EXHIBIT 3.2
REAL ESTATE ASSOCIATES LIMITED
THIRD RESTATED CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP
This Third Restated Certificate and Agreement of Limited Partnership
by and among Sonnenblick-Goldman Corp. of California, a California corporation
with principal offices at 1901 Avenue of the Stars, Los Angeles, California
90067 (the "Corporate General Partner"), and Charles H. Boxenbaum, an
individual residing at 780 Latimer Road, Santa Monica, California 90402 (the
"Individual General Partner") as general partners (hereinafter collectively
referred to as the "General Partners"), and Nicholas G. Ciriello, an
individual residing at 418 South Lucerne Boulevard, Los Angeles, California
90020 ("Initial Limited Partner"), is entered into as of the date(s) set forth
on the signature pages hereto. Such Initial Limited Partner, and any
additional or substituted limited partners hereafter admitted to the Limited
Partnership as herein provided, are referred to collectively as the "Limited
Partners" and individually as a "Limited Partner."
W I T N E S S E T H:
WHEREAS, on September 15, 1977, the Partnership was formed pursuant
to the laws of the State of California, on December 30, 1977, the Restated
Certificate and Agreement of Limited Partnership of the Partnership changing
certain provisions of such Agreement was filed, and on May 30, 1978, the
Second Restated Certificate and Agreement of Limited Partnership was filed;
WHEREAS, the General Partners and the Initial Limited Partner desire
to change certain provisions in, and restate in full, their agreement; and
WHEREAS, it is the intention of the parties thereto to admit
additional Limited Partners to the Partnership for the purpose of acquiring
additional capital therefor;
NOW, THEREFORE, the parties hereto hereby agree as follows:
Section 1: Formation.
1.1 The General Partners and the Initial Limited Partner do hereby
form a limited partnership (The "Partnership") under the Limited Partnership
Act of the State of California.
Section 2: Name.
2.1 The business of the Partnership shall be conducted under the name
Real Estate Associates Limited, which name may be changed by the General
Partners by written notice to the Limited Partners.
Section 3: Addresses of Parties.
3.1 The principal place of business of the Partnership shall be at
1901 Avenue of the Stars, Suite 1200, Los Angeles, California 90067, or at
such other place as the General Partners may from time to time designate in
writing to the Limited Partners. The Partnership may also maintain such other
offices at such other places as the General Partners may deem advisable.
3.2 The addresses of the General Partners shall be those stated in
the first paragraph of this Agreement, or at such other places as the General
Partners may from time to time designate in writing to the Limited Partners.
The addresses of the Limited Partners shall be those stated after their names
on Schedule A hereto or in any amended certificate hereto. A Limited Partner
may change such address by written notice to the General Partners, which
notice shall become effective upon receipt.
Section 4: Business of the Partnership.
4.1 The business of the Partnership shall be:
(a) to acquire debt and equity interests as a limited partner
in any partnership or joint venture (a "local limited partnership")
which will (i) acquire, hold, finance, construct, improve,
rehabilitate, manage, and/or operate government-assisted or other
housing projects (the "Projects" and the interests of the Partnership
in the local limited partnerships shall be referred to as "Project
Interests"), (ii) monitor and supervise management of construction
and operations of the Projects, (iii) arrange for and supervise the
conversion of any Project to other uses, or (iv) perform any act for
a purpose authorized by this Agreement;
(b) to acquire, hold (in the Partnership's name or under any
other title arrangement selected by the General Partners), lease,
sell, mortgage, convey, or refinance any real or personal property,
including, but not limited to, the Project Interests described in
paragraph (a) above;
(c) to hold, own, maintain, manage, improve, develop, operate,
sell, transfer, convey, lease, mortgage, exchange, or otherwise
dispose of or deal in or with Projects and Project Interests
described in paragraph (a) above; and
(d) to perform any acts to accomplish the foregoing purposes.
Section 5: Contributions to Capital; Additional Limited Partners.
5.1 The capital of the Limited Partnership shall be divided into no
less than 1 and up to 20 General Partners interests and no less than 1,400 and
up to 20,000 non-assessable limited partnership interests, each of which
limited partnership interest is hereinafter referred to as a "Unit."
5.2 The General Partners shall contribute an aggregate of $12,500 to
the capital of the Partnership, for which the General Partners shall be
credited with the ownership of a total of one General Partners interest, and
shall have such interest in and to the profits and losses thereof as is
described in Section 7 hereof.
5.3 (a) Each Limited Partner shall contribute as capital to the
Partnership an amount equal to the number of Units for which he has subscribed
multiplied by $1,000 (with a minimum aggregate capital contribution of
$5,000), all of which shall be paid to the Partnership concurrently with the
recordation in the Official Records of Los Angeles County of an amendment of
this Agreement reflecting the admission of each Limited Partner. Investors
whose subscriptions have been accepted by the General Partners will be
admitted as Limited Partners within 15 days after the minimum of $1,400,000
from the sale of Units has been received by the General Partners. Thereafter,
investors will be admitted as Limited Partners no later than the last day of
the calendar month following the date the General Partners accepted their
subscriptions. The General Partner will accept or reject subscriptions within
three business days after receipt thereof.
(b) The Initial Limited Partner shall contribute as capital to the
Partnership an amount equal to the number of Units for which he has subscribed
multiplied by $1,000 less brokerage commissions (with a minimum aggregate
capital contribution of $4,600), all of which shall be paid to the Partnership
concurrently with the recordation reflecting the admission of other Limited
Partners, and have the right, but not the obligation, to purchase additional
Units as provided herein. Furthermore, upon the admission of additional
Limited Partners to the Partnership, the Initial Limited Partner may elect to
withdraw such investment and cease to be a Limited Partner.
(c) The General Partners are authorized to admit additional Limited
Partners to the Partnership by selling not more than 20,000 Units for cash to
selected persons as may apply to become Limited Partners pursuant to the terms
of an offering described in a Prospectus (the "Prospectus") to which this
Agreement will be annexed, by completing a subscription agreement (the
"Subscription Agreement") in the form to be set forth in the Prospectus,
provided that no person admitted as a Limited Partner shall have been
permitted to purchase more than 250 Units, subject, however, to the right of
the General Partners to establish special requirements for larger
subscriptions.
(d) No Limited Partner shall have the right to withdraw or reduce his
capital contribution. No Limited Partner shall have the right to bring an
action for partition against the Partnership or to demand or receive property
other than cash in return for his capital contribution. No Limited Partner
shall have priority over any other Limited Partner, either as to the return of
his capital contribution or as to profits, losses, or distributions.
