
partnership or any other agreement, certificate,
report, consent, instrument, filing or writing made by
or relating to the Partnership that the Attorney deems
necessary, desirable, or appropriate for the lawful
purpose of (A) organizing the Partnership under the
Act, (B) admitting Partners with respect to the
Partnership, (C) pursuing or effecting any rights or
remedies available under this Agreement or otherwise
with respect to a defaulting Partner, (D) qualifying
the Partnership to do business in any jurisdiction and
(E) complying with any law, agreement or obligation
applicable to the Partnership;
(ii) any agreement, certificate, report,
consent, instrument, filing or writing made by or
relating to the Partnership necessary, desirable or
appropriate to effectuate the business purposes of, or
the dissolution, termination or liquidation of, the
Partnership pursuant to applicable law or the
respective terms of this Agreement; and
(iii) any amendment to or modification or
restatement of this Agreement, the Partnership's
certificate of limited partnership, or any other
agreement, certificate, report, consent, instrument,
filing or writing of any type described in subsection
(i) or (ii) of this Section 11.10, provided that any
amendment of or modification to this Agreement shall
first have been adopted in accordance with Article 9 of
this Agreement.
11.11 Transfer and Other Restrictions. INTERESTS IN
THE PARTNERSHIP HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD UNLESS SUCH
INTERESTS HAVE BEEN REGISTERED UNDER SUCH ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. INTERESTS IN THE
PARTNERSHIP ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER,
VOTING AND OTHER TERMS AND CONDITIONS SET FORTH IN (1) ARTICLE 7
AND (2) VARIOUS INVESTMENT AGREEMENTS BETWEEN OR AMONG CERTAIN
PARTNERS. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED FROM THE
PARTNERSHIP OR THE FINANCIAL PARTNER AT THEIR PRINCIPAL EXECUTIVE
OFFICES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this
instrument effective as of the Effective Date.
FINANCIAL PARTNER:
a___________________
By:_______________
Name:_____________
Title:____________
OPERATING PARTNER:
a__________________
By:________________
Name:______________
Title:_____________
LIMITED PARTNERS:
a__________________
By:________________
Name:______________
Title:_____________
a__________________
By:________________
Name:______________
Title:_____________
EXHIBIT A
Business Plan
EXHIBIT B
Operating Budget
SCHEDULE I
Partnership Capital Contributions and Sharing Ratios
[TO BE DETERMINED PER SECTION 2.1 OF COMMITMENT AGREEMENT]
Initial Capital Sharing
Partner and Address Contributions Ratios
Financial Partner:
Operating partner:
Limited Partners:
Total All Partners
Exhibit B
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is
executed as of the day of _______________ 1998, to be
effective conditioned upon and as of the date of the acquisition
of the Property by Owner, by and between
______________________________ a ___________________ (hereinafter
called "Owner"), and _____________________________ a
___________________ (hereinafter called "Property Manager").
W I T N E S S E T H:
WHEREAS, Owner is acquiring that certain real property
located in _________ _______________________ more particularly
described on Exhibit A attached hereto and made a part hereof for
all purposes, together with all of the improvements located
thereon (collectively, the "Property").
WHEREAS, Owner desires to engage Property Manager to
develop, lease, manage, maintain and operate the Property and
Property Manager desires to accept such engagement, upon the
terms and conditions hereinafter set forth.
WHEREAS, Owner has provided to Property Manager, Owner's
current Business Plan (hereinafter defined) and the operating and
capital budgets approved by Owner as of the date hereof.
NOW, THEREFORE, for and in consideration of the premises and
mutual covenants and agreements contained in this Agreement and
the compensation to be paid hereunder, Owner and Property Manager
hereby agree as follows:
ARTICLE I
ENGAGEMENT OF PROPERTY MANAGER
Owner hereby engages Property Manager and Property Manager
hereby accepts such engagement on the terms and conditions
hereinafter provided as manager for the Property. Property
Manager shall develop, lease, manage, maintain and operate the
Property in an efficient and first class manner consistent with
the Business Plan and Budget (hereinafter defined) and shall
exercise due diligence in all of its endeavors. All of Property
Manager's duties under this Agreement shall be subject to funds
being made available to Property Manager by Owner for the
Property Manager to perform its duties.
ARTICLE II
SERVICES TO BE PERFORMED BY PROPERTY MANAGER
II.1 Expenses. All reasonable obligations or reasonable
expenses approved by Owner in writing and incurred by Property
Manager in the performance of its duties hereunder in accordance
with the provisions hereof shall be at the expense of Owner
except as otherwise specifically provided in this Agreement.
Without Owner's prior written consent or as authorized in the
Business Plan or Budget, Property Manager shall not incur any
cost not specifically set forth in the most recently approved
Budget.