(e) The net proceeds to the Partnership will be $910 for each Unit. A
person acquiring Units will participate with other Limited Partners in the
income, gains, losses, deductions, credits, and cash distributions on a pro
rata basis in accordance with the number of Units owned. The "Capital Account"
for each Unit as of any date is the cash contributed to the Partnership in
respect of such Unit, properly adjusted to reflect as of such date profits,
losses, and cash distributions with respect to the interest in the Partnership
represented by such Units.
(f) To accomplish the purpose of this Section 5.3, the General
Partners are hereby authorized to do all things necessary to admit such
additional Limited Partners, including, but not limited to, registering the
Units under the Securities Act of 1933, as amended, pursuant to the rules and
regulations of the Securities and Exchange Commission, qualifying the Units
for sale with state securities regulatory authorities or perfecting exemptions
from qualification, and entering into such underwriting or agency arrangements
for the solicitation of the Units upon such terms and conditions as the
General Partners may deem advisable.
5.4 Proceeds from contributions for Units and other Partnership funds
shall be held by the General Partners as fiduciaries for the exclusive use of
the Partnership and after the start of Partnership operations, shall be
temporarily invested in U.S. Treasury Bills and Bonds, bank certificates of
deposit, other short-term government obligations, commercial paper (investment
grade), and tax-exempt notes and bonds, or registered investment companies
holding such securities. Interest thereon shall inure to the benefit of the
Partnership, and the Limited Partners, as such, shall not receive interest on
funds contributed by them. Any funds (other than designated reserves) not
invested in Projects or Project Interests within 18 months from the effective
date of the Prospectus shall be distributed pro rata to the Limited Partners
as a return of capital.
Section 6: Organizational Expenses.
6.1 The Partnership shall pay all costs of qualifying and offering
the Units (including sales commissions) and all formation and organization
expenses, including expenses associated with the selection and acquisition of
Projects (which expenses are, however, subject to the limitation set forth in
Section 9.6.1 hereof). The General Partners will be liable for the amount, if
any, by which the aggregate organizational expenses and sales commissions
exceed 12% of the gross proceeds from the sale of Units.
Section 7: Profits and Losses.
7.1 Prior to the amendment to this Agreement for the purpose of
admitting additional Limited Partners to the Partnership in accordance with
Section 5.3(c) hereof, the combined interests of the General Partners in each
item of income, gain, loss, deduction, and credit will be 99%, to be allocated
between the General Partners as they may agree. During such period, the
Initial Limited Partner shall share in 1% of the income, gain, loss,
deduction, and credit. Thereafter, the combined interests of the General
Partners in each material item of income, gain, loss, deduction, and credit
will be equal to 1% of each such item at all times during the existence of the
Partnership, except that upon dissolution and liquidation of the Partnership,
the General Partners shall be allocated, before any other allocations are made
hereunder, all Partnership income and/or gain in an amount up to the
difference between the losses allocated to the General Partners prior to the
admission of the additional Limited Partners and 1% of Partnership losses
during such period. Subject to this additional allocation of income to the
General Partners, the Limited Partners shall share 99% of the income, gain,
loss, deduction, and credit in proportion to their respective Units, provided
that, in determining whether such items are paid or incurred during any period
any Limited Partner is a member of the Partnership, such items shall be
allocated, as determined by the General Partners, on a daily basis, on a more
precise basis of actual amounts paid or incurred during such period, or on any
other basis permitted by the Internal Revenue Code of 1954. For the purpose of
Sections 702 and 704 of the Internal Revenue Code, or the corresponding
sections of any future federal internal revenue law, or any similar tax law of
any state or other jurisdiction, the determination of each Limited Partner's
distributive share of any Partnership item of income, gain, loss, deduction,
or credit for any Partnership accounting year or other period shall be made in
accordance with the proportion that number of such Limited Partner's Units
bears to the number of all Limited Partners' Units outstanding. In the event
of the transfer of a Unit (other than in the case of a default), the
distributive share of the aforesaid Partnership items (in respect of the Unit
so transferred) shall be allocated between the transferor and the transferee
in accordance with this Section.
Section 8: Cash Distributions.
8.1 The General Partners shall distribute annually substantially all
of the Partnership's Net Cash Flow as defined herein. The General Partners
shall be entitled to receive 1% of the Net Cash Flow to be distributed, but
any such distributions to the General Partners shall be reduced by the amount
paid as an Annual Management Fee as set forth in Section 9.5 hereof. The
Limited Partners shall receive, in proportion to their respective Units, the
balance of the distributed cash flow.
8.2 "Net Cash Flow" shall mean the Partnership's share of all cash
receipts derived from the ownership of a Project or Project Interest therein
(exclusive of any proceeds from the sale or financing of Projects or Projects
Interests, refinancing or other extraordinary transactions not in the ordinary
course of business) less (a) expenses, (b) such reserves as the General
Partners deem reasonably necessary for the proper operation of the
Partnership's business, and (c) any expenditures authorized by this Agreement
(except for construction expenditures paid out of capital or loan proceeds).
The General Partners may at their discretion reinvest or distribute all or any
portion of the proceeds from the disposition or refinancing of any Project or
Project Interest therein, provided that in the event of a sale, the Partners
shall have first received an amount sufficient to pay state and federal taxes
from the sale of such Project or Project Interest, if any, calculated at the
maximum rate then in effect. To the extent that such proceeds are not
reinvested or committed within twelve months from the date of the sale or
refinancing, they shall be distributed. Distributions of the net proceeds from
the sale or financing of Projects or Project Interests, refinancing thereof,
or other extraordinary transactions not in the ordinary course of business
shall be distributed to the General and Limited Partners pursuant to Section
9.6.2 hereof.
8.3 The General Partners shall designate a record date to determine
Partners entitled to cash distributions, which shall not be less than 15 days
nor more than 30 days before each cash distribution. The Partnership shall
cause to be maintained records reflecting the name, address, and number of
Units and General Partners interests held by each Partner for the Purpose of
determining recipients of cash distributions and notices.
Section 9: The General Partners.
9.1 The General Partners shall have complete discretion in the
management and control of the business of the Partnership for the purposes
herein stated, shall make all decisions affecting the business of the
Partnership and shall manage and control the affairs of the Partnership to the
best of their abilities and use their best efforts to carry out the purposes
of the Partnership. The powers of the General Partners include, but are not
limited to, the powers:
(a) to expend the capital and profits of the Partnership in
furtherance of the Partnership's business;
(b) to acquire, hold (in the Partnership's name or, in the best
interest of the Partnership, under any other title arrangement
selected by the General Partners), lease, sell, mortgage, convey, or
refinance any real or personal property, including Projects and
Project Interests, at such price and upon such terms, as they deem to
be in the best interests of the Partnership, including the power to
vote to amend a local limited partnership agreement in such a manner
as to reduce the limited partnership interest of the Partnership in
the local limited partnership, to vote to reduce the Partnership's
interests in the profits, losses, and special allocations of the
local limited partnership and assign a part of the limited
partnership interest in such partnership, provided that such action
is necessary to preserve the economic value of the Partnership's
Project Interest;
(c) to monitor the construction and operations of any of the
Projects, Project Interests, or other Partnership property and to
make recommendations with respect thereto;
(d) to retain independent consultants to evaluate the Projects,
Project Interests, and other Partnership property;
(e) to borrow money and execute promissory notes and to secure
the same by mortgage upon the Partnership's property;
(f) to invest in short-term debt obligations (including
obligations of federal and state governments and their agencies,
commercial paper, and certificates of deposit of commercial banks,
savings banks, or savings and loan associations) such funds as are
temporarily not required for investment in Projects, Project
Interests, or other Partnership property;
(g) to lend money or provide advances in furtherance of the
Partnership's purposes; and
(h) to enter into and carry out agreements of any kind,
provided that all contracts with the General Partners or their
affiliates must provide for termination by the Partnership on 60 days
written notice, without penalty, and to do any and all other acts and
things necessary, proper, convenient, or advisable to effectuate and
carry out the purposes of the Partnership.
9.2 The General Partners shall (a) diligently and faithfully devote
such of their time to the business of the Partnership as they deem necessary
to conduct it for the greatest advantage of the Partnership; (b) file and
publish all certificates, notices, statements, or other instruments required
by law for formation and operation of the Partnership in all appropriate
jurisdictions; (c) cause the Partnership to carry adequate public liability,
property damage, and other insurance, any or all of which may name the General
Partners as the sole insured; (d) indemnify and hold the Partnership harmless
from any loss, damage or liability due to, or arising out of, any General
Partner's breach of fiduciary duty; and (e) maintain capital accounts on the
books and records of the Partnership in respect of each Interest in the
Partnership. The General Partners may become Limited Partners and thereby
become entitled to all of the rights of Limited Partners to the extent of the
Units so acquired, provided that such acquisition of Units shall not reduce
any liability of the General Partner under this Agreement. Notwithstanding the
foregoing, the General Partners shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership, whether or not
in their immediate possession or control and they shall not employ, or permit
another to employ, such funds, or assets in any manner except for the
exclusive benefit of the Partnership.
9.3 Notwithstanding any provision in this Agreement to the contrary,
it is understood and agreed that (i) in conducting, carrying on, and managing
the business of the Partnership, the General Partners shall be bound by the
following investment policies, which may not be changed, altered, or amended
except as provided in Section 14 hereof and (ii) the General Partners shall
endeavor to conduct the Partnership's business in accordance with the policies
set forth in the Prospectus:
(a) except for interim commitments in U.S. Treasury Bills and
Bonds, bank certificates of deposit, other short-term government
obligations, commercial paper (investment grade), and tax-exempt
notes and bonds, or registered investment companies holding such
securities, investments will be initially limited to Project
Interests, provided that (i) not less than 90% of the amount of
public offering proceeds available for investment will be invested in
Project Interests in local limited partnerships or joint ventures
which will own or lease federal, state, or local government-assisted
housing projects and (ii) the Partnership may subsequently refinance
or convert such Project Interests to other uses with a view to
realizing higher revenue or capital gains, although reinvestment of
cash flow (excluding proceeds resulting from a disposition or
refinancing or property) shall not be allowed.
(b) Projects or Project Interests will be acquired with a view
toward maximizing tax deductions, with cash income and long-term
appreciation as additional considerations, and not with a view to
early resale;
(c) the Partnership will seek to avoid depreciation recapture
and defer taxes by not selling any Projects or Project Interests
within ten years, except (i) to qualified tenant cooperatives as
defined in the Internal Revenue Code, and (ii) under circumstances
described in the Prospectus;
(d) upon any sale or refinancing the Partnership shall not
reinvest any proceeds thereof prior to distributing to the Partners
from the proceeds sufficient cash to pay the state and federal tax at
the then maximum rates, and may distribute to the Partners the
balance of the Proceeds;
(e) the Partnership may (i) borrow money only against
Individual Projects or Project Interest to acquire such Projects or
Interests therein, to defray expenses or preserve its interest in
each Individual Project or interest therein but may not pledge or
encumber other Projects or Project Interests for this purpose, (ii)
borrow only such amount for which the Partnership can reasonably
expect to meet debt service requirements from anticipated Net Cash
Flow, and (iii) make or cause its affiliates to make loans or
advances for the acquisition of Projects or Project Interests, but
may not receive Interest or other financing charges or fees in excess
of the amounts which would be charged by unrelated banks for
comparable loans for the same purpose in the locality of the Project
or in amounts which otherwise are unreasonable or require any
prepayment charge or penalty, provided that in connection with any of
the foregoing transactions, (A) the Partnership shall not enter into
transactions involving the use of "all-inclusive" or "wrap-around"
notes except as permitted by the Rules of the Department of
Corporations of the State of California, and (B) the Partnership
shall not incur any indebtedness whereby the lender will have or
acquire, at any time as a result of making such loan, any direct or
indirect interest in the profits, capital, or property of the
Partnership other than as a secured creditor;
(f) the Partnership shall not (i) issue senior securities,
except as set forth in the preceding paragraph and even then only at
par or at a premium, (ii) invest in other issuers for the purpose of
exercising control (other than local limited partnerships owning or
leasing projects), (iii) underwrite the securities of other issuers,
or (iv) offer Units in exchange for property;
(g) except in a case in which a single Project investment
exceeds this limitation, the Partnership shall not sell and reinvest