II.2 Contracts. To the extent necessary to fulfill its
obligations under this Agreement, Property Manager shall (i)
identify and, with the prior written approval of Owner or as set
forth in the Business Plan or Budget, enter into, in Owner's
name, contracts with engineers, tradesmen and other independent
contractors to perform services necessary or advisable for the
development, operation, maintenance or repair of the Property;
and (ii) with the prior written approval of Owner or as set forth
in the Business Plan or Budget, place orders, in Property
Manager's name on behalf of Owner, for such equipment, tools,
appliances, materials and supplies as are reasonable and
necessary to properly develop, maintain, manage, operate or
repair the Property. Except with the prior written consent of
Owner, every contract entered into by Property Manager for or in
connection with the Property shall include as a condition thereof
the right by Owner to terminate, with or without cause, on thirty
(30) days prior written notice, without the payment of a
cancellation fee. Owner shall be obligated to pay the cost of
any contract or agreement described in this section only if such
cost is provided for in the Preliminary Budget or the most
recently approved Budget or is otherwise approved by Owner in
writing.
II.3 Maintenance, Repair and Sale of Property. Property
Manager shall supervise the development and sale of the Property
and shall maintain the improvements, appurtenances and grounds of
the Property in accordance with the "Management Standard" (as
defined in Section 4.1 hereof), including within such
maintenance, without limitation thereof, such normal maintenance
and repair work as may be necessary or, with Owner's prior
written consent, desirable.
II.4 Insurance.
(a) Owner Obligations. Owner shall cause to be placed
and kept in force all forms of insurance as Owner deems
prudent and reasonable given the nature of the Property.
All insurance coverage shall be placed with such companies,
in such amounts, and with such beneficial interests
appearing therein as Owner deems prudent and reasonable
given the nature of the Property. Owner shall procure
appropriate clauses in, or endorsements on, all of the
policies whereby the insurer names Property Manager as an
additional insured, and the insurer waives subrogation and
agrees to not terminate any such policy or reduce coverage
or amount without giving Owner at least thirty (30) days
prior written notice.
(b) Property Manager Obligations. Property Manager
shall promptly investigate and make a full and timely
written report to Owner and, if Owner requests, to Owner's
insurance company as to all accidents, claims for damages
relating to the ownership, operation and maintenance of the
Property and any damage or destruction to the Property and
the estimated cost of repair thereof and shall prepare any
and all reports required by Owner and, if Owner requests, by
its insurance company in connection therewith. All such
reports shall be timely filed with the insurance company as
required under the terms of the insurance policy involved.
Without obtaining the prior written approval of Owner, which
may be granted or withheld in Owner's sole discretion,
Property Manager shall not settle any claims against
insurance companies arising out of any policies or take any
other action in connection with such settlements, including
the execution of proofs of loss, the adjustment of losses,
signing of receipts and collection of money. The cost of
the insurance and the payment of all premiums therefor shall
be the sole responsibility of, and at the sole expense of,
Owner. Property Manager shall assist Owner in completing
any insurance applications, questionnaires, etc. reasonably
requested by Owner or Owner's insurance agent or insurance
company.
II.5 Operating Budgets; Business Plans. Notwithstanding the
delivery of the approved Budget and Business Plan, unless some or
all of the obligations of this Section 2.5 are specifically
waived in writing by Owner, Property Manager shall prepare the
items described herein.
(a) Preliminary Budgets. Within thirty (30) days of
the date this Agreement is fully executed, Property Manager
shall prepare and deliver to Owner, for Owner's approval, a
proposed budget and operating plan for the upcoming one
hundred twenty (120) days, which budget and operating plan
shall reflect thereon projections of all receipts (if any)
and operating costs and expenses, capital expenditures and
reserves that Property Manager, in the exercise of good
business judgment, believes will be received or necessary to
be incurred, as the case may be, to develop and maintain the
Property during such one hundred twenty (120) days. Within
ninety (90) days of the date this Agreement is fully
executed, Property Manager shall further prepare and deliver
to Owner an additional proposed budget and operating plan
(such proposed budget and operating plan, together with the
foregoing budget and operating plan, the "Preliminary
Budget" and the "Preliminary Plan", respectively), for the
upcoming calendar year, which budget and operating plan
shall reflect thereon projections of all receipts (if any)
and operating costs and expenses, capital expenditures and
reserves that Property Manager, in the exercise of good
business judgment, believes will be received or necessary to
be incurred, as the case may be, to develop and maintain the
Property during such calendar year.
(b) Annual Budgets. Thereafter, on or prior to
October 31st of each calendar year during the Term (as
defined in Section 4.4) hereof, beginning on the first
October 31st, after the date hereof, Property Manager shall
submit to Owner, for Owner's approval, proposed budgets and
operating plans for the Property on an annual basis for the
upcoming calendar year, which proposed budgets and operating
plans shall reflect thereon projections of all receipts (if
any) and operating costs and expenses, capital expenditures
and reserves that Property Manager, in the exercise of good
business judgment, believes will be received or necessary to
be incurred, as the case may be, to develop and maintain the
Property during such calendar year. Such proposed budgets
and operating plans (including the Preliminary Budget and
the Preliminary Plan) shall be submitted by Property Manager
solely as good faith estimates, without warranty of their
accuracy or attainability; provided, however, that, except
as otherwise expressly provided in this Agreement, Property
Manager shall not be reimbursed by Owner for, and Property
Manager hereby expressly indemnifies Owner against, any
loss, expense or claim in connection with any unauthorized
expenditure or liability incurred by any action taken by
Property Manager. Property Manager shall use its best
efforts to manage the development of the Property in a
manner consistent with, and subject to, both the total cost
limitations and categories in the most recently approved
Budget.
(c) Contents. Without limiting the foregoing, each
Budget and Business Plan (including the Preliminary Budget
and the Preliminary Plan) shall include between them: (i) a
projected income statement for the Property, (ii) a
projected balance sheet for the Property, (iii) a schedule
of projected operations and cash flow, (iv) a reasonable
estimate and projected budget of gross receipts and
operating expenses, itemized in a manner acceptable to
Owner, (v) a projected budget for capital expenditures and
replacements, (vi) an identification of staffing to be
employed, (vii) a separate estimate of the Property
Management Fee (as defined in Section 31.), (viii) a
narrative description of the program for the development and
marketing of the Property, and (ix) any and all other
matters reasonably requested by Owner.
(d) Owner Approval. Owner shall, within thirty (30)
days after receipt of a proposed Budget and Business Plan
(including the Preliminary Budget and the Preliminary Plan),
approve or disapprove such Budget and Business Plan in its
sole discretion. As used herein, the terms "Business Plan"
and "Budget" shall refer to the currently approved Budget
and Business Plan approved by Owner as amended and/or
modified from time to time. Owner shall provide Manager
written notice of its approval or disapproval; provided,
that in the event Owner fails to do so, the Budget or
Business Plan, as the case may be, from the previous year
shall control until a new budget or business plan is
approved. Within fifteen (15) days after Owner submits any
objection to the proposed budget or business plan, Manager
will submit a revised budget or business plan to Owner, as
the case may be. If Owner does not approve such revised
budget or business plan within fifteen (15) days of its
submission to Owner, the budget or business plan as the case
may be, from the previous year shall control until a new
budget or business plan is approved.
II.6 Property Account and Owner Account.
(a) Owner Account. Property Manager shall establish
and maintain in a banking or other financial institution
approved by Owner or set forth in the Business Plan from
time to time throughout the term of this Agreement, a
separate bank or similar account in the name of Owner for
the deposit of moneys of Owner received, if any, with
respect to the Property (the "Owner Account"). Property
Manager shall also establish such other special bank or
similar accounts as may be approved by Owner. All revenue
from the Property shall be promptly deposited in the Owner
Account.
(b) Property Account. Operating expenses of the
Property shall be paid by the Property Manager from an
account established in a financial institution approved by
Owner to process funds as described in Section 2.7 (the
"Property Account")
II.7 Disbursements by Owner to Property Manager.
(a) Monthly Payments. On or before the twentieth
(20th) day of each calendar month, Property Manager shall
deliver to Owner a written request for disbursement, setting
forth, in reasonable detail, the costs and expenses
reasonably estimated to be paid by Property Manager for the
upcoming calendar month, together with any other working
capital needs of the Property for the upcoming calendar
month, in each case, in accordance with the Budget (the
"Required Monthly Funds"). Property Manager shall also
submit reasonable substantiation as requested by Owner for
all requested disbursements. In the event that any
requested disbursement is not consistent with, or in
compliance with, the Budget, Property Manager shall set
forth such requested disbursements in a separate report and
shall set forth a brief explanation for the reason for such
discrepancy. On or before the first day of the month for
which the particular request for the Required Monthly Funds
is made, Owner shall transfer, via wire transfer, from the
Owner Account to the Property Account designated by Property
Manager the Required Monthly Funds approved by Owner.
(b) Emergency Withdrawals. Property Manager shall
only be entitled to make withdrawals from the Property
Account in accordance with the Budget or the Business Plan
or in connection with a bona fide emergency due to casualty
or act of God under circumstances in which it would be
unreasonable to seek to obtain Owner's approval, in which
case Property Manager shall be entitled to exceed, by a
reasonable amount, the amounts set forth in the Budget in
order to address such bona fide emergency situation;
provided that as soon as practicable after such emergency,
Property Manager shall fully inform Owner of the
circumstances surrounding such situation and obtain, on a
"going-forward" basis only, Owner's approval with respect to
Property Manager's handling of similar emergency events at
the Property in the future. It is understood that any
action taken by Property Manager under this Section 2.7(b)
in connection with any particular emergency event shall be
considered as being within Property Manager's scope of
authority under this Agreement but shall not create any
precedent or duty on the part of Property Manager or Owner
to take any action in connection with any future event.
Nothing contained in this Section 2.7(b) or elsewhere in
this Agreement is intended to provide any benefit to any
third parties who are not parties hereto or successors or
permitted assigns of parties hereto or impose upon Property
Manager or Owner any duty or obligation to any third parties
who are not parties hereto or successors or permitted
assigns of parties hereto, nor shall it have the effect of
giving, any enforceable rights to any third parties who are
not parties hereto or successors or permitted assigns of
parties hereto, whether such claims are asserted as third
party beneficiary rights or otherwise. The Owner and
Property Manager hereby acknowledge and agree that, if the
Owner fails to deposit funds in the Property Account in an
amount sufficient to fund the expenses authorized in the
Budget, Property Manager shall not be required to incur any
out of pocket costs in order to perform Property Manager's
obligations under this Agreement.