more than 25% of its portfolio of Projects or Project Interests
within any single year, unless by exempted sales to qualified tenant
cooperatives;
(h) the Partnership shall not make loans to the General
Partners or their affiliates and will not make loans to others except
(i) to developers in connection with the acquisition of Projects or
Project Interests (and then only if such loans do not exceed, in the
aggregate, 5% of the difference between the aggregate amount of
contributions made pursuant to Section 5 hereof less expenses of the
Partnership determined in accordance with Section 6 hereof), (ii) to
local limited partnerships in which the Partnership has an equity
interest, and (iii) as permitted by Sections 5.4 or 9.3(a) hereof:
(i) commitments of Partnership funds will be contingent upon
receipt of satisfactory appraisals as to non-government-assisted
Projects and Projects Interests or FHA feasibility or equivalent
letters as to government-assisted projects and no significant
contribution to government-assisted projects will be made prior to
initial Endorsement by FHA/HUD or its equivalent for non-FHA/HUD
Projects;
(j) the Partnership will not purchase or lease a Project or
Project Interest, if the General Partners or their affiliates have
(or if any limited partnership in which the General Partners or their
affiliates have an interest in has) any equity interest in such
Project or have made loans with respect thereto, or any interest of a
type other than equity or debt, which equity interests, loans, or
other type of interest have not been disclosed to the Limited
Partners;
(k) the Partnership will not sell or lease any Project or
Project Interest to the General Partners or their affiliates;
(l) the Partnership will not purchase Projects or Project
Interests in exchange for Units;
(m) the Partnership shall not give the General Partners or
their affiliates the exclusive right of employment to sell Projects
or Project Interests;
(n) the Partnership may not pay the General Partners or their
affiliates any commission in connection with the reinvestment of the
proceeds of any resale, exchange, or refinancing of any Project
Interest;
(o) the General Partners, their affiliates, and any salesman or
dealer offering Units shall not take any action in violation of
Section 260.140.114.6 of Title 10 of the California Administrative
Code;
(p) the Partnership's funds may not be commingled with the
funds of others;
(q) all expenses of the Partnership shall be billed directly to
it, except organizational expense (including, subject to the
limitation set forth in Section 9.61, expenses associated with the
selection and acquisition of Projects or Project Interests) paid by
the General Partners or their affiliates, which expenses may be
reimbursed;
(r) the Partnership will not enter into any transaction or
agreement with any Limited Partner or any affiliate of a Limited
Partner, if the Partnership would be prohibited pursuant to this
Section 9.3 from entering into a similar agreement or transaction
with the General Partners or their affiliates, provided that nothing
herein set forth shall prohibit a "sponsor" (i.e., a general partner,
developer, contractor, or affiliates thereof) of any local limited
partnership from acquiring or holding Units in the Partnership or
being admitted as a Limited Partner;
(s) the Partnership will not acquire an interest in a local
limited partnership or joint venture which does not constitute at
least a 50% interest of all limited partnership interests; and
(t) the Partnership shall not sell all or substantially all of
the Partnership's assets in a single transaction or a series of
related transactions without obtaining the consent of Limited
Partners owning a majority of the Units; provided, however, that the
foregoing will not apply to a sale of a single Project or Project
Interest;
(u) the General Partners and their affiliates (except other
local limited partnerships) will not acquire properties adjacent to
properties in which the Partnership has an interest.
(v) the General Partners and their affiliates will not purchase
a property for their own account if the Partnership is in a position
to purchase such property.
9.4 The General Partners may delegate all or any of their powers,
rights, and obligations hereunder, and in furtherance of any such delegation
may appoint, employ, or contract with any person for the account of the
Partnership for the transaction of the business of the Partnership, which
persons may, under the supervision of the General Partners, perform any acts
or services for the Partnership as the General Partners may approve.
9.5 As compensation for services to the Partnership by the General
Partners pursuant to this Agreement, the General Partners shall be entitled to
receive an Annual Management Fee, the amount of which shall be equal to
one-half of 1% of the Partnership's "Invested Assets." "Invested Assets" is
defined as the cost of acquiring Project Interests, including the
proportionate amount of the mortgage loans on and other debts related to the
Projects equivalent to the Partnership's Interest in the capital accounts of
the respective partnerships and joint ventures, but excluding depreciation,
amortization, and capitalized expenditures (such as the Acquisition and
Selection Fees [defined in Section 9.6.1 hereof] due the General Partners,
organizational expenditures, and acquisition closing costs). The Annual
Management Fee shall be due and payable in monthly installments in every year
(except that in 1978 such fee shall be due monthly but payable only beginning
with the month of the Partnership's initial investment); the fees due the
General Partners shall be deferred until Management Fees due are paid, and
Management Fees may, to serve the best interest of the Partnership, be paid
out of any Partnership funds. The amount, if any, of the Annual Management Fee
earned, but unpaid in any year, shall accrue for payment in later years.
9.6.1 In addition, the Partnership will pay to the General Partners,
as compensation for services rendered by the General Partners or their
affiliates, fees for their services and expenses in the organization and
initial management of the Partnership, the syndication of the Units, and a
commitment fee in exchange for its agreement to advance assets to facilitate
financial arrangements regarding a Project Interest. Organization, Syndication
and Commitment Fees in an aggregate amount of approximately .9% if the
Partnership's Invested Assets (defined in Section 9.5 hereof) will be paid to
the General Partners. Acquisition and Selection Fees in an aggregate amount of
approximately 1.0% of the Partnership's Invested Assets (defined in Section
9.5 hereof) will be paid to the General Partners for their services in
connection with the review, selection, evaluation, negotiation and acquisition
of the Projects. No payment of any portion of the Organization, Syndication,
and Commitment Fees or Acquisition and Selection Fees will be made prior to
the termination of the offer and sale of Units or prior to the payment, at any
time, of Management Fees accrued. Such fees (including the Organization,
Syndication, and Commitment Fee and Acquisition and Selection Fees), any real
estate fees or commissions from sale of Projects to the Partnership and any
fee and expense incurred by the Partnership (whether directly or in the form
of reimbursements to the General Partners for funds advanced during the
organization period) in connection with the selection of Projects and Project
Interests and the negotiations with respect thereto and investments therein
may not exceed (a) 18% of gross offering proceeds, (b) for any Project or
Project Interest, 18% of the proportion of gross offering proceeds allocable
to that Project or Project Interest and (c) the lesser of 6% of the total
investment in the Project or Project Interest (including mortgages) or
standard real estate commissions for the region in which the Project is
located. The amount, if any, of the Organization, Syndication, and Commitment
Fees and Acquisition and Selection Fees unpaid in any year shall accrue for
payment in later years.
9.6.2 Upon total or partial liquidation of the Partnership and
distribution of the proceeds, the then General Partners will be entitled to a
liquidation fee equal to the lesser of (a) 10% of the net proceeds to the
Partnership from the sale of a Project or Project Interest or (b) 1% of the
sales price (including the mortgage), plus 3% of the net proceeds after
deducting assumed taxes at the then maximum federal individual income tax
rates, provided that no part of such fee shall accrue, or be paid, unless: (i)
the Limited Partners' share of the proceeds has been distributed to them; (ii)
the Limited Partners shall have first received an amount equal to their
invested capital attributable to the Project(s) or Project Interest(s) sold;
and (iii) the Limited Partners shall have received an amount sufficient to pay
state and federal income taxes from the sale of the Project(s) or Project
Interest(s), if any, calculated at the maximum rate then in effect. This fee
may accrue but shall not be paid until the Limited Partners have received
distributions equal to 100% of their capital contributions.
9.6.3 The General Partners and their affiliates will not receive any
real estate brokerage commission with respect to sales of Projects or Project
Interests. No Limited Partner or affiliate thereof may receive more than a
standard real estate commission. The General Partners or their affiliates may
perform other services for the Partnership, but neither the General Partner or
affiliates may receive compensation therefor other than from compensation
stated herein as otherwise due to a General Partner, unless the terms of such
services and compensation are approved by the Department of Corporations for
the State of California as complying with the Rules of such Department.
9.7 The General Partners may pay compensation to an entity selected
by them to perform any of the management functions set forth above, provided
that duplicate property management or other fees shall be prohibited and that
any property management fee paid to the General Partners or any of their
affiliates shall not exceed the customary rates paid for such property
management services in the regions where the Projects are located.
9.8 All expenses of the Partnership shall be billed directly to and
paid by the Partnership. Reimbursements (other than for organization and
offering expenses) to the General Partners or their affiliates shall not be
allowed, except for reimbursement of the actual cost to the General Partners
or their affiliates of goods and materials used for or by the Partnership.
Expenses incurred by the General Partners or their affiliates in connection
with the administration of the Partnership, including, but not limited to,
salaries, rent, travel expenses, and such other items generally falling under
the category of General Partners' overhead, shall not be charged to the
Partnership. Neither the General Partners nor their affiliates may receive
insurance brokerage fees or write insurance policies covering the Partnership
or any Projects, or Project Interests, or other investments of the
Partnership.
9.9 The General Partners may not withdraw their interest in the
Partnership, transfer their interest to any person, or admit any person as a
substitute General Partner, except as follows:
(a) Upon notice to all Partners, the Corporate General Partner
may substitute its parent, any of its wholly-owned subsidiaries, or
any wholly-owned subsidiaries of its parent in its stead as General
Partners, provided that such substitution is consented to by the
remaining Partners.
(b) Any General Partner may add or substitute any other person
as a General Partner, provided that such substitution is consented to
by the remaining Partners.
(c) Any General Partner may resign as a General Partner, upon
90 days notice, with the consent of the remaining General Partners,
provided that upon any such resignation the Partnership has (i) a
corporate General Partner who is qualified to act as such and who has
sufficient net worth to meet the then applicable net worth
requirement for a sole corporate general partner of a partnership
established by the Internal Revenue Service for the purpose of
determining that a limited partnership is entitled to be treated as a
partnership for tax purposes and not as an association taxable as a
corporation, or (ii) one or more other individual General Partners
and that the aggregate net worth of the General Partners is
substantial.
(d) Upon the written consent or affirmative vote of Limited
Partners owning a majority of the Units then outstanding, any General
Partner may be removed.
(e) The holders of a majority of the Units then outstanding may
elect another person or other persons as additional or substitute
corporate or individual General Partners without the consent of the
existing General Partner of any General Partner who was removed in
accordance with paragraph (d) of Section 9.9.
Upon the removal or withdrawal of any General Partner pursuant to this Section
9.9, the interest of such General Partner in the Partnership shall be valued
at its fair value on the date of such removal or withdrawal, determined, if
necessary, in accordance with the arbitration procedure of the American
Arbitration Association. If, however, immediate payment of such fair value
would cause the Partnership to be insolvent or to be unable to meet its
reasonably foreseeable cash requirements, the Partnership may deliver its
promissory note for such fair value providing for interest at the then prime
rate at United California Bank for a term of not more than five years.
Section 10: Rights of Limited Partners.
10.1 No Limited Partner shall be subject to assessment nor shall any
Limited Partner be personally liable for any of the debts of the Partnership
or any of the losses thereof beyond the amount contributed by him to the
capital of the Partnership and his share of undistributed profits of the
Partnership.
10.2 No Limited Partner, as such, shall take part in the management
of the business, transact any business for the Partnership, or have the power
to sign for or to bind the Partnership to any agreement or document.
10.3 Limited Partners and their designated representatives shall be
entitled to (a) review the records of the Partnership at reasonable times and
at the location where such records are kept by the Partnership and (b) obtain
a list of the names and addresses and interests owned by the Limited Partners
upon payment to the Partnership of such reasonable charges and expenses for
the reproduction of such list.
Section 11: Nature of Limited Partner's Liabilities for Claims Against
the Partnership.
In furtherance of the intent of the parties that each Limited Partner
shall be liable to creditors only for his contributed capital and
undistributed Partnership profits:
11.1 The General Partners shall arrange to prosecute, defend, settle,
or compromise actions at law or in equity at the expense of the Partnership as
such may be necessary to enforce or protect the Partnership's interests.
11.2 The General Partners shall satisfy any judgment, decree,
decision, or settlement involving the Partnership first, out of any insurance
proceeds available therefor, second, out of the Partnership assets and income,
and third, out of the assets and income of the General Partners.
Section 12: Assignment and Transfer of Units.
12.1 Except as provided in this Section 12, the only restriction on
the assignment or hypothecation of a Unit shall be the obtaining by the
assignor of a Consent to Transfer for such Unit, if required, from the
Department of Corporations of the State of California and the consent, if
required, of any other state securities commission having jurisdiction with
respect to such assignment or hypothecation. A reasonable transfer fee (not to
exceed $200 per transaction) shall be required to be paid to the Partnership
by the assignor and/or the assignee with respect to any transfer pursuant to
this Section.