II.8 Costs Not Reimbursed to Property Manager. Unless
otherwise provided herein, Owner shall not be obligated to
reimburse Property Manager for the payment by Property Manager of
(a) any expense for office equipment or office supplies of
Property Manager other than those used on the Property and
approved in writing by Owner; (b) any overhead expenses of
Property Manager incurred in its general offices; (c) unless
otherwise consented to by Owner in writing, any salaries, wages
and expenses for any personnel, including, without limitation,
personnel spending all or a portion of their working hours at or
providing services to the Property specifically performing
Property Manager's duties hereunder; (d) the cost of fidelity
insurance; (e) any accounting costs or overhead costs incurred in
connection with the preparation and delivery of the statements
and reports required hereunder; or (f) any travel costs incurred
by Property Manager not specifically provided for in the Budget.
II.9 Records; Reporting.
(a) Records. All statements, receipts, invoices,
checks, leases, contracts, worksheets, financial statements,
books and records, and all other instruments and documents
relating to or arising from the development, operation or
management of the Property shall be the property of Owner;
provided, that throughout the term of this Agreement, all of
such items shall be maintained by Property Manager in a
manner consistent with the terms of this Agreement and with
books and records customarily maintained by managing agents
of properties similar in location, size and revenue to the
Property. Owner and Property Manager shall have the right
to inspect and to copy all such items, at such party's
expense, at all reasonable times, and from time to time,
during the term of this Agreement. Upon the termination of
this Agreement, all of such books, records and all other
information relating to the Property promptly shall be
delivered to Owner; provided, however, that at Property
Manager's sole expense, Property Manager or its
representatives shall have the right, for a reasonable
period of time not to exceed three (3) years following such
termination, to inspect such books, records and other
information for data that directly relates to the period
during which Property Manager managed the Property and to
make copies thereof, at the offices of Owner upon reasonable
advance notice to Owner.
(b) Statements. Property Manager shall prepare and
deliver to Owner on a monthly and on a calendar quarterly
basis, Property Manager's written estimates of the amounts,
if any, by which any categories of the Preliminary Budget or
the Budget must be adjusted to adequately fund the
development, operation and maintenance of the Property for
the then current month or quarter as the case may be,
although Owner shall be under no obligation to change the
Preliminary Budget or the Budget. Such reports shall
include the following information: (i) a statement of
operations on the Property during such month or quarter as
the case may be, and the cost thereof, (ii) a statement of
year-to-date operations on the Property, and the cost
thereof, (iii) a statement of the actual cost of operations
on the Property during such month or quarter as the case may
be compared to the Preliminary Budget or the Budget which
identifies any variance between such costs and the
Preliminary Budget or the Budget, and (iv) a description and
explanation of such variances. Property Manager also shall
furnish Owner, within thirty (30) days after Owner's
request, such further information covering the operation and
maintenance of the Property as Owner may reasonably require,
including, but not limited to, the following: (i) income
statement (accrual basis for taxes and insurance), month and
year-to-date versus Budget; (ii) variance report (narrative
form, month and year-to-date), (iii) balance sheet, (iv)
general ledger, (v) rent roll (including security deposit
listing), (vi) accounts receivable aging report, (vii) bank
reconciliation for each account, (viii) calculation of
Property Management Fee, (ix) schedule of reserve and escrow
accounts, (x) schedule of capital expenditures, (xi) a re-
forecast report, on a quarterly basis, of current full year
operations compared to the Budget with explanations for all
material variances, (xii) a marketing qualitative summary of
property operations for the preceding month including
comments on revenues, expenses, marketing, leases,
competition, legal and other issues affecting the Property,
and (xiii) any and all other reports reasonably requested by
Owner.
(c) Annual Accounting Report. Property Manager agrees
(i) to deliver to owner, within twenty (20) days after the
end of each fiscal year, an annual accounting report
(including balance sheet, income statement and other
financial statements), showing the results of gross
receipts, gross operating expenses, net operating income,
net cash flow and the Property Management Fee which would be
payable if the Agreement were terminated as of the end of
such fiscal year and any other information necessary to make
the computations required hereby or which may be requested
by Owner, all for such fiscal year and (ii) to cooperate
fully with Owner, at no additional expense to Property
Manager, but without limiting Property Manager's obligations
under Section 2.9(e), in supplying all of the information
and documentation necessary for a nationally recognized firm
of certified public accountants selected by Owner (the
"Auditor") to prepare and deliver to Owner an audit of the
annual accounting report provided by Property Manager to
Owner pursuant to this Section 2.9(c) within forty-five (45)
days after the end of each fiscal year.
(d) Additional Fiscal Reports. Property Manager
shall, upon the request of Owner, prepare for Owner or
assist Owner in the preparation of such additional financial
reports with respect to the Owner or the Property as Owner
may reasonably request or may be required in the preparation
of the audited annual accounting to be prepared pursuant to
this Section 2.9. Property Manager acknowledges and agrees
that the Property Management Fee to be paid under this
Agreement includes compensation to Property Manager for the
preparation of papers and schedules reasonably necessary for
the Auditor to conduct its review of the Property's books
and records. To the extent such papers and schedules are
not properly prepared, Property Manager agrees to reimburse
Owner for the reasonable additional cost and expense
incurred by Owner for the Auditor to prepare such papers or
schedules.