12.2 Any Partner may, without restriction or consent of the
Department of Corporations of the State of California or any other Partners,
give, sell, transfer, or assign any portion or all of his Units to his spouse,
any member or members of his family, to a trust set up for the benefit of his
spouse or any member or members of his family, or to a corporation or any
other entity in which such Partner has a majority interest. The Units of any
Partner may pass, without consent, to his heirs or legatees upon his death or
by operation of law. A reasonable transfer fee (not to exceed $200 per
transaction) shall be required to be paid to the Partnership by the assignor
and/or the assignee with respect to any transfer pursuant to this Section.
12.3 Subject to compliance with applicable federal and state
securities laws, a Limited Partner may transfer his entire legal and equitable
interest in his Units other than as provided in Section 12.2 hereof, by an
executed and acknowledged written instrument, only with the consent of the
General Partners (which consent may be granted or withheld at the sole
discretion of the General Partners).
12.4 No assignments or transfers will be permitted if such
assignments or transfers would result in 50% or more of the Units being
assigned or transferred within any twelve-month period. Subject to compliance
with applicable federal and state securities laws, assignments will be
recognized by the Partnership only effective the last day of the calendar
month following receipt by the Partnership of written notice of the
assignment. Each item of income, gain, loss, deduction, and credit of the
Partnership attributable to any assigned or transferred Unit shall be divided
between and charged against the assignor and assignee, or transferor and
transferee, or such Unit, in a manner so as to permit the assignor and
assignee, or transferor and transferee, to be allocated such items in the
amounts recognized by the Partnership in those months in which the assignor
and the assignee, or the transferor and transferee, were owners of the Units.
The Partnership may charge the assigning or transferring Limited Partner and
any Limited Partner requesting a change of name, type of ownership, etc., a
fee not to exceed $200 per transaction and, in the discretion of the General
Partners, actual legal expenses incurred to defray the actual costs of
effecting the assignment or transfer of his interest in the Partnership or
other change in the records of the Partnership.
12.5 No assignee of the whole or any portion of a Limited Partner's
Interest in the Partnership shall have the right to become a substituted
Limited Partner in the place of his assignor unless all of the following
conditions are satisfied:
(a) The fully executed and acknowledged written instrument of
assignment which has been filed with the Partnership sets forth the
intention of the assignor that the assignee become a substituted
Limited Partner in his place;
(b) The Partnership Interest being acquired by the assignee
consists of one or more whole Units (and where applicable, complies
with any additional limitations or, or restrictions with respect to,
transfers of Units which may be imposed by state securities laws);
(c) The assignor and assignee execute and acknowledge such
other instruments as the General Partners may deem necessary or
desirable to effect such admission, including the written acceptance
and adoption by the assignee of the provisions of this Agreement and
his execution, acknowledgement, and delivery to the General Partners
of a Power of Attorney, the form and content of which shall be
provided by the General Partners.
(d) Any transfer fee and legal expenses, if any, referred to in
Section 12.4 required to be paid shall have been paid;
(e) The transfer shall not be in violation of any applicable
federal or state securities law, including the Securities Act of
1933, as amended, it being understood and agreed that the General
Partners (i) will require that until January 1, 1984 each assignee
must satisfy the same suitability imposed upon his assignor and (ii)
may require as a condition to such transfer that the Partnership be
furnished with an opinion of counsel, which counsel and opinion shall
be satisfactory to the General Partner, to the foregoing effect; and
(f) The General Partners have consented to the assignment
(which consent may be granted or withheld at the sole discretion of
the General Partners).
12.6 The General Partners may elect to treat an assignee who has not
become a substituted Limited Partner as a substituted Limited Partner in the
place of his assignor should they deem, in their sole discretion, that such
treatment is in the best interest of the Partnership for any of its purposes
or for any of the purposes of this Agreement.
12.7 No consent of any of the Limited Partners is required to effect
the substitution of a Limited Partner, except that a Limited Partner who
assigns his Interest must evidence his intention that his assignee be admitted
as a substituted Limited Partner in his place and execute any instruments
required in connection therewith.
12.8 The General Partners will be required to amend the Certificate
of Limited Partnership only once each calendar quarter to reflect the
substitution of Limited Partners, provided that prior to the termination of
the offering of the Units, such Certificate will be amended monthly. Until the
Certificate of Limited Partnership is so amended, an assignee shall not become
a substituted Limited Partner.
12.9 Upon the death or legal incompetency of an individual Limited
Partner, his personal representative shall have all of the rights of a Limited
Partner for the purpose of settling or managing his estate and such power as
the decedent or incompetent possessed to constitute a successor as an assignee
or his interest in the Partnership and to join with such assignee in making
application to substitute such assignee as Limited Partner. The General
Partner may elect to adopt the provisions of Section 754 of the Internal
Revenue Code of 1954, as amended (or any other similar election designed to
protect the estate of a deceased Limited Partner which may in the future be
enacted) upon the first death of a Limited Partner or transfer for value of a
Unit; such election is, however, subject to the revocation rights contained in
Section 754.
12.10 Upon the bankruptcy, insolvency, dissolution, or other
cessation to exist as a legal entity of a Limited Partner not an individual,
the authorized representative of such entity shall have all the rights of a
Limited Partner for the purpose of effecting the orderly winding up and
disposition of the business of such entity and such power as such entity
possessed to constitute a successor as an assignee of its interest in the
Partnership and to join with such assignee in making application to substitute
such assignee as a Limited Partner.
Section 13: Duration of Business; Dissolution.
13.1 The Partnership shall continue until dissolution, as set forth
in Section 13.3. Upon dissolution the business of the Partnership shall be
continued pending an election to continue the Partnership pursuant to Section
13.4, if appropriate, and failing such election shall be terminated in
accordance with Section 13.5.
13.2 The Partnership shall not be terminated by the death, insanity,
bankruptcy, withdrawal, or expulsion of any Limited Partner, by the assignment
by any Limited Partner of his interest, or by the admission of a new Limited
Partner.
13.3 The Partnership shall be dissolved only upon the occurrence of
any of the following events:
(a) The expiration of 53 complete calendar years (December 31,
2031) from the date of formation of the Partnership;
(b) The written consent or affirmative vote to dissolve and
terminate the partnership of Limited Partners owning a majority of
the Units then outstanding;
(c) The disposition of all interest in real estate and other
Partnership assets;
(d) The death or insanity of the individual General Partner or
any substitute individual General Partner, the removal of any General
Partner or substitute General Partner in accordance with Section 9.9
or the retirement, bankruptcy, or insolvency of any General Partner
or substitute General Partner.
13.4 In the event of a dissolution caused by an occurrence specified
in Section 13.3(d), the remaining General Partner or General Partners, if any,
may elect to continue the Partnership, provided that counsel to the
Partnership is of the opinion that such election would not jeopardize the
Partnership's status as a partnership rather than as an association for
federal tax purposes. If such remaining General Partner fails to so elect
within 30 days of the event causing dissolution, or if there is no remaining
General Partner, the Limited Partners owning a majority of the then
outstanding Units may elect to continue the Partnership and, if necessary,
elect a new General Partner.
13.5 In the event of dissolution and the subsequent failure of
election pursuant to Section 13.4 within 60 days of dissolution, the General
Partners or other party appointed for such purpose shall wind up the affairs
of the Partnership, shall sell all of the Partnership's assets as promptly as
is consistent with obtaining the fair value thereof, and pay all liabilities
and all costs of dissolution. The winding up of the affairs of the Partnership
and the distribution of its assets shall be conducted exclusively by the
General Partners, who are hereby authorized to do any and all acts and things
authorized by law for these purposes.
13.6 Upon the dissolution of the Partnership and failure of an
election to continue the Partnership pursuant to Section 13.4, a final
statement shall be prepared by the Partnership's independent certified public
accountants as soon as practicable setting forth the assets and liabilities of
the Partnership. A copy of such statement shall be furnished to each Partner
within 90 days after such dissolution. Thereupon all assets of the Partnership
shall be liquidated as promptly as possible and the proceeds therefrom shall
be distributed in the following order of priority: (a) to the payment of the
debts and liabilities of the Partnership and the expenses of liquidation; (b)
to the setting up of such reserves as the General Partners may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Partnership arising out of or in connection with the Partnership, provided
that any such reserves shall be paid over by the General Partners to an escrow
agent, to be held by such escrow agent for the purpose of disbursing such
reserves in payment of any of the aforementioned contingencies and, at the
expiration of such period as the General Partners shall deem advisable, to
distribute the balance thereafter remaining in the manner hereinafter
provided; (c) to the Limited and General Partners in accordance with Section
9.6.2 hereof; (d) to the Limited Partners in respect of the balances of their
capital accounts; and (e) to the General Partners in respect of the balances
of their capital accounts;
13.7 Upon dissolution and termination each Limited Partner shall look
solely to the assets of the Partnership for the return of his cash
contribution, and if the Partnership property remaining after the payment of
discharge of the debts and liabilities of the Partnership is insufficient to
return the cash contribution of each Limited Partner, such Limited Partner
shall have no recourse against the General Partners or any other Limited
Partner.
Section 14: Amendments.
14.1 Amendments to this Agreement may be proposed by the General
Partners or by Limited Partners owning not less than 10% of the then
outstanding Units. Following such proposal, the General Partners shall submit
to the Limited Partners a verbatim statement of any proposed amendment and an
opinion of counsel as to the legality of such amendment. The General Partners
shall include in any such submission its recommendations as to the proposed
amendment. In any such event the affirmative vote of Limited Partners owning a
majority of the then outstanding Units will be required to change this
Agreement. The General Partners may require a written approval to be given by
the Limited Partner within a specified period of not less than 15 days and not
more than 60 days from the date of notice thereof, and may treat a failure to
respond as the equivalent of concurrence with the General Partner's
recommendations.
14.2 Notwithstanding the foregoing Section 14.1, no amendment shall
change the Partnership to a general partnership, change the method of removing
a General Partner or electing a successor General Partner, change the term of
the Partnership, change the liability of the General Partners or the limited
liability of the Limited Partners, change the interest of the General and
Limited Partners as set forth in Section 7.1, or make any changes which, in
the opinion of counsel to the Partnership, may result in the Partnership being
treated as an association rather than as a partnership for federal tax
purposes.
Section 15: Voting Rights of Limited Partners.
15.1 The voting rights granted to the Limited Partners in Section
9.3, 9.9(d), 13.3, 13.4, and 14.1 hereof are granted pursuant to Section 15507
of the Limited Partnership Act as in effect in the State of California. Thus,
under the laws of the State of California, a Limited Partner shall not be
deemed to take part in the control of the Partnership by virtue of his
possessing or exercising such voting rights.
15.2 For purposes of taking any action permitted under the Agreement,
a Partnership meeting may be called by the General Partners or by the holders
of 10% or more or the Units outstanding. Upon receipt by the General Partners
of a written request, delivered either in person or by registered mail,
executed by the holders of 10% or more of the Units outstanding and stating
the purpose of the meeting, or if a meeting is to be held at the call of the
General Partners, in each case the General Partners shall provide all of the
Limited Partners, within 10 days after receipt of such request, written notice
(either in person or by certified mail) of the meeting and the purpose of such
meeting which shall be held on a date not less than 15 nor more than 60 days
after receipt of such request, at a time and place (within the state and
county of the principal office of the Partnership) as shall be selected by the
General Partners, convenient to the Partners.
Section 16: Books, Records, and Reports.
16.1 The Partnership's books and records, this Agreement and all
amendments thereto, and appraisals, feasibility of commitment letters, or
equivalents shall be maintained at the principal office of the Partnership
until five years after termination and liquidation of the Partnership and
shall be open to the reasonable inspection and examination of the Partners or
their duly authorized representatives. Such books and records shall be kept on
the cash basis in accordance with sound accounting principals.
16.2 The General Partners will send the following reports to each
person who held an interest in the Partnership during the period covered by
such report:
(a) A semi-annual report within 60 days following the end of
the first six-month period of each year, which report shall be
audited but shall contain a balance sheet, a statement of income for
the period then ended, a cash flow statement for the period then
ended, and any other pertinent information regarding the Partnership
and its activities during the period covered thereby, including the
information designated in Rule 260.140.115.5 of Title 10 of the
California Administrative Code as in effect on the date of this
Agreement.
(b) A report within 60 days of the end of each quarter during
which the General Partners or their affiliates receive fees for
services, containing a detailed statement setting forth the services
rendered, or to be rendered, and the amount of the fees received.
(c) A special report within 30 days of the end of each quarter
in which the Partnership acquires or disposes of any Projects or
Project Interests, containing a description of the Projects and
Project Interests acquired during such quarter, including the
purchase price therefor, other material information, and a statement
as to the aggregate investments to date, which reports are required
to be prepared until an amount equal to 75% of the proceeds of the
offering of the Units has been invested in the acquisition of
Projects and Project Interests.