(e) No Liability for Returns Required by Law.
Property Manager shall be responsible for preparing and
filing any forms, reports or returns (except Owner's tax
returns) that may be required by law relating to the
Property. Property Manager shall also be responsible for
any forms, reports or returns that may be required by law
relating to any of Property Manager's employees.
II.10 Compliance with Legal Requirements. Property
Manager shall take such action as may be necessary to comply with
any and all orders or requirements affecting the Property by any
federal, state, county or municipal authority having jurisdiction
thereover. Property Manager, however, shall not take any such
action as long as Owner is contesting, or has affirmed Owner's
intention to contest and institutes proceedings contesting, any
such order or requirement, except that if failure to comply
promptly with any such order or requirement would or might expose
Property Manager to criminal liability, Property Manager shall
comply with same. Property Manager shall promptly notify Owner
in writing of all such orders and notices or requirements.
Nothing contained herein shall require Property Manager to employ
counsel to represent Owner in any such proceeding or suit.
II.11 Taxes. Property Manager shall timely render the
Property for taxation, and obtain and verify bills for real
estate, personal property, and all other taxes and assessments,
if any, against the Property and promptly pay such tax bills and
any other Impositions (as defined below), and assist and
cooperate with Owner in connection with all such taxes and
assessments in all ways reasonably requested by Owner including
applications or petitions of Owner for reduction of taxes or
assessments. Owner shall have the option but not obligation to
employ a third party consultant to accomplish the foregoing, in
which event, Property Manager shall assist and cooperate with
such consultant. As used herein, "Impositions" shall mean all
taxes, assessments, special assessments, rents and charges for
any easement or agreement maintained as part of or for the
benefit of the Property, use and occupancy taxes and charges,
water and sewer for public and private utilities, excises,
levies, license and permit fees and other governmental charges,
general and special, ordinary and extraordinary, unforeseen and
foreseen, of any kind and nature whatsoever which at any time
prior to or during the term of this Agreement may be assessed,
levied, confirmed, imposed upon or grow or become due and payable
out of or in respect of, or become a lien on (i) the Property or
any part thereof or any appurtenances thereto, or upon any
personal property located, or used in connection with, the
Property, (ii) the rent, income or other payments (if any)
received by or for the account of Owner or anyone claiming by,
through or under Owner, (iii) any use or occupation of the
Property, (iv) such franchises, licenses and permits as may be
appurtenant to the use of the Property and (v) any document to
which Owner is a party transferring an interest or estate in the
Property.
ARTICLE III
FEES TO PROPERTY MANAGER
[The economic terms shall be agreed among the parties]
In consideration for the performance of Property Manager's
duties and responsibilities under this Agreement, in exchange for
its services provided to Owner and the Property, Owner shall pay
to Property Manager a management fee to be computed as follows:
Property Manager shall receive an annual fee from Owner (the
"Management Fee") equal to one percent (1%) of the Acquisition
and Development Costs (as defined hereinbelow) computed as
follows:
(i) the Management Fee shall commence on the first day
of the month following the initial acquisition of the
Property;
(ii) the monthly balance subject to the Management Fee
shall be the arithmetic average of the Acquisition and
Development Costs of the Property owned by Owner on the
first day of the month and on the last day of the month; and
(iii) the Management Fee shall be payable monthly
in arrears and shall be equal to 0.000833 multiplied by the
balance computed in (ii) above.
As used herein, "Acquisition and Development Costs" means the sum
of (a) purchase price, whether cash or credit, paid, or for which
Owner is obligated to pay (if on credit), for the Property,
together with all closing costs paid by Owner, including title
insurance, recordation charges, registration and transfer taxes,
if any, and similar expenses, and to the extent reflected on the
closing statement executed by Owner in connection with the
acquisition of the Property, all fees and expenses paid or
incurred by or on behalf of Owner in connection with the
acquisition of the Property, including legal, engineering and
consulting fees, any real estate commissions or brokerage fees
paid by Owner, or on behalf of Owner, to anyone in connection
with such acquisition (the "Acquisition Costs") and (b) all costs
and expenses incurred by Owner in connection with development and
marketing of the Property, including, without limitation,
engineering, legal, land planning and related expenses (the
"Development Costs").
ARTICLE IV
RELATIONSHIP OF PROPERTY MANAGER TO OWNER
IV.1 Use and Maintenance of Premises. Property Manager
shall employ its best efforts to develop, operate and maintain
the Property in a manner (referred to herein as the "Management
Standard") consistent with (i) first class standards (consistent
with the Business Plan); (ii) prudent business and management
practices applicable to the development, operation, management
and maintenance of the Property; and (iii) the requirements of
any deeds of trust, certificates of occupancy, permits, licenses,
consents or other recorded or unrecorded agreements now or
hereafter affecting the Property or as required by the limited
partnership agreement (collectively referred to herein as the
"Key Documents"). Property Manager shall use all contacts,
discount programs and cost-savings measures at its disposal to
obtain services, products and tax and insurance rates for the
Property at the lowest cost, without sacrificing the quality of
such services or products. Property Manager shall perform such
other acts and deeds as are reasonable, necessary and proper in
the discharge of its duties under this Agreement. Property
Manager may with prior written approval of Owner obtain goods or
services for the Property from direct or indirect affiliates of
Property Manager, its officers, directors, shareholders or
employees, but only if such goods and services are of at least
equal quality and of no higher prices than comparable goods and
services obtainable from unaffiliated parties and such goods and
services are otherwise competitive with comparable goods and
services.