(d) A report within 75 days after the end of each of the
Partnership's fiscal years containing all information with respect to
the Partnership necessary for the preparation of the Limited
Partner's federal and state income tax returns.
(e) An annual report within 120 days after the end of each of
the Partnerships fiscal years containing (1) a balance sheet as of
the end of the fiscal year, and a statement of income, partner's
equity, and changes in financial position for the year then ended,
all of which shall be prepared in accordance with generally accepted
accounting principals and accompanied by an auditor's report
containing an opinion of an independent certified public accountant
and (2) a report of the activities of the Partnership during the
period covered by the report. Such report shall also include a cash
flow statement which will set forth distributions to Limited Partners
for the period covered thereby, and shall separately identify
distributions from cash flow from operations during the period, cash
flow from operations during a prior period which had been held as
reserves, proceeds from disposition of property and investment, lease
payments on net leases with builders and reserves retained from the
gross proceeds of the offering originally obtained from the Limited
Partners.
16.3 The General Partners will file with the Department of
Corporations of the State of California copies of any of the reports sent to
holders of Units pursuant to Section 16.2 hereof.
Section 17: Power of Attorney.
17.1 Each Limited Partner makes, constitutes, and appoints the
General Partners, with full power of substitution, his true and lawful
attorneys for him and in his name, place, and stead and for his use and
benefit, to sign, execute, certify, acknowledge, file, and record this
Agreement, and to sign, execute, certify, acknowledge, file, and record all
appropriate instruments amending this Agreement as now or hereafter amended,
including, without limitation, agreements or other instruments or documents:
(a) to reflect the exercise by the General Partners of any of the powers
granted to them under this Agreement; (b) to reflect any amendments duly made
to the Agreement; (c) to reflect the admission to the Partnership of a
substituted Limited Partner or the withdrawal of any Partner, in the manner
prescribed in this Agreement; and (d) which may be required of the Partnership
or of any Partner by the laws of the State of California or any other
jurisdiction or governmental agency, including, but not limited to,
Certificates of Fictitious Name as required by Section 17910 of the California
Business and Professions Code. Each Limited Partner authorizes such
attorneys-in-fact to take any further action which such attorneys-in-fact
shall consider necessary or advisable to be done in and about the foregoing
(including the power to consent to items (a), (b), (c), and (d) above as fully
as such Limited Partner might or could do if personally present) and hereby
ratifies and confirms that all such attorneys-in-fact shall lawfully do or
cause to be done by virtue hereof.
17.2 The foregoing power of attorney is a special power of attorney
coupled with an interest and is irrevocable, may be exercised by such
attorneys-in-fact by listing all of the Limited Partners executing any
agreement, certificate, instruction, or document with the single signature of
any one of such attorneys-in-fact acting as attorney-in-fact for all of them,
and notwithstanding any provision of this Agreement to the contrary, shall
survive the delivery of an assignment by a Limited Partner of the whole or a
portion of his interest in the Partnership, until the assignee thereof becomes
a substituted Limited Partner.
17.3 Each Limited Partner has executed and delivered to the General
Partners a power of attorney as set forth in the Subscription Agreement. Each
such power of attorney is on file at the principal place of business of the
Partnership and is incorporated herein by reference.
Section 18: Indemnification.
18.1 The Partnership, its receiver or its trustee, shall indemnify,
save harmless and pay all judgments and claims against the General Partners,
their officers, directors, employees, agents, affiliates, subsidiaries and
assigns, from any liability, loss, or damage incurred by them or by the
Partnership by reason of any act performed or omitted to be performed by them
in connection with the business of the Partnership, including costs and
attorney's fees (which attorneys' fees may be paid as incurred) and any
amounts expended in the settlements of any claims of liability, loss or damage
provided that, if such liability, loss, or claim arises out of any action or
inaction of the General Partners, the General Partners must have determined,
in good faith, that such course of conduct was in the best interests of the
Partnership and did not constitute fraud, negligence, breach of fiduciary
duty, or willful misconduct by the General Partners and, provided further,
that any such indemnification shall be recoverable only from the assets of the
Partnership and not from the assets of the Limited Partners. All judgments
against the Partnership and a General Partner, wherein a General Partner is
entitled to indemnification, must first be satisfied from Partnership assets
before such General Partner is responsible for these obligations.
18.2 Notwithstanding the above Section 18.1, neither the General
Partners nor any officer, director, employee, agent, affiliate, subsidiary, or
assign of the General Partners or of the Partnership shall be indemnified from
any liability, loss, or damage incurred by them (i) in connection with any
liability imposed by law, including liability for fraud, bad faith, or
negligence, or (ii) in connection with any claim or settlement involving
allegations that the securities laws, including the Securities Act of 1933, as
amended, were violated by the General Partners or by any such other person or
entity unless, as to liabilities, loss, or damages arising under clause (ii)
hereof, (a) the General Partners or other persons or entities seeking
indemnification are (except in case of a settlement) successful in defending
such action; and (b) such indemnification is specifically approved by a court
of law which shall have been advised as to the current position of both the
Securities and Exchange Commission and the California Commissioner of
Corporations regarding indemnification for violations of securities laws.
Section 19: Miscellaneous Provisions.
19.1 Notices. Except as otherwise provided herein, any notice which
shall be given in connection with the business of the Partnership shall be
duly given if reduced to writing and delivered personally to the person to
whom it is authorized to be given, or if sent by mail or telegraph to the last
address furnished by him for such purposes.
19.2 Validity. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons
or circumstances other than those as to which it is held invalid, shall not be
affected thereby.
19.3 Applicable Law. This agreement has been executed, delivered, and
recorded in the State of California by the General Partners and the Limited
Partners, and all questions with respect to the validity, construction, or
enforceability hereof shall be governed exclusively by its terms and by the
law of the State of California.
19.4 Binding Agreement. This Agreement shall be binding upon the
parties hereto, their successors, heirs, devisees, assigns, legal
representatives, executors, and administrators.
19.5 Waiver of Action for Partition. Each of the parties hereto
irrevocably waives during the term of the Partnership any right that he may
have to maintain any action for partition with respect to the property and
other assets of the Partnership.
19.6 Section Headings. All section headings in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of
any section.
19.7 Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on
all of the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.
19.8 Nonrecourse Creditors. A creditor who makes a nonrecourse loan
to the Partnership must now have or acquire, at any time as a result of making
the loan, any direct or indirect interest in the profits, capital, or property
of the Partnership other than as a secured creditor.