IV.2 Sale or Refinancing of the Property. Upon the express
request of Owner but not otherwise, Property Manager shall assist
and cooperate in any attempt(s) by Owner to sell, finance or
refinance all or any portion of the Property. Such assistance
and cooperation by Property Manager and Property Manager's
personnel shall not be deemed to create a broker-principal or
similar relationship unless Owner and Property Manager enter into
a separate written agreement engaging Property Manager as broker
with respect to all or any portion of the Property. Such
assistance and cooperation shall include, without limitation,
answering prospective purchasers' or lenders' questions about the
Property or any portion thereof, preparing rent rolls, notifying
tenants about the sale of the Property and obtaining estoppel
certificates and other documents from all tenants of the Property
in the form required by the prospective purchaser or lender.
Property Manager shall also provide, promptly upon request by
Owner, (a) an estoppel certificate executed by Property Manager
certifying that no uncured default by the Owner exists under this
Agreement or, if such a default(s) exists, stating the nature
thereof, (b) a certificate in favor of Owner and any lender
executed by Property Manager confirming, to the best of Property
Manager's actual knowledge, that any representations and
warranties made (or to be made) by Owner with respect to the
Property, or the condition or operation thereof, in any loan
documents executed (or to be executed) by Owner in connection
with any sale, financing or refinancing of the Property, are
substantially true, correct and complete, or, if not
substantially true, correct or complete, stating with
particularity why such representations and warranties are not
substantially true, correct or complete, and (c) a subordination
and attornment agreement executed by Property Manager in
accordance with the provisions of Section 5.9 of this Agreement.
IV.3 Approvals and Consents to Property Manager. Owner and
Property Manager hereby acknowledge and agree that_______________
is authorized by Owner to grant approvals and consents required
under this Agreement to Property Manager, and otherwise instruct
Property Manager with respect to Property Manager's obligations
and performance under this Agreement.
IV.4 Term. This Agreement shall commence on the date hereof
and continue until such time as it is terminated as provided
herein (a) for Cause (as herein defined) or (b) upon the mutual
agreement of the parties. The entire term of this Agreement is
sometimes herein referred to as the "Term".
IV.5 Termination by Owner. Owner, at its option, may
terminate this Agreement for "Cause" at any time upon giving
written notice thereof. The term Cause shall include (a) the
failure of Property Manager to cure any fraud, misrepresentation,
misappropriation of funds, furnishing any statement, report,
notice, writing or schedule to Owner that Property Manager knows,
or reasonably should have known, is untrue or misleading in any
material respect on the date as of which the facts set forth
therein are stated or certified or the date such statement,
report, notice, writing or schedule is furnished to Owner, and
such failure continues for a period of ten (10) days after
written notice thereof by Owner to Property Manager, (b) the
failure of Property Manager to comply with any term or condition
of this Agreement (except for breach of the Management Standard)
and such failure continues for a period of thirty (30) days after
written notice thereof by Owner to Property Manager, provided
that if such default is not reasonably susceptible of cure within
thirty (30) days, then such reasonable time so long as Property
Manager is diligently prosecuting the cure of the default, but in
no event longer than ninety (90) days, (c) the bankruptcy or
insolvency of, the assignment for the benefit of creditors by, or
the appointment of a receiver for any of the property of,
Property Manager, (d) the sale of all or part of the Property;
provided that in the case of a partial sale, termination will
only apply to those portions of the Property sold, (e) the
failure of Property Manager to cure an intentional or grossly
negligent or illegal act committed by Property Manager against
Owner and such failure continues for a period of ten (10) days
after written notice thereof by Owner to Property Manager, (f)
the failure of Property Manager to cure Property Manager's
willful and/or reckless misconduct that causes damage to Owner
and such failure continues for a period of ten (10) days after
written notice thereof by Owner to Property Manager, or (g) upon
thirty (30) days written notice from Owner to Property Manager in
the event Property Manager fails to perform its duties consistent
with the Management Standard as determined by the management
committee of Owner.
IV.6 Termination by Property Manager. Property Manager, at
its option, may terminate this Agreement for the failure of Owner
to comply with any term or condition of this Agreement and such
failure continues for a period of thirty (30) days after written
notice thereof by Owner to Property Manager, provided that if
such default is not reasonably susceptible of cure within thirty
(30) days, then such reasonable time so long as Owner is
diligently prosecuting the cure of the default, but in no event
longer than ninety (90) days.
IV.7 Obligations Upon Termination.
(a) Upon termination of this Agreement, each party
shall continue to be fully liable for their respective
obligations which have accrued up to and including the
termination date and shall promptly pay to the other all
amounts due to the other party under the terms of this
Agreement. Such payment shall be made as soon after the
effective date of termination as such amounts are
determinable. Upon such payment, neither party shall have
any further claim or right against the other, except as
expressly provided herein.
(b) In the event of termination of this Agreement,
upon the effective date of such termination, Property
Manager shall (i) surrender and deliver to Owner all income
of the Property, if any, and other monies of Owner then held
by Property Manager and/or in any bank account (including,
without limitation, the Owner Account and the Property
Account) in excess of the reimbursements due and payable to
Property Manager up to and including the effective date of
such termination, (ii) deliver to Owner as received by
Property Manager any monies or other property due Owner
under this Agreement but received after such termination,
and (iii) deliver to Owner everything then held by Property
Manager pertaining to the Property, including, without
limitation copies of all books, records, keys and all other
materials, property and supplies pertaining to the Property
and/or this Agreement.
IV.8 Negation of Partnership, Joint Venture or Lease.
Nothing in this Agreement shall constitute, or be construed to be
or to create, a partnership, joint venture or lease between Owner
and Property Manager with respect to the Property. In the
performance of this Agreement, Property Manager shall act solely
as an independent contractor. Neither this Agreement nor any
agreements, instruments, documents or transactions contemplated
hereby shall in any respect be interpreted, deemed or construed
as making either party a partner, joint venturer, principal or
agent with, or with respect to, the other party or as creating
any similar relationship or entity, and each party hereto agrees
that it will not make any contrary assertion, contention, claim
or counterclaim in any action, suit or other legal proceedings
involving Property Manager and Owner.
IV.9 Indemnification. Property Manager shall be liable for
and shall indemnify and hold harmless Owner (and each partner,
venturer, employee, agent, shareholder, director and officer of
Owner) from any loss, damage, liability, cost or expense
(including reasonable attorneys' fees) arising out of (i) any
actions of Property Manager not within the scope of Property
Manager's duties hereunder, (ii) any breach by Property Manager
of Property Manager's obligations hereunder or (iii) the gross
negligence or willful misconduct of Property Manager. Owner
shall indemnify and hold harmless Property Manager (and each
employee, agent, director, shareholder are officer of Property
Manager) from any loss, damage, liability, cost or expense
(including reasonable attorneys' fees) arising out of (x) a
breach by Owner of Owner's obligations hereunder, (y) Owner's
gross negligence or willful misconduct or (z) actions taken by
Property Manager within the scope of Property Manager's
responsibilities under this Agreement.
IV.10 Owner's Limited Liability. No general or limited
partner in or of Owner, whether direct or indirect, or any
disclosed or undisclosed officers, shareholders, principals,
directors, employees, partners, servants or agents of Owner or
any of the foregoing or any investment advisor of Owner
(including any assignee or successor of Owner) or other holder of
any equity interest in Owner, shall be personally liable for the
performance of Owner's obligations under this Agreement. The
liability of Owner (including any assignee or successor of Owner)
for Owner's obligations hereunder shall be limited to the equity
interest of Owner in the Property.
IV.11 Property Manager's Limited Liability. No general
or limited partner in or of Property Manager, whether direct or
indirect, or any disclosed or undisclosed officers, shareholders,
principals, directors, employees, partners, servants or agents of
Property Manager or any of the foregoing or any investment
advisor of Property Manager (including any assignee or successor
of Property Manager) or other holder of any equity interest in
Property Manager, shall be personally liable for the performance
of Property Manager's obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
V.1 No Assignment by Property Manager Etc. Without the
prior written consent of Owner, which consent may be granted or
withheld in Owner's sole discretion, Property Manager shall not
have the right to assign, transfer or convey any of Property
Manager's right, title or interest hereunder, nor shall Property
Manager have the right to delegate any of the obligations or
duties required to be kept or performed by Property Manager
hereunder.
V.2 Notices. All notices, demands, consents, approvals and
requests given by either party to the other hereunder shall be in
writing and sent via the U.S. Postal Service by registered or
certified mail, postage prepaid or via a nationally recognized
overnight delivery service (e.g. Federal Express) and addressed
to the appropriate party at the respective addresses shown below.
All such notices shall be deemed given on the earlier of actual
receipt or refusal of receipt by the addressee. The respective
addresses and additional notice parties are as follows:
If to Owner: _______________________ Partnership
c/o Olympus Real Estate Corporation
200 Crescent Court, Suite 1650
Dallas, Texas 75201
Attention: Hal R. Hall
and to: Robert C. Feldman
Weil, Gotshal & Manges, LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
If to Property Manager:___________________________
98 San Jacinto Blvd., Suite 220
Austin, Texas 78701
Attention: Mr. William H. Armstrong, III
With a copy to: Kenneth N. Jones
Armburst, Brown & Davis, L.L.P.
100 Congress, Suite 1350
Austin, Texas 78701
Any party may at any time change its respective address by
sending written notice to the other parties of the change in the
manner hereinabove prescribed.
V.3 GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED AND IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS,
AND THE TERMS AND PROVISIONS HEREOF SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THIS
AGREEMENT IS PERFORMABLE IN, AND THE EXCLUSIVE VENUE FOR ANY
ACTION BROUGHT WITH RESPECT HERETO SHALL LIE IN, DALLAS COUNTY,
TEXAS.
V.4 Not a Third Party Beneficiary Contract. Neither this
Agreement nor any part hereof nor any service, relationship or
other matter alluded to herein shall inure to the benefit of any
third party (specifically including any lender, tenants or
contractors), to any trustee in bankruptcy, to any assignee for
the benefit of creditors, to any receiver by reason of
insolvency, to any other fiduciary or officer representing a
bankruptcy or insolvent estate of either party or to the
creditors or claimants of such an estate. In addition, this
Agreement shall terminate and be of no further force or effect
upon the filing of any bankruptcy petition by or against Property
Manager.
V.5 Validity. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
V.6 Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the matters
herein contained and any agreement hereafter made shall be
ineffective to effect any change or modification, in whole or in
part, unless such agreement is in writing and signed by the party
against whom enforcement of the change or modification is sought.
This Agreement shall bind, and inure to the benefit of, the
parties hereto and their respective successors, legal
representatives and assigns.
V.7 Attorneys' Fees. If either Owner or Property Manager
employs an attorney to enforce or defend its rights hereunder,
the prevailing party shall be entitled to recover its reasonable
attorneys' fees, costs and expenses incurred in connection with
such enforcement or defense.
V.8 INDEMNIFICATION PROVISIONS. THIS AGREEMENT CONTAINS
INDEMNIFICATION PROVISIONS SPECIFICALLY DESCRIBED IN SECTIONS 2.5
AND 4.7 HEREOF.
V.9 Subordination. This Agreement and any extension hereof
shall be subordinate to any mortgage or similar security
instrument now or hereafter affecting the Property, and all
renewals, modifications, consolidations, replacements and
extensions thereof (a "Mortgage"). Property Manager further
agrees to attorn to the holder of any Mortgage or similar
security instrument affecting the Property, and any successor or
assignee thereof, upon Owner's being dispossessed by such holder
of Owner's interest in all or any portion of the Property. The
provisions of this Section 5.9 shall be self-operative and no
further instrument of subordination or attornment shall be
required. Property Manager shall execute promptly any
certificate or other document that Owner or any mortgagee or
other security holder may request as to such subordination and/or
attornment, which certificate or document may include such
customary and normal provisions as Owner may determine in its
sole discretion. In the event that Property Manager fails to
execute and deliver such certificate or document on or before
five (5) business days after written notice to Property Manager
by Owner, then without any further notice and opportunity to
cure, such failure by Property Manager shall be deemed to be an
event for Cause hereunder.
V.10 Representations, Warranties and Covenants of Property
Manager. In order to induce Owner to enter into this Agreement,
Property Manager does hereby make the following representations,
warranties and covenants:
(a) Property Manager represents and warrants to Owner
that Property Manager is a , is duly
and legally existing under the laws of the state of
its and is duly qualified to do
business in the State of Texas.
(b) Property Manager represents and warrants to Owner
that Property Manager has full power and authority to enter
into this Agreement and to carry out the transactions herein
contemplated, and that the undersigned officers of Property
Manager have all necessary authority to execute and deliver
this Agreement on behalf of Property Manager.
(c) Property Manager represents and warrants to Owner
that this Agreement has been duly execuded and delivered by
Property Manager and constitutes the legal, valid and
binding obligations of Property Manager enforceable in
accordance with their terms, subject to laws applicable
generally to creditor's rights.
(d) Property Manager shall deliver to Owner, upon the
effective date hereof (i) a good standing certificate from
the State of Texas, and (ii) an incumbency certificate and
_________resolutions of Property Manager authorizing the
execution and delivery by Property Manager of this
Agreement, certified by an authorized officer of Property
Manager as being true, correct and complete.
(e) There is no claim, litigation, proceedings or
governmental investigation pending, or as far as is known to
Property Manager, threatened, against Property Manager or
relating to the Property or the transactions contemplated by
this Agreement which does, or may reasonably be expected to,
affect the ability of Property Manager to enter into this
Agreement or to carry out its obligations hereunder, and, to
Property Manager's actual knowledge, there is no basis for
any such claim, litigation, proceedings or governmental
investigation.
(f) Neither the consummation of the actions
contemplated by this Agreement on the part of Property
Manager to be performed, nor the fulfillment of the terms,
conditions and provisions of this Agreement, conflicts with
or will result in the breach of any of the terms, conditions
or provisions of, or constitute a default under, any
agreement, indenture, instrument or undertaking to which
Property Manager is a party or by which it is bound.
(g) Property Manager has and will continue to have
during the term of this Agreement qualified personnel to
implement Property Manager's obligations hereunder.
V.11 Publicity and Public Relations. Owner shall have the
exclusive right to control, manage and monitor all publicity and
public relations with respect to the Property or Owner's
ownership thereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
OWNER:
_____________________,
a____________________
By:____________________
Name:__________________
Title:_________________
PROPERTY MANAGER:
_______________________,
a______________________
By:_________
Name:__________________
Title:_________________
EXHIBIT A
TO MANAGEMENT AGREEMENT
(ATTACH PROPERTY DESCRIPTION)